Economy in Brief

Money growth is accelerating globally as money growth is positive over 12 months in all countries in the table as money supply completes the transition from contracting to expanding in the wake of the Covid disruption. European Monetary Union money growth is up by 2.6% over 12 months, U.S. money growth is up by 3.1%, U.K. money growth is up by 3.4%, and Japan's M2 plus CDs is up by 1.2% over the last year.

In the United States and the euro area both show money growth accelerating from 12-months to six-months to three-months. The U.K. shows fairly steady increases in the growth rate of money supply with a slight step down over six months; that then has speeded up over three months. Japan's money growth shows positive growth rates over each horizon without a clear trend developing from 12-months to 3-months.

In inflation-adjusted terms (or real terms), the euro area shows accelerating money supply growth. The U.S. shows the same trend with money growth picking up from 12-months to six-months and then holding that higher growth rate over three months. In the United Kingdom, real money supply growth is slowing - but only very slightly. Japan's real money supply growth shows contractions over 12 months, over six months, and over three months. Japan doesn't exactly show a trend but the declines over three and six months are deeper than the annual rate decline over 12 months.

The euro area shows positive credit growth in nominal terms over three months, six months, and 12 months. In real terms, the euro area shows positive credit growth over three months and six months, after shaking off a decline over 12 months.

The year-over-year chart of money growth shows some clear trends for money growth where the U.S., the euro area, and the U.K. demonstrate clear accelerating trends in money growth are underway. For Japan, money growth continues on a very long and slow decelerating path that dates back to 2021 and then shows a slight pick up the pace of deceleration in 2024.

Globally unemployment rates are continuing to move sideways or falling but the main exception is the United States with some recent increase in unemployment; unemployment in the U.S. has recently picked up from its cycle low in the wake of the Covid recession and government policies to deal with it.

In the European Monetary Union, the unemployment rate has had its low and it's been stuck here for several months. Despite some disquieting and weak economic data for the monetary union, unemployment has stayed at an extremely low level- its all-time low.

Among the 12 countries listed in the table, 5 of them have higher unemployment rates month-to-month with only Italy seeing the unemployment rate fall in October compared to a month ago. Countries experiencing a rise in their local unemployment rates are Finland, France, Luxembourg, Ireland, and Greece.

In terms of the monetary union aggregates, total unemployment continues to fall in the union as a whole over 12 months, over six months, and over three months.

Unemployment rates fell in only three of the EMU countries listed in the table one month ago. Two months ago, in August, unemployment rates fell in seven EMU member countries, while unemployment rose month-to-month in only three. The impetus for unemployment rates to drop is running out of steam while the list of countries experiencing higher rates of unemployment is rising.

Over broader periods, trends are less clear as there are the same number of countries with unemployment rates falling over three months as there are over six months. Over 12 months, there's one more country that experiences a decline in its unemployment rate compared to the count over three- and six-month horizons. Over three and six months, unemployment falls compared to the previous period in four countries; over 12 months compared to 12 months ago, unemployment rate falls in five countries. So the process of unemployment reduction has slowed then stabilized, based on comparing these trends.

The overall trend as well as the trend for countries in the EMU as well as for the U.S. and Japan shows mostly tempered unemployment rates with unemployment falling or low but with nine showing 12-month increases. Finland and the U.K. show the sharpest 12-month increases. However, global PMI data, for example, and other global data, continue to show more economic weakness. So far that weakness has not permeated the job market that continues to be strong globally, despite some -so far- not very significant backtracking.

In this week’s letter, we look back at and review some of the key trends that have shaped the outlook for Asia this year. While growth picked up in several parts of the region earlier in the year, signs of a slowdown have emerged as we head toward year-end (Chart 1). Disinflationary trends have continued in many economies, welcome news for central banks across the region. However, the growth and inflation landscape remains uneven. Economies like Japan and India have experienced slower growth, while others such as Singapore, Taiwan, Malaysia, and Vietnam have seen improvements, in part driven by strong demand for electronics and semiconductors (Chart 2).

On monetary policy, the anticipated regional alignment with the Fed's easing cycle has not fully materialized. Instead, many central banks in Asia have opted to keep policy rates higher for longer, thanks to the influence of various domestic factors (Chart 3). Touching on semiconductors, key players like Taiwan and South Korea have reaped significant benefits from the AI-driven surge in demand, while China’s pre-emptive purchases of semiconductor equipment have finally started to taper off (Chart 4). Turning to financial markets, Asian equities largely tracked their US counterparts through early October. However, market expectations were disappointed by China’s underwhelming stimulus plans, triggering sell-offs across regional markets, while US equities maintained a broader upward trend (Chart 5).

Lastly, in the political arena, both India and Japan saw their incumbent governments retain power, although with notable losses in parliamentary seats, raising some concerns over future economic policy direction (Chart 6). And as we head into December, uncertainty remains—particularly following President-elect Trump’s recent victory in November. We will continue to explore these developments and their potential impact for 2025 in next week’s publication.

Growth and inflation Asia-Pacific economies had plenty to celebrate this year, as growth strengthened on average while inflation remained well-behaved in many economies. As shown in Chart 1, GDP growth rates rose from the lows of 2023, averaging just under 4% y/y in both Q1 and Q2. That said, while growth momentum persisted in some economies during Q3, it slowed further in many others. Meanwhile, the region experienced further disinflation, with average CPI inflation falling from a peak of 2.9% y/y in May to just 2% in October—a level at which many central banks would likely feel comfortable. However, a deeper dive into economy-specific nuances reveals disparities in the relationship between growth and inflation across the region's economies—an issue we will explore in the next section.