Economy

Import prices decreased 1.2% last month after declining 1.1% in August, the Labor Department said on Friday. In the 12 months through September, import prices increased 6.0%, the smallest rise since February 2021, after advancing 7.8% in August.Economists polled by Reuters had forecast import prices, which exclude tariffs, falling 1.1% month-on-month.Government data this week showed consumer and producer prices increasing more than expected in September, which cemented expectations for a fourth straight 75-basis point interest rate hike from the Federal Reserve next month.Falling import prices also suggested an easing of bottlenecks in the global supply chain, which was reflected in unchanged readings in underlying consumer and producer goods prices in September.Imported fuel prices dropped 7.5% last month after decreasing by the same margin in August. Petroleum prices also fell 7.5%, while the cost of imported food rebounded 0.2%. But oil prices have likely bottomed following last week’s decision by the Organization of the Petroleum Exporting Countries and allies to cut crude production. Excluding fuel and food, import prices fell 0.5%. These so-called core import prices dipped 0.1% in August. They increased 3.3% on a year-on-year basis in September. Dollar strength is helping to limit the increase in core import prices.The dollar has gained 10.5% against the currencies of the United States’ main trade partners since January.The report also showed export prices dropped 0.8% in September after plunging 1.7% in August.Prices for agricultural exports decreased 1.0%, pulled down by lower prices for soybeans, fruit, meat and nuts. Nonagricultural export prices declined 0.9%. Export prices increased 9.5% year-on-year in September, the smallest rise since February 2021, after advancing 10.7% in August. More

(Reuters) – Profits slid at Wall Street’s biggest banks in the third quarter as they braced for a weaker economy while investment banking was hit hard as dealmaking dried up, but investors saw a silver lining with some shares gaining and JPMorgan Chase & Co (NYSE:JPM) beating estimates. JPMorgan, Morgan Stanley (NYSE:MS), Citigroup Inc (NYSE:C) and Wells Fargo (NYSE:WFC) & Co’s reported earnings on Friday, showing a slide in net income after turbulent markets choked off investment banking activity and lenders set aside more rainy-day funds to cover losses from borrowers who fall behind on payments.JPMorgan Chief Executive Officer Jamie Dimon said there were “significant headwinds immediately in front of us,” noting stubbornly high inflation, higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine and the fragile state of oil supply and prices. “While we are hoping for the best, we always remain vigilant and are prepared for bad outcomes,” he said in the bank’s earnings report.On a conference call, Dimon said U.S. consumers remained strong and he wasn’t predicting a recession but “there are a lot of headwinds out there.” JPMorgan reported a 17% drop in third-quarter profit to $9.74 billion, although that was less than had been feared. Others reported similar slides. Morgan Stanley reported a 30% slump in profit to $2.49 billion. Wells Fargo posted a 31% decline to $3.53 billion. And Citi reported a 25% drop to $3.5 billion. Banks set aside more money in preparation for a hit from a potential economic slowdown. JPMorgan set aside $808 million in reserves, Citi added $370 million to reserves and Wells had a $385 million increase in the allowance for credit losses. James Gorman, Chairman and Chief Executive Officer of Morgan Stanley, said his firm’s performance was “resilient and balanced in an uncertain and difficult environment.” While investment banking and investment management were impacted by the market environment, he said fixed income and equity divisions “navigated challenging markets well.”Morgan Stanley’s earnings showed that investment banking revenue more than halved to $1.23 billion with declines across the bank’s advisory, equity and fixed income segments.Corporations’ interest in mergers, acquisitions and initial public offerings dried up, particularly hitting banks strong in investment banking. Global M&A lost ground in the third quarter with volumes in the United States plummeting nearly 63% as the rising cost of debt forced companies to postpone big buyouts.Morgan Stanley’s shares slid 3% in premarket trading. Still, shares of JPMorgan and Wells Fargo gained, up 1% premarket and 0.8% respectively. “JPMorgan delivered a solid set of results, from top to bottom,” Susan Roth Katzke, an analyst at Credit Suisse, wrote in a note. “At least equally as important is the evidence of preparedness to manage through whatever turn the macro takes; expect the latter to be in focus.” More

Speaking at a press conference, Putin said the “partial mobilization” he announced last month was finishing and would be over within two weeks.At 8:58 a.m. ET, Dow e-minis were up 381 points, or 1.27%, S&P 500 e-minis were up 51.25 points, or 1.39%, and Nasdaq 100 e-minis were up 166.75 points, or 1.5%. More

A former foreign minister, Hunt has twice been unsuccessful in running for the governing Conservative Party’s leadership, once losing to Boris Johnson and then being knocked out in the first round of voting in a contest which saw Truss take the prize.Seen as on the centre-right of the party, Hunt endorsed Truss’s leadership rival, former finance minister Rishi Sunak to become prime minister, and is seen by many in the party as a safe pair of hands. Hunt, who has also previously served as health minister and culture minister, becomes Britain’s fourth finance minister in as many months.Truss’s office also said Edward Argar had replaced Chris Philp as Chief Secretary to the Treasury, the second most important job in the department. More

MUMBAI (Reuters) – The Reserve Bank of India’s monetary policy committee may lean more on data in deciding the key interest rate going ahead even as policymakers appeared divided on the future path of rate hikes, minutes of its September meeting suggested on Friday.The MPC raised its benchmark repo rate by 50 basis points late last month, the fourth straight increase to tame stubbornly high inflation.”Going forward, monetary policy needs to remain watchful and nimble, based on incoming data and evolving conditions,” RBI Governor Shaktikanta Das wrote in the minutes.Minutes from two external members Ashima Goyal and Jayant Varma, however, showed their preference for a tapering of the rate-hike cycle going ahead.”A pause is needed after this hike because monetary policy acts with lags,” Varma wrote in his minutes.”It is dangerous to push the policy rate well above the neutral rate in an environment where the growth outlook is very fragile,” he added.RBI’s forecasts and the survey of professional forecasters show inflation falling to around 5 percent in the first quarter of the next financial year, Varma wrote.India’s annual retail inflation accelerated to a five-month high of 7.41% in September, its ninth straight reading above the MPC’s target band of 2-6%, but wholesale price inflation fell to an 18-month low, separate data this week showed.Michael Patra, deputy governor in-charge of monetary policy, underlined the importance of front-loading rate hikes.”Front-loading of monetary policy actions can keep inflation expectations firmly anchored and balance demand against supply so that core inflation pressures ease,” Patra wrote.”It will also reduce the medium-term growth sacrifice associated with steering inflation back to target.”Patra said even after stripping inflation off the recent transitory supply side shocks, price rise has become unyielding and tightly range bound around the upper tolerance band of the inflation target.”The need of the hour is calibrated monetary policy action, with a clear understanding that it is required for sustaining our medium-term growth prospects,” Das said.Varma highlighted the need for monetary policy to focus on domestic economic factors, saying, “MPC cannot be guided by the effect of global monetary tightening on the interest rate differential”.Goyal said the carry trade based on interest rate differentials “is not a stable source of financing”.”India has earned enough independence to protect itself from policy errors of other nations,” she added. More

Retail and food services sales in total were little changed in September against the estimate for a 0.3% gain.
Excluding autos, sales rose 0.1%, vs. the estimate for spending to be unchanged.
The numbers are not adjusted for inflation, indicating that consumer spending slowed.

Customers shop at the GU Co. store in the SoHo neighborhood of New York, US, on Friday, Oct. 7, 2022.
Gabby Jones | Bloomberg | Getty Images

Consumer spending was flat in September as prices moved sharply higher and the Federal Reserve implemented higher interest rates to slow the economy, according to government figures released Thursday.
Retail and food services sales were little changed for the month after rising 0.4% in August, according to the advance estimate from the Commerce Department. That was below the Dow Jones estimate for a 0.3% gain. Excluding autos, sales rose 0.1%, against an estimate for no change.

Considering that the retail sales numbers are not adjusted for inflation, the report shows that real spending across the range of sectors the report covers retreated for the month.
A Bureau of Labor Statistics report Thursday indicated that consumer prices rose 0.4% including all goods and services, and 0.6% when excluding food and energy.
Miscellaneous store retailers saw a decline of 2.5% for the month, while gasoline stations were off 1.4% as energy prices declined.
A slew of other sectors also posted drops, including sporting goods, hobby, books and music stores as well as furniture and home furnishing stores, both of which posted a -0.7% drop, while electronics and appliances were off 0.8% and motor vehicle and parts dealers fell 0.4%.
General merchandise store sales rose 0.7%. Gainers also included online stores, bars and restaurants, clothing retailers and health and personal care stores, all of which saw 0.5% increases.

While the gains for the month were muted, retail sales rose 8.2% from a year ago, matching the rise in the consumer price index. Shoppers remain generally flush with cash though there are indications of late that they are dipping into savings to make ends meet.
The Fed has enacted multiple interest rate hikes aimed at reducing inflation and bringing the economy back into balance. Markets expect the central bank to raise rates up to 1.5 percentage points more through the end of the year.
A separate report Thursday showed that import prices fell 1.2% in September, slightly more than the 1.1% estimate. Exports declined 0.8%.

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The Commerce Department said on Friday that the unchanged reading in sales last month followed an upwardly revised 0.4% increase in August. Sales in August were previously reported to have gained 0.3%.Economists polled by Reuters had forecast sales climbing 0.2%, with estimates ranging from as low as a 1.1% decline to as high as a 0.8% increase. Sales are slowing also as spending shifts back to services. Retail sales, which are mostly goods, are not adjusted for inflation.Soaring costs for rents and healthcare are squeezing budgets for many Americans, leading to cutbacks on spending on goods. The situation has been compounded by higher borrowing costs, which are making credit more expensive. The Federal Reserve has raised its policy rate from near-zero in March to the current range of 3.00% to 3.25% as it battles inflation. A fourth straight 75-basis-point interest rate hike is expected next month after data on Thursday showed inflation increasing strongly in September.Excluding automobiles, gasoline, building materials and food services, retail sales increased 0.4% last month. Data for August was revised higher to show these so-called core retail sales rising 0.2% instead of being unchanged as previously reported.Core retail sales correspond most closely with the consumer spending component of gross domestic product. Economists estimate that growth in consumer spending was likely below a 1.0 annualized rate in the third quarter after increasing at a 2.0% pace in the April-June quarter. Still, GDP is expected to have rebounded last quarter after two straight quarterly declines mostly as slowing domestic demand curbs imports and leaves a stockpile of unsold merchandise in warehouses. The Atlanta Fed is estimating that GDP increased at a 2.9% rate last quarter after falling at a 0.6% pace in the second quarter. The government is scheduled to publish its snapshot of third-quarter GDP at the end of the month. More

JOHANNESBURG/LONDON (Reuters) -Africa’s central banks are walking a tightrope trying to curb inflation that is mostly out of their control and causing “horrifying” food insecurity, the International Monetary Fund’s Africa head warned. The IMF’s twice-yearly Regional Economic Outlook released on Friday warned that 123 million people, or 12% of sub-Saharan Africa’s population, face acute food insecurity – where the lack of access to adequate food puts someone’s life or livelihood in immediate danger – by the end of the year. That compares to around 82 million people affected before the COVID-19 pandemic, but the hammer blow of the virus, spillovers from the war in Ukraine as well as worsening unrest and drought in parts of the continent have seen the numbers spiral.”What worries us really is the fact that this is coming on top of all of the dislocation caused by the pandemic,” the IMF’s Abebe Selassie told Reuters this week.”I was in Chad (in May) and really the conditions that you saw there in terms of food security really are very, very horrifying.”Ethiopia, Somalia and parts of Kenya are also on track for a fifth failed rainy season, with famine looming in Somalia.Annual food price inflation in sub-Saharan Africa has stood at over 10% since the second half of 2021 and the IMF’s new economic forecasts this week revised up its regional inflation projection by 2 percentage points to 8.7% for this year. It also cut the GDP growth forecast by 0.2 percentage points to 3.6%, a significant drop from the 4.7% expansion in 2021, and has said Nigeria, Ghana, Ethiopia, Malawi, and Zimbabwe may all need to raise interest rates faster or more decisively.”It’s a delicate balancing act that central banks face,” Selassie said. “Inflation is this insidious, insidious tax on the poorest.” Rapidly rising global interest rates mean that sub-Saharan Africa’s most heavily-indebted countries have effectively lost access to the international capital markets.That has pushed countries including Ghana to request IMF bailouts and Selassie said work was still ongoing to determine if the West African country now needs debt relief.Ethiopia, Zambia and Chad, meanwhile, had long been seeking to restructure their debts under the G20 Common Framework initiative established in 2020 in response to the COVID-19 pandemic.Progress has been painfully slow. Ethiopia’s restructuring has been delayed by ongoing civil war, although IMF managing director Kristalina Georgieva has said this week she hoped both Zambia and Chad’s processes would now be finished by the end of the year.Chad’s bilateral creditors said late Thursday that the country now did not need debt relief, given the surge in the price of crude oil, one of the country’s major revenue earners. Oil trading and mining firm Glencore (OTC:GLNCY), Chad’s largest commercial creditor, declined to comment.”The delay from Chad’s creditors in approving much needed debt relief has been really very problematic,” Selassie said in a press conference on Friday.”We want to make sure that the resources we provide will go to support Chad rather than address an unsustainable debt situation,” he said, referring to a three-year, $570 million programme approved in December. “The benefits of these higher oil prices should accrue as much to Chadian people as much as its creditors.””Is everything working as timely, as speedily as we hoped? No,” Selassie said of the Common Framework, in an interview before the statement from Chad’s creditors. “But I also want to stress that there’s been quite a lot of cooperation from members of the G20, China and others.”He said Zambia and Chad’s restructurings now rely on the private firms and funds that provided the country with loans.”Anything that exceeds what is a reasonable ask of the Zambians would be unfair to the people of Zambia,” Selassie added.He warned that more African countries might need to restructure their debt. “If global conditions persist,” he said, “There will be some countries that will require debt reprofiling.”Meanwhile, an assessment of Ghana’s debt sustainability is ongoing, Selassie said in the press conference, after the West African country requested help from the fund amid soaring inflation and a tumbling currency.The IMF is waiting for the government to set out how it will address its debt, while a fund programme will also depend on how quickly Ghana implements planned economic reforms, Selassie said. More