U.S. first-quarter growth weakest in three years as consumer spending falters
The U.S. economy grew at its weakest pace in three years in the first quarter as consumer spending barely increased and businesses invested less on inventories, in a potential setback to President Donald Trump’s promise to boost growth. Gross domestic product increased at a 0.7 percent annual rate also as the government cut back on defence spending, the Commerce Department said on Friday. That was the weakest performance since the first quarter of 2014. The economy grew at a 2.1 percent pace in the fourth quarter. Economists polled by Reuters had forecast GDP rising at a 1.2 percent pace last quarter. The survey was, however, conducted before Thursday’s advance data on the March goods trade deficit and inventories, which saw many economists lowering their first-quarter growth estimates. The pedestrian first-quarter growth pace is, however, not a true picture of the economy’s health. The labour market is near full employment and consumer confidence is near multi-year highs, suggesting that the mostly weather-induced sharp slowdown in consumer spending is probably temporary.
China stocks post worst month of 2017 on worries over regulation, economic growth
China’s main stock indexes were little changed on Friday but posted worst month of the year on fears that regulators will step up their latest crackdown on riskier types of financing and speculation, and on lingering worries over economic growth. While China’s regulatory enforcement has tended to wax and wane in the past, investors fear there may be no let up in the latest campaign after President Xi Jinping made a rare speech this week on financial stability. Xi called on Tuesday for increased efforts to ward off systemic risks to help maintain financial security, the official Xinhua news agency said. “We think it sends an important signal to support the ongoing tightening of financial regulation and enforcement,” Citi wrote in a recent note. The blue-chip CSI300 index fell 0.2 percent, to 3,439.75 points, while the Shanghai Composite Index edged up 0.1 percent to 3,154.66 points.
Stronger inflation prods euro towards November highs
Strong inflation numbers drove the euro close to 5-1/2 month highs on Friday, turning markets back towards the prospect of a tightening of European Central Bank policy a day after it warned of substantial barriers to sustained higher price growth. Official flash estimates put euro zone inflation at 1.9 percent in the first quarter, on the verge of crossing over the bank’s target of below but close to 2 percent, and above estimates for a rise of 1.8 percent. According to standard EU measures, in Italy it was 2 percent. That, allied with another batch of solid growth numbers from Spain, helped drive the euro as high as $1.0947 in morning trade in Europe, within inches of highs of $1.09515 hit this week after the first round of France’s presidential election. That followed a dip for the single currency on Thursday after ECB chief Mario Draghi took a cautious line and encouraged talk that the bank will seek to cap any gains for the currency for fear of undermining hard-won rises in prices. Oanda strategist Craig Erlam was among those arguing that the bank will be able to do more in June to point to a reining-in of its ultra-loose policy later in the year, pushing up the market interest rates that investors get for holding euros.