U.S.
U.S. job growth slows in August; wage growth retreats
U.S. job growth slowed more than expected in August after two straight months of strong gains, but the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio. Anemic wage gain could, however, make the U.S. central bank cautious about raising interest rates gain this year. The Labour Department said on Friday that nonfarm payrolls increased by 156,000 last month after rising 189,000 in July. Average hourly earnings rose three cents or 0.1 percent after advancing 0.3 percent in July, keeping the year-on-year gain in wages at 2.5 percent for a fifth consecutive month. August’s moderation in employment growth, which pushed payroll gains below the 176,000 monthly average for this year likely reflects a seasonal quirk as well as a dearth of qualified workers. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength. The department said Hurricane Harvey, which devastated parts of Texas, has no “discernable” effect on payrolls as the disaster struck after the survey period for the August employment report. Economists said the storm could hurt September payrolls if the disruption from the flooding lingers.
Europe:
U.K. Manufacturing Unexpectedly Accelerates to Four-Month High
U.K. manufacturing expanded at the strongest pace in four months in August, lifted by both export orders and domestic demand. A measure of factory output rose to 56.9 from a revised 55.3 in July, according to IHS Markit’s Purchasing Managers’ Index. That exceeds the 55 forecast by economists in a Bloomberg survey and is well above the 50 level dividing expansion from contraction. Companies reported the strongest intake of new orders since May, bolstered by the weaker pound. The currency’s depreciation also contributed to purchase-price gains accelerating for the first time in seven months, though at a slower pace than seen at the start of the year. Last year’s referendum to leave the European Union sparked a plunge in the U.K. currency, making exports more competitive as well as driving up the cost of imported goods. While overall economic growth slowed in the first half as consumer spending stalled, some Bank of England policy makers are calling for an interest-rate increase to keep a lid on above-target inflation.
Asia:
China’s yuan hits fresh 14-month high after best month
China’s yuan strengthened to a fresh 14-month high against the U.S. dollar on Friday after its best month on record, buoyed by strong guidance while the dollar remained under pressure. The Chinese currency extended gains from its late domestic close on Thursday to end the month 2.1 percent stronger than the dollar – its best month since 1994 – when China unified official and market exchange rates and price data was available. Prior to the market open on Friday, the People’s Bank of China raised its official yuan midpoint to 6.5909 per dollar, past the key psychologically important 6.6 level for the first time since June 2016. The midpoint, the strongest level since June 24, 2016, was 101 pips or 0.15 percent firmer than the previous fix of 6.6010 set on Thursday. In the spot market, the yuan opened at 6.5860 per dollar and rose to a high of 6.5781, also the strongest since June last year. The yuan was changing hands at 6.5806 by midday, 83 pips firmer than the previous late session close and 0.16 percent stronger than the midpoint.