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Economics

The Sigmanomics Economics page offers timely and insightful coverage of global economic developments, focusing on key indicators, policy shifts, and market trends. It features in-depth analyses of economic data releases—such as inflation rates, retail sales, and consumer sentiment—and explores their implications for financial markets and investment strategies.

Economics

United States Economic Outlook for 2025 amid tariffs and uncertainty

by sigmanomics May 12, 2025

written by sigmanomics

As the first half of 2025 comes to a close, the United States economy finds itself at a critical juncture. The memory of the post-pandemic recovery is still fresh and the same uncertainty now looms over the country. This is due to tariff policies, monetary strategies, and global dynamics. Against this backdrop, policymakers and investors are grappling with conflicting signals about the true state of the economy.

This article aims to provide clarity. It will utilize data from reputable sources. These sources include the Bureau of Labor Statistics and the Federal Reserve. We will examine economic activities in the world’s largest economy as the nation faces current challenges and opportunities ahead.

Challenges in the United States

In the first quarter of 2025, the Gross Domestic Product (GDP) fell by 0.3 percent. This decline is a worrying sign of economic performance, raising concerns among analysts and policymakers. The unemployment rate stayed the same at 4.2 percent, according to the latest economic update from April 2025. This stability in unemployment figures may seem positive, but it could hide underlying vulnerabilities. Economists say that the real effects of tariffs on the economy may not show up in the job market for a few months.

Moreover, the United States faces additional challenges, particularly within the housing market and the broader fiscal policy landscape. In March 2025, the number of building permits issued dropped to 1.482 million. This is a small decrease from the 1.485 million permits granted in March 2024. The drop in building permits shows that the housing market is cooling. This trend is important for the overall health of the economy. As we look ahead, we will closely examine the housing market. Its impact on economic stability and growth is significant. The connection between these economic indicators is essential. It helps us comprehend the trajectory of the U.S. economy in the upcoming months. Stakeholders must navigate the complexities of fiscal policy and market dynamics.

Written by Sigmanomics Team

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https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis.html

May 12, 2025 0 comments

Economics

Canada’s Export Growth and Import Decline Narrow Trade Gap; USD/CAD Trades at Weekly Support

by sigmanomics May 6, 2025

written by sigmanomics

Canada’s trade deficit in March narrowed to C$506 million compared to expectations of widening to C$1.56 billion. The improvement comes on the back of a larger decline in imports, that fell 1.5 percent to C$70.40 billion. In the future, Canada’s trade balance will be shaped by economic conditions, trade policies, and commodity prices.

In March 2025, the Trump administration made a major policy change. They imposed a 25 percent tariff on aluminum and steel imported from Canada. This decision reverberated throughout the trade landscape, fundamentally altering the dynamics of commerce between the two nations. In response, Canada acted decisively by cutting its imports from the United States by 2.9 percent. This move highlights the growing tensions between these neighboring countries. Canadian businesses are currently facing challenges due to ongoing trade disputes. As a result, they are seeking alternative markets. This strategy aims to mitigate the adverse effects of tariffs. This search for new opportunities shows a strategic shift. It aims to sustain operations and ensure long-term viability in a complex global trade environment.

Resolving the trade dispute with Canada and the U.S. will not be something that can be done in the short term. The strategy is multi-faceted with emphasis on long-term structural reforms, diplomacy, and economic pragmatism. Goals that we believe will need to happen are:

Negotiation leverage allowing Canada to reduce reliance on U.S. trade
Addressing U.S. domestic concerns while protecting key Canadian exports will need to occur
Co-developing EV battery plants or semiconductors across U.S.-Canada borders
Reducing public pressure on policymakers to adopt populist protectionist measures

Technical Analysis

On the daily time frame, the greenback versus the Canadian dollar has broken out of its descending channel that stayed intact since February to March of 2025. With the pair now reaching support on the weekly chart as shown below, a break back above 1.36 on the daily chart will confirm bullish bias. Key levels to watch are 1.37 (immediate resistance), 1.36 (immediate support), and 1.3360 (2023-2024 support base).

USD/CAD Weekly Chart

The USD/CAD is currently trading at pivotal weekly support. As long as price action remains above trend line support, bulls will look for a return back towards 1.48 in the coming weeks. MACD is also negative (below signal), further signaling bearish momentum. For bulls looking for reversal from support and confirmation of new uptrend, the MACD turning bullish will be one of the first signs.

Upcoming economic events on the docket that traders should keep an eye on are Canada’s job report and U.S. consumer price index. Both could also serve as a catalyst to move market direction either way.

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Written by Sigmanomics team

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https://www150.statcan.gc.ca/n1/daily-quotidien/250403/dq250403a-eng.htm

May 6, 2025 0 comments

Economics

U.S. Services Sector Shows Resilience Amid Tariff Pressures: April 2025 ISM Non-Manufacturing PMI Rises to 51.6%

by sigmanomics May 5, 2025

written by sigmanomics

The U.S. services sector grew by 51.6 percent in April. This is up from 50.8 percent in March. It also beat economists’ expectations of a 50.4 percent decline. The services sector makes up more than two-thirds of economic activity in the U.S and is positive for the economy. It shows strength despite tariff pressures. This report is helpful, but the future will depend on many factors. These include the supply chain, consumer demand, and trade policies.

Taking a look at the breakdown of the report, New Orders rose 52.3 percent, displaying a demand for services. Employment index contracted for the second straight month, dipping below 50 percent. Supplier Deliveries registered 51.3 percent, suggesting slower deliveries. The market result was mixed with 10 year treasury yields gaining 4.355 percent while major stock indices opened lower.

While the U.S. service sector indicated growth, the S&P global U.S. services PMI painted a slightly different picture. The S&P report dropped to 50.8 percent in April from 54.4 percent the month prior. This divergence shows varying assessments in the sector’s health.

Key Breakdown of the ISM Services Report (April 2025)

Of the 18 services industries that were surveyed, 11 reported growth, while 6 contracted. Meanwhile, 1 remained unchanged. This report also has major implications globally.

Higher tariffs may slow cross-border service flows. A stronger-than-expected PMI will support the strength of the dollar. This is a concern as economies with high external debt in dollars will likely face additional stress. Further, oil and industrial metals are poised to witness impacts as global demand expectations recalibrate.

Market participants who want to trade based on this report should pay close attention to these markets

Commodities: Oil prices
Forex Exchange: Greenback relative to Japanese yen and euro
Bond Markets: Yields on U.S. treasuries
Equities: Technology services, financials, and consumer discretionary

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Written by Sigmanomics Economics Team

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May 5, 2025 0 comments

Economics

Markets Await Tariff Shifts, Central Bank Moves, and Earnings Reports – Week of May 5th, 2025 Outlook

by sigmanomics May 2, 2025

written by sigmanomics

As the second quarter rattles on, the global financial landscape looks to exit its critical phase as quickly as possible. For the week of May 5, 2025, traders will look to the economic docket and are hopeful of policy developments. Of great attention is U.S. – China tariff negotiations and Federal Reserve interest rate decision. Central bank meetings in Poland, Norway, U.K. and Brazil will also gather spotlight, with key inflation readings from Turkey, Philippines, Mexico, and Switzerland.

United States

Market participants are expecting that the Federal Reserve will keep interest rates unchanged, while maintaining its range of 5.25 percent to 5.50 percent. At the same time, effects of uncertainty tied to the presidents tariff agenda will also be evaluated. To date, President Trump has signaled openness to lowering duties on Chinese imports. Paired with cooling job gains and sub par wage growth, recent indicators support the Fed’s cautious stance. With the ISM services PMI on the calendar, a miss of analysts expectations will surely fuel the Fed’s outlook in the face of ongoing trade uncertainty.

Canada

Canada’s upcoming economic calendar is set to reveal Employment data, trade balance figures, and IVEY PMI. It’s unemployment rate is expected to come in at 6/3 percent, while analysts expect PMI to decline towards 52.0, signaling Canadian businesses are cautiously optimistic. Inflation dynamics also support this caution as prices eased to 2.3 percent year-over-year in March, down from 2.6 percent in Febraury. With Canada’s economy cooling, the Bank of Canada is likely to keep rates on hold for now and wait for clearer signs from the labor and price trends.

Asia-Pacific

China is expected to release weaker than expected trade figures for April 2025 due to its record exports ahead of businesses front-loading ahead of tariff increases. Exports expectations lie for -3.5 percent YoY and imports at -2.8 percent YoY.

Japanese markets are keeping a close eye on household consumption set to release as forecasts point to contraction of 1.1 percent. A lower than expected release will sour an already bearish outlook for the region in light of tariff concerns impacting its auto market.

Global themes to watch

Tariff concerns remain focus as President Trump’s on again-off-again tariffs create uncertainty for global supply chains, investments, and inflation. If developments do not present itself, global markets could test recent lows.

Central bank policies and clues thereof are set to be overanalyzed. While the Federal Reserve and Brazil remain in tightening mode, the Bank of England and NBP are pivoting to rate cuts.

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May 2, 2025 0 comments

Economics

U.S. Job Growth Surges Past Expectations in April Despite Tariff Uncertainty

by sigmanomics May 2, 2025

written by sigmanomics

The U.S. economy added 177,000 jobs in April 2025 led by Health care and transportation sectors exceeding economists expectations of 130,000, according to the Bureau of Labor Statistics. This The result surprised wall street as this occurred amid economic uncertainties surrounding President Donald Trump’s on again – off again tariff policies.

Unemployment rate remained unchanged at its historically low 4.2 percent. The labor force participation rate remained unchanged at 62.6 percent, with employment-population ration also staying flat. Diving further into the report, average hourly earnings increased by 6 cents to $36.06 in April 2025.

Sector specific, healthcare lead the march with 51,000 new positions, while transportation and financial activities followed by 29,000 and 14,000 jobs respectively. The rise in healthcare represents one of the most consistent areas of growth over the past year, largely driven by access to healthcare and aging. Worth noting, social assistance saw an tick higher as well of 8,000 jobs though this figure dipped below its 12-month average.

April’s report marks another month of improved gains; however, it is worth noting that this rise is on the back on growing recession fears.

Following announcement of the data, stock futures rose with Dow futures up 300 points or 0.7% and S&P 500 futures rising 0.78 percent.

Market Moves

S&P 500 futures

The S&P 500 extended its 8 day gain on the back of the better than expected news with bulls now eying pivot high resistance at 5837. Failure to overcome this barrier will likely place pressure back on the asset with return to recent lows. Furthermore, technical traders will be keeping their eye on the MACD indicator as both the fast and slow length lines remains below midpoint. A crossover of the short term length back underneath slow length could spell trouble for S&P 500 futures.

Going forward, traders will closely monitor FOMC meeting, with the reserve expected to maintain interest rates and adopt a wait-and-see approach due to mixed economic signals. Trumps “Liberation day” tariffs, which raise duties on Chinese goods to 145% has placed considerable uncertainty into the market. Key themes that will be of focus in the near-to-medium term are tariffs, rate policy and recession signals. Thus, despite todays optimistic jobs report, the full impact of trade policies should not be overlooked as impact will likely show in the coming months.

Written by Sigmanomics team

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May 2, 2025 0 comments

Economics

May 2025 Economic Outlook; earnings reports and Non-Farm Payrolls

by sigmanomics April 30, 2025

written by sigmanomics

Traders are set to keep a close eye on key economic events for May 2025 in light of earning reports, potential tariff deals, and potential economic slowdown. In the cross hairs are Meta Platforms, Amazon, Apple, and Amazon. Strong earnings reports could re-install market confidence, while results below expectations could exacerbate April’s selloff.

Non-Farm Payrolls (May 02, 2025)

Payrolls are expected to rise 129,000 jobs from 228,000 the month prior. At the same time, unemployment is expected to hold unchanged 4.2%. This report is expected to be watched closely with direct forex and stock movements to follow.

FOMC Meeting (May 07, 2025)

The Federal Open Market Committee (FOMC) is expected to cross the wires with a cautious tone following markets previously pricing in rate cuts early summer. A dovish tone could provide tailwind for equities, while a more hawkish tone is likely to apply pressure to risk assets.

Inflation (May 13, 2025)

Consumer price index (CPI) will provide a deeper look into price pressures within ongoing trade tensions. Signs of moderate inflation could alleviate and in return lead risk assets higher.

In all, May 2025 is set to be market moving for the better or for the worse. Economic events and looming tariff tensions will be paramount in managing risks.

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April 30, 2025 0 comments

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