In April, United States economists were somewhat alarmed by the findings of the BLS’ “The Employment Situation – March 2012” report, which found that only 120,000 positions had been added to the national economy in March. But, a majority of economists remained cautiously optimistic as they forecasted April’s jobs report findings.Unfortunately, in spite of economists’ optimism, job creation stalled even more last month, leaving many economists uncertain about the nation’s future employment situation.
On the other hand, the United States’ neighbors to the north, Canada, and to the south, Mexico, appear to be more economically stable. Inflation has decreased in both countries in recent months, while their monetary policies have remained unchanged in years. But did either of those trends end in April? And are there any signs that they will shift this summer?
For the 20th consecutive month, the Bank of Canada retained the nation’s overnight target rate at one percent in April. Two of the Bank’s other inflation measurements, the bank rate and the deposit rate, were also unchanged last month, holding steady at 1.25 and 0.75 percent, respectively. Although inflation remains above average, a majority of Canadian economists do not believe the overnight target rate will be raised or lowered this summer. Even so, the Bank will continue to monitor the nation’s economic progress, to determine whether or not there are any signs the economy will encounter a double-dip recession later this year.
In the meantime, Canada’s most recent Ivey Purchasing Managers’ Index figures have also been published. According to the Index, the dollar value of purchasing managers’ purchases dropped for the second straight month in April, from 63.5 to 52.7, the lowest index that has been recorded in 2012. Two of the index’s four sub-indices also decreased from March to April, including employment and suppliers. Nonetheless, three of the index’s sub-indices were still measured at 50 or higher, signifying that a majority of firms had more purchases in April than in March. The index is now 13.8 points lower than it was in February, when it rose to an 11-month high.
During the first full week of May, Banco de Mexico released the nation’s latest underlying inflation statistics concerning the month of April, and, as expected, year-to-year inflation declined for the third successive month. According to the bank’s measurements, inflation rose by 3.4 percent from April 2011 to April 2012, a three percent decrease when compared to March’s year-ago change. Since January, total, year-to-year inflation has diminished by 0.6 percent. The bank’s “underlying inflation – goods” and “underlying inflation – services” measurements have also dropped from January to April; however, the goods measurement remained unchanged from March to April.
Consequently, Banco de Mexico’s central bank rate lingered at 4.50 percent last month, the 33rd straight month in which the rate has not risen or been lowered. Throughout that time span, the rate has remained well below the bank’s neutral nominal rate of 6.5 percent. As long as year-to-year inflation continues to either decline, or remain at or near its presently low level, economists do not believe the bank’s board of governors will consider lowering or raising the central bank rate during the second half of 2012.
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