Canada April producer prices up 1.6% vs March on lumber - Reuters News

May 31 (Reuters) - Producer prices in Canada rose by 1.6% in April from March on higher prices for lumber and other wood products, Statistics Canada said on Monday. The annual increase in softwood lumber prices was the largest increase on record since the series began in 1957.

The increase followed an upwardly revised 1.8% increase in March. Raw materials prices were up 1.0% in April, and were up 56.4% on the year.

INDUSTRIAL PRODUCT PRICES (pct change)

                              Month-on-month             Year-on-year

                          April   Mar(rev)  Mar(prev)  April   Mar(rev)  Mar(prev)

total                    +1.6    +1.8      +1.6      +14.3   +10.3     +10.0

ex energy/petrol +1.8    +1.5      +1.3      +10.3    +8.4      +8.1

RAW MATERIALS PRICE INDEX (pct change)

                        Month-on-month             Year-on-year

                 April   Mar(rev)  Mar(prev)  April   Mar(rev)  Mar(prev)

total            +1.0    +2.2      +2.3      +56.4   +34.7     +34.7

ex crude energy  +3.4    +0.5      +0.5      +21.9   +16.1     +16.0

NOTE: A flash estimate by Statscan released on May 13 had pointed toward a 1.7% increase in April from March.

Canada posts first current account surplus since 2008 in first quarter - Reuters News

May 31 (Reuters) - Canada's current account balance was a surplus of C$1.18 billion ($977.47 million) in the first quarter, from a revised C$5.27 billion deficit in the fourth quarter of 2020, on a higher trade in goods and services, Statistics Canada said on Monday. This was the first surplus since the third quarter of 2008.

Seasonally adjusted figures in billions of Canadian dollars:

                          Q1 2021  Q4(Rev)  Q4(Prev)   Q1 2020

    Current Account        +1.184   -5.274    -7.261    -0.619

    Goods                  +1.684   -9.266    -9.490    -1.009

    Services               +0.458   +0.407    +0.285    +0.075

    Investment Income      +0.979   +5.916    +4.171    +0.453

NOTE: Analysts had on average forecast a current account surplus of C$3.4 billion for the first quarter of 2021. Figures are seasonally adjusted.

China's factory activity grows at slightly slower pace as raw materials costs surge - Reuters

• Manufacturing PMI slips to 51.0 in May from 51.1 in April
• Services PMI rises to 55.2 in May from 54.9 in April
• Raw materials costs grow at fastest pace since 2010

BEIJING, May 31 (Reuters) - China's factory activity growth slowed slightly in May as raw materials costs grew at their fastest pace in over a decade, weighing on the output of small and export-oriented firms.

The official manufacturing Purchasing Managers' Index (PMI) inched lower to 51.0 in May, against analyst expectations that it would remain unchanged from April at 51.1, data from the National Bureau of Statistics (NBS) showed on Monday. 

The official PMI, which largely focuses on big and state-owned firms, has stood above the 50-point mark that separates growth from contraction for over a year.

While the Chinese economy has largely shaken off the gloom from the COVID-19 pandemic, officials warn the foundations for the recovery are not yet secure amid problems like higher raw material costs and the pandemic situation overseas.

Iris Pang, chief economist for Greater China at ING, said in a note that "external demand will likely remain flat" as economic recoveries in the United States and parts of Europe are likely to be "offset by increasing Covid cases in ASEAN, which is the biggest trade partner of China."

Some emerging COVID-19 cases in China's Guangdong province, where most electronic factories are located, continued semiconductor chip shortages and high commodity prices are also among the challenges facing producers, she added. (Full Story)

A sub-index for new export orders stood at 48.3 in May, down from 50.4 in the previous month and slipping sharply into contraction.

A sub-index for raw material costs in the official PMI stood at 72.8 in May, up from April's 66.9 and hitting the highest level since 2010.

Prices for commodities such as coal, steel, iron ore and copper have surged this year, fuelled by post-lockdown recoveries in demand and easing liquidity globally.

China's policymakers have repeatedly expressed concern about rising commodity prices in recent weeks and called for stricter management of supply and demand and to crack down on "malicious speculation." (Full Story) (Full Story) (Full Story)

"We expect commodity prices to stabilize in the coming months," said Louis Kuijs, head of Asia economics at Oxford Economics.

Tougher oversight on spot and futures markets and increased global commodity supply in the second half of 2021 should help reduce cost pressures on China's firms, he said.

In addition to surging raw material prices, Chinese factories are struggling with high shipping costs and an appreciating Chinese currency. Some are able to pass on the higher costs to overseas customers, while some small firms are stopping taking orders to avoid losses. (Full Story) (Full Story)

A sub-index for the activity of small firms stood at 48.8 in May, sharply down from April's 50.8.

Firms continued to lay off workers and at faster pace, the official data also showed.

In the services sector, activity expanded for the 15th straight month, and at a faster pace, with the non-manufacturing PMI index rising to 55.2 from 54.9 the month before.

China posted a record 18.3% growth in the first quarter, but analysts expect the brisk expansion to moderate later this year. (Full Story)

Policymakers have pledged to support job-creating small firms that were hit harder by the coronavirus pandemic. The central bank is trying to cool credit growth to help contain debt risks, but is treading warily to avoid hurting the economic recovery.

"The mixed data strengthens our case for policy stability in the near term, especially before the CCP's centenary celebration in July," said analysts at Citi in a note, referring to the ruling Communist Party.

German inflation pushes further above ECB target in May - Reuters News

• HICP accelerates to 2.4% from 2.1% in April
• ECB targets inflation close to but below 2%
• ECB has pushed back against predictions of new inflation era

BERLIN, May 31 (Reuters) - Germany's annual consumer price inflation accelerated in May, advancing further above the European Central Bank's target of close to but below 2%, the Federal Statistics Office said on Monday.

Consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 2.4% in May, up from 2.1% in April. A Reuters forecast had pointed to a May reading of 2.5%. 

The ECB's chief economist, Philip Lane, said earlier this month the bank had a "lot of work to do" to raise inflation back to its 2% goal and market talk of rapidly rising prices is misplaced.

Euro zone inflation is approaching 2%, its fastest rate in years, on the back of fiscal support and the unwinding of last year's oil price crash, prompting some commentators to predict a new era of inflation.

But Lane pushed back on this narrative, arguing that the labour market will take years to get back to its pre-crisis level, corporate balance sheets are depleted and the economic rebound is still predicated on copious central bank and government support. (Full Story)

The ECB will next meet on June 10 and must decide whether to ease up on its stimulus given the prospect of rapid growth over the rest of the year as economic restrictions are lifted and the services sector rebounds.

"The ECB is unlikely to be disturbed by the short-term fluctuations in the inflation rate and will only slowly return its policy to normal," Holger Schmieding, chief economist at Berenberg Bank, said.