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Macro Snapshot – Japan’s Service Sector Activity Posts Growth; China’s April exports grow 3.9%

RIYADH: Japan’s service-sector activity expanded in April for the first time in four months, as consumer sentiment rebounded after the government lifted coronavirus restrictions following a drop in domestic omicron infections.

The final Purchasing Managers Index from au Jibun Bank Japan Services rose to a seasonally adjusted 50.7 from 49.4. That was also better than a lightning 50.5 for April.

The figure marked the first expansion since December.

“The easing of COVID-19 restrictions allowed customer-centric companies to operate more freely in April,” said Usamah Bhatti, an economist at S&P Global, which compiles the survey.

China’s exports are growing

China’s exports rose 3.9 percent year on year in April, beating analysts’ expectations, while imports were flat, customs data showed on Monday.

Analysts in a Reuters poll had expected exports to rise 3.2 percent, after rising 14.7 percent in March.

Imports were expected to fall 3 percent after slipping 0.1 percent in the previous month.

China posted a trade surplus of $51.12 billion in April, while the survey forecast a surplus of $50.65 billion. The country reported a surplus of $47.38 billion in March.

Indonesia Q1 economic growth

Indonesia’s economy grew for a fourth straight quarter between January and March as COVID-19 restrictions were further eased, statistics office data showed on Monday.

Gross domestic product in Southeast Asia’s largest economy grew 5.01 percent in the first quarter from the same period last year, compared with 5.02 percent in the October-December 2021 period. A Reuters poll of analysts estimated the economy would grow 5 percent.

On a quarterly, non-seasonally adjusted basis, the economy shrank 0.96 percent, compared with October-December growth of 1.06 percent and a forecast contraction of 0.89 percent.

Egypt’s spending is set to increase by 15%

Egypt expects spending in the fiscal year beginning July 1 to rise 15 percent and its budget deficit to rise 14.5 percent as it grapples with the aftermath of the Ukraine crisis and ongoing pain from the coronavirus pandemic, the said Finance Minister on Monday opposite Parliament.

Spending for the 2022/23 financial year is set to rise to 2.07 trillion Egyptian pounds ($112 billion) from an expected 1.79 trillion pounds this year, he said, presenting his proposed budget to lawmakers.

Sales will rise to a projected £1.52 trillion from £1.3 trillion in 2021/22. This will result in a deficit of £558.2 billion versus £487.7 billion.

The budget deficit is forecast at 6.1 percent of gross domestic product in 2022/23, after an estimated 6.2 percent in the current fiscal year.

The government forecasts that economic growth will slow slightly to 5.5 percent from 5.7 percent this year and inflation will remain steady at 9 percent.

US earnings forecasts weaken

With U.S. first-quarter earnings in the final stages, corporate growth expectations for the current quarter and 2022 are mostly down as the cost of oil and other supplies rises and interest rates rise.

Sky-High Oil has boosted forecasts for energy companies’ earnings while raising concerns about profit margins for many other S&P 500 industries.

Disappointing prospects from, Netflix and other big players have stood out among recent reports, although estimated year-over-year earnings growth in the first quarter rose to 10.4 percent from 6.4 percent in early April, according to IBES data from Refinitiv.

On Friday, analysts lowered their overall forecast for second-quarter earnings growth for the S&P 500 to 5.6% from 6.8% in early April, while the full-year forecast remained at 8.8% based on Refinitiv data.

But the 2022 growth estimate drops to about 5 percent excluding energy sector growth — a sizeable impact for a sector that accounts for just 4 percent of the S&P 500’s market cap.

“Given the oil shock that we’ve seen, there will be further downside,” said Ohsung Kwon, US equity strategist at BofA Securities in New York.

“It’s going to take some time for that to catch on,” he said. “It’s not just about energy; it is headline inflation plus the higher interest rate environment.”

With input from Reuters

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