Europe:
U.K. Loses Most Jobs Since 2015 as Labor Market Shows Strain
Britain shed jobs at the fastest pace in almost 2 1/2 years between August and October in a sign that the labor market is slowing. The number of people in work fell by 56,000, the most since the period through May 2015, the Office for National Statistics said on Wednesday. The decline exceeded the median forecast of economists. Pay growth accelerated, though it still lagged well behind inflation, meaning a fall in real terms that’s forecast to continue into 2018. The number of unemployed also declined in the period, leaving the jobless rate at a 42-year low of 4.3 percent. That’s because people left the labor force. A falling participation rate may be sign of weaker jobs demand, according to Bloomberg Economics. In a further sign of weakness, figures for October alone show the unemployment rate rising to 4.4 percent from 4.2 percent in September. Between August and October, there was an increase of 115,000 in the number of people classified as inactive. For Bank of England officials, the policy debate centers on the amount of slack remaining in the labor market, and some say there’s only a limited margin now. The bank raised its key interest rate for the first time in more than a decade last month, saying supply constraints could fuel inflation, but questions remain about how the labor market will fare in the face of Brexit uncertainty and the prospects of slowing economic growth. Markets expect no further rate increases until late 2018.
Asia:
China’s property price rally to stall in 2018 as small city boom wanes
China’s home price growth is likely to stall in 2018 as a surprise boom in smaller cities is expected to lose steam while measures to tighten credit and other property curbs continue to constrain the market, a Reuters poll showed on Wednesday. China has imposed an array of measures to crack down on property speculation since early 2016, but prices in October still crept up 5.4 percent from a year earlier, largely driven by a buying frenzy that has spread from the big metropolises to the country’s less-regulated smaller centers. A softening but still resilient property market in the year ahead, underpinned by steady prices, would be welcome news for China’s policymakers, who are keen to keep the market – still a vital source of growth for the economy – stable, as they ramp up efforts to tackle an alarming build-up in debt. Average nationwide new home prices are expected to flatline by end-2018 after rising a median 2 percent in the first six months from the same period a year earlier, according to a Reuters poll which surveyed 18 property analysts and economists from Dec. 1 to 12. Prices were forecast to increase 6.8 percent in 2017 and 3.5 percent in the first half of 2018 in the last Reuters poll conducted in August.
U.S.:
With rate hike in the bag, Fed may hint at Trump effect on economy
The Federal Reserve is widely expected to raise interest rates on Wednesday, but, more significantly, it may give its strongest hint yet on how the Trump administration’s tax overhaul could affect the U.S. economy. Investors will pay close attention to how the central bank aims to balance a stimulus-fueled economic boost with the ongoing weak inflation and tepid wage growth that has curbed some policymakers’ appetite for higher rates. The Fed’s policy statement and its latest economic projections are due to be released at 2 p.m. EST (1900 GMT) following the end of a two-day meeting. Fed Chair Janet Yellen is scheduled to hold a press conference half an hour later. It will be her last before her four-year term ends early next year. Her successor, Fed Governor Jerome Powell, said at his recent confirmation hearing before a Senate panel that he had “no sense of an overheating economy,” an early signal he may not want to quicken the pace of rate increases until there is evidence of an acceleration in wage growth and inflation. The Fed has increased rates twice in 2017 and is currently expected to push through three more hikes next year. Much of Yellen’s tenure as Fed chief has been defined by a desire to leave loose monetary policy in place as long as possible in the hope that unemployment continued to decline, workers rejoined the labor force, and wages rose.