Date: August 27, 2018
United States:
Jobless Claims Fall for Third Week in Tight U.S. Labor Market
U.S. filings for unemployment benefits fell for a third week and remain near the lowest in almost five decades, indicating a tight job market, Labor Department figures showed Thursday. While applications can be volatile from week to week, the trend reinforces signs that businesses are holding on to existing staff and adding new workers to help meet demand. Economists will likely pay extra attention to Thursday’s figures because they encompass the 12th of the month, the reference period for the Labor Department surveys that produce the monthly employment figures. Those data show the unemployment rate is near the lowest since 1969 and payrolls are climbing at a solid pace even in the 10th year of the economic expansion. The report for August is due Sept. 7.
Europe:
U.K. Services Firms Feel the Squeeze as Retailer Profits Slide
The U.K.’s dominant services industries saw profits slide to the lowest level since 2013 in the first quarter as beleaguered retailers struggled, according to the Office for National Statistics. Services firms, which account for almost 80 percent of the economy, experienced a slump in their net rate of return in the first three months of the year. Calculated as the economic gain shown as a percentage of the capital used in production, the drop coincides with a tough time for shops. High street firms including Toys ‘R’ Us U.K., Maplin Electronics and Poundland fell into administration earlier this year. While Britain’s manufacturers also had a decline in the rate of returns, they elevated after a six month climb. Exports have been boosted by the depreciation of the pound since the Brexit vote even amid concern about global trade tension and uncertainty surrounding the nation’s future trading relationship with the European Union, the ONS said, citing IHS Markit data. The U.K. economy slowed at the start of the year, posting quarterly growth of just 0.2 percent as snow blighted activity. A pickup in the second quarter has proved mixed, with services at a standstill in June and exports dropping. The net rate of return on capital employed in the first quarter stood at 17.2 percent for the services sector, down from a revised 18.4 percent in the previous three months, and at 15 percent for the manufacturers, the ONS said.
Asia:
$10 Billion of India Power Debt Near Resolution, State Bank Says
Delinquent loans worth as much as 700 billion rupees ($10 billion) in India’s power sector are in the process of being resolved, according to the nation’s largest bank, helping lenders avoid dragging seven accounts to bankruptcy court under new norms laid out by the regulator. State Bank of India identified 34 stressed accounts in the power sector, with dues of about 1.8 trillion rupees, said Arijit Basu, a managing director at the lender. Of these, 14 have already been referred to insolvency court and for eight “the difficulties have been resolved,” he said. Twelve more have the potential to be recast and in seven of these cases — where State Bank has an exposure of 170 billion rupees — talks are in an advanced stage, he said. State Bank of India “has been referring a large number of cases” to the bankruptcy courts in the past six months, Basu said. In the seven accounts being worked on, bidders have been identified, State Bank approvals are in place and other banks have been consulted, he said. “They have given their preliminary consent but we are awaiting the final outcome.” Indian lenders have been working to recognize and restructure non-performing power assets since the central bank in February laid out a new mechanism for dealing with stressed loans. Asia’s third-largest economy is trying to clean up more than $210 billion in soured assets to boost lending and investment. About 40 of 70 companies put at risk from the central bank’s February change were in the power sector, Credit Suisse Group AG said in June.