Economy
US consumer confidence up more than expected amid tariff anxiety
Consumer confidence in the United States improved in May after five straight months of declines sent it to its lowest level since the onset of the Covid-19 pandemic, boosted by hopes of easing trade tensions after U.S. President Donald Trump’s tariffs jolted the economy.
The Conference Board said Tuesday that its consumer confidence index rose 12.3 points in May to 98, up from April’s 85.7, its lowest reading since May 2020.
A measure of Americans’ short-term expectations for their income, business conditions and the job market jumped 17.4 points to 72.8, but remained below 80, which can signal a recession ahead.
The proportion of consumers surveyed saying they think a U.S. recession is coming in the next 12 months also declined from April.
Trump’s aggressive and unpredictable policies – including massive import taxes – have clouded the outlook for the economy and the job market, raising fears that the American economy is headed toward a recession.
However, Trump’s tariff pullbacks, pauses and negotiations with some trading partners may have calmed nerves for the time being.
“The rebound was already visible before the May 12 U.S.-China trade deal but gained momentum afterwards,” said Stephanie Guichard, senior economist at The Conference Board.
Trump had initially imposed a stunning 145% tariff on most goods from China, but agreed to a 90-day pause for negotiations. The U.S. also came to an agreement with the U.K. earlier in May.
Over the Memorial Day holiday weekend, Trump and European Union leaders announced that the president’s 50% tariff on imports from the E.U., which he announced Friday, are on hold until July 9. That announcement would not have impacted the Board’s survey, which closed on May 19.
The Conference Board said the rebound in confidence this month was broad-based across all ages and income groups.
Consumers’ assessments of the present economic situation also improved, with the exception of their view on job availability, which weakened for the fifth straight month despite another strong U.S. jobs report.
However, less than 25% of respondents said they were worried about losing their jobs, compared with the 50% of respondents who said they were concerned about not being able to buy the things they need or want.
The Labor Department earlier this month reported that U.S. employers added a surprising 177,000 jobs in April and the unemployment rate remained at a low 4.2%.
Write-in responses to the survey showed that tariffs are still consumers’ biggest concern. Inflation is also still weighing on their minds, though some noted that inflation seemed to be easing, along with gas prices.
Earlier in May, the Commerce Department reported that consumer prices rose just 2.3% in March from a year earlier, down from 2.7% in February. Excluding the volatile food and energy categories, core prices rose 2.6% compared with a year ago, below February’s 3%. Economists track core prices because they typically provide a better read on where inflation is headed.
Gas prices have hovered around $3.17 per gallon this month, down from $3.59 a year ago, but up a few pennies from April.
The slowdown in inflation could be a temporary respite until the widespread duties imposed by Trump begin to push up prices in many categories. Most economists expect inflation to start ticking up in the coming months.
Robert Frick, an economist with Navy Federal Credit Union, said that while the tariff rollbacks may have boosted Americans’ confidence this month, that optimism may be fleeting.
“When prices start rising from existing tariffs in a month or two, it will be a sobering reminder that a new inflation fight has just begun,” Frick said.
The Board’s survey Tuesday also showed that Americans’ plans to spend on homes, cars and vacations also increased from April, with significant gains coming after the May 12 China tariff pause.
China’s factory activity flatlined in May following two months of expansion, official data showed Sunday, as weaker demand and soaring energy costs due to the war in the Middle East weighed on growth and output.
The manufacturing purchasing manager’s index (PMI) – a key measure of industrial activity – was 50.0 in May, according to the National Bureau of Statistics (NBS).
The 50.0 mark separates expansion from contraction. Economists surveyed by Bloomberg had predicted a reading of 50.0 as well.
The figure slipped from 50.3 in April and 50.4 in March.
The new orders sub-index dropped to 49.9 from 50.6 in April, while the sub-index on production edged down to 51.2 from April’s 51.5. The sub-index for raw material stockpiles fell to 48.6 from 49.3 in April.
China has been less affected by the global energy shock from the Iran war than many other countries, which face inflationary pressures as oil prices have surged due to the closure of the Strait of Hormuz, through which a fifth of the world’s oil is shipped in peacetime.
Analysts say China’s ample oil reserves and diversified sources of energy have helped the world’s second-largest economy weather the war nearly unscathed.
However, Chinese factories are facing higher costs with the prices of raw materials rising, particularly in the energy and chemical sectors.
Both supply and demand in industries including petroleum, rubber and plastics showed “continued weakness,” said NBS statistician Huo Lihui.
Meanwhile, exports remain crucial for China’s broader economy, according to banking giant HSBC.
While China’s exports to the U.S. have dropped on an annual basis during most months in the past year, its global exports have been robust, particularly to Europe and Southeast Asia.
Hopes for a recovery in exports to the U.S. have risen following President Donald Trump’s summit with Chinese leader Xi Jinping in Beijing in mid-May, and after the two countries agreed to set up separate boards of trade and investment.
Autos, technology and artificial intelligence-related exports have been helping to drive export growth, but some economists also point to concerns over the broader economy. Domestic demand remains sluggish in the wake of a years-long property sector slump that has clobbered consumer confidence and investment.
“Domestic demand is lagging, but high-end manufacturing and exports are holding the line,” Robin Xing, Chief China Economist at Morgan Stanley, wrote in a research note last week.
Chinese leaders have set an annual economic growth target of 4.5% to 5% for this year. That’s the lowest target since 1991, albeit only slightly lower than the “around 5%” target set in 2025.
Morgan Stanley said China will still likely meet its 2026 target, but oil prices and the easing of uncertainties around global oil supplies would be key factors determining where things might be heading.
China’s foreign minister said Friday that Canada could surpass its goal of increasing exports to China by 50% by 2030, signaling potential for deeper trade ties during talks with Canadian Foreign Minister Anita Anand.
Wang said he thought Canada’s exports to China could increase by 100%, building on the momentum between the countries.
“Canada is focused on growing our economy and diversifying our trading relationships,” Anand said during the meeting. “The Canada-China economic relationship is significant,” she said.
Wang is on a three-day visit to Canada, the first visit by a Chinese foreign minister in a decade and the latest step to improve ties. On Friday afternoon, he shook hands with Prime Minister Mark Carney ahead of a private meeting. Canada and China struck an initial trade deal in January to slash tariffs on electric vehicles and canola, when Carney became the first Canadian prime minister to visit China since 2017. China is Canada’s second-largest trading partner, and Carney has sought to reduce his country’s overwhelming reliance on the United States after U.S. President Donald Trump imposed tariffs on Canada, a longtime ally. Amid an ongoing trade war with the U.S., Carney has vowed to double Canadian exports to other markets in the next decade and signed more than 20 economic and security deals in the last year.
On Thursday, Carney delivered a speech in New York calling for a “new partnership” with the U.S., saying that a stronger Canada would “help make America great again.”
The Chinese foreign minister’s Ottawa visit comes after the Canadian warship HMCS Charlottetown completed a routine transit through the Taiwan Strait on May 23. China said on Friday it firmly opposes any attempt by any country to undermine its sovereignty and security “under the pretext of freedom of navigation.”
Earlier this month, Conservative lawmaker Michael Chong travelled to Taiwan, where he met with Taiwanese President Dr. Lai Ching-te and other senior officials. Chong said in a statement his visit was intended to “show solidarity with a democracy at the front lines of intimidation from the People’s Republic of China” and to assert Canada’s sovereignty, after a warning from the Chinese ambassador to Canada regarding politicians visiting Taiwan.
The top tourism body said on Friday that Turkish applicants were being effectively “shut out” of the Schengen visa application system, citing persistent appointment shortages and alleged technical manipulation of booking platforms.
The remarks by the Turkish Travel Agencies Association (TÜRSAB) came after data showed Türkiye was the second-largest source of Schengen visa applications worldwide in 2025.
According to statistics published by the European Commission, applications to Schengen Area countries reached 11.93 million last year, an increase of 1.8% from 2024.
Türkiye accounted for nearly 1.27 million applications, ranking second after China. The figure compared to 1.17 million in 2024 and just over 1 million in 2023.
The rejection rate for Turkish applicants stood at 14.6% last year, up 0.1 percentage points from 2024.
The TÜRSAB said in a statement that the data confirms a structural access problem rather than a lack of demand.
Its Chair Firuz Bağlıkaya said Turkish citizens are often unable to even enter the application process because of limited appointment availability.
He argued that the system itself has become a barrier.
For years, Turkish citizens and businesses have complained about the EU’s visa system, including long appointment wait times, the issuance of very short-term visas and high rejection rates.
Bağlıkaya pointed to sharp declines in applications to key destinations such as Italy and France, which are among the most popular countries for organized tour programs.
According to EU data, applications to Italy fell by 32.3% year-over-year, while France recorded a 6% decline.
Bağlıkaya attributed the drop to reduced access to visa appointments, rather than weakening travel interest.
“Due to current practices, our citizens are shut out of the system before they even get a chance to submit a visa application,” he noted.
He further claimed that the appointment system is being exploited, alleging that limited time slots are rapidly captured by automated bot accounts and later resold at significantly higher prices.
Bağlıkaya said figures reportedly were reaching up to 1,000 euros ($1,165) per appointment in urgent cases.
“A stop must be put to this situation,” he stressed.
Diversified supply routes and infrastructure assets have helped Türkiye maintain energy stability despite disruptions around the Strait of Hormuz, while also reinforcing its position as a key link between producers and European markets.
The key transit route for roughly a fifth of the world’s oil and liquefied natural gas supply, the Strait of Hormuz was effectively shut after the U.S. and Israel launched strikes on Iran in late February, causing what is described as the biggest energy crisis ever, which sent global prices higher.
Data compiled from the Energy Market Regulatory Authority (EPDK) indicates that Türkiye’s supply structure remained broadly stable in the first quarter of the year.
Natural gas imports reached 19.2 billion cubic meters (bcm) in the January-March period, while crude oil and petroleum product imports totaled 3.32 million tons.
The U.S., Russia and Azerbaijan remained the leading suppliers of gas. In January, the U.S. accounted for approximately 35.7% of imports, followed closely by Russia at 35% and Azerbaijan at 13.4%. In February, the U.S. retained the top position, while Russia regained the lead in March.
On the oil side, Russia continued to dominate imports across the quarter, while Iraq, Kazakhstan and Saudi Arabia also held significant shares. Russia supplied roughly half of Türkiye’s crude imports in both January and March.
Despite global volatility, Türkiye did not experience major disruptions in its energy supply, benefiting from its diversified portfolio and extensive pipeline infrastructure, which also positions the country as a transit hub for regional energy flows.
A key component of this system is the southern Ceyhan Terminal, which serves as a major export gateway for crude oil from Iraq and Azerbaijan to global markets.
Crude oil is transported to Türkiye primarily through pipelines rather than maritime imports alone, including the Baku-Tbilisi-Ceyhan (BTC) pipeline and the Iraq-Türkiye Crude Oil Pipeline. These routes reduce reliance on maritime chokepoints and provide alternative corridors for regional producers.
According to data from the state oil and natural gas pipeline operator BOTAŞ, nearly 30.9 million barrels of oil were transported through the BTC pipeline in the first two months of the year.
The pipeline stands out as a critical route that delivers Caspian oil to global markets through a path outside of Russia and Iran.
The Iraq-Türkiye pipeline, which runs from Kirkuk to Ceyhan, resumed operations in March. With a daily capacity of around 1.5 million barrels, initial flows were expected to rise from 170,000 barrels per day toward 250,000 barrels.
On the gas side, Türkiye continues to act as a key energy corridor between producer countries and Europe, importing gas from Russia, Azerbaijan and Iran through long-term pipeline agreements.
Russia supplies gas via the Blue Stream pipeline, while the TurkStream system, with a total capacity of 31.5 billion cubic meters, delivers gas both for domestic consumption and European exports.
Azerbaijan’s gas flows through the Baku-Tbilisi-Erzurum pipeline and the Southern Gas Corridor, which includes TANAP and TAP, linking Caspian production directly to European markets. TANAP carries about 16 billion cubic meters annually, while TAP has an initial capacity of 10 billion cubic meters, expandable to 20 billion.
Türkiye has also strengthened regional interconnections through the Iğdır-Nakhchivan pipeline, which supplies gas to Azerbaijan’s exclave, reducing its dependence on Iranian deliveries. It boasts a capacity to carry 2 million cubic meters a day.
Meanwhile, Iranian gas continues to flow to Türkiye under long-term agreements via the Iran-Türkiye pipeline, which has a technical capacity of around 14 billion cubic meters per year.
Türkiye’s financial markets are heading into a data-heavy June period following the nine-day Eid al-Adha holiday break, with investors closely watching growth figures, inflation readings and a key central bank interest rate decision.
The calendar includes first-quarter gross domestic product (GDP) data, monthly inflation figures and the Monetary Policy Committee (MPC) meeting of the Central Bank of the Republic of Türkiye (CBRT).
Data on Monday will provide a snapshot of economic momentum at the start of 2026 that has been marked by the Iran war, which triggered the closure of the Strait of Hormuz, a key transit route for roughly a fifth of the world’s oil and liquefied natural gas supply.
That caused what is described as the biggest energy crisis ever, which sent global prices higher, pressuring countries that heavily rely on imports.
The Turkish Statistical Institute (TurkStat) is scheduled to release data that is likely to show the economy expanded by about 2.7% year-over-year in the first quarter of the year, according to surveys.
The economy grew 3.6% in 2025, with fourth-quarter growth recorded at 3.4%, extending a growth streak to 22 consecutive quarters.
Inflation, trade, labor data
Inflation, due next Friday, will be one of the most closely watched indicators.
Consumer prices rose 4.18% month-over-month and 32.37% on an annual basis in April, mainly driven by pressures amid the fallout from the Iran war.
The domestic producer index rose 3.17% month-over-month in April for an annual increase of 28.59%.
The central bank has flagged rising inflation risks, saying it’s closely monitoring the fallout of the conflict and potential second-round effects.
The bank earlier this month raised its end-2026 interim inflation target to 24% from 16% and lifted its end-2027 target to 15% from 9%. It set its end-2028 interim target at 9%.
A day earlier, Trade Minister Ömer Bolat is expected to announce the May foreign trade data.
April exports rose 22.3% year-over-year to $25.4 billion despite the challenging global environment.
The figure marked the second-highest monthly export figure in Türkiye’s history.
On the same day, the TurkStat will release April labor market statistics.
The unemployment rate fell to 8.1% in March, down 0.3 percentage points from the previous month, with the number of unemployed declining by 96,000 to 2.87 million.
Industrial production data for April is scheduled for June 10, following a March decline of 0.8% month-over-month and 1.1% year-over-year.
Central bank decision in spotlight
Markets will closely watch the CBRT’s June 11 policy meeting for signals on the monetary stance.
At its previous meeting, the central bank held its benchmark one-week repo rate steady at 37%.
In its last statement, the bank said geopolitical risks and energy price volatility continued to pose uncertainty for inflation.
It said policymakers were closely monitoring these factors for their impact on economic activity and the disinflation outlook.
Fiscal, sectoral data
Other data releases include financial investment returns, budget balance figures and sectoral confidence indicators throughout the month.
On June 12, the CBRT will publish the current account balance figures.
The balance registered a $9.67 billion deficit in March. Excluding energy and gold, the shortfall stood at nearly $3.89 billion.
The Treasury and Finance Ministry will be releasing the May budget figures on June 15.
Data from April showed a deficit of TL 338.7 billion and a year-to-date shortfall of TL 758.8 billion.
Additional data releases will include construction and services output, agricultural producer prices and housing sales.
Residential property sales in April rose 2.6% year-over-year to 126,808 units, according to TurkStat.
Türkiye’s installed electricity capacity rose to 125,410 megawatts (MW) as of the end of April, according to official data, propelled by a rapid growth in variable renewable sources such as solar and wind.
The Energy and Natural Resources Ministry said renewable sources accounted for 62.5% of total installed capacity, equivalent to 78,377 megawatts. The ministry also reported that domestically sourced capacity reached 71.7% of the total electricity mix.
Solar energy has emerged as the fastest-growing segment in Türkiye’s power system, reaching 26,769 megawatts and accounting for 21.3% of total installed capacity.
Wind power increased to 15,075 megawatts, representing 12% of total capacity.
Together, wind and solar reached 41,844 megawatts, or 33.3% of Türkiye’s total installed electricity capacity, meaning roughly one-third of installed capacity now comes from the two renewable sources alone.
Renewables dominate
Hydropower remains the single largest source of installed capacity at 32,338 megawatts, or 25.8%, followed by natural gas at 25,013 megawatts (20%).
Domestic coal accounted for 11,565 megawatts (9.2%), while imported coal stood at 10,456 megawatts (8.3%).
Smaller contributors included biomass at 2,396 megawatts (1.9%) and geothermal energy at 1,798 megawatts (1.4%).
Türkiye aims to raise combined wind and solar installed capacity to 120,000 megawatts by 2035.
To support the expansion, it plans to invest around $30 billion.
Expansion plans
Energy and Natural Resources Minister Alparslan Bayraktar said Türkiye had built a 26,769-megawatt solar capacity from scratch over the past 13 years.
Bayraktar said solar power is expected to soon become the largest single source in the system.
“By the end of this year, solar power will surpass hydropower to reach the top spot in total installed capacity,” he noted.
He added that renewable energy continues to expand its share in line with Türkiye’s long-term climate and energy targets, including its 2035 net-zero emissions ambition.
The minister also pointed to record additions in wind and solar capacity in recent years and said further expansion would be marked by President Recep Tayyip Erdoğan at an upcoming mass ceremony for renewable energy investments scheduled for next week.
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