Economy

Nearly 46% of Chinese households think the employment situation remains “grim” in the second quarter, urban depositors surveyed by the People’s Bank of China (PBOC) said. Another indicator of future expectation of employment also dropped to the worst level since 2009. With the survey-based jobless rate in 31 big cities rising to a record of 6.9% in May, Premier Li Keqiang said China would strive to return the economy to a normal track and cut the jobless rate as soon as possible, state media said on Tuesday.A cohort of graduates larger than the entire population of Portugal is about to enter one of China’s worst job markets in decades, at a time when youth unemployment stands at a record of 18.4%.Faced with economic uncertainties, more than 58.3% of the households are inclined to save rather than spend or invest in the second quarter, up from 42.4% in the first quarter, the PBOC survey showed. Despite signs of economic recovery in May from the previous month’s slump, with the commercial hub of Shanghai under full lockdown, consumption stayed weak, underlining the challenge of attaining positive GDP growth.A separate survey of bankers published by the bank showed weaker loan demand in the current quarter.An index of loan demand dropped to 56.6%, the lowest since the third quarter of 2016, with declines in the manufacturing, infrastructure, retail sales and property sectors.As COVID-19 lockdowns shut businesses, an index of entrepreneurs’ confidence in the economy dropped by 9.2 percentage points for the second quarter from the previous quarter, and was down 15.5 percentage points on the year. More

TOKYO (Reuters) -Japan braced on Wednesday for its hottest day yet of a record-breaking heatwave, as Prime Minister Fumio Kishida called for a ramp-up of nuclear power use amid fears of a shortage of electricity to keep air conditioners whirring. As some manufacturers announced plans to scale back production to save power, temperatures of around 40 C were predicted in areas surrounding Tokyo on the fifth day of the capital’s worst June heatwave since records began in 1875.The Japan Meteorological Agency forecast that temperatures there won’t drop back to 30 C until July 5.”The electricity demand and supply situation is expected to be the toughest in the last three days (of this week),” an industry ministry official told reporters. All additional measures to boost supply had been incorporated, according to national grid monitor OCCTO, whose mid-morning estimate showed the reserve ratio of power generation capacity for the Tokyo area likely to fall as low as 2.6% between 4.30 p.m. and 5 p.m. on Wednesday – under the minimum 3% threshold deemed necessary to ensure stable supply.The government signalled a power shortage warning for the fourth consecutive day on Thursday for Tokyo and surrounding areas although the supply-demand balance would likely be less tight with additional capacity coming on stream. Prime Minister Kishida said he would do his utmost to secure enough supply, telling a news conference he would make the greatest possible use of nuclear power as long as safety was assured.Most of Japan’s nuclear plants have been halted since the March 2011 tsunami that set off the Fukushima nuclear accident. Meanwhile, power companies are rushing to restart thermal power plants that have been shut down and calls are rising for additional use of alternate energy sources, including restarting reactors.As officials again called on households to save electricity where possible – without stinting on air conditioning where it would endanger the health of the vulnerable – auto parts maker Yorozu Corp said it would close its manufacturing plants for at least two days a month from July through September. Seven & i Holdings said it was asking 7-Eleven stores in and around Tokyo to take further power-saving measures such as dimming signboards and turning off ventilation fans when deep-frying equipment was not in use during the 3-8 p.m. crunch time. More

Fed research shows that it’s more costly for policy makers to be wrong about inflation expectations being well anchored when they are not, as opposed to erroneously assuming they are rising when they’re actually well anchored, Mester said Wednesday in remarks prepared for delivery to the European Central Bank’s annual policy forum in Sintra, Portugal.“These simulation results, coupled with research suggesting that persistent elevated inflation poses an increasing risk that inflation expectations could become unanchored, strongly argue against policy makers being complacent about a rise in longer-term expectations,” Mester said.In an interview earlier with CNBC, Mester said the Fed is “just at the beginning of raising rates” and that she wants to see the benchmark lending rate reach 3% to 3.5% this year and “a little bit above 4% next year” to rein in price pressures even if that tips the economy into a recession. She also said if the economic conditions remain the same as now she would back another 75 basis points hike when officials next gather in July. The Fed earlier this month raised interest rates by 75 basis points, the largest increase since 1994, as it battles the highest prices in 40 years. Policy makers had been telegraphing a 50-basis-point move before the meeting, but quickly changed course when, days before the June 14-15 gathering, a preliminary survey showed rising inflation expectations.A final reading of the University of Michigan’s longer-term US consumer inflation expectations, published Friday, settled at 3.1% for June, down from the initial report of 3.3%, which would have been a 14-year high. Fed officials keep a close eye on barometers of consumer price sentiment, and have expressed concern about expectations becoming unanchored and leading to runaway inflation.Mester said long-term inflation expectations are rising and may continue to do so as gasoline and food prices remain elevated.“The current inflation situation is a very challenging one,” Mester said Wednesday. “Central banks will need to be resolute and intentional in taking actions to bring inflation down.”Mester said the current inflation climate, which is partly being driven by supply-side shocks, belies the view that central banks should err on the side of being too accommodative, popular in the pre-pandemic era where low inflation was the main challenge for policy makers. “It also calls into question the conventional view that monetary policy should always look through supply shocks,” Mester said. “In some circumstances, such shocks could threaten the stability of inflation expectations and would require policy action.”©2022 Bloomberg L.P. More

The People’s Bank of China (PBOC), in a statement after the conclusion of a quarterly meeting of its monetary policy committee, promised to use aggregate and structural policy tools to boost confidence in the economy. “At present, global economic growth is slowing, inflation is running at a high level, geopolitical conflicts continue, and the external environment is becoming more complex and severe,” the PBOC said. “Economic development is facing triple pressures of shrinking demand, supply shock and weakening expectations.”China’s favourable conditions of stable and increased grain output and a stable energy market will help keep domestic inflation basically stable, the central bank said.China’s economy has recovered to some extent, but its foundation is not solid, state media on Tuesday quoted Premier Li Keqiang as saying.Central bank governor Yi Gang said earlier this week that China’s monetary policy would continue to be accommodative to support the recovery.The PBOC will improve the market-oriented interest rate regime, promote the reduction of comprehensive financing costs for enterprises, and support banks to replenish capital, it said in the statement.The central bank also reaffirmed its stance of making the yuan exchange rate more flexible and keep the yuan basically stable. More

JOHANNESBURG (Reuters) – With two days to go until opening to the public, workers rush to put the finishing touches on the Kwena Square shopping complex, a shiny $13 million sign that South Africans are defying the global “retail apocalypse”.Not even COVID-19 could separate them from their beloved malls. “I love going to the mall with my daughter and my grandkids,” said 54-year-old Kowie Erasmus, who’s eagerly awaiting Friday’s grand opening of Johannesburg’s Kwena Square, which broke ground at the height of the pandemic. “Malls are a social place.” The South African market has evolved differently from many other places in the world; high crime rates and a scarcity of safe public spaces have long driven both retailers and shoppers into commercial complexes. Armed guards and parking with restricted access ensured carefree consumer consumption. The attachment to malls has confounded the expectations of many industry players and experts who saw lockdowns in South Africa – initially among the world’s strictest – as an opportunity for e-commerce to finally take hold and take significant bites into traditional sales.Some leading players are now actually doubling down on brick-and-mortar expansion plans in Africa’s most developed economy, a 1 trillion rand ($62 billion) retail market. “Investments in physical stores will still be significantly greater than investment in online,” said David North, chief transformation officer at grocery and clothing group Pick n Pay, one of several retailers that said they would invest more in physical operations than online in this financial year.Commercial property developers are following the money.More than 300,000 square metres of new leasable retail space are set to be completed across the country this year, compared with about 367,000 square metres over the previous two years combined, according to data from property consultants Rode & Associates.The new spaces include a string of malls that are due to open in 2022, including Oceans Mall in the coastal city of Durban, kwaBhaca Mall in the Eastern Cape and Mamelodi Square in Pretoria”The experience economy – being in a physical space and enjoying that space – is what South Africans crave and value the most,” said Ulana van Biljon of Emira Property Fund, a real estate investment trust. AMERICA’S MALL DECLINEThe pandemic gave e-commerce a huge global boost. In seven leading economies accounting for roughly half of the world’s economic output, online retail sales increased from $2 trillion in 2019 to around $2.9 trillion last year, according to U.N. trade agency UNCTAD.Traditional retail players in those markets have taken a pounding with over 17,500 chain store outlets vanishing across Britain alone in the first year of the pandemic. In the United States, the number of malls – already in a years-long decline – could drop to around 600 from just over 1,000 in 2020.While e-commerce’s share of South Africa’s total retail sales more than tripled to around 5% from 2019 to 2021, according to Euromonitor International, it lags far behind many nations. South Africa has almost half as many people as Mexico, for instance, yet its $2.9 billion e-commerce market is a sliver of Mexico’s $19 billion. E-commerce accounts for 28% of retail sales in Britain, 25% in China and 14% in the United States, according to UNCTAD estimates.In South Africa, even with growing internet access through increasing mobile phone penetration, high data costs still prevent many lower-income people from shopping online. Furthermore, home deliveries are complicated by the fact some consumers lack recognizable street addresses, such as in townships which can lack proper signage. ‘NOT JUST ABOUT SHOPPING’The resilience of South African malls isn’t simply down to e-commerce’s difficult path, though. The security they offer is still a big attraction at a time when the country’s historically high crime rates show little sign of abating.National police reported a 15% increase in so-called contact crimes – including assault, murder, robbery and sexual offences – in the quarter ended March 2022, when they rose to their highest level in the past five years over that period. Carjackings rose 19.7%.Gomotsegang Motswatswe, a public relations account manager, said she spent a lot of time with her family at the mall. “It’s important for malls to provide security and a safe place,” said the 35-year-old, adding that it gave her peace of mind to know her car was parked in a secure place. “It’s not just about shopping,” she explained. “We still want to be out there as people and socialise.” Motswatswe is among the many South Africans who are returning in force to malls following the easing of COVID-19 restrictions. Foot traffic has not yet recovered – still 18% below pre-pandemic levels at the end of the most recent quarter – yet shoppers are spending more per visit, according to data compiled by MSCI Research.Business at South Africa’s shopping centres is now beating pre-pandemic levels on average, in terms of trading density, which measures turnover per square metre, according to the data.In the first quarter of 2022, the MSCI quarterly trading density index recorded 21.1% year-on-year growth in annualised trading density. THREE HOURS TO THE MALLRetail executives are betting on both traditional and online operations.Pick n Pay is opening 200 discount Boxer stores and revamping Pick n Pay stores, though it is also targeting an eight-fold increase in online sales. The bulk of its 3.5 billion rand capital investment in the current financial year is earmarked for new stores and revamps.Value fashion and homeware retailer Mr Price says 66.5% of its capital expenditure for the current financial year will be allocated to stores, with a plan to open 180-200.Massmart, which is majority-owned by Walmart (NYSE:WMT), says 57% of its capex will go towards new stores and remodels this year, while 15% is allocated for e-commerce expansion. Over the next five years, it wants to expand its e-commerce business to 15% of total sales, from 2.2% now.Upmarket fashion and homeware retailer TFG is spending 75% of its capex on new stores and e-commerce.There may be room to grow, in terms of brick-and-mortar stores, by meeting the needs of South Africans living in rural and downmarket communities who have long been underserved by retail parks and complexes. Much of the country’s new retail property development is now happening outside of major cities, Niel Harmse, vice president of MSCI Inc told Reuters.South Africans like Phindile Nkosi, who lives in Pongola, a small town in rural eastern South Africa and drives three hours with her children to spend the day at a mall on the coast, demonstrate there’s still unmet demand. “I do wish that Pongola would have a mall. Because, as much as it’s a small town, it’s developing.” ($1 = 15.9966 rand) More

As the Federal Reserve tries to fight high inflation, costly mortgage rates have begun to price people out of the housing market.For the past two years, anyone who had a home to sell could get practically any asking price. Good shape or bad, in cities and in exurbs, seemingly everything on the market had a line of eager buyers.Now, in the span of a few weeks, real estate agents have gone from managing bidding wars to watching properties sit without offers, and once-hot markets like Austin, Texas, and Boise, Idaho, are poised for big declines.The culprit is rising mortgage rates, which have spiked to their highest levels since the 2008 housing crisis in response to the Federal Reserve’s recent efforts to tame inflation. The jump in borrowing costs, adding hundreds of dollars a month to the typical mortgage payment and coming on top of two years of home price increases, has pushed wishful home buyers past their financial limits.“We’ve reached the point where people just can’t afford a house,” said Glenn Kelman, chief executive of Redfin, a national real estate brokerage.Weekly average 30-year fixed mortgage rate

Source: Freddie MacBy The New York TimesMore than any other part of the economy, housing — a purchase that for most buyers requires taking on huge amounts of debt — is especially sensitive to interest rates. That sensitivity becomes even more pronounced when homes are unaffordable, as they are now. As a result, home prices and new construction are a central component of the Federal Reserve’s efforts to slow rapid inflation by raising interest rates, which the central bank has done several times this year. But the Fed’s moves come with an inherent risk that the economy will spiral into a recession if they stifle home purchases and development activity too much.While housing does not account for a huge amount of economic output, it is a boom-bust industry that has historically played an outsize role in downturns. The sector runs on credit, and new home purchases are often followed by new furniture, new appliances and new electronics that are important pieces of consumer spending.“We need the housing market to bend to rein in inflation, but we don’t want it to break, because that would mean a recession,” said Mark Zandi, chief economist at Moody’s Analytics.Home prices are still at record levels, and they are likely to take months or longer to fall — if they ever do. But that caveat, which real estate agents often hold up as a shield, cannot paper over the fact that demand has waned considerably and that the market direction has changed.Sales of existing homes fell 3.4 percent in May from April, according to the National Association of Realtors, and construction is also down. Homebuilders that had been parsing out their inventory with elaborate lotteries now say their pandemic lists have shriveled to the point that they are lowering prices and sweetening incentives — like cheaper counter and bathroom upgrades — to get buyers over the line.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.An Economic Cliff: Inflation is expected to remain high later this year even as the economy slows and layoffs rise. For many Americans, it’s going to hurt.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. “There was this collective belief that housing was invincible — that it was so undersupplied and demand so high that nothing could stop price growth,” said Ali Wolf, chief economist with Zonda, a housing data and consulting firm. “A very rapid increase in interest rates and home prices has proven that theory to be false.”It is a stark change for a market that blossomed soon after the initial shock of the pandemic, which for many people turned out to be a perfect time to buy a home. Rock-bottom mortgage rates lowered borrowing costs, while the shift to home offices and Zoom meetings opened up new swaths of the country to buyers who had been struggling to penetrate the market near the jobs they once commuted to.That caused prices to explode in far-flung exurbs and once-affordable places like Spokane, Wash., where a crush of new home buyers decamped from pricey West Coast cities. People became so willing to move long distances to buy a home that “the normal laws of supply and demand didn’t apply,” Mr. Kelman said.After two years of swift price increases, however, places that once seemed cheap no longer are. Home values have risen about 40 percent over the past two years, according to Zillow, forcing buyers to stretch ever further in price even as they run out of geography.Now add in mortgage rates, which have nearly doubled this year. And inflation, which is eating into savings for some families as it increases household expenses. And a wobbly stock market, which has reduced the value of portfolios that many buyers intended to tap for a down payment.Larisa Kiryukhin and her husband are renting a home in Sarasota, Fla., after higher interest rates thwarted their purchase of a house.Todd Anderson for The New York TimesLarisa Kiryukhin and her family were long ago priced out of the San Francisco Bay Area, where they had lived for decades. Ms. Kiryukhin, 44, is a medical assistant who was tied to her hospital, but the pandemic gave her husband, who works in information technology, the flexibility to move to a more affordable city. So Ms. Kiryukhin switched jobs, and this year the couple and their two children moved to Tampa, Fla., in hopes of buying a home.Inflation F.A.Q.Card 1 of 5What is inflation? More

Georgia actually has a long history with vineyards. About 90 miles from Atlanta, in the shadow of the Blue Ridge Mountains, there are more than 40 wineries and tasting rooms.La Tanya Eiland is from Compton, Calif. and has a passion for wine. So when she moved to Atlanta in 2013, she asked locals the question she always asks when she travels anywhere new: “Where is wine country?”In Atlanta, the most common answer was “north.”About 90 miles north of Atlanta, nestled in the foothills of the Blue Ridge Mountains, the city of Dahlonega has a dozen wine tasting rooms and eight wineries. Nearby communities, including Helen, Cleveland and Sautee Nacoochee, are also home to several establishments that offer local, regional and international wines. In total, North Georgia has more than 40 wineries and tasting rooms in a region that is becoming an increasingly popular destination for day trips and weekends away. More