Overseas Headlines – May 18, 2017


Falling U.S. Jobless Claims Add to Signs of Labour Tightness
The U.S. labour market continues to show signs of tightening, with unemployment claims declining for the third straight week and benefit rolls matching the lowest level since 1973, Labor Department data showed Thursday.

Highlights of Jobless Claims (Week Ended May 13)

• Initial benefit filings decreased by 4k to 232k (est. 240k), the lowest since late February

• Continuing claims fell by 22k to 1.898m in week ended May 6 (data reported with one-week lag)

• Four-week average of initial claims declined to 240,750 from 243,500 in the prior week

Key Takeaways

Hiring managers remain more occupied with finding workers than trimming staff, with the headline jobless rate drifting below the Federal Reserve’s estimate of full employment. Benefit claims have been a particularly durable indicator of tightness in the labour market, with initial filings holding at lower than 300,000 for more than two years. The gauge contributes to Fed policy makers’ case that the economy can withstand further increases in the benchmark interest rate this year.

Other Details

• Previous week’s initial claims were unrevised

• Unemployment rate among people eligible for benefits unchanged at 1.4 percent

• Louisiana had estimated claims last week


ECB Officials Left Changes for June After Disagreeing on Risks
European Central Bank policy makers pointed to June as a more opportune time to revisit their policy stance after disagreeing over an assessment of growth risks and facing uncertainty over the euro area’s inflation path. At the Governing Council’s policy meeting on June 8, new staff projections and data will put them “in a better position to take stock and reassess the sustainability of the recovery and the outlook for inflation,” an account of the Governing Council’s April 26-27 meeting showed. Back then, members were still divided on how to characterize growth risks even if they broadly agreed these had improved, while the inflation outlook was subdued and could be prone to downward revisions. “Some members considered that the risks to real gross domestic product could now be characterized as broadly balanced” while “other members maintained that downside risks to growth still prevailed,” the account showed. “It was also remarked that a downward revision to the inflation outlook in the June 2017 Eurosystem staff macroeconomic projections could not be ruled out.”


China’s foreign direct investment slips in Jan-April year-on-year
Foreign direct investment into China fell 0.1 percent to 286.41 billion yuan ($41.6 billion) in the first four months of 2017 from the same period a year earlier, the Ministry of Commerce said on Thursday. Foreign investment into China slowed in April, falling 4.3 percent from a year earlier to 59.91 billion yuan, compared to 6.7 percent growth in March. In the first three months of the year, foreign investment rose 1 percent. The Chinese government has promised new measures to further open its economy to foreign investors this year, including easing limits on investment in banks and other financial institutions. Foreign investment into China last year rose 4.1 percent but was less than outbound investment for the first time as capital outflows put pressure on the government to support the yuan. Outbound investment has declined sharply this year in the face of strict controls on funds leaving the country, with inbound investment for the first four months of the year surpassing outbound investment by over $15 billion. China’s April non-financial outbound direct investment (ODI) fell 71 percent from a year earlier to $5.82 billion, according to Reuters’ calculations based on data from the Ministry of Commerce released Wednesday.