Tag: economy

Economic and Market Highlights

The Economy

• The recent jobs report brought a mix of news. Job growth accelerated to 142,000 positions, while the unemployment rate dipped to 4.2% from July’s 4.3%. However, downward revisions to job gains in previous months suggest softer trends. This report played a key role in the Federal Reserve’s decision to cut short-term interest rates by 50-basis-points (0.50%) in September.
• Manufacturing continues to struggle, with the ISM Manufacturing Index rising slightly to 47.2 in August from 46.8 in July, but still indicating contraction (below 50). This marks 21 of the last 22 months of manufacturing decline, one of the longest downturns in history.
• Inflation pressures appear stable. July’s Personal Consumption Expenditures (PCE) price index rose 0.2%, advancing 2.5% year-on-year, while Core PCE inflation also gained 0.2%, reaching 2.6% year-on-year. Consumer spending increased 0.5% in July, while personal income climbed 0.3%. However, the personal savings rate has fallen to 2.9%.
• Internationally, global growth remains positive. The U.S. economy outperformed expectations with 2.8% growth in Q2, while the Eurozone saw a modest 0.3% quarterly growth. Real GDP in the UK rose by 0.9% for the three months to May 2024, reflecting solid service sector output.
• Global economic conditions have maintained a cautious sentiment, but U.S. equities rebounded after recent dips due to monetary stimulus created by lower interest rates. Meanwhile, U.S. Treasury yields remain steady, with the 2-year and 10-year yields little changed after this week’s interest rate cut, respectively.
• Globally, G7 economic data has been sparse, but indicators like the Conference Board’s employment trend index for August and the Atlanta Fed’s GDP now model projecting 2.5% GDP growth for Q3 2024 have alleviated some recession concerns.
• China’s exports in August surged unexpectedly, hitting a 17-month high with 8.7% YoY growth, defying predictions of a slowdown. Imports, however, remain sluggish due to weak domestic demand, and iron ore prices have dipped below $90/ton, reflecting China’s economic slowdown.