No surprises from the US Fed

<p>Kia ora,</p><p>Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news the chances of a global recession are receding in 2023.</p><p>First up today, the US Federal Reserve <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20230503a1.pdf" target="_blank"><strong>announced</strong></a> the expected +25 bps rate hike, taking its upper bound rate to 5.25% and a 16 year high. Their short Statement reinforced their focus on getting inflation back down to its target 2% range. Their decision was unanimous. But compared to previous pledges, this Statement no longer refers to the potential need to raise rates from here. The Fed doesn't see a recession coming for the US.</p><p>The data today confirms their assessment that the American "economic activity expanded at a modest pace in the first quarter" and is continuing like that. The widely-watched <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/april/" target="_blank"><strong>ISM services PMI</strong></a> for April rose to a slightly faster and modest expansion with new orders strong. The internationally-benchmarked <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/46b3803d32d943318f8010723215007b" target="_blank"><strong>Markit</strong></a> one reported a similar expansion in their services sector.</p><p>The US <a href="https://adp-ri-nrip-static.adp.com/artifacts/us_ner/20230503/ADP_NATIONAL_EMPLOYMENT_REPORT_Press_Release_2023_04%20FINAL.pdf?_ga=2.156182843.1668103901.1683138104-751211893.1683138104" target="_blank"><strong>ADP employment report</strong></a> signaled a much faster expansion in their April labour market than expected, also confirming the Fed's view of a strong labour market there. The ADP report was expected to show of +148,000 in April, but it came in twice as strong at +296,000. On Sa