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Daily Economic Update
19.02.2025US: Trump mulls 25% sectoral tariffs on auto, pharma, and semiconductors. President Trump stated that he would impose tariffs on auto, pharmaceuticals and semiconductors imports as soon as early April, with duties of around 25% or higher. He had previously mentioned imposing levies on such imports, without specifying any particular tariff rates. In 2024, US imports of road vehicles and pharmaceutical products amounted to around $380bn (12% of total imports) and $230bn (7% of total), respectively, as per international trade data from the US Census Bureau. For now, the president didn’t clarify whether these duties would be in addition to planned reciprocal tariffs or would there be any exemptions under the existing free trade agreements with certain trading partners.
UK: Employment rebounds and wage growth accelerates further. UK payrolls (based on employment tax records) rebounded by 21K jobs in January after falling for two consecutive months, and from a smaller than previously reported 14K drop in December. The unemployment rate unexpectedly held steady at 4.4% in Oct-Dec, and vacancies reversed their falling trend, stabilizing at 819K in Nov-Jan from an upwardly revised 818K in Oct-Dec, after broadly declining since Apr-Jun 2022. Wage growth also accelerated, as regular pay rises increased to an eight-period high of 5.9% y/y in three months through December from 5.6% in the preceding three months, with total pay growth (including bonuses) rising to its highest since Sep-Nov 2023 at 6% from 5.5% earlier. A relatively better labor market read, mainly higher jobs and quickening wage growth could pose additional challenges for the Bank of England. The bank had, until recently, maintained that it could look through the expected rise in inflation over the coming months as a weakening labor market and falling demand should help reverse the inflation trajectory later. After the release of the strong labor data, futures markets pared back expectations for interest rate cuts this year, still seeing two to three cuts but with negligible probability for the third one.
Japan: Exports rise in January as threat of US tariffs loom. Japanese exports rose 7.2% y/y in January, accelerating from December’s 2.8% though falling short of markets forecasts of 7.9%, according to the latest data from the Ministry of Finance. The annual growth rate was led by transport equipment (12.0%) but also boosted by motor vehicles (10.5%) and cars (11.4%), as manufacturers frontload ahead of the US’s threat of hefty tariffs on car imports which could hurt shipments in coming months. Imports, meanwhile, grew 16.7% in January led by communication machinery and computers, rising significantly against December’s 1.7% and beating market expectations of 9.7%. Japan’s trade deficit increased substantially at the start of the year, at ¥2.76 trillion ($18.2 billion), the largest in two years.
China: Slower decline in new home prices in a sign that the market may be beginning to stabilize. China’s new home prices fell at a slower pace in January at -5% y/y from -5.3% in the previous month and marking the smallest drop since July 2024, amid ongoing government efforts to support the troubled property sector including providing financial support to Vanke, one of China’s largest residential real estate developers. Sources indicate that more support may be on the way, with reports of a 50 billion yuan ($6.8 billion) cash injection to Vanke later this year. Meanwhile, the price of existing homes fell 7.4% y/y from -7.8% in December. The ailing property market will still likely continue to weigh on growth in the broader economy, and while current data suggests that it might have moved past the worst part of this cycle, a market turnaround is not likely before prices show clearer signs of bottoming out.
