Tag Archives: Economy

Factbox: Latest on the worldwide spread of the coronavirus

(Reuters) – The Euro 2020 soccer tournament was blamed for a surge in cases as fans have flocked to stadiums, bars and spectator zones across Europe to watch the action while the pandemic still raged.

DEATHS AND INFECTIONS

EUROPE

* Europe’s drug regulator said the vaccines approved in the European Union offered protection against all coronavirus variants, including Delta, but called for active monitoring by vaccine manufacturers to stay alert.

* Prime Minister Boris Johnson said he was confident Britons fully vaccinated against COVID-19 would be able to travel abroad this year.

* A 10-week decline in new infections across Europe has come to an end and a new wave of infections is inevitable if citizens and lawmakers do not remain disciplined, the head of WHO in Europe, Hans Kluge, told a news briefing.

ASIA-PACIFIC

* President Joko Widodo said that Indonesia will impose emergency measures until July 20 to contain an exponential spike in cases that has strained the medical system.

* Japan is considering an extension of two weeks to a month for coronavirus prevention measures in Tokyo and other areas, Japanese media said.

AMERICAS

* Bolivia’s government is looking to stabilize the country’s economy, which last year plunged the most in over half a century, with a mix of fiscal spending, vaccines and gold.

* Dominican health authorities will on Thursday begin distributing a third dose of vaccine in an effort to protect against more contagious new variants.

MIDDLE EAST AND AFRICA

* The United States will begin shipping the first batch of vaccines it has donated to Africa from this weekend, a special envoy of the African Union said, as the continent sees a surge in cases fueled by variants.

* The South African Medical Association threatened to take the government to court because scores of new junior doctors cannot find work placements despite staff shortages during the pandemic.

* Police in Uganda have arrested two nurses and were hunting for a man who had posed as a doctor to sell and administer fake vaccines to hundreds of people, authorities said, amid a rising second wave of infections.

MEDICAL DEVELOPMENTS

* Indian drugmaker Zydus Cadila said it has applied for emergency use approval of its three-dose vaccine that showed efficacy of 66.6% in an interim study and could become the second home-grown shot if regulators consent.

* CureVac said its COVID-19 vaccine was 48% effective in the final analysis of its pivotal mass trial, only marginally better than the 47% reported after an initial read-out two weeks ago.

ECONOMIC IMPACT

* Global stock markets rose on strong European and U.S. shares on Thursday, with stocks brushing off a rapid re-acceleration in coronavirus cases and oil and the dollar extending their first-half rallies.

* Mexico’s factories deteriorated for a 16th straight month in June amid the ongoing COVID-19 crisis and local restrictions, though the pace of contraction was the slowest since the effects of the pandemic first hit Mexico, a survey showed.

* Turkey’s pandemic-era ban on layoffs and a government wage support system, both adopted in early 2020, expired as most remaining restrictions were also lifted, setting the stage for a rise in unemployment.

* The IMF’s executive board approved the second review of Jordan’s four-year reform program and commended it for meeting its fiscal targets despite the fallout from the coronavirus, the finance ministry said.

(Compiled by Federico Maccioni, Amy Caren Daniel and Jagoda Darlak; Edited William Maclean)

Global shares fall on pandemic fears ahead of jobs report

By Carolyn Cohn and Elizabeth Dilts Marshall

NEW YORK (Reuters) -Global shares retreated from recent highs on Wednesday, as Asian markets grew jittery about a resurgence of COVID-19 cases and Western markets awaited Friday’s U.S. jobs report and what it might mean for monetary policy.

Asset markets have been buoyed over the past year by trillions of dollars of monetary and fiscal stimulus by central banks and governments around the world in response to the pandemic.

The success of vaccination rollouts in some places has fueled an economic recovery, and consumer confidence in June surged to 21-year-highs in Europe and 1-1/2-year-highs in the United States.

But fears over a sudden rise in inflation and the highly contagious Delta variant combined with investors taking gains as the first half of the year ended on Wednesday.

“The search for yield is a very powerful force. It doesn’t have (a) narrative right now to stop,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.

MSCI’s all-country world index, which tracks shares across 50 countries, shed 0.28%. It was still set for a fifth straight month of gains, and for a rise of more than 11% in the first half.

The Dow Jones Industrial Average rose 134.39 points, or 0.39%, the S&P 500 gained 3.06 points, or 0.07%, and the Nasdaq Composite dropped 13.63 points, or 0.09%. [.N]

The pan-European STOXX 600 index lost 0.77%. The German DAX fell 159.55, or 1.02%, and London’s FTSE 100 fell 50.08, or 0.71%.

EYES ON PAYROLLS

Data released on Wednesday showed that U.S. private payrolls increased 692,000 jobs in June, more than expected but less than the 886,000 jobs added in May.

That figure pushed the S&P 500 to near record highs on Wednesday. But markets are still focused on the more comprehensive U.S. nonfarm payrolls figures to come on Friday. Economists polled by Reuters were expecting a gain of 690,000 jobs for June, up from 559,000 in May. But the variation among the 63 estimates was large, ranging from 400,000 to more than a million.

The benchmark 10-year yield rose to yield 1.4426%, from 1.48%

The dollar rose 0.357%, headed for its biggest monthly rise since November 2016. The dollar has gained about 2.6% against a basket of currencies this month, partly in the wake of the U.S. Federal Reserve’s hawkish tilt.

A “very optimistic” Fed Governor Christopher Waller on Tuesday said it may need to start dialing down its massive asset purchase program as soon as this year to allow the option of raising interest rates by late 2022.

The euro was down 0.37% to $1.1851, while Britain’s pound was last trading at $1.3807, down 0.20% on the day.

The Japanese yen weakened 0.45% versus the greenback to 111.03 per dollar.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.11% lower, while Japan’s Nikkei lost 0.07%. Chinese blue chips added 0.65%.

Indonesia, Malaysia, Thailand and Australia are all battling outbreaks of COVID-19 and tightening restrictions, and Spain and Portugal announced restrictions for unvaccinated British tourists.

Oil prices were heading for monthly and quarterly gains after some data suggested U.S. crude stockpiles were shrinking.

U.S. crude rose 0.36% to $73.24 per barrel and Brent was at $75.08, up 0.43% on the day.

Gold headed for its largest monthly decline since November 2016. Spot gold added 0.2% to $1,765.16 an ounce. U.S. gold futures gained 0.13% to $1,765.10 an ounce.

(Reporting by Carolyn Cohn in London and Elizabeth Dilts Marshall in New York; editing by Jonathan Oatis, Kirsten Donovan)

U.S. consumer spending takes breather amid shortages; inflation rises

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer spending paused in May as shortages hurt motor vehicle purchases, but the supply constraints and increased demand for services helped to lift prices, with the Federal Reserve’s main inflation measure rising by the most in 29 years.

There was, however, some good news on inflation. Consumers this month perceived higher inflation to be temporary, a survey showed on Friday, aligning with the views of Fed Chair Jerome Powell and Treasury Secretary Janet Yellen. Consumers’ inflation expectations are key as they can influence households’ behavior.

With at least 150 million Americans fully vaccinated against COVID-19, which is allowing the economy to reopen and people to travel, dine out and engage in other activities that were restricted during the pandemic, consumer spending is expected to pick up in the coming months. Trillions of dollars in excess savings and rising household wealth due to gains in stock prices and home values are expected to provide a powerful tailwind.

“Spending growth will shift to services from goods, and drive a strong economic recovery throughout the rest of 2021 and all of 2022,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh. “The biggest drags are higher prices for some goods and services and shortages due to production bottlenecks.”

The unchanged reading in consumer spending, which accounts for more than two-thirds of U.S. economic activity, followed an upwardly revised 0.9% jump in April, the Commerce Department said. Consumer spending was previously reported to have increased 0.5% in April. Economists polled by Reuters had forecast consumer spending would rise 0.4% in May.

Motor vehicles and some household appliances are scarce because of supply bottlenecks stemming from the pandemic. A global shortage of semiconductors is hampering motor vehicle production. Spending is also starting to shift back to the services part of the economy, which accounts for two-thirds of consumer spending, though the pace last month was insufficient to offset the drag from goods.

Spending on services rose 0.7%, led by recreation, restaurants and hotels as well as housing and utilities. Spending on goods fell 1.3%, with outlays of long-lasting goods like motor vehicles tumbling 2.8%. Goods spending surged as the pandemic confined people to their homes.

The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5% after advancing 0.7% in April. In the 12 months through May, the so-called core PCE price index shot up 3.4%, the largest gain since April 1992. The core PCE price index rose 3.1% on a year-on-year basis in April.

The core PCE price index is the Fed’s preferred inflation measure for its flexible 2% target. Year-on-year inflation is accelerating in part as last spring’s weak readings drop from the calculation.

Stocks on Wall Street were trading largely higher, with the S&P 500 index hitting a record high as investors focused on the moderation in the monthly inflation reading. The dollar slipped against a basket of currencies. U.S. Treasury prices were mostly lower.

NO RUNAWAY INFLATION

Though the so-called base effects likely peaked in May, inflation will probably remain high in the near term because of the supply constraints and worker shortages, which are boosting wage growth.

“While we foresee increased inflation stickiness, with core PCE inflation hovering around 3.0% in the second half (of the year), we don’t foresee runaway inflation,” said Lydia Boussour, lead U.S. economist at Oxford Economics in New York.

Consumers seem to agree. The University of Michigan consumer survey’s one-year inflation expectation dropped to 4.2% in June from a decade-high 4.6% in May. The survey noted that “consumers also believed that the price surges will mostly be temporary.”

The five-to-10-year inflation expectation fell to 2.8% this month from 3.0% in May. Fed officials put more emphasis on the five-to-10-year series.

Powell acknowledged this week that “inflation has increased notably in recent months,” but told lawmakers that the U.S. central bank “will not raise interest rates preemptively because we fear the possible onset of inflation.”

When adjusted for inflation, consumer spending fell 0.4% last month after rising 0.3% in April. Despite May’s drop in the so-called real consumer spending, consumption is running higher than its pace in the first quarter.

Gross domestic product growth estimates for this quarter are around a 9% annualized rate, which would be an acceleration from the 6.4% pace logged in the first quarter. Economists believe the economy could achieve growth of at least 7% this year. That would be the fastest growth since 1984. The economy contracted 3.5% in 2020, its worst performance in 74 years.

In addition to the supply squeeze, the ebbing boost from government stimulus checks likely restrained consumer spending last month. Transfer payments from the government dropped 11.7%. That resulted in personal income falling 2.0% after declining 13.1% in April.

But there is ample fuel to drive spending. Wages gained 0.8% after rising 1.0% in April. The saving rate fell to a still-lofty 12.4% from 14.5% in April. Households accumulated at least $2.5 trillion in excess savings during the pandemic.

From July through December some households will receive income under the expanded Child Tax Credit program, which will soften the blow of an early termination of government-funded unemployment benefits in 26 states.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. jobless claims dropping faster in states ending federal benefit

By Howard Schneider

WASHINGTON (Reuters) – Ongoing claims for U.S. unemployment insurance have dipped faster in recent weeks in states ending federal benefits this summer than in states keeping the $300 weekly supplement in place until the fall, according to government data through last week.

From the week ending May 1 through the week ending June 12, continuing claims for state unemployment benefits fell 17.8% in the 26 states ending benefits early, to 990,000, and by 12.6%, to 2.18 million, in the rest of the country, according to a Reuters analysis of weekly federal unemployment data.

The data do not yet answer the larger and arguably more important question of whether hiring will also accelerate in those states, the outcome an almost all-Republican group of governors says is the goal of cutting the benefits early.

Weekly data from small business time provider Homebase through the week ending June 20 in fact has shown no pickup in hiring in the states cancelling unemployment benefits. To the contrary the other states appear to have added jobs faster in recent weeks – a possible consequence of the fact that large Democratic-led states like California and New York have recently lifted most of the remaining restrictions put in place to fight the pandemic.

The states stopping benefits as a group have also pulled closer to their pre-pandemic levels of unemployment, suggesting less room for improvement.

The issue of how unemployment benefits are impacting the recovery of the U.S. job market has become a core concern among Federal Reserve and other policymakers as they try to determine how fast national employment might rebound to pre-pandemic levels, a judgment hard to make until the economy is fully reopened and benefit levels returned to normal.

Twelve states have already halted benefits in what has been a largely partisan split between Republican governors arguing that the pandemic emergency unemployment payments are now discouraging people from working, and Democratic governors who feel people still need support as the pandemic wanes.

The states stopping benefits early include the entire Deep South, where pandemic unemployment has fallen hard on the large Black population, but only one state, Louisiana, with a Democratic governor. Only two Republican-led states, Vermont and Massachusetts in the Northeast, plan to continue the payments until they end nationwide in September.

The data overall suggest “more downward momentum in initial and continuing claims over the next few weeks,” said Jefferies economist Thomas Simons. Sky-high unemployment claims have been a hallmark of the pandemic, topping 23 million at one point in the spring of 2020 as the coronavirus took hold, more than 10 times the level at the start of the year.

(Reporting by Howard Schneider; Editing by Andrea Ricci)

Factbox: Latest on the worldwide spread of the coronavirus

(Reuters) – Olympics organizers capped the number of spectators at 10,000 for each venue of the 2020 Tokyo Games, days after experts said holding the event without fans was the least risky option during the pandemic.

DEATHS AND INFECTIONS

EUROPE

* President Vladimir Putin said the coronavirus situation in some Russian regions was getting worse as authorities began promoting the idea of regular revaccinations to try to halt a surge in cases.

* French nightclubs will be allowed to re-open from July 9, government minister Alain Griset said, allowing the industry to operate for the first time since it was shut during the France’s COVID-19 lockdown in March 2020.

* As the Delta coronavirus variant continues to spread, Portuguese authorities are scrambling to bring a spike in cases under control and said they would accelerate vaccinations and increase testing.

ASIA-PACIFIC

* India’s government is in talks with Pfizer and other vaccine manufacturers to import their COVID-19 vaccines in accordance with local laws, a senior government official said.

* Indonesia passed the mark of 2 million coronavirus cases after a record number of new infections, as authorities announced a tightening of restrictions to contain the spread in the world’s fourth most populous country.

* Hong Kong said it would shorten the quarantine period for vaccinated people arriving in the city to seven days from 14, provided travelers show sufficient antibodies against the novel coronavirus.

* Taiwan welcomed 2.5 million vaccine doses from the United States on Sunday as help from a true friend. China’s foreign ministry urged the United States not to seek “political manipulation” in the name of vaccine assistance.

* Well above 80% of the athletes and officials residing in the Olympic village will be vaccinated when the Games kick off, the International Olympic Committee President said.

AMERICAS

* Canada will start cautiously lifting border restrictions for fully vaccinated citizens and other eligible people on July 5 but U.S. and other foreign travelers will still be excluded, the government said.

* U.S. land borders with Canada and Mexico will remain closed to non-essential travel until at least July 21, the U.S. Homeland Security Department said.

MIDDLE EAST AND AFRICA

* Africa is working with the European Union and other partners to help create regional vaccine manufacturing hubs in Rwanda, Senegal and South Africa, with Nigeria under consideration, World Trade Organization Director-General Ngozi Okonjo-Iweala said.

* An Israeli health official urged more 12- to 15-year-olds to be vaccinated, citing new outbreaks that he attributed to the Delta variant.

* Qatar will only allow people fully vaccinated to attend next year’s World Cup and is in talks to secure one million doses, the prime minister said.

MEDICAL DEVELOPMENTS

* GlaxoSmithKline and Vir Biotechnology said final results from a late-stage study of their monoclonal antibody confirmed it significantly reduced hospitalization and death among high-risk COVID-19 patients when given early in the disease.

* Cuba’s Soberana 2 vaccine candidate has shown 62% efficacy with just two of its three doses, state-run biopharmaceutical corporation BioCubaFarma said on Saturday.

ECONOMIC IMPACT

* Global stocks dropped to a four-week low after last week’s surprise hawkish shift by the U.S. Federal Reserve reduced the allure of riskier assets, while the dollar held gains and stood near a 10-week high.

(Compiled by Veronica Snoj and Juliette Portala. Edited by Shounak Dasgupta, Mark Heinrich and Barbara Lewis)

U.S. labor market healing despite unexpected rise in weekly jobless claims

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits increased last week for the first time in 1-1/2 months, but layoffs are easing amid a reopening economy and a shortage of people willing to work.

While other data on Thursday showed factory activity in the mid-Atlantic region continuing to grow at a steady pace in June, a measure of future production surged to its highest level in nearly 30 years. Factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware also reported stepping up hiring, which bodes well for job growth this month.

The scarcity of labor is a hurdle to faster employment growth. The Federal Reserve on Wednesday held its benchmark short-term interest rate near zero and said it would continue to inject money into the economy through monthly bond purchases. The U.S. central bank brought forward its projections for the first post-pandemic interest rate hikes into 2023 from 2024.

“We continue to see labor market progress, but as has been the case through the pandemic, the situation remains fluid,” said AnnElizabeth Konkel, an economist at Indeed Hiring Lab. “We are in a wildly different place than we were in June 2020, but we have not crossed the finish line just yet.”

Initial claims for state unemployment benefits rose 37,000 to a seasonally adjusted 412,000 for the week ended June 12, the Labor Department said. That was the first increase since late April. Economists polled by Reuters had forecast 359,000 applications for the latest week.

The increase in claims was led by California, Kentucky and Pennsylvania. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 8,000 to 395,000.

The economy, ironically, is facing a labor crunch despite employment remaining 7.6 million jobs below its peak in February 2020. A shortage of childcare facilities is keeping some parents, mostly women, at home.

Generous government-funded unemployment benefits, including a $300 weekly check, have also been blamed, as well as a reluctance by some to return to work out of fear of contracting COVID-19 even though vaccines are widely accessible.

Pandemic-related retirements and transitions into new careers are also factors.

Fed Chair Jerome Powell told reporters on Wednesday he was “confident that we are on a path to a very strong labor market, a labor market that shows low unemployment, high participation, rising wages for people across the spectrum.”

The White House also struck an optimistic note on the labor market, with senior economic adviser Jared Bernstein saying: “I saw a labor market that continues to improve, continues to grow as shots in arms and checks in pockets have helped pull this recovery forward.”

Iowa, Mississippi and Missouri terminated all federal government-funded emergency benefits last Saturday, while Alaska ended only the $300 supplement. Twenty-one other states also led by Republican governors, including Texas and Florida, will end these benefits for residents between June 19 and July 10.

Louisiana is ending the weekly supplementary check on July 31, the only state with a Democratic governor to terminate the federal benefits. For the rest of the country, they will lapse on Sept. 6.

Iowa reported an increase in claims for the regular state unemployment insurance program last week, while Alaska, Mississippi and Missouri saw declines. Only Alaska reported a decrease in claims for the government-funded Pandemic Unemployment Assistance.

Economists are watching the 26 states to see if their actions will boost employment or labor force participation over the summer, which could offer clues on labor market trends for the rest of the year when all government aid lapses.

There are a record 9.3 million job openings, while 9.3 million people are officially unemployed.

“We also could see added noise in the claims report if people end up trying to shuffle between programs or re-determine eligibility,” said Daniel Silver, an economist at JPMorgan in New York.

Stocks on Wall Street were mixed while the dollar rose against a basket of currencies. Longer-dated U.S. Treasury prices were trading higher.

STRONG FACTORY HIRING

In a separate report on Thursday, the Philadelphia Fed said its business conditions index dipped to a reading of 30.7 this month from 31.5 in May. But its measure of activity over the next six months surged to 69.2, the highest level since 1991, from 52.7 last month.

The survey’s gauge of factory employment in the mid-Atlantic region surged to 30.7 from a reading of 19.3 May. Factories also anticipated hiring more workers over the next six months, which offers further support to the labor market. Many, however, reported that labor shortages and supply chain bottlenecks were constraining their ability to fully use their resources.

Though layoffs are easing, initial claims remain well above the 200,000-250,000 range that is viewed as consistent with healthy labor market conditions. Claims have, however, dropped from a record 6.149 million in early April 2020.

Last week’s claims data included the period during which the government surveyed business establishments for the nonfarm payrolls component of June’s employment report. The economy created 559,000 jobs in May after adding 278,000 in April.

To get a better picture of how hiring fared in June, economists will await data next week on the number of people continuing to receive benefits after an initial week of aid.

The so-called continuing claims, which are reported with a one-week lag, edged up 1,000 to 3.518 million in the week ended June 5. There were 14.8 million people collecting unemployment checks under all programs at the end of May.

(Reporting by Lucia Mutikani; Additional reporting by Evan Sully and Trevor Hunnicutt; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao)

U.S. manufacturing sector picks up in May; work backlogs rising

WASHINGTON (Reuters) – U.S. manufacturing activity picked up in May as pent-up demand amid a reopening economy boosted orders, but unfinished work piled up because of shortages of raw materials and labor.

The Institute for Supply Management (ISM) said on Tuesday its index of national factory activity increased to a reading of 61.2 last month from 60.7 in April.

A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index rising to 60.9 in May.

A shift in demand to goods from services as the COVID-19 pandemic kept Americans at home, strained supply chains, with the virus also disrupting labor at manufacturers and their suppliers, leading to raw material shortages across industries.

More than half of adults in the United States are now fully vaccinated against COVID-19, allowing authorities to lift pandemic-related restrictions on businesses. That is whipping up demand across the economy, as is massive fiscal stimulus. There is no sign the supply bottlenecks are easing, even as demand is reverting back to services.

The survey’s forward-looking new orders sub-index jumped to 67.0 from a reading of 64.3 in April. Inventories at factories are barely growing and business warehouses are almost bare.

But production is being constrained by worker shortages. A measure of factory employment dropped to a six-month low in May. Labor is scarce despite nearly 10 million Americans being officially unemployed.

Generous unemployment benefits funded by the government, problems with child care and fears of contracting the virus, even with vaccines widely accessible, as well as pandemic-related retirements have been blamed for keeping workers home.

Lack of workers and shortages of raw materials such as semiconductors used in the production of motor vehicles and electronic goods led to a further increase in backlogs of uncompleted work.

The shortages are also keeping input prices elevated. The ISM survey’s measure of prices paid by manufacturers hovered near levels last seen in July 2008, when the economy was in the throes of the Great Recession.

The higher prices are fanning inflation pressures. The government reported on Friday that a measure of underlying inflation tracked by the Federal Reserve for its 2% target accelerated 3.1% on a year-on-year basis in April, the biggest increase since July 1992.

Most economists and Fed Chair Jerome Powell maintain that higher inflation will be transitory.

The slowdown in hiring at factories last month could temper expectations for an acceleration in job growth in May after nonfarm payrolls increased by only 266,000 in April.

According to an early Reuters survey of economists, payrolls likely increased by 700,000 jobs in May. The government is due to publish May’s employment report on Friday.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

Factbox: Latest on the worldwide spread of the coronavirus

(Reuters) – The head of the World Health Organization has called for launching negotiations this year on an international treaty to boost pandemic preparedness, as part of sweeping reforms envisioned by member states.

EUROPE

* Germany’s Robert Koch Institute (RKI) for infectious disease is to reduce the coronavirus risk level for the country to “high” from “very high” as the situation improves, Health Minister Jens Spahn said.

* Spain is considering easing rules on wearing face masks outdoors, as early as in mid-June.

AMERICAS

* With half the country at least partially protected against the coronavirus, Americans escaped their pandemic doldrums over the Memorial Day holiday weekend.

ASIA-PACIFIC

* South Korea closed its first phase of reservations for Johnson and Johnson vaccines as military personnel signed up for all 800,000 shots on offer, the government said.

* A shipment of coronavirus vaccines to North Korea via the global COVAX sharing program that was expected for late May has been delayed again amid protracted consultations, South Korea’s Unification Ministry said.

* Australia’s Victoria state authorities said it was still unclear whether a snap one-week lockdown to contain a fresh COVID-19 outbreak would end as planned on Thursday night, as the state grapples with a growing virus outbreak.

* Japan plans to start vaccination at workplaces and universities on June 21 to speed up the country’s inoculation drive.

MIDDLE EAST AND AFRICA

* Dubai, the second-largest member of the United Arab Emirates federation, has started offering the Pfizer-BioNTech vaccine to 12-15 year old’s, the government media office said on Twitter.

* Turkey further eased measures including partially lifting a weekend lockdown and opening restaurants to a limited number of guests.

MEDICAL DEVELOPMENTS

* A Wuhan-based affiliate of China’s Sinopharm said the start of operations at a new factory will raise the annual production capacity of its COVID-19 vaccine to at least 1 billion doses.

* A deal on an intellectual property waiver for COVID-19 vaccines at the World Trade Organization was no closer to acceptance on Monday despite Washington’s backing, due to expected skepticism about a new draft, sources close to the talks told Reuters.

ECONOMIC IMPACT

* Global stocks again hit record highs and oil rose on Tuesday, before European and U.S. data that should this week offer major clues to the health of the world economy.

* Euro zone manufacturing activity expanded at a record pace in May, according to a survey which suggested growth would have been even faster without supply bottlenecks that have led to an unprecedented rise in input costs.

* Ireland will begin to gradually phase out temporary coronavirus-related jobless payments later this year while maintaining other income and business supports as the economy fully reopens, Public Expenditure Minister Michael McGrath said.

* Turkish factory activity shrank in May for the first time in a year as output and new orders slowed down due to a 17-day full lockdown imposed to curb a surge in new coronavirus cases, a survey showed.

(Compiled by Jagoda Darlak and Ramakrishnan M.; Editing by William Maclean)

G7 criticizes nations who undermine global trade in rallying cry for reform

By William James

LONDON (Reuters) -Trade ministers from the Group of Seven (G7) wealthy nations criticized countries who undermine the global trading system and called for democratic states to rally behind reforms of the international trade rulebook.

Following a virtual meeting, the G7 members said they were concerned about “increased use of non-market policies and practices” and took aim at those who use heavy subsidies, mask the state’s involvement in the economy, and steal technology.

“These distort competition and reduce fairness and trust in the system,” they said in a communique issued by Britain, which holds the rotating presidency of the G7 this year.

“Fundamentally, we note that they are a threat to the integrity and sustainability of the rules-based multilateral trading system.”

The communique did not refer to China directly, but members like Britain have accused Beijing of undermining the system by using all the policies mentioned.

China, a World Trade Organization member since 2001, has denied criticism that it steals intellectual property, unfairly hurts the environment or improperly trades goods made with forced labor.

In another indirect reference to China, the communique also called on countries which use World Trade Organization rules designed for developing economies to their advantage, and called for the rules to be changed to prevent that.

Britain and other WTO members have previously argued that China benefits from exceptions to the rules which were made decades ago and no longer reflect its status as an economic superpower.

“We call on advanced WTO Members claiming developing country status to undertake full commitments in ongoing and future WTO negotiations,” the communique said.

The group held “frank and constructive” discussions regarding reform of the WTO dispute resolution system – parts of which were paralyzed in recent years by former U.S. President Donald Trump’s administration.

They said those discussion would continue at a further meeting in October, and more broadly expressed support for WTO Director-General Ngozi Okonjo-Iweala’s efforts to reform the organization.

(Reporting by William James; Editing by Hugh Lawson, Toby Chopra and Nick Macfie)

U.S. labor costs accelerate in the first quarter

WASHINGTON (Reuters) – U.S. labor costs increased more than expected in the first quarter as wage growth picked up, further evidence that inflation will push higher this year as the economy reopens.

The Employment Cost Index, the broadest measure of labor costs, jumped 0.9% last quarter after gaining 0.7% in the October-December quarter. That lifted the year-on-year rate of increase to 2.6% from 2.5% in the fourth quarter.

The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation as it adjusts for composition and job quality changes. Economists polled by Reuters had forecast the ECI rising 0.7% in the first quarter.

Wages and salaries shot up 1.0% after advancing 0.8% in the fourth quarter. They were up 2.7% year-on-year. Economists expect wages will increase further in the second quarter as companies compete for scarce workers.

Despite employment being 8.4 million jobs below its peak in February 2020, businesses are struggling to find suitable workers as they rush to meet robust domestic demand.

Federal Reserve Chair Jerome Powell on Wednesday acknowledged the worker shortage saying “one big factor would be schools aren’t open yet, so there’s still people who are at home taking care of their children, and would like to be back in the workforce, but can’t be yet.”

Higher wages, if the worker scarcity persists, could contribute to boosting inflation this year, though many economists and Powell believe the anticipated surge in price pressures as the broader economy reopens will be transitory.

(Reporting By Lucia Mutikani)