每周经济评论

US economy shows signs of slowdown. Eurozone faces risks from Chinese trade retaliation. China’s consumption growth remains weak. China US Eurozone US housing market is showing clearer signs of slowingdown, supporting the chances of the Fed’s rate cutsthisyear.In May,retail sales grew 2.27%YoY,decelerating for the 3rd consecutive month. At the sametime, housing starts contracted by-5.5% MoM to 1.27munits, the lowest level since July 2020, while buildingpermitsfell by-3.8%MoM to 1.38 million units,thelowest since June 2020. Consumption,production,and investment all remainexposedto risk,while property crisis continues toundermine China’s economy.May retail sales grew byjust 3.7% YoY, up slightly from April’s 8-month low of2.3%. Even though sales of electrical appliances surged145% in the latter half of May, sales of some key itemsremainedsluggish.Expansion in industrial output andfixedassetsinvestmentunderperformedmarketexpectations,decelerating from 6.7%YoY in April to5.6% May and 4.2% to 4%, respectively. Prices for newandexisting homes in 70 cities have continued todecline for two years, with rates accelerating from-3.5%to-4.3% and from-6.8% to-7.5%. Worseningtrade tensions are adding to uncertaintyoverthe Eurozone’s growth track through 2H24.At50.8, June’s Eurozone Composite PMI spent its 4thmonthin expansionary territory, although the index was downfrom 52.2 in May due to a slump in the ManufacturingPMI to a 6-month-low and a dip in the Services PMI to52.6 from 53.2. However, the ZEW Economic Sentimentclimbed to 51.3 in June, its 9thmonth in positive territoryand its highest since July 2022. May’s slump in building permits and housing start to anear 4-year low is partly a result of long-restrictivelevelof interest rates with 30-year mortgages ratestaying at a 22-year high of 6.8%. This is in line withsales of new and existing homes that have continuedto decline since 2022, when the FED started thefirstratehikes. Added to this, signs of a slowdown in theUSeconomy can also be seen in:(i)weaker GDPgrowthin Q1;(ii)contraction of real consumerspending and manufacturing output; and (iii) the slidein ratio of job openings to unemployment to 1.24, closetoits pre-Covid level.Given the above,we aremaintaining our view that two rate cuts are possiblelater this year. Major indicators are pointing to ongoing recovery fromthe lows of 4Q23: (i) The Composite PMI expanded forthe4th consecutive month;(ii)the ZEW EconomicSentiment is at a 23-month high; and (iii) retail saleshave strengthened for the past 2 months. However, anescalatingtrade war with China may affect therecovery outlook of the Eurozone, especially in targetindustries in the next period. The most recent sign ofapproaching danger is the move by China’s Ministry ofCommerceto launch an anti-dumping investigationaimed at certain pork products from the EU (annualexports of pork to China from the EU are worth morethanUSD 3bn,or around 0.5%of all EU exports toChina). The improving but still weak retail sales figures reflectlimited positive impacts of the trade-in programs thataimedto stimulate purchases of new electricalappliances and machinery. Moreover, production andinvestment in some industries may face risks when thisstimulus programendsand trade tensions escalate. Inthe real estate sector, the decline in new home saleshas slowed and prices may slightly improve in 2H24followinggovernment stimulus efforts.However,thesupply glut would continue to pressure home prices. May exports benefit from a rebound in agricultural yields. Structural headwinds expected to weigh on manufacturing sector through 2024. Thailand’scompetitiveness is improving,but this islargelyexplained by cyclical factors.Thailand’splacingin the 2024 IMD World CompetitivenessYearbookhas improved,climbing from 2023’s 30thplace to 25thand moving from 3rdto 2ndplace in theASEANregion(after only Singapore,which is in 1stplacebothwithinASEANandglobally).Competitivenessis assessed across four areas:(i)economic performance, for which Thailand has risenfrom 16thto 5thplace; (ii) business efficiency, up from23rdto 20th; (iii) government efficiency, unchanged at24th; and (iv) infrastructure, unchanged at 43rd. Export figures beat market expectations in May, but wetrimmed our 2024 export growth forecast to just 1.8%.The Ministry of Commerce reports that following growthof 6.8% in April, the value of exports jumped 7.2% YoY inMay to hit a 14-month high of USD 26.2bn, outperformingmarket expectations of a 1.9% expansion. Excluding goldandoil from the calculations,exports grew by 6.5%.Productcategories that performed well include fresh,chilled,frozen and dried fruit(+128%),rubber(+46.6%),computersand computer equipment(+44.4%),and faxmachines,telephones,equipment and parts(+110.7%),while export contractions were seen in autos, equipmentandparts(-2.1%),electronic integrated circuits(-11.9%),rice (-4.5%), and sugar (-46.1%). For export destination, anexpansion was seen in exports to the US, China an