Economy

SEOUL (Reuters) -South Korea’s export growth slowed to a seven-month low in October, missing market expectations, in a sign of cooling global demand that puts further pressure on a stuttering economic recovery. Outbound shipments from Asia’s fourth-largest economy rose 4.6% from a year earlier to $57.52 billion, compared with gains of 7.5% the month before and slowing for the third month, official data on Friday showed. A Reuters poll of economists had tipped a 6.9% rise. It was the 13th straight month exports grew in annual terms though they were the smallest increase since March. On average per working day, exports were down 0.2%, their first fall since September 2023. The trade data aligns with a survey showing South Korea’s factory activity shrank for a second month in October, with output falling by the most in 16 months.The trade-reliant economy barely grew in the third quarter, despite signs of recovery in consumer spending, as exports weakened, raising the chance for more stimulus to support growth.Exports of semiconductors were up 40.3% to $12.5 billion in October, which was lower than an all-time high of $13.6 billion in September. Sales of cars rose 5.5%. By destination, shipments to China rose 10.9% to a 25-month high of $12.2 billion. Those to the United States and European Union were up 3.4% and 5.7%, respectively. Imports rose 1.7% to $54.35 billion in October, after gaining 2.2% in September, also weaker than a 2.0% rise expected by economists. The country posted a monthly trade surplus of $3.17 billion, narrower than the previous month’s $6.66 billion. More

TOKYO (Reuters) – The dollar steadied against major peers on Friday, as investors awaited the U.S. jobs report to confirm economic resiliency heading into the Federal Reserve’s monetary policy meeting and a close-call U.S. presidential election next week.The yen held onto to Thursday’s gains as investors continued to digest a less dovish message from the Bank of Japan (BOJ) in the previous session.The U.S. dollar started November off at a lower level after coming under pressure against the yen and on Thursday.Nonfarm payrolls data closes out the week, with economists polled by Reuters estimating 113,000 jobs were added in October, although analysts say that the number could be impacted by recent hurricanes in the U.S.That’s likely to make the October jobs report “incredibly hard to read,” Tapas Strickland, head of market economics at National Australia Bank (OTC:NABZY), wrote in a note.The unemployment rate, expected to come in at 4.1%, may offer a clearer picture of labour markets.”Such an outcome would likely see the unemployment rate coming in well below the FOMC’s September projections of the unemployment rate lifting to 4.4% in Q4 2024. And thus continue to question the need for rate cuts,” he said.Data overnight suggested upward price pressures continue to ease, adding to a trend of upbeat data and supporting bets that the Fed will cut interest rates by 25 basis points next week.The dollar index, which measures the greenback against six major currencies, was up 0.03% at 103.91.The Japanese currency was last largely unchanged at 152.02 per dollar. On Thursday, the central bank maintained ultra-low interest rates but said risks around the U.S. economy were somewhat subsiding, signalling that conditions are falling into place to raise interest rates again.”We think the chances of a Dec. rate hike have somewhat increased after Gov. (Kazuo) Ueda’s press conference,” Morgan Stanley MUFG economists Takeshi Yamaguchi and Masayuki Inui wrote in a report on Thursday.Their base case remains for the BOJ to raise rates again in January to 0.5%, although they noted that factors such as dollar/yen and inflation data leading up to the year-end decision will be important. The euro stood just off a two-week high against the greenback, buoyed this week after data showed that the euro zone’s inflation accelerated more than expected in October. It was last down 0.02% at $1.0882.Sterling remained on the backfoot, down 0.06% to $1.2891, as investors continued to react after British finance minister Rachel Reeves launched the biggest tax increases since 1993 in her first budget. The pound slid to its lowest since mid-August at $1.28445 on Thursday.The Fed’s monetary policy decision next week comes just days after the U.S. presidential election on Tuesday.Republican candidate Donald Trump and Democratic Vice President Kamala Harris remain neck and neck in several polls, but some investors have been putting on trades betting Trump will win, lifting the dollar and U.S. Treasury yields.Trump’s pledges to implement tax cuts, loosen financial regulations and raise tariffs are seen as inflationary and could slow the Federal Reserve in its policy easing path.In cryptocurrencies, bitcoin, the world’s largest cryptocurrency by market cap, last traded at around $70,132. More

BENGALURU (Reuters) – Australia’s central bank will hold its key interest rate at 4.35% on Tuesday and for the rest of the year, according to a Reuters poll of economists, as strong economic activity and sticky core inflation still warrant a cautious approach.Consumer price inflation fell to 2.8% last quarter, within the Reserve Bank of Australia’s 2-3% target for the first time in three years, but core inflation, stripped of volatile components, remained elevated.During its post-COVID tightening cycle, the RBA raised rates by 425 basis points from 0.10% to 4.35%, less than many of its peers despite the risk of prolonged higher inflation.That was partly to promote job creation, part of the central bank’s mandate. The jobless rate has held relatively steady between 4.0% and 4.2% since April. With the employment market still strong and a relatively lower peak in interest rates, the RBA is likely to be slower to ease policy than other central banks in developed nations, in line with its peers in Asia.All 30 economists in the Oct. 30-31 poll expected the RBA to hold its official cash rate at 4.35% at the end of its two-day policy meeting on Nov. 5.All but one also expected the central bank to leave rates unchanged at the December meeting.”We are not expecting the RBA to change the official cash rate. Aside from that, what we could see at the margin is a slight softening in their language from hawkish to a bit more balanced,” said Craig Vardy, head of fixed income at BlackRock (NYSE:BLK) Australasia.”We think the data was pretty much in line with the RBA’s thoughts about the path of core inflation. That is, it’s still too high for them to think about cutting the cash rate in 2024…early 2025 is probably a bit more realistic.” All the major local banks – ANZ, CBA, NAB, and Westpac – forecast no rate change this year. However, all four expected the RBA to cut rates at its first meeting of 2025 in February.Nearly 70% of respondents who had a view into next year, 20 of 29, expected a 25 basis point cut in February to 4.10%. Of the remaining nine, eight predicted no change while one saw a bigger cut to 3.75%.Markets are not pricing in a first cut until April.Median forecasts in the survey showed the RBA cutting rates by 75 basis points next year, to end 2025 at 3.60%, compared with a total of 225 bps of cuts expected from the U.S. Federal Reserve.”(Core) inflation is not going to get into the target band until the middle of the third quarter…So without a recession, (the RBA) are probably not going to be in a hurry to cut rates sharply,” said My Bui, economist at AMP (OTC:AMLTF), forecasting three rate cuts next year.”Cutting rates is basically bringing it back to a more normal level, which in our view is slightly above 3%.”With the Fed easing much more swiftly than the RBA, the Australian dollar will regain all of its year-to-date loss of 3.5% by end-January and then trade around $0.68, according to a separate Reuters poll of foreign exchange strategists.(Other stories from the November Reuters global economic poll) More

BENGALURU (Reuters) – The U.S. dollar will hold on to its recent strength over coming months on robust domestic economic data and continued scaling back of bets for Federal Reserve interest rate cuts, a Reuters poll found.Some analysts have attributed the dollar’s 4% October rally to speculation about the likely result of the Nov. 5 U.S. presidential election. Others say the move is primarily due to resilient economic activity in the United States, particularly strong consumer spending and labor data.The latest opinion polls show a near-deadlock between Democratic Vice President Kamala Harris and Republican candidate Donald Trump in the final stretch of a tightly-fought presidential contest.Meanwhile, persistent U.S. economic outperformance has pushed financial markets to price in a higher year-end Fed funds rate than thought even a month ago. A separate Reuters survey of economists predicts two more quarter-point reductions this year.Based on interest rate differentials, the dollar’s recent momentum seems unlikely to fade quickly anytime soon. Fed peers, such as the European Central Bank, appear more likely to be aggressive in the near-term with rate reductions. “In the U.S., we started getting better economic data, so we started pricing in a more hawkish Fed relative to what we had been and in Europe we started getting weaker data and so we started pricing in a more dovish ECB,” said Dan Tobon, head of G10 FX strategy at Citi.”We’re basically just looking for the dollar to rally into the election, reverse that slightly and then chop around sideways like it’s been doing now.”The euro will trade around its current $1.09 level by the end of November before edging up about 1% in three months to $1.10, according to median forecasts from over 70 forex strategists polled by Reuters from Oct. 28-31.Yet, an overwhelming 90% majority of respondents, 28 of 31, to an additional question predicted better dollar performance in the immediate aftermath of a Trump victory. The currency is forecast to gain an additional 1.5% under that scenario and lose 1% if Harris wins, according to median responses.”We’re seeing risks to the dollar as asymmetric to the upside in case of a Trump victory and a bit more status quo, slightly maybe to the downside, in a Harris victory,” said Alex Cohen, FX strategist at Bank of America.”That’s mainly due to trade and tariff policy in a Trump administration that could … have a disproportionate impact on the dollar, pushing it higher both from expected inflation as well as from a trade perspective.”While both Trump and Harris have proposed policies that could reignite price pressures, Trump’s policies would be more inflationary of the two, according to 39 of 42 economists in a separate Reuters survey.Yet, the euro was forecast to rise to $1.11 by the end of April and then to $1.12 in a year, poll medians showed.”Our medium-term view of the dollar is it should ultimately trade negative in a soft landing environment. But given how strong U.S. data has been recently, there are definite additional upside risks to that forecast,” BofA’s Cohen added. More

The trade pact would remove tariffs for 51% of New Zealand’s exports to the region from day one and deliver duty-free access for 99% of New Zealand’s exports over 10 years, New Zealand Trade Minister Todd McClay said in a statement late on Thursday. “Successfully concluding a trade agreement with the GCC has been a long-standing ambition for successive governments for almost two decades,” McClay said in Doha. The statement did not specify when the trade pact will become effective.The agreement with the Gulf states comes after New Zealand reached a trade deal with the United Arab Emirates in September. Trade between New Zealand and the GCC is worth more than NZ$3 billion ($1.79 billion) annually. The Pacific island nation exported NZ$2.6 billion to the Middle Eastern member countries in the year to June 2024, which included NZ$1.8 billion of dairy, official data showed.($1 = 1.6734 New Zealand dollars) More

Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report Friday that payrolls expanded by just 100,000 on the month, the lowest in nearly four years.
Whatever the results, markets may choose to look through the report, as multiple one-time hits including strikes and storms dampened hiring.
Indicators leading up to the much-watched jobs report show that hiring has continued apace and layoffs are low.

Hiring signs outside a Stewart’s gas station in Catskill, New York, US, on Wednesday, Oct. 2, 2024. 
Angus Mordant | Bloomberg | Getty Images

Powerful hurricanes and a major labor strike could take a chunk out of the nonfarm payrolls count for October, which is expected to be the slowest month for job creation in nearly four years.
Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report Friday that payrolls expanded by just 100,000 on the month, held back by hurricanes Helene and Milton as well as the strike at Boeing. If their prediction is accurate, it would be the lowest job total since December 2020 and a huge drop from September’s 254,000.

The report, which will be released at 8:30 a.m. ET, is also expected, however, to indicate that the unemployment rate will be unchanged at 4.1%.

“When we look through that [headline jobs number], the unemployment rate will remain low, and I think wages will grow faster than inflation, and both those things are going to underscore the health of the U.S. economy,” said Michael Arone, chief investment strategist at State Street Global Advisors.
On wages, average hourly earnings are projected to rise 0.3% for the month and 4% from a year ago, the annual figure being the same as September and furthering the narrative that inflation is sticky but not accelerating.

Whatever the results, markets may choose to look through the report, as so many one-time hits dampened hiring.
“The top-line numbers will be a little bit noisy, but I think there’ll be enough there to continue to determine that the soft landing is intact and that the U.S. economy remains in good shape,” Arone added.

The hurricanes caused what could be historic levels of monetary damage, while the Boeing strike has sidelined 33,000 workers.
Goldman Sachs estimates that Helene shaved as much as 50,000 off the payrolls count, though Hurricane Milton probably happened too late to affect the October count. The Boeing strike, meanwhile, could lower the total by 41,000, added Goldman, which is forecasting total payrolls growth of 95,000.

Data has been solid

Yet indicators leading up to the much-watched jobs report show that hiring has continued apace and layoffs are low, despite the damage done from the storms and the strikes.
Payrolls processing firm ADP reported this week that private companies hired 233,000 new workers in October, well above the forecast, while initial jobless claims fell to 216,000, equaling the lowest level since late April.
Still, the White House is estimating that the events cumulatively may hit the payrolls count by as many as 100,000. The “disruptions will make interpreting this month’s jobs report harder than usual,” Jared Bernstein, chair of the Council of Economic Advisers, said Wednesday.
Jobs numbers in general have been noisy in the post-Covid era.

Earlier this year, the BLS announced benchmark revisions that knocked off 818,000 from previous counts in the 12-month period through March 2024. Year to date through July, revisions have taken a net 310,000 off the initial estimates.
“This report will reinforce the big picture, which is that the labor market is still growing. But the fact is that it’s growing but slowing,” said Julia Pollak, chief economist at ZipRecruiter. “Growth is slowing and also becoming more narrowly concentrated in just a couple of sectors.”
Leading areas of job creation this year have been government, health care, and leisure and hospitality. Pollak said that continues to be the case, particularly for health care, while ZipRecruiter also has seen more interest in skilled trades along with finance and related businesses such as insurance.
However, she said the general picture is of a slowing market that will need some help from Federal Reserve interest rate cuts to stop the slide.
“For the last two quarters now, job growth has been below the pre-pandemic average, and job gains have been unusually narrowly distributed,” Pollak said. “That has real effects on job seekers and workers who felt their leverage erode, and many of them are struggling to find sort of acceptable jobs. So I do think the Fed’s attention should be firmly on the labor market.” More

Benchmark natural gas prices remained subdued during much of the quarter, hurt by high storage levels and tepid demand. The U.S. Energy Information Administration expects U.S. gas production to decline in 2024, the first time since 2020, as producers like Coterra have reduced their output after prices touched multi-decade lows. The company’s average sales price for natural gas, excluding hedges, fell to $1.30 per thousand cubic feet (mcf) from $1.80 per mcf a year earlier. Oil prices also fell 8.4% to $74.04 per barrel on demand woes. Total production fell marginally to 669,100 barrels of oil equivalent per day (boepd) from 670,300 boepd, as declines in natural gas output were mostly offset by a 22.2% rise in oil production. Coterra has reallocated resources to oil-heavy Permian and Anadarko basins from the country’s largest gas producing region, Marcellus shale, following the slump in natural gas prices this year. The company, however, raised 2024 production forecast to a range of 660,000 to 675,000 boepd, up 1% at midpoint compared to its earlier projections, primarily backed by strong oil production.Its shares rose 1.8% in after-market trade.The company also forecast oil production to grow at 5% annually for the next two years.But it said total equivalent production growth would be in the range of zero to 5% until 2026.Coterra’s third-quarter net income fell 22% to $252 million, compared to the year-ago quarter.Its adjusted profit of 32 cents per share came in below market estimate of 34 cents, according to data compiled by LSEG. More