The Day at a Glance | June 1 2023

*The timely inflationary estimate in the Eurozone points to a greater than expected decrease in May; the figure set at its lowest level since the beginning of last year. 

*In the United States, the bill that would allow the suspension of the debt ceiling was approved in the House of Representatives. It will now proceed to a vote in the Senate for approval before being signed by President Biden. However, since any legislator in the upper chamber can delay the vote, it´s still unclear when the final vote will take place. 

*This Wednesday, the FED made its Beige Book public, which provides a qualitative assessment of conditions by district. Few changes were reported compared to the previous month, with a slight deterioration in future growth expectations and slightly tighter financial conditions in most districts. 

*The private sector employment report (ADP) recorded a 278 thousand jobs increase in May, significantly higher than the 170 thousand forecasted figure; this indicates ongoing strength in the North American labor market. 

*The Eurozone´s unemployment rate set at 6.5%, in line with estimates. 

*New unemployment claims in the US reached 232,000 in the week ending on May 26^th, below market expectations (235,000e.). 

*The Federal Reserve Bank of Dallas´s services sector activity index logged greater deterioration in May by setting at -17.3 points (compared to the -14.4 points recorded in April). 

Economic environment

Inflation in the Eurozone surprised to the upside in May and set at 6.1%, its lowest level since February 2022. Furthermore, this reading compares to the consensus estimate of 6.3% y/y. This noticeable decline was aided by a -1.7% decrease in energy prices, following a sharp 2.4% increase recorded in April. Food prices also logged moderation in their annual reading by setting at 13.5% (vs 15.5% y/y prev.), although they still exhibit high rates of variation. On the other hand, regarding the underlying component – which excludes energy and food prices – also decreased more than expected by logging a 5.3% y/y figure (vs 5.5% y/y). Lastly, on a monthly basis, inflation logged no change and also set below the expected 0.2% m/m and the previous 0.6% monthly figure. While May´s figures alleviate some pressure on the European Central Bank, the rates of variation in several sectors remain well above the 2.0% target, which is why we don´t expect significant changes in the ECB´s stance.