Summary
United States: Hiring Slows to a Crawl
- The U.S. economy added jobs at a remarkably slow clip in August, telling us many are already feeling the negative effects of a moderating jobs market and providing further support that the FOMC will elect to reduce rates at its upcoming meeting on Sept. 17. While underlying activity continued through August, tariff-induced cost pressure is materializing, challenging purchasing managers across manufacturing and services industries.
- Next week: NFIB Small Business Optimism (Mon.), CPI (Thu.)
International: Foreign Economies Show Some Resilience, with Inflation Trends Generally Benign
- This week’s global growth data were encouraging on balance, as China’s August PMIs improved, Australia’s GDP showed increased momentum and Brazil’s Q2 GDP surprised to the upside. An unexpected fall in Canada’s August employment was the key exception to the favorable growth trends. Meanwhile, inflation figures were reasonably benign overall from the Eurozone, Switzerland and Sweden, with the latter likely, in our view, to prompt Sweden’s central bank to lower its policy rate by 25 bps later this month.
- Next week: Mexico CPI (Tue.), European Central Bank Rate Decision (Thu.), U.K. Monthly GDP (Fri.)
Credit Market Insights: Consumer Caution
- The Beige Book, which is published eight times a year, provides a qualitative review of economic conditions and activity from the 12 Federal Reserve districts. In the most recent report covering mid-July to August, a majority of the districts reported little to no change in economic activity from the prior period. While the economy remains resilient, all districts report that consumers are feeling the squeeze.
Topic of the Week: The Global Economic Impact of a U.S.-China Bipolar World
- With the U.S. and China on opposite sides of the economic and geopolitical spectrum, countries around the world will have to pick a side: Align with the U.S. or align with China. This fragmentation, which is driving a second era of deglobalization, could cause downward pressure on global growth.
