Eurozone inflation falls to lowest level since Russia invaded Ukraine. Inflation in Europe slowed to the lowest level since Russia invaded Ukraine, supporting the case for the European Central Bank (ECB) to stop raising interest rates. Inflation in the twenty countries that share the euro currency eased to 6.1 percent year-on-year (y-o-y) in May from 7.0 percent y-o-y in April. The reading came in better than consensus, which was 6.3 percent. This was the lowest rate since February 2022, when inflation was 5.9 percent. Core inflation, which excludes volatile items like energy, food, alcohol, and tobacco prices, slowed moderately to 5.3 percent y-o-y from 5.6 percent y-o-y in the previous month. Even though headline inflation benefited from the recent decline in energy and food prices, the ECB is envisaging more interest rate hikes in order to bring inflation to its 2 percent medium target as core inflation remains stubbornly high.
US real estate declines may be over, S&P Case-Shiller says. US home prices increased slightly in March, showing a gain for the second month in a row, according to the latest S&P CoreLogic Case-Shiller US National Home Price Index, released on Tuesday. The Index gained 0.4 percent in March compared to February, the second consecutive month of gains. The index was up 0.7 percent compared to March of last year. For the month, the 10-City Composite Index, which includes the Los Angeles and New York metropolitan areas, added 0.6 percent, and the 20-City Composite Index, which includes Dallas-Fort Worth and the Detroit area, was 0.5 percent higher. “Two months of increasing prices do not a definitive recovery make, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end,” said Craig J. Lazzara, managing director at S&P DJI, in a release.
UK house prices fell at fastest pace in nearly 14 years in May. The UK housing market is showing signs of stress as mortgage lending fell to its lowest monthly level on record, and house prices fell at the fastest annual rate in 14 years. House prices in the UK fell by 3.4 percent y-o-y in May. Compared to April, the house prices declined by of 0.1 percent, with the average cost of a UK home now said to be £260,736. Mortgage rates have risen sharply recently on expectations that the Bank of England will continue with interest rate hikes as inflation remains stubbornly high.
China's factory activity falls faster than expected on weak demand. On account of weaker demand, factory activity in China fell more quickly than anticipated in May, putting additional pressure on policymakers to stabilise the economy. The official manufacturing purchasing managers' index (PMI) in the world’s second largest economy fell to 48.8 in May, down from 49.2 in April, according to published by the National Bureau of Statistics (NBS). The May figure is the lowest in five months and below the 50-point level, indicating activity is in contractionary territory. The data was also below the forecasted reading of 49.4. This decline “suggests that the risk of a downward spiral, especially in the manufacturing sector, is becoming more real,” said Nomura economists in a report. They are also anticipating that the PMI will likely remain in negative territory in June.
India's factory output expanded at the quickest pace in the last 31 months in May on the back of strong demand and robust output. This improved optimism encouraged employers to increase workforce at the fastest pace in six months, a private survey showed on Thursday. The India Manufacturing Purchasing Managers’ Index rose to 58.7 in May compared to 57.2 in April, a report by his Markit showed. The reading remained above the 50-mark, showing that activity is in expansionary mode, for the 23rd consecutive month. Over the past few quarters, the manufacturing sector has undergone solid growth which has been one of the main drivers of India’s economy.
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