Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Eurozone inflation remained at 2.2 per cent in April, surpassing expectations and complicating the European Central Bank’s task as it considers whether to cut interest rates further at its next meeting in June.Economists had predicted that the figure would fall to 2.1 per cent, according to a poll by Reuters.“The ECB will probably look through this surprise,” said TomaszWieladek, economist at T Rowe Price, emphasising that the central bank was increasing its focus on economic activity in the Eurozone, which recent surveys have indicated is weak. “Much lower oil prices and a stronger euro still have yet to fully feed through to inflation,” he added.The euro was flat after the data, as investors continued to bet on rate cuts. It was up 0.4 per cent against the dollar by late afternoon in London at $1.134.Friday’s figure marks the sixth month in a row that inflation in the single currency bloc has been above the ECB’s target of 2 per cent.Annual core inflation, which excludes highly volatile prices for energy and food, rose to 2.7 per cent, surpassing both the previous month’s pace of 2.4 per cent and economists’ expectations of a 2.5 per cent rate.Services inflation — a closely watched metric that the ECB regards as an important gauge of domestic price pressure — increased to 3.9 per cent year over year, after falling to 3.5 per cent in March. Analysts at Capital Economics said the services inflation rise was “unlikely to worry ECB officials too much as it was probably driven mainly by Easter timing effects” and was “unlikely to stand in the way” of further cuts.Economists argue that the year-on-year comparison is distorted by the fact that the Easter holidays — a time when services in hotels, restaurants andother areas tend to rise because of a rise in travel — were in April thisyear but in March last year. Traders put a roughly 90 per cent chance on a quarter-point cut at the ECB’s June meeting, according to levels implied by swaps markets, largely unchanged from before the release. Overall, two or three such cuts are expected by the end of the year.The ECB began lowering rates last summer after battling to tame an unprecedented surge in consumer prices during the coronavirus pandemic, when inflation peaked at 10.6 per cent.ECB rate-setters voted unanimously last month to cut rates by a quarter point to 2.25 per cent, citing concerns over growth amid “rising trade tensions” from US President Donald Trump’s aggressive tariff agenda.Christine Lagarde, ECB president, added last month that “most measures of underlying inflation” suggested that the central bank was on track to meet its target “on a sustained basis”.While the Eurozone economy performed better than expected in the first three months of the year, with growth of 0.4 per cent, the announcement of Trump’s so-called “reciprocal duties” has since dented the outlook for the region.“The ECB has indicated it is not as concerned about inflation as it is on growth due to the tariff impact,” said Francesco Pesole, FX strategist at ING. In other circumstances, investors would expect a hawkish shift from the central bank, he added. More

Nonfarm payrolls increased a seasonally adjusted 177,000 for the month, slightly below the downwardly revised 185,000 in March but above the Dow Jones estimate for 133,000.
The unemployment rate, however, held at 4.2%, as expected, indicating that the labor market is holding relatively stable.
Average hourly earnings rose just 0.2% for the month, below the 0.3% forecast, while the annual rate of 3.8% also was 0.1 percentage point less than expected

Job growth was stronger than expected in April despite worries over the impact of President Donald Trump’s blanket tariffs against U.S. trading partners.
Nonfarm payrolls increased a seasonally adjusted 177,000 for the month, slightly below the downwardly revised 185,000 in March but above the Dow Jones estimate for 133,000, the Bureau of Labor Statistics reported Friday.

The unemployment rate, however, held at 4.2%, as expected, indicating that the labor market is holding relatively stable. The survey of households, which is used to calculate the jobless rate, showed an even stronger gain, with an increase of 436,000 in those who reported holding jobs on the month.
A broader unemployment gauge that includes discouraged workers and those holding part-time jobs for economic reasons, or the underemployed, edged lower to 7.8%. The labor force participation rate edged higher to 62.6%.

Stock market futures rose following the release as did Treasury yields.
“We can push recession concerns to another month. Job numbers remain very strong, suggesting there was an impressive degree of resilience in the economy in play before the tariff shock,” said Seema Shah, chief global strategist at Principal Asset Management. “The economy will weaken in the coming months but, with this underlying momentum, the U.S. has a decent chance of averting recession if it can step back from the tariff brink in time.”
The report comes amid an uncertain climate in which Trump kicked off April by slapping a “liberation day” 10% across-the-board tariffs on U.S. imports, and threatened a menu of other “reciprocal” duties on dozens of other nations.

However, Trump later decided to put a 90-day hold on the reciprocal tariffs pending ongoing negotiations. In recent days, White House officials have indicated that deals with some of the impacted nations are forthcoming, though there have been no official announcements.
Health care continued to be a leader in job creation, adding 51,000 jobs. Other sectors posting gains included transportation and warehousing (29,000), financial activities (14,000) and social assistance.
The federal government reported a loss of 9,000 jobs on the month amid Trump’s efforts, led by Elon Musk and the Department of Government Efficiency, to trim payrolls in the public sector. Federal government jobs have declined by just 26,000 since January, as employees furloughed but still receiving severance are not counted as unemployed, according to the BLS.
“This first jobs report post-Liberation Day is much too soon for the impacts of tariffs to show up,” said Daniel Zhao, lead economist at job review site Glassdoor. “Even May may still be too early as businesses work down inventories. But today’s report does set the benchmark against which we’ll measure the tariff impacts.”
On the wage side, average hourly earnings rose just 0.2% for the month, below the 0.3% forecast, while the annual rate of 3.8% also was 0.1 percentage point less than expected and the lowest since July 2024.

Revisions brought previous months’ job totals lower than previously reported.
For March, the BLS pulled the initial estimate down by 43,000, while the February number came down to 102,000, a decrease of 15,000.
The report comes just ahead of next week’s Federal Reserve policy meeting.
Central bank officials are currently in their quiet period heading into the two-day session that concludes Wednesday. However, in recent days they’ve expressed greater concern with addressing potential inflation impacts from the tariffs and have indicated a wait-and-see approach before adjusting interest rates.
Markets widely expect the Fed to hold its benchmark short-term borrowing rate steady at the meeting, though they are pricing in a quarter percentage point cut in June with two or three more to follow by the end of the year.
Following the report, the president again called on the Fed to lower interest rates.
“Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!” Trump said in a Truth Social post. More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Temu has stopped shipping low-cost items from China to sell directly to US consumers, as the Chinese ecommerce company overhauls its business model in response to the Trump administration’s tariffs.Sales on Temu’s US marketplace — which sells households goods ranging from phone chargers to silicone toilet brushes — will now all be fulfilled from US-based sellers, rather than Chinese sellers, it said on Friday. The company, which has been building a network of sellers in the US for more than a year, added that it was actively recruiting more merchants in the country. However, the decision to move away from Chinese sellers means its US business could shrink significantly as a result.The changes have been made as the US scraps its “de minimis” customs rules, which exempted inbound parcels worth less than $800 from import duty. From Friday, low-value shipments from China and Hong Kong will be subject to a 120 per cent tariff or a flat $100 fee, depending on how goods are delivered. The $100 fee will be doubled from June 1. The sudden changes are posing major challenges to Temu and its rival Shein, which sells mostly cheap clothes. Both retailers exploited the “de minimis” exemption to undercut US retailers with cheap Chinese-made goods shipped directly to consumers.The Financial Times reported this week that Shein is exploring whether to shift production for its US business out of China and that its long-awaited London stock market float was likely to be delayed further by the tariff changes. The fast-fashion retailer’s US business accounts for about a third of its $38bn in revenue. Analysts estimate that the US is the biggest market for Temu, which is owned by Chinese company PDD Holdings.“Temu’s pricing for US consumers remains unchanged as the platform transitions to a local fulfilment model,” the company said. “The move is designed to help local merchants reach more customers and grow their businesses. This shift is part of Temu’s ongoing adjustments to improve service levels.” Temu will continue to source from Chinese sellers for its operations in other western countries. Temu and Shein are two prominent victims of the US-China trade war. Washington has imposed tariffs of as much as 145 per cent on most Chinese goods, and China has retaliated with tariffs of 125 per cent. Temu and Shein, which both fuelled their rapid growth with blanket social media advertising, have responded by slashing advertising spending in recent weeks. Chinese officials signalled on Friday that Beijing was “evaluating” recent overtures from the US to begin trade talks. Beijing had previously suggested Washington should drop the steep levies if it wanted it to engage. More

This article is an on-site version of our Moral Money newsletter. Premium subscribers can sign up here to get the newsletter delivered three times a week. Standard subscribers can upgrade to Premium here, or explore all FT newsletters.Visit our Moral Money hub for all the latest ESG news, opinion and analysis from around the FT Welcome back.As Treasury secretary under Joe Biden, Janet Yellen was central to his administration’s push to foster a US boom in low-carbon industries of the future. In the three months since Yellen left office, Donald Trump has made serious headway in pulling down the clean energy framework that she and her colleagues built.Yellen — who also previously chaired the Federal Reserve — is keeping some skin in the climate game. She’s just taken a position on the advisory board of Angeleno Group, a Los Angeles-based venture capital firm focused on clean energy and other climate-related businesses.In our conversation this week, Yellen told me why she’s still bullish on the opportunities for green tech investors in the US — even as she warned of severe risks that Trump’s tariff war is creating for the entire national economy.Join global leaders in business, finance and policy on 21-22 May for the Climate & Impact Summit, taking place in London and online. As a newsletter subscriber, you can register for a free digital pass here or secure a discount on your in-person pass here.Janet Yellen enters the climate VC arenaThis transcript has been edited for length and clarity.Simon Mundy: I’m sure you’ve had no shortage of invitations to take various positions since leaving government. Why did you decide to take this one?Janet Yellen: Well, I think climate change is an existential challenge, and addressing it effectively has to involve massive private investment, and I am very impressed with the work and commitment of the Angeleno Group to identifying investments that will be both profitable and also mitigate emissions or deal with adaptation. Over four years during the Biden administration, I tried to use every tool that we had at Treasury to address climate change; most recently, being involved in writing the tax rules for the Inflation Reduction Act. But I really believe that this is an utterly critical global challenge, and that private investment in climate solutions is a key way to address it.SM: As you mentioned, this was a priority for the Biden administration, and there were policies that were seen as very helpful to this space. Now we have a very different administration that is dismantling a lot of that policy framework. How much of it do you think is going to survive?JY: Well, I am certainly concerned about the hostility towards climate change. For example, I think it was yesterday or the day before we saw the entire staff of the National Climate Assessment team sacked, which is discouraging. I’m discouraged about what’s happening to research in this field.That said, the Inflation Reduction Act is an extremely important law. It created enormous incentives for investment in clean energy, and many of the rules have been finalised. Yellen played an important role in the Biden administration’s push to support low-carbon investment More

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning, and happy Friday. Here’s what we’re covering today: Hopes for a thaw in the trade warDonald Trump’s Latin American fan club How the US-Ukraine minerals deal was struckAnd the ‘strange beauty’ of dying at homeSigns of a possible thaw in US-China trade tensions have helped drive global stock markets higher today after Beijing said it was “evaluating” recent overtures from Washington on starting trade talks. Here’s what you need to know.China’s commerce ministry said the US had recently “conveyed messages to China through various channels, expressing a desire to engage in discussions”. The ministry spokesperson said earlier today: “China is currently evaluating this.” Friday’s statement marks a slight softening of Beijing’s stance from last week, when it said Washington would need to drop its steep levies on China for talks to begin, and was first signalled yesterday by a social media account tied to state broadcaster CCTV.What has been the investor reaction? Global equities rallied, with Taiwan’s Taiex climbing 2.7 per cent, Hong Kong’s Hang Seng index rising 1.8 per cent and Europe’s Stoxx 600 index gaining 1 per cent. S&P 500 futures climbed 0.5 per cent. The Wall Street benchmark has been buoyed by strong Big Tech earnings this week and is on the brink of erasing all of its losses since Donald Trump’s “liberation day” tariff blitz on April 2 sent global markets into a tailspin. “The peak of uncertainty may be over,” said Wee Khoon Chong, a senior strategist at BNY. Asian currencies rallied against the dollar on signs of easing trade tensions. This story has the latest market prices in the lead up to Wall Street opening. Opinion: If tariffs stay in place, US companies will be in sore need of funds to pay the bills and prepare for other potential shocks, writes Gillian Tett.Here’s what else we’re keeping tabs on today and over the weekend:Economic data: The US government releases monthly employment data later. Economists expect the number of new job openings to have slowed last month compared with March but the unemployment rate to remain at 4.2 per cent. Trump’s tariffs: The “de minimis” exemption for small packages from China closes today and a 25 per cent duty on car parts takes effect tomorrow.Results: Chevron, ExxonMobil, DuPont, T Rowe Price and Cboe Global are among the companies reporting earnings today. HSBC holds its first annual meeting under new chief executive Georges Elhedery and Berkshire Hathaway has its AGM tomorrow.Elections: Australia and Singapore go to the polls on Saturday. Romania’s presidential election takes place on Sunday.How well did you keep up with the news this week? Take our quiz.Five more top stories1. Apple chief executive Tim Cook has warned that Donald Trump’s tariffs will increase costs by $900mn in the current quarter. Apple shares fell 2.75 per cent in after-market trading after Cook’s remarks to analysts. Here’s more on the impact tariffs had on Apple’s results.Amazon: The online retailer’s shares also fell in after-hours trading after it released lower than expected guidance for the current quarter. Microsoft: The software group has emerged as the winner from Big Tech’s first earnings of Trump’s new term. Here’s why. 2. Eurozone inflation remained at 2.2 per cent in April, surpassing expectations and complicating the European Central Bank’s task as it considers whether to cut interest rates further at its next meeting in June. Economists had predicted that the figure would fall to 2.1 per cent in April. Here’s more on the outlook for Eurozone interest rates following today’s inflation numbers.3. Nigel Farage claimed his rightwing populist Reform party was now Britain’s main opposition to Sir Keir Starmer’s government after winning the Runcorn & Helsby by-election, ousting Labour by just six votes. The result capped a night of extraordinary advances by Farage’s party in local elections across the UK.4. Large pension funds and other big institutional investors have started to borrow against their private equity portfolios to raise cash after a slowdown in dealmaking and public offerings has dimmed their hopes of exiting trillions of dollars in ageing deals. The stockpile of unsold private equity deals hit a record $3tn last year, according to Cambridge Associates. Read more on the growing demand for so-called net asset value loans on Wall Street.5. Israeli jets struck near Syrian President Ahmed al-Sharaa’s palace this morning in what Benjamin Netanyahu said was a message to Damascus after a wave of sectarian violence involving the Druze minority. The attack marks another escalation in Israel’s military intervention in Syria. Here’s the latest from Malaika Kanaaneh Tapper in Beirut.How should central banks navigate the new world order? Pose questions to Chris Giles and other FT experts about monetary policy, and have them answered in a live Q&A next Wednesday.The Big Read© FT montage/Getty ImagesAs Donald Trump unravels the global trade system and publicly criticises the Federal Reserve, investors more broadly are starting to question the haven status of the dollar and Treasuries — assets that have long formed the bedrock of China’s $3.2tn in foreign reserves. Here’s how Beijing is quietly diversifying from US government bonds.We’re also reading and listening to . . . Chart of the dayAs US factories struggle to find workers, with half a million jobs remaining unfilled in March, the Trump administration has envisaged robots taking up the slack. Industry experts are sceptical, citing several barriers to a rapid acceleration in automation.Some content could not load. Check your internet connection or browser settings.Take a break from the newsMónica Manzutto, the co-founder of Mexico City’s Kurimanzutto gallery, was born in Colombia but moved to Mexico and settled in the capital. She shares her favourite shops, markets and places to eat mole in her insider’s guide.Restaurante Rosetta More

Euro zone inflation was unchanged at 2.2% in April, flash data from statistics agency Eurostat showed.
Economists polled by Reuters had been expecting the reading to come in at 2.1% in April compared to March’s 2.2%.
Both the core and services inflation print re-accelerated compared to March’s readings.

Shoppers buy fresh vegetables, fruit, and herbs at an outdoor produce market under green-striped canopies in Regensburg, Upper Palatinate, Bavaria, Germany, on April 19, 2025.
Michael Nguyen/NurPhoto via Getty Images

Euro zone inflation was unchanged at 2.2% in April, missing expectations for a move lower, flash data from statistics agency Eurostat showed Friday.
Economists polled by Reuters had been expecting the reading to come in at 2.1% in April compared to March’s 2.2% as inflation has been easing back towards the European Central Bank’s 2% target.

Core inflation, which excludes more volatile food, energy, alcohol and tobacco prices, accelerated to 2.7% from March’s 2.4%. The closely-watched services inflation print also picked up again, coming in at 3.9% compared to the previous 3.5% reading.
The euro was higher against the U.S. dollar and the British pound following the data release. Bond yields were little changed, with the yield on 10-year German bonds continuing to trade around 3 basis points higher.
The increase in services inflation was likely “driven mainly by Easter timing effects,” Franziska Palmas, senior Europe economist at Capital Economics, said in a note. These effects would reverse in the coming month, she added, suggesting that this left the door open for further interest rate cuts from the European Central Bank.
“We think the services rate will decline significantly in the rest of this year as US tariffs weigh on activity and the labour market continues to weaken,” Palmas added.
Michael Field, chief equity strategist at Morningstar, meanwhile urged caution, saying tariff uncertainty meant “any level of comfort we have here is precarious.” A further escalation of tariff tensions would mean a pick-up of inflation in Europe, he said.

Field added that further ECB rate cuts were still on the table. “This relatively low level of headline inflation keeps the pressure off the ECB, who can in turn lower interest rates further,” he said.
ECB President Christine Lagarde told CNBC last week that “we’re heading towards our [inflation] target in the course of 2025, so that disinflationary process is so much on track that we are nearing completion.”
Lagarde and other policymakers last week warned the picture for inflation was less clear in the medium-term, with factors such as potential retaliation countermeasures from Europe against U.S. tariffs and fiscal shifts like Germany’s major infrastructure package coming into play.
Lagarde said the ECB would be “data dependent to the extreme,” when making interest rate decisions. The central bank last cut interest rates last month, taking its key rate — the deposit facility rate — to 2.25%, down from highs of 4% in mid-2023.

Several major euro zone economies had already earlier in the week released their latest inflation figures, which are harmonized for comparability across the bloc. Germany’s statistics office said Wednesday it expects consumer prices to have risen by 2.2% in April, below the previous month’s reading but slightly higher than expected. Meanwhile French harmonized inflation came in at 0.8%, also slightly ahead of expectations.
Data released earlier this week indicated that the euro zone economy could be picking up steam, with the bloc’s gross domestic product rising 0.4% in the first quarter of 2025, according to a preliminary reading. This was higher than the forecast of 0.2%, and followed a revised 0.2% growth print in the last quarter of 2024.
Growth is however widely expected to slow in the coming months due to the global tariff fallout. More

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