Economy

German harmonised consumer inflation came in at 2.2% in April, preliminary data showed.
The country’s economy expanded by 0.2% in the first quarter from the previous three-month period, preliminary data indicated.
Germany’s economy, the largest in Europe, has long been sluggish, with its GDP flip-flopping between growth and contraction in each quarter throughout 2023 and 2024.

Two German flags fly in front of and on top of the Reichstag building at sunset.
Photo by Hannes P Albert/picture alliance via Getty Images

German consumer inflation came in at 2.2% in April on an annual basis, easing slightly from March levels but coming in above expectations, preliminary data showed Wednesday.
Economists polled by Reuters had estimated a 2.1% reading. The country’s consumer price index, harmonized for comparability across the euro zone, had come in at 2.3% in March on an annual basis.

So-called core inflation, which excludes food and energy prices, accelerated to 2.9% in April from 2.6% in March. The closely-watched services print also jumped to 3.9%, after a 3.5% reading in the previous month.
Energy prices meanwhile dropped sharply, falling by 5.4% according to the statistics office.
While the inflation rate closing in on the European Central Bank’s 2% mark is good news for consumers at first glance, there are some less positive points about the data on closer look, Sebastian Becker, economist at Deutsche Bank, said in a note Wednesday.
The slight decrease of the headline figures only took place due to lower energy and food costs, he said. “In comparison, the core inflation rate, which is more important for the ECB … rose notably again.” And services inflation appears “considerably more stubborn than expected,” Becker added.

Economic growth

Earlier on Wednesday, preliminary data showed that Germany’s economy expanded by 0.2% in the first quarter from the previous three-month period.

The figure, released by the German federal statistics office, is adjusted for price, calendar and seasonal variations.
The gross domestic product reading was in line with estimates from economists polled by Reuters. Germany’s gross domestic had contracted by 0.2% in the fourth quarter.
The statistics office attributed the quarterly increase to the fact “that both household final consumption expenditure and capital formation were higher than in the previous quarter.”
While acknowledging Wednesday’s figures were positive, “the quarterly increase is still far too small to end the country’s long-lasting stagnation,” Carsten Brzeski, global head of macro at ING, said in a note.
Europe’s largest economy has long been sluggish, with its GDP flip-flopping between growth and contraction in each quarter throughout 2023 and 2024. The country has so far avoided technical recession, which is defined by two consecutive quarters of contraction.
Key sectors of the economy, such as autos, have been suffering from stronger competition from China. Other industries including housebuilding and infrastructure have also been going through trying times that have been linked to higher costs, muted investment and bureaucratic hurdles.
Separately, U.S President Donald Trump’s tariff policies have thrust uncertainty onto export reliant Germany which counts the U.S. as its most important trading partner.
As part of the European Union, Germany is facing 20% blanket tariffs on goods exported to the U.S., although these levies have been temporarily reduced to 10% to allow time for negotiations. U.S. duties on steel, aluminum and autos also affect the country.
The German government last week cut its economic outlook to predict stagnation in 2025, with outgoing economy minister Robert Habeck saying Trump’s trade policies and their impact on the country were the main factor behind the revision.

Fiscal upheaval

One bright spot could emerge on the horizon. Germany earlier this year made changes to its long-standing debt brake fiscal rule, enabling higher defense spending, and creating a 500 billion euro ($570 billion) fund dedicated to infrastructure and climate investments.
This move has widely been regarded as a positive shift for the German economy, although much still depends on how the changes are implemented.
“Today’s GDP report paints a picture of what could have happened if it hadn’t been for US President Donald Trump’s tariff blast – an economy that bottoms out and goes through a weak cyclical rebound, but could gain momentum with the announced fiscal stimulus,” ING’s Brzeski said.
While this recovery could still happen, the process now will likely take longer, the analyst said. He stressed that tariffs, uncertainty and other shifts in trade and geopolitics are weighing on the short-term economic outlook, while the planned fiscal measures can boost long-term growth. More

Private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024, down from 147,000 in March and missing the Dow Jones consensus estimate for an increase of 120,000.
Leisure and hospitality posted the biggest gain, adding 27,000 jobs. Others that showed increases included trade, transportation and utilities (21,000), financial activities (20,000) and construction (16,000).

Companies slowed hiring sharply in April as they braced against potential impacts from President Donald Trump’s tariffs against U.S. trading partners, ADP reported Wednesday.
Private sector payrolls rose by just 62,000 for the month, the smallest gain since July 2024, amid heightened uncertainty over the degree of the tariffs and the impact they would have on hiring plans and broader economic conditions.

The total marked a deceleration from the downwardly revised gain of 147,000 in March and missed the Dow Jones consensus estimate for an increase of 120,000.
“Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data,” said ADP chief economist Nela Richardson. “It can be difficult to make hiring decisions in such an environment.”
Wage gains also took a step backwards, rising 4.5% from a year ago for those staying in their jobs, down 0.1 percentage point from March. However, job changers saw an increase to 6.9%, up 0.2 percentage point.
From a sector standpoint, leisure and hospitality posted the biggest gain, adding 27,000 jobs. Others that showed increases included trade, transportation and utilities (21,000), financial activities (20,000) and construction (16,000). Education and health services lost 23,000 positions while information services fell by 8,000.
The ADP estimate serves as a precursor to Friday’s nonfarm payrolls report from the Bureau of Labor Statistics, and the two reports can differ substantially. Economists surveyed by Dow Jones are looking for job growth of 133,000 in the BLS report, which unlike ADP includes government hiring. The unemployment rate is expected to be unchanged at 4.2%. More

Euro zone GDP grew 0.4% in the first quarter, according to a preliminary reading, ahead of the 0.2% expected by economists.
Germany, Europe’s largest economy, rose 0.2% over the same period.

Freight containers are stacked in the east of the banking city on the site of the DB transshipment station. The skyscrapers of the banking skyline rise up behind them. US President Trump’s aggressive US customs policy can also be seen as a trade war against the rest of the world.
Photo by Arne Dedert/picture alliance via Getty Images

The euro zone economy grew by a stronger-than-expected 0.4% in the first quarter, flash data from statistics agency Eurostat showed Wednesday, as global tariff tensions cast uncertainty upon the bloc’s trajectory.
Economists polled by Reuters had forecast a 0.2% expansion in the first three months of the year, following a revised 0.2% growth print in the last quarter of 2024.

Figures published earlier Wednesday showed the gross domestic product (GDP) of Germany, Europe’s largest economy, rose 0.2% over the same period. French GDP added 0.1% across the three-month stretch.
Continuing a recent trend, southern European and smaller economies outperformed, with the Spanish and Lithuanian GDPs adding 0.6% each, while Italy’s economic output grew by 0.3%. The economy of Ireland, which tends to have volatile readings due to its high proportion of multinational companies, expanded by 3.2% in the first quarter.
Franziska Palmas, senior Europe economist at Capital Economics, said the latest euro zone GDP reading showed the area’s economy started 2025 on a stronger footing than activity surveys had suggested.
“Nevertheless, we still expect growth to slow sharply in the next six months as the US tariffs introduced in April will hit activity,” Palmas said, adding that any boost coming from the huge fiscal stimulus expected in Germany would mostly be felt next year.
The euro was choppy Wednesday, trading 0.08% lower against the U.S. dollar at 10:35 a.m. in London following the print, and 0.2% higher against the British pound. Germany’s 10-year bond yield, seen as the benchmark for the euro area, was three basis points lower.

Euro zone economic growth has been lackluster for much of 2023 and 2024, even as the European Central Bank has been cutting interest rates in an effort to stimulate growth and boost economic activity. The ECB’s deposit facility rate, its key rate, was taken down to 2.25% earlier this month — down from highs of 4% in mid-2023.
The ECB in March said it was expecting the euro zone economy to grow by 0.9% in 2025, slightly below its January forecast. Fresh projections are due out in June, with central bank policymakers last week suggesting to CNBC that the forecasts would prove crucial in the rate decision-making process.
On the sidelines of the International Monetary Fund World Bank Spring meetings, the policymakers and other economists and officials widely noted the U.S.’ tariff policy as a key concern when it comes to growth.
ECB President Christine Lagarde noted that, while the “disinflationary process is so much on track that we are nearing completion,” there were shocks that would “dampen” economic growth.
The European Union, which includes the euro zone countries, is facing 20% blanket trade tariffs from the U.S., which has briefly reduced these measures alongside levies on other counterparties until July for negotiations. The EU has also put its own retaliatory measures on hold for now. The bloc is also subject to additional tariffs on steel, aluminum and autos.
Data released on Tuesday nevertheless showed that economic sentiment in the euro area fell in April, hitting its lowest level since December 2024.
While growth has been subdued, euro zone inflation has been nearing the ECB’s 2% target, coming in at 2.2% in March. The latest inflation data release is expected later this week. More

The first 100 days of President Trump’s second term have been a whirlwind of action, with the imposition of steep tariffs worldwide, the detention of immigrants and deep cuts to the federal work force.The New York Times has been talking with a group of voters who all cast their ballots in last November’s election with some trepidation. While they had expressed a range of hopes and concerns about the new administration, they have now seen enough to make some early judgments at the close of the first 100 days. (A recent Times/Siena College poll also found that majorities of voters, even many who approve of the job Mr. Trump is doing, view his first few months as “chaotic” and “scary.”)‘I don’t regret voting for him.’Jaime Escobar Jr., 46, from Roma, TexasAs mayor of the small border town of Roma, Jaime Escobar Jr. was accustomed to assessing whether strategies were working. At this point, Mr. Escobar remained mostly optimistic, but he was still wary.“I’m not saying I’m 100 percent happy with everything, but for the most part, I feel that Trump is tackling the issues that the American voters thought were important,” he said, referring to immigration and the economy. “I don’t regret voting for him.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Most levies on imported cars and car parts will remain in place, but automakers have secured some relaxation of the trade policy.President Trump signed a pair of executive orders on Tuesday that walked back some tariffs for carmakers, removing levies that Ford, General Motors and others have complained would backfire on U.S. manufacturing by raising the cost of production and squeezing their profits.The changes will modify Mr. Trump’s tariffs so carmakers that pay a 25 percent tariff on auto imports are not subject to other levies, for example on steel and aluminum, or on certain imports from Canada and Mexico, according to the orders. However, the rules do not appear to protect automakers from tariffs on steel and aluminum that their suppliers pay and pass on.Carmakers will also be able to qualify for tariff relief for a proportion of the cost of their imported components, though those benefits will be phased out over the next two years.At a in Michigan on Tuesday night, Mr. Trump said that he was showing “a little flexibility” to the automakers but that he wanted them to make their components in the United States.“We gave them a little time before we slaughter them if they don’t do this,” he said.The decision to reduce the scope of the tariffs is the latest sign that the Trump administration’s decision to impose stiff levies on nearly all trading partners has created challenges and economic uncertainty for American companies. But even with the concessions announced Tuesday, administration policies will add thousands of dollars to car prices and endanger the financial health of automakers and their suppliers, analysts said.Mr. Trump signed the executive orders aboard Air Force One as he flew to Michigan, home to America’s largest automakers, for a speech marking his 100 days in office.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump’s top economic adviser Stephen Miran struggled to reassure leading bond investors in a meeting last week that followed a bout of intense tumult on Wall Street triggered by the president’s tariffs. Miran, chair of the Council of Economic Advisers, met representatives from top hedge funds and other major investors at the White House’s Eisenhower Executive Office building on Friday, said people with direct knowledge of the matter. Some participants found Friday’s meeting counter-productive, with two people describing Miran’s comments around tariffs and markets as “incoherent” or incomplete, and one of them saying Miran was “out of his depth”. “[Miran] got questions and that’s when it fell apart,” said one person familiar with the meeting. “When you’re with an audience that knows a lot, the talking points are taken apart pretty quickly.”Another person familiar with the meeting was more encouraged by the administration’s approach to deregulation and tax cuts.The roughly 15 attendees included representatives of hedge funds Balyasny, Tudor and Citadel, as well as asset managers PGIM and BlackRock. The event, convened by Citigroup, was timed to coincide with the IMF’s spring meeting. “Administration officials maintain regular contact with business leaders and industry groups about our trade and economic policies. The only interest guiding the administration and President Trump’s decision-making, however, is the best interest of the American people,” the White House said when asked about the meeting.Citi, BlackRock, PGIM, Balyasny, Citadel and Tudor declined to comment.Trump’s policies have triggered intense volatility in US equity and debt markets. US government bonds sold off sharply after the president’s April 2 announcement of steep “reciprocal” tariffs. They stabilised after he paused the levies for 90 days, but many investors remain on edge. The US 10-year Treasury yield traded at 4.17 per cent on Tuesday, down from a high of 4.59 per cent on April 11. Yields move inversely to prices. Treasury secretary Scott Bessent also addressed investors at a closed-door meeting last week. Bessent’s comments indicating he expected the US and China to reach a trade deal in the “very near future” helped lift US stocks. But attendees of the meeting with Miran said he did little to assuage the participants about the tumult in markets and maintained the administration’s line that tariffs would hurt the US’s trading partners more than American consumers. Miran also stated the primary aim of tariffs was not to generate revenue, though additional revenue could be a benefit.The Council of Economic Advisers was established after the second world war to provide advice on domestic and international economic policy to the president. However, the National Economic Council is responsible for co-ordinating policy. Before joining the administration, Miran wrote about the merits of a so-called Mar-a-Lago Accord to align global markets more firmly around US interests in trade and geopolitics. Elements of his thinking, pinned on the notion that the US dollar’s dominant reserve currency status represents a “burden”, were outlined in a widely read note in November. They include weakening the dollar and tying holders of US government bonds in to arrangements to fund defence spending, in return for an American security guarantee. Early this month, Miran delivered a speech at the Hudson Institute think-tank that did not specifically call for a new global currency pact, but did say currency markets were “distorted” and there were “unfortunate side effects of providing reserve assets”. Among his solutions were that countries should accept tariffs on exports to the US without retaliation, or simply “write cheques to Treasury that help us finance global public goods”. Bond investors have balked both at this and at the rollout of Trump’s tariffs. Sinking long-term bond prices and a falling dollar suggest the US’s role as a market haven is under strain, investors say. One person familiar with the situation said Miran had been increasingly distancing himself from the ideas in the 2024 paper in recent meetings with investors. “He is in full-scale retreat,” said the person familiar with the matter. Additional reporting by James Politi More

Unlock the White House Watch newsletter for freeYour guide to what Trump’s second term means for Washington, business and the worldDonald Trump visited the US industrial heartland on Tuesday to tout another step back from his trade war, as he offers more tariff relief for some of the world’s biggest carmakers. The president is sparing the manufacturers from some of his steepest duties and offering those that make their vehicles in the US small rebates to offset the cost of the levies. Carmakers importing parts will also avoid the administration’s tariffs on steel and aluminium. “I’m giving them a little bit of a break,” Trump told a crowd of supporters in Michigan on Tuesday evening. “I want them to make their parts here. But I gave them a little bit of time.”“We give them a little time before we slaughter them if they don’t do this right,” he added, to cheers from the crowd.Show video infoTrump’s moves were formalised in an executive order on Tuesday that the president signed ahead of his trip to Michigan, a hub of US auto manufacturing, where he celebrated his 100th day in office. The relief comes just four days before the administration was due to impose a 25 per cent tariff on imported car parts. A separate 25 per cent tariff on all imports of foreign-made cars was imposed earlier this month and included some exemptions for Mexico and Canada.A senior commerce department official said the alterations to Trump’s tariffs on cars were “designed to allow all of the domestic auto manufacturers to grow their plan, to grow their employment and to build more factories in America”.The Financial Times first reported Trump’s new car tariff relief plan last week. The president’s trade war has caused alarm across the car industry about the extra costs it faces to increase production in the US.Although Trump’s executive order simplifies his tariff regime for car parts, manufacturers will still be subject to a 20 per cent tariff that he has applied to all imports from China.Parts from Mexico and Canada that are compliant with the rules of the 2020 USMCA trade agreement will remain tariff-free. Non-compliant vehicles will face a maximum tariff of 25 per cent.The tariff rebate in the executive order allows carmakers that assemble their vehicles in the US to reclaim up to 3.75 per cent of its value for the next year, according to a senior commerce department official. It will drop to 2.5 per cent from May 1 2026 and be phased out completely on April 30 2027. The softening of the tariffs follows lobbying by industry to mitigate their costs and policy uncertainty. Carmakers including General Motors, Volvo Cars and Porsche have pulled or drastically lowered their profit guidance.The heads of Ford, GM and Stellantis all welcomed the relief measures, although some executives complained that the tariff structure remained too complex. “We look forward to our continued collaboration with the US administration to strengthen a competitive American auto industry and stimulate exports,” Stellantis chair John Elkann said. GM chief executive Mary Barra said: “We believe the president’s leadership is helping level the playing field for companies like GM and allowing us to invest more in the US economy.” Ford said Trump’s decisions would “help mitigate the impact of tariffs on automakers, suppliers and consumers”.Earlier on Tuesday, GM abandoned its previous profit guidance and temporarily halted share buybacks, blaming tariff uncertainty. Additional reporting by Myles McCormick in Washington 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 welcome back to FirstFT Asia. In today’s newsletter: China’s global propaganda pushHow Trump’s honeymoon turned sour so quickly Martin Wolf argues why the US will lose against ChinaWe start today with China’s international propaganda campaign against the US trade war, featuring slick videos portraying itself as standing up against American “bullying” on behalf of the rest of the world.‘Never Kneel Down’: That’s the title of the latest video posted yesterday by China’s ministry of foreign affairs on social media. It warns countries not to make deals with the US, which “slaps its allies in the face”. The video reflects concerns in Beijing that President Donald Trump is using tariffs to force other countries to join America in isolating China. “Bullying will be stopped . . . when the rest of the world stands together in solidarity, the US is just a small stranded boat,” the video said.The propaganda videos contrast dark scenes of Wall Street chaos and angry American protesters with a bright and futuristic China.Charm offensive: The propaganda push comes after Xi toured Vietnam, Malaysia and Cambodia this month to strengthen ties as part of what analysts have described as China’s trade war charm offensive that also includes Europe and Latin America. Beijing wants “to try and shore up its support in western and non-western capitals to prevent Trump forming an anti-China trade bloc”, said Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis. Read the full story.More trade war news: Wall Street economists forecast that GDP shrank in the first quarter after the US trade deficit in goods surged to a record high in March.China’s European auto ambitions: Chinese carmakers expanding into Europe are being forced to readjust their short-term ambitions as EU tariff roadblocks have slowed product launches and made their electric vehicles less affordable.Here’s what else we’re keeping tabs on today:Economic data: Australia reports CPI inflation figures, China publishes March PMI and Japan releases industrial production data. First-quarter GDP data is due from Taiwan, the US and the EU.Monetary policy: The Bank of Thailand is expected to cut its policy rate amid slower economic growth. (Bangkok Post)Results: Earning season continues with Samsung, Hong Kong Exchanges & Clearing, Barclays, Microsoft and Volkswagen reporting. Vietnam: Today is the 50th anniversary of the end of the Vietnam war, with commemorations planned across the country.Five more top stories1. Mark Carney has won Canada’s election after a campaign dominated by the country’s relationship with the US under Trump. Carney’s Liberal party was on track to win the largest number of seats and the right to form a minority government. Read more about the pivotal vote.2. Trump is set to announce another step back from his trade war and unveil more tariff relief for some of the world’s biggest carmakers. The president will use a visit to the US industrial heartlands on Tuesday evening (local time) to announce that he is sparing the manufacturers from some of his steepest duties and offer those that make their vehicles in the US small rebates to offset the cost of the levies.More US news: The White House lashed out at what it called a “hostile and political act by Amazon” after a report alleged the tech giant was planning to display price increases caused by Trump’s tariffs on its products.Trump’s first 100 days: These 10 charts map the tumultuous start of his second term.3. China’s copper stockpiles are set to run out in just a few months, as the market suffers “one of the greatest tightening shocks” in its history on fears of US tariffs, according to senior executives at commodities trading house Mercuria. Kostas Bintas, the company’s head of metals and mining, said the US was for the “first time” competing with China for supplies of copper, which was likely to supercharge prices.A blow to nickel producers: Miners in Indonesia are warning of lower profits and output cuts after the government increased the royalties it levies on one of the country’s biggest export industries.4. Starbucks’ profits fell by half in its latest quarter amid mounting costs of the coffeehouse chain’s turnaround effort. Under chief executive Brian Niccol, who took charge in September, has sought to reduce customers’ wait times, simplify menus and restore the welcoming feel that was lost as more business moved online during the Covid-19 pandemic. Here’s the latest on Starbucks’ revival campaign.5. Spain’s electricity grid operator has ruled out a cyber attack as the cause of this week’s huge power outage as authorities rushed to get transport networks and infrastructure running again. 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Here’s how his honeymoon turned sour so quickly.We’re also reading and listening to . . . Sinking feeling: Iran suffers from some of the worst land subsidence in the world, threatening heritage sites and spurring suggestions to move the capital.‘Core’ GDP: Against an uncertain policy outlook, we need to utilise durable economic statistics that tell the real story, writes Harvard professor Jason Furman.Tech Tonic 🎧: John Thornhill explores the Israel Defense Forces’ use of AI in the war against Hamas and what the country’s defence tech ecosystem tells us about the future of warfare.Chart of the dayMartin Wolf’s latest column argues that the US will lose its trade war against China, which has powerful cards to play in the dispute. Many significant powers already do more of their trade with China than with the US, including Australia, Brazil, India, Indonesia, Japan and South Korea.Some content could not load. Check your internet connection or browser settings.Take a break from the newsAhead of the FT Weekend Festival’s US edition on May 10, our DC bureau shares its selection of the restaurants, museums, running routes — and more — to make your visit to Washington a memorable one.© Zach Gibson/Bloomberg More