U.S. Congress negotiators set spending plan to avert shutdown, bolster defense
Negotiators in the U.S. Congress reached a deal late on Sunday on around $1 trillion in federal funding that would avert a government shutdown later this week, while handing President Donald Trump a down payment on his promised military build-up. The full House of Representatives and Senate must still approve the bipartisan pact, which would be the first major legislation to clear Congress since Trump became president on Jan. 20. Prompt passage of the legislation was expected this week. The funds, which should have been locked into place seven months ago with the start of fiscal 2017 on Oct. 1, would pay for an array of federal programs from airport and border security operations to soldiers’ pay, medical research, foreign aid, space exploration, and education. “The agreement will move the needle forward on conservative priorities and will ensure that the essential functions of the federal government are maintained, said Jennifer Hing, a spokeswoman for Republicans on the House Appropriations Committee.
U.S. consumer spending unchanged in March; inflation subsides
U.S. consumer spending was unchanged in March for a second straight month and the overall monthly inflation rate fell for the first time in a year, confirming the weak domestic demand in the first quarter. But when adjusted for inflation consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3 percent, ending two straight months of decline, the Commerce Department said on Monday. Economists polled by Reuters had forecast consumer spending, rising 0.2 percent. The data was included in last Friday’s first-quarter gross domestic product report, which showed consumer spending increasing at a 0.3 percent annual rate – the slowest since the fourth quarter of 2009. The economy grew at a 0.7 percent pace in the first quarter, the worst performance in three years. March’s increase in real consumer spending sets it up for an acceleration in the second quarter. Consumption is likely to be supported by a pick-up in wage growth. A report on Friday showed private wages recorded their biggest increase in 10 years in the first quarter.
China Manufacturing Gauge Declines From Almost Five-Year High
China’s official factory gauge declined on lower commodity prices, clouding the outlook for sustaining the past two quarters’ acceleration in economic growth. The manufacturing purchasing managers index fell to 51.2 in April from an almost five-year high of 51.8 in March, missing the median estimate of 51.7 in a Bloomberg survey and falling short of all projections. The services PMI decreased to a six-month low of 54 from 55.1. Both gauges still show momentum as readings over 50 indicate improving conditions. The first official economic indicator for the second quarter signals growth is poised to slow after unexpectedly picking up to 6.9 percent in the first quarter, the first back-to-back acceleration in two years. Factory and services activity remain at relatively robust levels, but April data showed weakening across employment, output, new orders and export orders.
May expects tough talks; EU alarmed at Brexit ‘illusions’
British Prime Minister Theresa May expects divorce talks with the European Union to be tough, she said on Sunday after EU leaders agreed stiff terms and voiced alarm at “illusions” in London that may wreck a deal. “What this shows, and what some of the other comments we’ve seen coming from European leaders shows, is that there are going to be times when these negotiations are going to be tough,” May told the BBC a day after her EU peers agreed on demands they want met to avoid chaos when Britain leaves the bloc in 2019. At Saturday’s Brussels summit of the 27 other EU states, EU chief executive Jean-Claude Juncker accused unnamed pro-Brexit figures of underestimating the complexity of the task and German Chancellor Angela Merkel repeated her concern that London still harboured “illusions” about negotiating a quick free-trade pact. May, who has called an election for June 8 in the hope of strengthening her position, repeated her insistence that no deal would be better than a bad deal — a position many in Brussels view as bluff, arguing that the legal void that would dawn on March 30, 2019, would hurt Britain much more than the others.