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Last Week in Numbers: US Economy grows 2.3%

The United States’s gross domestic product (GDP) rose 2.3% year-on-year in the first quarter of 2018. This was slightly slower than the previous quarter’s growth of 2.9%, but faster than the median forecast of 2%. Consumer spending, which constitutes the bulk of the US economy, rose 1.1%, while government spending increased by 1.2%. Trade added 0.2 percentage points to growth, while inventories added 0.43 points.

At the same time, inflation picked up in the US during the quarter, the GDP price index rising 2%. Another measure of inflation tied to consumer spending but excluding food and energy costs, grew 2.5% from a year ago, the fastest in 7 years.

Meanwhile, the Federal Reserve, the US’s central bank, left interest rates unchanged at a target range of between 1.5% and 1.75%. The Fed had raised rates in March and is expected to raise it again in June. The Fed’s medium term target of 2% inflation is also within reach as an inflation index rose to 1.9% over the last 12 months ending in March 2018.

The central bank has forecast another two rate hikes this year. The pace of rate hikes has quickened since the central bank began its tightening cycle in December 2015. It raised rates once in 2016, thrice in 2017, and is expected to raise rates three to four times this year.

The manufacturing sector in Singapore expanded for the 20th straight month in April. The Purchasing Managers’ Index (PMI) stood at 52.9, with a reading above 50 indicating growth. The electronics sub-sector achieved its 21st consecutive month of expansion with a PMI of 52.2.

According to a new study by Gallup, Singapore is the top Asian economy in adult full-time employment with 48% of adults having this type of contracts (excludes self employed). Hong Kong is second at 43% and Taiwan, third at 42%.

However, the study also found that Singaporeans are not that engaged in their work. The study defines an engaged employee as being “highly involved in and enthusiastic about their work.” Only 11% of Singapore’s adult population is considered to be engaged at work, according to the survey. This engagement deficit can cause lower productivity, and depress workers’ well being.

China’s manufacturing sector expanded for the 21st straight month in April despite the ongoing Sino-US trade row. The official PMI stood at 51.4, just marginally below the previous month’s reading of 51.5. The high-tech manufacturing sub-index rose to 53.8, from 53.2 in March. PMI for the services industry was at 54.8, up slightly from 54.6 the previous month. The composite PMI, which includes both manufacturing and services activity, inched up to 54.1 in April, from 54.0 in March.

However, there were some signs of softness in the trade sector as the export orders sub-index fell to 50.7 from 51.3 the previous month.

Finally, Xiaomi has chosen to list in Hong Kong. It will become the first major company to make use of the territory’s new rules on different share classes. Xiaomi is also set to become the largest IPO in 4 years. Although the initial filing did not say how much capital the company is looking to raise, it is expected that the tech gadget manufacturer wants to raise at least US$10 billion, and the market cap of the company would be as high as US$100 billion.

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