Per the Reserve Bank of Australia announcement, the Board decided to increase the cash rate target by 25 basis points to 4.10 per cent. It also increased the interest rate paid on Exchange Settlement balances by 25 basis points to 4.00 per cent.
Inflation in Australia has passed its peak, but at 7 per cent is still too high and it will be some time yet before it is back in the target range. This further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe.
The Bank of Canada increased its target for the overnight rate to 4¾%, with the Bank Rate at 5% and the deposit rate at 4¾%. The Bank is also continuing its policy of quantitative tightening.
Globally, consumer price inflation is coming down, largely reflecting lower energy prices compared to a year ago, but underlying inflation remains stubbornly high. While economic growth around the world is softening in the face of higher interest rates, major central banks are signalling that interest rates may have to rise further to restore price stability. In the United States, the economy is slowing, although consumer spending remains surprisingly resilient and the labour market is still tight. Economic growth has essentially stalled in Europe but upward pressure on core prices is persisting. Growth in China is expected to slow after surging in the first quarter. Financial conditions have tightened back to those seen before the bank failures in the United States and Switzerland.
The US Department of Labor stated that in the week ending June 3, the advance figure for seasonally adjusted initial claims was 261,000, an increase of 28,000 from the previous week’s revised level. This is the highest level for initial claims since October 30, 2021 when it was 264,000. The previous week’s level was revised up by 1,000 from 232,000 to 233,000. The 4-week moving average was 237,250, an increase of 7,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 229,500 to 229,750.
According to Statistics Canada overall employment was little changed in May, as employment fell by 77,000 (-2.8%) for youth aged 15 to 24, and it increased by 63,000 (+0.5%) among people aged 25 to 54.
The unemployment rate rose 0.2 percentage points to 5.2%—the first increase since August 2022.
Employment declined in Ontario (-24,000; -0.3%), Nova Scotia (-5,200; -1.0%), and Newfoundland and Labrador (-4,200; -1.8%) in May 2023, while it increased in Manitoba (+8,200; +1.2%). There was little change in the other provinces.
There were fewer people employed in business, building and other support services (-31,000; -4.4%), as well in professional, scientific and technical services (-13,000; -0.7%). Employment increased in manufacturing (+13,000; +0.7%), “other services” (+11,000; +1.5%) and utilities (+4,200; +2.7%).
Total hours worked fell 0.4% in May, but were up 2.2% on a year-over-year basis.
On a year-over-year basis, average hourly wages rose 5.1% (+$1.61 to $33.25) in May (not seasonally adjusted).
