Aurelia Butler

Turkey announced its second increase in the minimum wage in six months, raising pay by 30 per cent in a bid to cushion households from soaring living costs.The increase, which comes after the official annual rate of inflation reached a 23-year high of 74 per cent in May, lifts the take-home pay earned by around 40 per cent of the workforce from TL4,250 to TL5,500 ($254 to $328). But a 20 per cent plunge in the lira since the start of January — when the last increase came into force — means that the rise amounts to the equivalent of just $9. President Recep Tayyip Erdoğan, whose refusal to allow the central bank to raise interest rates has fuelled runaway inflation, said the government would continue to strive to protect the public from the worst excesses of a cost of living crisis.“We are taking many measures to compensate for the loss of prosperity of all our people, especially our workers,” he said on Friday. “We will continue to take them.”The Turkish leader, who faces a challenging bid for re-election in a presidential vote that must be held before June 2023, has suffered a steep decline in opinion polls, partly as a result of the sharp erosion in living standards. Analysts warned that the rise in the minimum wage, which applies to millions of workers in sectors including construction, hospitality and retail and is expected to have a knock-on effect on salaries across the board, would itself exacerbate inflation. Haluk Bürümcekçi, an Istanbul-based economist and analyst, said the 30 per cent increase was likely to add around 6 percentage points to the rate of inflation over the next six months.Opposition parties said the rise was insufficient to protect households from soaring inflation at a time when many believe that the real rate of price rises is higher than the data published by the national statistical institute.“Salary increases are no use until Erdoğan puts a halt to inflation,” Engin Özkoç, a member of parliament with the Republican People’s party (CHP), wrote on Twitter. Nazmi Irgat, secretary-general of the Türk İş, a confederation of trade unions that was involved in negotiations for the increase, had pushed for a rise in the minimum wage to around TL6,400 — the amount his organisation said was needed to lift a family of four over the “hunger and poverty threshold”.The Turkish economy has suffered from repeated bouts of currency depreciation and high inflation in recent years as Erdoğan, a life-long opponent of high borrowing costs, has asserted more and more control over the central bank.The Turkish president, who has ruled Turkey for almost 20 years, last year ordered a series of aggressive interest rate cuts even as inflation was rising. That caused the lira to plunge to a record low, pushing up costs in a country that is dependent on imported materials, especially energy. Inflation has been compounded by a surge in global commodity prices caused by Russia’s invasion of Ukraine.Erdoğan has argued that he is pursuing a “new economic model” and that the country will “leave inflation behind it” at the start of next year.   More

LONDON/TOKYO (Reuters) -Global factory growth stalled in June as higher prices and a darker economic outlook left consumers wary of making purchases, while China’s strict COVID-19 lockdowns and Russia’s invasion of Ukraine added to supply chain disruptions, surveys showed.They were the latest signs pointing to the risk of all-out recession in the global economy, coming after the world’s top chipmakers said they were facing waning demand and as central bankers warned of painful interest rate hikes ahead.”Between central banks digging their heels in to counter inflation and growing fears there is absolutely no path to a soft landing for the global economy, there are few, if any, places to hide,” said Stephen Innes at SPI Asset Management.In the euro zone, manufacturing output contracted for the first time since the pandemic’s initial wave two years ago. S&P Global (NYSE:SPGI)’s manufacturing Purchasing Managers’ Index (PMI) fell to 52.1 in June from May’s 54.6, its lowest level since August 2020.Earlier, surveys showed China’s factory activity recovering in June, though a slowdown in Japan and South Korea, as well as a contraction in Taiwan, highlighted the strain from supply disruptions, rising costs and persistent material shortages.At a meeting of central bank chiefs in Portugal this week, Federal Reserve Chair Jerome Powell and European Central Bank President Christine Lagarde made it clear that bringing down high inflation could hurt badly but must be done quickly to prevent rapid price growth from becoming entrenched.Evidence from the real economy suggests that higher prices are already biting into consumer and corporate demand.Micron Technology Inc (NASDAQ:MU) sounded the latest warning from the world’s chipmakers, forecasting worse-than-expected revenue for the current quarter, noting that the market had “weakened considerably in a very short period of time.”Facebook-owner Meta Platforms Inc has cut plans to hire engineers by at least 30% this year, CEO Mark Zuckerberg told employees on Thursday.”If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history,” Zuckerberg told workers in a weekly employee Q&A session, audio of which was heard by Reuters.’TUG OF WAR’A Reuters poll of economists last month found there is a 40% chance of a recession in the United States over the next two years, with a 25% chance of it happening in the coming year. “There’s hope China’s economy will pick up after a period of some weakness. But now there’s a risk of slowdown in the U.S. and European economies,” said Yoshiki Shinke, chief economist at Japan’s Dai-ichi Life Research Institute.”It will be a tug of war between the two, though there’s a lot of uncertainty over the global economic outlook.”China’s Caixin/Markit manufacturing PMI rose to 51.7, marking the first expansion in four months and well above analysts’ expectations for a reading of 50.1.The Caixin survey, which focused on export-oriented and small firms in coastal regions, follows official data showing the country’s factory and service sectors snapped three months of activity decline in June.China’s economy has started to chart a recovery path out of the supply shocks caused by its strict lockdowns, though risks remain such as diminished consumer spending and fear of a further wave of infections.Meanwhile, the final au Jibun Bank Japan Manufacturing PMI slipped to 52.7 in June from 53.3 in the previous month.South Korea’s S&P Global PMI fell to 51.3, dropping for a second straight month, reflecting supply constraints and a truckers’ strike.Separate data showed South Korean exports, seen as a proxy for global trade because its manufacturers are positioned in many parts of the world supply chain, growing at their slowest pace in 19 months.India’s PMI showed factory output expanded at its slowest pace in nine months, as elevated price pressures restricted demand and output. More

(Reuters) – Futures pointed to opening losses on Wall Street at the start of the second-half on Friday, as investor worried about the hit to economic growth from the aggressive steps by policymakers determined to stamp out raging inflation.As the era of cheap money draws to a close and a cycle of higher interest rates sets in, investors for much of the year have been selling equities, pushing the benchmark S&P 500 to close out its worst first six months since 1970.Federal Reserve policymakers have been making a case for a second 75-basis points interest rate hike in July despite signs of slowing economic growth, leaving investors assessing the hit to corporate earnings ahead of quarterly reporting season.”Investor confidence is evaporating right now. The Fed is saying they are going to raise interest rates, and if they want the inflation controlled, the economy will go through some pain in the short term and in the next at least six to 12 months,” said Kunal Sawhney, chief executive at research firm Kalkine.”Volatility is going to be there in the second half of the year, given the recession risks have intensified.” Meanwhile, latest data showed manufacturing activity stalled in Asia and production fell in Europe as higher prices and a darker economic outlook left consumers wary of making purchases.The Institute for Supply Management’s survey, due at 10:00 a.m. ET, is expected to show U.S. factory activity eased further in June. Markets saw a turbulent first-half as fears about aggressive interest rate hikes, geopolitical uncertainty, prolonged supply-chain snarls and COVID-19 lockdowns in China weighed on sentiment.In the previous session, all three indexes posted their second straight quarterly declines. The Dow suffered its biggest first-half percentage plunge since 1962 and the tech-heavy Nasdaq recorded its worst-ever first six months.At 08:47 a.m. ET, Dow e-minis were down 73 points, or 0.24%, S&P 500 e-minis were down 7 points, or 0.18%, and Nasdaq 100 e-minis were down 25.5 points, or 0.22%.Micron Technology Inc (NASDAQ:MU) dropped 4.7% in premarket trading as the memory-chip firm predicted current-quarter revenue below market expectations, triggering concern the chip industry was turning toward a down cycle.Other chip stocks Qualcomm (NASDAQ:QCOM), Advanced Micro Devices (NASDAQ:AMD) and Texas Instruments (NASDAQ:TXN) were down between 0.7% and 1.4%.Facebook-owner Meta Platforms Inc slipped 0.6%. The company has cut plans to hire engineers by at least 30% this year, CEO Mark Zuckerberg told employees, warning them to brace for a deep economic downturn.Kohl’s Corp (NYSE:KSS) tumbled 18.6% as the department store chain called off its sale to Vitamin Shoppe-owner Franchise Group (NASDAQ:FRG), blaming a downturn in market conditions. More

China will also facilitate cross-border bond subscriptions, and make it easier for foreign passive funds to trade Chinese bonds, the China Foreign Exchange Trade System (CFETS), affiliated to China’s central bank, said in a statement.Passive funds track indexes, as opposed to active funds where managers pick assets to invest in.Overseas investors reduced holdings of Chinese bonds for a fourth consecutive month in May, as diverging monetary policies kept Chinese yields pinned below their U.S. counterparts. The move is aimed at “promoting further opening of China’s bond market”, and deepen capital market reforms, said the CFETS, which operates the platform for China’s interbank and forex trading.To reduce foreign investors’ trading cost, service fees under the Bond Connect scheme, a major cross-border channel for bond investors, will be slashed by 25% starting July 11, according to the CFETS. And on Monday, the CFETS will roll out a service for cross-border bond subscriptions, making it easier for overseas investors to participate in the primary market of Chinese bonds. In addition, CFETS will make it easier for foreign investors to conduct forex hedging business in China, and will further extend trading hours in the onshore forex market.China will also improve a mechanism for trading based on closing prices to better meet the needs of foreign passive bond investors. Global index publishers including FTSE Russell and JPMorgan (NYSE:JPM) have added Chinese bonds to their indexes, channeling passive money inflows into China. ($1 = 6.7015 Chinese yuan renminbi) More