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 A weaker yen is hurting the confidence of Japanese households and could erode their purchasing power, the government said in a report on Friday, highlighting its concerns about the negative impact of the yen’s depreciation on the economy. Rising inflation expectations helped improve household confidence in 2013, when former Prime Minister Shinzo Abe’s government implemented the “Abenomics” stimulus policy, the government said in an annual white paper analyzing the economy. But since mid-2023, inflation expectations have risen again, dampening household sentiment, partly as the public reacts to media reports of rising food prices and higher import costs due to a weaker yen. “A weaker yen could weaken consumers’ purchasing power” as it pushes up inflation, outstripping wage growth, the paper said. “The yen had been hovering below a low of 38 to 160 against the dollar for much of July, but it rose sharply against the dollar in the days leading up to and following the Bank of Japan’s decision to raise interest rates on Wednesday.The yen traded at 149.07 against the dollar in Asian trading on Friday as investors began to turn their attention to the prospect of steady rate hikes by the Bank of Japan and the Federal Reserve, which is expected to begin a U.S. monetary easing cycle in September. In a white paper prepared ahead of the Bank of Japan’s decision on Wednesday, the government said a weaker yen was no longer boosting exports as it had in the past as more Japanese manufacturers shifted production overseas. Instead, the report said a weaker yen was weighing on profits at small companies by increasing the cost of raw material imports.A weaker yen has become a source of concern for Japanese policymakers because it dampens consumption by raising the cost of imported fuel, food and raw materials. Japanese authorities spent 5.53 trillion yen ($37 billion) in foreign exchange market intervention in July to push the yen from 38 to 160 to the dollar to 40.00 per dollar, official data showed. The Bank of Japan also cited the risk of overshooting inflation due to a weak yen as one of the reasons for its rate hike on Wednesday.

 The number of Americans filing new claims for unemployment benefits fell more than expected last week as disruptions from weather and temporary auto plant shutdowns faded. The Labor Department said Thursday that initial jobless claims fell by 10,000 to a seasonally adjusted 235,000 in the week ended July 20. Economists predict that the number of applicants this week will be 238,000.The previous week, the number of applicants rose to the upper end of the range of 194,000-245,000 due to a surge in applications related to Hurricane Burr in Texas and temporary auto plant shutdowns. Despite the fluctuations, layoffs are still at historically low levels, and the slowdown in the labor market mainly comes from the reduction in employment caused by the Federal Reserve’s aggressive interest rate hikes in 2022 and 2023, which will cool demand.During the week of July 13, the number of people receiving unemployment benefits (the number of people continuing to receive unemployment benefits after initial claims, which can be used as an indicator of employment) fell by a seasonally adjusted 9,000 people to 1,851,000. The claims renewal data covers the period when the government surveyed the unemployment rate in July. The number of people renewing claims did not change much between the June and July survey weeks. As job opportunities declined, the U.S. unemployment rate rose to a 2.5-year high of 4.1% in June.The U.S. Federal Reserve has maintained its benchmark overnight interest rate in a range of 5.25%-5.50% over the past year. Since 2022, it has raised interest rates by a cumulative 525 basis points to curb inflation. Financial markets expect the Federal Reserve to cut interest rates in September and again in November and December. Another report from the Commerce Department’s Census Bureau showed that non-defense capital goods orders excluding aircraft orders, one of the important indicators of corporate investment plans, rebounded 1.0% in June after falling 0.9% in May.

 Russia’s central bank will raise key interest rates by 200 basis points to 18% at a board meeting on July 26 in an effort to curb inflation and cool an overheating economy. Massive state spending, wage growth across sectors, severe labor shortages and continued growth in business and retail lending are the main factors behind inflation, which currently stands at 9.2%, well above the regulator’s 4% target.Analysts agree that a rate hike is inevitable, with three-quarters of those polled expecting a 200 basis point hike. Only a handful of analysts see a 100 basis point rise as possible.Opponents of the central bank, including industry lobbyists and bankers, accuse it of stifling economic growth at a time when the economy can grow at a faster rate than the current 5%, fueled by defense-sector spending. The Fed’s rhetoric has become tougher, with its governor, Elvira Nabiullina, saying the board will focus on the size of the rate hike rather than the need for it. The central bank said earlier that tightening monetary policy would last much longer than previously expected in order to curb inflation in a more sustainable way.Regulators are also expected to review inflation forecasts for this year, currently at 4.3-4.8%. Some analysts pointed out that the inflation rate is currently at a peak of more than 9% and will slow to 7% by the end of the year.

 Canadian retail sales fell more than expected in May as consumers spent less at supermarkets and grocery retailers amid rising food prices and high interest rates, data released Friday showed.Retail sales, which include autos, clothing, furniture, food and beverages, fell 0.8% in May from the previous month, reversing a 0.6% gain in April, Statistics Canada said. Preliminary estimates for June retail sales, which polled only half of respondents, showed sales may have fallen 0.3%. Retail sales excluding auto and parts dealers, which account for more than a quarter of total sales, fell 1.3%.Analysts had forecast sales could fall 0.6% in May and estimated a 0.5% drop excluding autos and parts. Sales at food and beverage retailers, which account for nearly a fifth of total sales, fell 1.9%, the report said, mainly due to a sharp drop in purchases at supermarkets and grocery retailers.Total retail sales in May were C$66.13 billion ($48.2 billion), with eight of the nine subsectors declining.

 U.S. retail sales were flat in June, with a strong underlying trend that could boost second-quarter economic growth expectations. Retail sales were flat last month after an upwardly revised 0.3% gain in May, the Commerce Department’s Census Bureau said Tuesday.The sales outlook, however, is grim. Households are becoming more price-sensitive and focusing on basic needs, as evident in earnings reports from major retailers and manufacturers. Most households have used up excess savings built up during the pandemic and are carrying large amounts of credit card debt that are becoming increasingly expensive as interest rates remain elevated. Wage growth is also slowing as the labor market cools. Still, the pace of consumer spending remains strong enough to keep the economic expansion on track.Retail sales excluding autos, gasoline, building materials and food services surged 0.9% last month and rose 0.4% in May. These so-called core retail sales are closest to the consumer spending component of gross domestic product. Before the retail sales data were released, expectations for growth in the April-June quarter were around 2%. The economy grew at a 1.4% pace in the first quarter.

 A measure of U.S. services sector activity fell to a four-year low in June as orders plunged, potentially suggesting the economy lost momentum at the end of the second quarter. The Institute for Supply Management (ISM) said its non-manufacturing purchasing managers’ index (PMI) fell to 48.8 last month from 53.8 in May, the lowest level since May 2020. It was the second time this year that the PMI has fallen below 50, which suggests the services sector is contracting.The PMI fell below the 49 level that the ISM says typically indicates expansion in the overall economy. The survey’s measure of business activity fell to 49.6 from 61.2 in May, the first contraction since May 2020. The ISM reported Monday that manufacturing activity deteriorated further in June. However, the surveys may underestimate the health of the economy, with so-called hard data such as consumer spending suggesting modest growth last quarter. The economy is adjusting to higher interest rates, and rising rates are slowing demand.Growth expectations for the second quarter are around a 2% annualized rate. The economy grew at a 1.4% pace in the January-March quarter. The survey’s new orders measure fell to 47.3 from 54.1 in May, the lowest level since December 2022. Employment in the services sector continued to decline. That suggests slower job growth in the coming months, although sentiment surveys are not reliable predictors of wage growth. Services inflation eased slightly last month. The ISM’s gauge of prices paid for service inputs slipped to 56.3 from 58.1 in May. That suggests deflationary trends are back on track after price pressures intensified in the first quarter.

 The number of Americans filing for unemployment benefits fell last week, potentially easing concerns about a major shift in the labor market. The Labor Department said Thursday that the number of people filing for state unemployment benefits fell 6,000 to a seasonally adjusted 233,000 in the week ended June 22. The data included a new holiday, Juneteenth, last Wednesday. Claims tend to fluctuate around public holidays.So far this year, claims have fluctuated between 194,000 and 243,000. Economists are divided over whether the recent increase in claims indicates more layoffs or a repeat of last year’s swing. Claims remain historically low and are being closely watched for signs that employers are laying off workers as the economy slows. The Federal Reserve has raised interest rates by 525 basis points since 2022 to curb inflation.In another report Thursday, the government confirmed that economic growth slowed significantly in the first quarter. The Commerce Department’s Bureau of Economic Analysis said the first-quarter gross domestic product growth rate was slightly raised to an annualized 1.4%, the third estimate of GDP for the January-March quarter. The previous growth estimate was 1.3%. The economy grew at a 3.4% rate in the fourth quarter.The U.S. central bank has kept its benchmark overnight rate in a range of 5.25%-5.50% since July last year. According to the unemployment claims report, the number of people continuing to receive benefits after an initial aid increased by 18,000 to a seasonally adjusted 1.839 million in the week ended June 15. These so-called continuing claims data cover households during the period when the government surveyed unemployment in June. The unemployment rate rose to 4.0% in May, the first increase since January 2022. However, most economists do not view the current unemployment level as a threat to the labor market, arguing that the increase in unemployment is mainly concentrated in the 35-44 age group, recent immigrants and certain industries.