1. US jobless claims fall, easing market fears
The number of new unemployment benefit claims in the US has fallen more than expected, easing concerns about labour market stability.
Initial claims dropped by 17,000 to a seasonally-adjusted 233,000 for the week ending 3 August, marking the largest decline in about 11 months, and coming in below the 240,000 forecast by Reuters’ economists.
The news follows last week’s worse-than-expected US job data, which saw global stock markets fall. The jump in jobless claims was attributed to factors including people being unable to work because of Hurricane Beryl, Deutsche Bank’s Jim Reid told The Guardian.
Another positive indicator this week is that, despite an increase in total US household debt during Q2 2024, delinquency rates stabilized. This suggests borrowers are in good enough shape to support the economy, according to a new report from the Federal Reserve Bank of New York.
However, recent data suggests the labour market is cooling, with some analysts predicting an increase in job cuts, Bloomberg reports.
Softer job data makes the Fed’s widely anticipated September rate cut more likely, according to Forbes.
2. China’s consumer prices exceed expectation
Consumer prices in China rose 0.5% in July, surpassing the 0.3% estimate. This is mainly due to seasonal factors like adverse weather, which pushed up vegetable and egg prices, and a low base for pork prices, says Bloomberg.
The country’s core Consumer Price Index, excluding food and energy, increased by 0.4%, the smallest gain since January, highlighting ongoing demand weakness.
The rise in consumer prices, driven by higher food costs, contrasts with continued deflation in producer prices and persistent economic challenges, underscoring the need for further policy support.
“Despite a slight pickup, China’s consumer price inflation stayed low in July, showing policymakers still have lots of work to do to help the economy shed the risk of deflation,” a Bloomberg economist said.
3. News in brief: Stories on the economy from around the world
The Bank of Japan is considering further interest rate hikes, a meeting summary showed, following its landmark rate rise on 31 July that contributed to global market turmoil.
Germany’s Federal Statistical Office reported a 3.9% rise in industrial orders for June – the first month-on-month increase this year, according to DW. This growth was driven by a 9.1% rise in domestic orders, while foreign demand increased by 0.4%. However, Q2 figures remained down overall.
The Reserve Bank of Australia, the country’s central bank, has ruled out a rate cut in 2024 because of concerns over inflation.
The European Central Bank could continue to cut interest rates if confidence in the slowing inflation trend strengthens, bolstering Eurozone recovery, according to one of its policymakers.
Revised official data shows that the UK economy grew more strongly than previously thought in 2022, with growth revised up to 4.8% from a previous estimate of 4.3%.
Mexico’s central bank lowered its benchmark interest rate in a divided vote on 8 July, amid growing inflation concerns. Banxico cut the key borrowing rate to 10.75%, contradicting the expectations from an earlier Reuters poll, where a narrow majority of analysts anticipated the rate would hold at 11%.
The Reserve Bank of India (RBI) has kept its key interest rate at 6.50%. This marks the ninth consecutive policy meeting without a change, as the RBI aims to reduce inflation to its 4% target.
4. More on finance and the economy from our blog
With 1.4 billion unbanked people worldwide lacking access to financial resources, fintech has a major role to play in financial inclusion, writes Harrison Lung, Group Chief Strategy Officer, e&. Here, he explains how it can foster economic growth and reduce poverty.
How should we assess competitive advantage? Read this article to learn more about a new methodology for measuring a company’s performance, which includes stakeholder rents, and allows CEOs to demonstrate that their company may share more value with other stakeholders than competitors.
Financial advice is evolving with technology and demographic changes, according to a new report from the World Economic Forum and Accenture. Read more here about the industry’s increasing focus on personalized advice for lifelong financial well-being and literacy, with social media influencers filling gaps left by traditional financial services. This is leading to greater inclusion of traditionally underserved communities.