OECD revises 2024 growth forecast upwards by 2/10 pp to +3.1%: activity remains resilient

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Renta 4: European stock markets open flat on a day that will be dominated by the official US employment report (14:30h), where moderation is expected (in line with Wednesday’s ADP private employment survey and JOLTS job openings), but showing a still solid labour market and tightening in wages (yesterday 1Q24 unit labour costs +4.7% year-on-year vs +4% estimated). Consensus expects 240,000 estimated non-farm payrolls versus 303,000 estimated previously, unemployment rate stable at 3.8% and wages +4% year-on-year (versus +4.1% previously). We will also get ISM services, where a slight improvement is expected (52.0 versus 51.4) in contrast to the deterioration seen in manufacturing, and where the focus will once again be on prices after the sharp rise in the manufacturing component.

As was mentioned yesterday, macro data are relevant for the decisions of a Fed that needs greater confidence regarding the achievement of the 2% inflation target in order to start cutting rates. It should be recalled that the market consensus expects between one and two rate cuts in 2024, the first one after the summer (or at the end of the year), and that it will be the data that will be in charge (inflation and its expectations, the labour market, financial and international developments).

All this is happening in a context of improved expectations for the global economic cycle, as the OECD showed yesterday when it revised upwards its 2024 growth forecast by 2 tenths of a percentage point to +3.1%. Despite the impact of tighter monetary conditions, activity remains resilient, although with divergences by geographical areas: greater strength in the US (GDP 2024e +2.6%, revised up by 5 tenths) versus Europe (GDP 2024e +0.7%, revised up by 1 tenth) and Emerging Europe, while inflation continues to moderate.

For its part, the Bank of Spain (de Cos) yesterday expressed optimism that inflation will reach its 2% target in 2025, while seeing downside risks to European growth stemming from the tightening of the ECB’s monetary policy. Statements that reinforce the idea of a first ECB rate cut on 6-June (90% probability), with subsequent cuts depending on macro data and the Fed, among others.

Likewise, the markets will read Apple’s 1Q24 accounts yesterday after the American close. In the after-hours markets, +6% after publishing better-than-expected revenues (despite falling 4%), and pointing to a return to growth in 2Q24, plus the announcement of the largest share buyback in American history.

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