April’s US retail sales and the Canadian CPI inflation reports will be in the spotlight today as market analysts scrutinize financial data coming from China. The Chinese National Bureau of Statistics (NBS) reported that retail sales in April grew by 18.4% on an annualized basis, almost 3% lower than anticipated. The report showed that industrial production rose by 5.6% on a yearly basis, missing analysts’ expectations.

In the UK, the Office for National Statistics (ONS) announced that the unemployment rate ticked higher in the January-March quarter, coming in at 3.9%. According to the ONS report, the increase was driven by the number of people unemployed for more than a year.
 

US Retail Sales in April

April’s US retail sales report will be published by the US Census Bureau later today. Market experts project a 0.7% rise on a month-to-month basis. Some analysts suggest that a positive retail sales figure combined with a strong labor market could mean the US economy might avoid recession.

The Financial Times (FT) reported that “the outlook for retail sales is mixed as continued strength in the labor market and wages is likely to support consumer spending.”
 

Canada: April CPI inflation reports

On Wednesday, investors will be waiting for the Canadian CPI inflation data reports released by the Bank of Canada (BoC) and Statistics Canada. Both reports are taken into consideration by the BoC when planning its monetary policy and could affect the Canadian dollar’s value against other currencies.

Market analysts suggest that the BoC’s CPI report will likely show headline inflation coming in at 3.9% on a year-to-year basis while Statistics Canada data is expected to show CPI inflation dropping to 3.7% on an annualized basis. The BoC’s target is to bring inflation down to 2% which, according to its analysts, is expected to happen by the end of 2024. Canada’s central bank kept interest rates unchanged in its last meeting, but the BoC’s Governor implied that markets should not expect rate cuts anytime soon.
 

European Commission: Eurozone economy to grow more than expected

A survey released by the European Commission (EC) showed that the eurozone’s economies are likely to grow faster than anticipated this year, despite high inflation figures and elevated interest rates. Economists at EC said the EU’s 27 members would grow at an average of 1% this year, up from a previous estimate of 0.8%. The report noted that the forecast for growth in 2024 was upgraded to 1.7% from 1.6%.

Regarding inflation, the EC survey stresses that “falling energy commodity prices are driving a sharp fall in energy consumption bills and the overall rate of price growth from its October peak, but core inflation has been firming. As a result, markets have raised expectations about future policy rate hikes. The small contraction of core inflation in April suggests that it has also peaked, but the convergence toward the target is now expected to take longer. Greater persistence of core inflation would call on monetary authorities to act even more forcefully to stem inflationary pressures.”
 

PBoC Q1 2023 monetary policy report

The Peoples Bank of China (PBoC) published its first quarter monetary policy report on Monday. PBoC’s economists noted that “China's economic growth will likely see marked growth in Q2 2023 due to low base effect”, adding that “prudent monetary policy will be precise and forceful.”

According to the report, the PBoC’s governing board has vowed “to prevent transmission of risks from abroad to China” and “to keep interest rates reasonable and appropriate.”

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