经济月报（2024年5月）

MONTHLYECONOMICBULLETINMay 2024 Global: G3 economy is sailing ahead while China is adjusting its sails China Manufacturing activity is improving but remainsexposed to rising trade tensions.Still dragged by weak domestic demand and the realestate slump. EuropeThe mild recession may be over, but growth will remain subdued in 2H24.Slowing inflation encourages the ECBto cut interest rates ahead of the Fed. JapanGradual recovery with conviction US on hitting 2% inflation goal.Yen weakness has become aproblem, might needintervention. Slow drop in inflation reduceschance of near-term rate cuts.But more signs of slowing growthcould soften demand-pull inflationand open the door for rate cuts thisyear. Globalgrowthimprovesslowlyledbyservicesactivity;manufacturingsectorseesmildslowdownalthoughnewordersarerisinginEMs;inputpricesincreasemodestly US:Stickypricepressurereduceschanceofnear-termratecuts,butmoresignsofslowinggrowthcouldsoftendemand-pullinflationandopendoorforratecutsthisyear KrungsriResearch’sview TheFeddecidedtoholdbenchmarkratesat5.25-5.50%inMay,signalingnoratehikethisyear.However,thesloweasingofpricepressurecouldtaketheFedlongertobringinflationtothe2%targetorreducechanceofratecutsinthenextfewmonths. Still-stickypricepressuredespitesomesoftening:Headlineinflationeasedonlyslightlyto3.4%YoYinAprilfroma6-monthhighof3.5%inMarch.Coreratesoftenedtoa3-yearlowof3.6%from3.8%.ThetrimmedmeanPCEpriceindex,akeygaugeofunderlyinginflationarypressure,wasat2.9%MoMannualizedinMarch,lowerthaninJanuaryandFebruary,buthigherthananymonthin4Q23.Theheadlineproducerpriceinflationwassteadyat2.2%inAprilandcorerateroseto2.4%from2.1%.Givensignsoflosinggrowthmomentum,theFedmightmovetocutratesthisyear.Weakergrowth:1Q24GDPgrowthweakenedto1.6%QoQannualizedfrom2.5%in4Q23.Slowingprivateconsumption:DespitestrongerspendingonservicesinQ1,therearesignsofaslowdownwithAprilServicesPMIfallingtoa5-monthlow,consumerconfidenceindexdroppingtoitslowestsinceAugust2022,andretailsalespostingzeromonth-on-monthgrowth.Looserlabormarketconditions:Jobopeningsfelltoa3-yearlowof8.48m,growthinnon-farmpayrollsslowedfrom315kinthepriormonthto175k,andunemploymentrateroseby0.1%to3.9%.Keymeasuresofwagegrowthwerealsotheslowestsincethepandemic.Lookingahead,therearesignsofpolicyeasingaftertheFedannouncedplanstoslowthepaceofQuantitativeTightening(QT),startinginJune.Thelaggedeffectoftightmonetarypolicycoulddrageconomicgrowthtobelowitspotentiallevelandaffectthelabormarket,whichwouldeasebothwagegrowthanddemand-pullinflation.Topreventasharpeconomicslowdown,theFedmightmakeitsfirstrate-cutinSeptemberandtheFedFundsratecoulddropto4.50-4.75%byyear-end. Eurozone:Slowing inflation encourages the ECB to cut interest rates ahead of US Fed KrungsriResearch’sview EconomicrecoverygainedmomentuminQ1,suggestingthemildrecessionisover;however,growthwillremainsubduedin1H24.EurozoneQ1GDPreversedtopostpositivegrowthafteratechnicalrecession,largelyledbyincreasesinGermanyandFrance(+0.2%QoQeach),Italy(+0.3%),andSpain(+0.7%).Thisisinlinewith:(i)theCompositePMIbeinginexpansionzoneforthesecondmonth,backedbyservicesactivitieswhichmarkedthestrongestgrowthinnearlyayear;and(ii)inflationpotentiallydroppingfrom2.7%currentlytowardsthelong-termtargetof2.0%in2H24,whichwouldhelptoliftrealincomeandleadtoamildrecoveryinhouseholdconsumptionandbusinesssentiment.InApril,theZEWEconomicSentimentIndexrosetothehighestsinceFebruary2022.However,thereisunlikelytobeameaningfulrecoveryin1H24given:(i)still-contractingmanufacturingactivity;(ii)tighterfiscalpolicy;and(iii)continuedweakcreditdemandfromhouseholdsandNFC.Althoughunemploymentrateremainslow,thejobvacancyratecontinuedtodropinQ4suggesting thelabormarketismorebalanced.Giventhestill-softlabormarketamidcoolinginflation,workerswillbelesswillingtoaskforlargenominalpayincreases,andthiswillfurtherundercutpressurefromwage-pushinflationin2024.Givenslowingwagegrowthandloweroilprices,weexpectunderlyinginflationtofalltowards2%inH2andencouragetheECBtocutinterestratesaheadoftheFED.InQ4,JobVacancyRatefellto2.7%from2.9%inthepreviousquarter,markingthelowestreadingin9quarters.Giventhecombinedimpactofthesefactorsandstill-slowgrowththroughout1H24,wemaintainthattheEuropeanCentralBank(ECB)wouldannouncethefirstratecutinJune,withtheECB’sdepositrateexpectedtofallfrom4.00%to3.25%bytheendof2024. Japan:Gradual recovery with conviction on hitting inflation goal of 2%; yen weakness hasbecome a problem suspecting the need of intervention KrungsriResearch’sview Followingstagnationinthepriorquarter,Japan’sGDPshrank2%YoYand0.5%QoQinQ1,withconsumptionmarkingthesteepestfallin3quartersasconsumersreducedspendingamidsluggishwagegrowth.Economicgrowthwouldlikelyremainsubduedinthe1H24.Butlookingahead,thelatestindicatorssuggestgrowthwouldpick-upgraduallyfromQ2onwardswithinflationmovingtowards2%target,supportedby(i)improvingconsumptionfollowingthehighestwageincreaseinthree-decades;(ii)strongservicesactivity;and(iii)ongoingmonetarypolicysupport. Withtheyenstillweak,theBOJ