Amazon’s advertising business continues to thrive, growing 19% YoY in Q4 2022 to $11.6 billion in sales, despite a slowdown in the digital advertising market that has affected other companies like Alphabet, Facebook, and Snap. While Amazon’s advertising unit is still a small portion of the company’s overall revenue, it is seen as a fast-growing area that could play a significant role in the digital advertising market in the future. In contrast, Facebook’s sales dropped 4% YoY in Q4 2022, and Alphabet’s advertising revenue declined from the previous year. The digital advertising industry has been impacted by the economy, competition from TikTok, and privacy concerns. A recent survey by Insider Intelligence revealed that Amazon now holds 7.3% of the online ad market, while Google and Facebook/Instagram hold 28.8%, 11.4%, and 9.1% respectively.
January NFP Massively Outperforms
The US jobs report for January showed a significant increase in nonfarm payrolls, with 517,000 jobs added, far surpassing the expected 187,000. The unemployment rate also fell to 3.4%, the lowest it has been since 1969. The strong jobs report, however, caused concerns about future interest rates and resulted in a decline in US stocks on Friday. The S&P 500 declined 1.04%, the Nasdaq Composite fell 1.59%, and the Dow Jones Industrial Average slipped 0.38%. The question remains as to whether the Federal Reserve will prioritize this robust labor market data, which might lead to persistently high inflation, or focus on other economic data like inflation, consumption, and manufacturing which have fallen. Fed Chair Jerome Powell has indicated he’s focusing on the labor market, which he described as “out of balance.”
Xi Urges Spending to Speed Up Economic Growth
China’s banks are offering cheap consumer loans as President Xi Jinping urges people to spend more. The move is aimed at boosting consumption and supporting the economy as it recovers from the pandemic. The central bank has also reduced the reserve requirement ratio for some banks, freeing up more funds for lending. This is part of the government’s efforts to increase credit growth and support small and micro enterprises. Bank of China and Agricultural Bank of China, two of the largest state-owned banks, have already lowered interest rates for consumer loans and offered flexible repayment terms. The consumer loan market in China has seen rapid growth in recent years and is expected to continue to grow in the coming months. However, experts warn that these cheap loans could also lead to an increase in debt levels, which could pose a risk to the country’s financial stability. The government is walking a tightrope, trying to encourage spending while avoiding the accumulation of debt.