U.S.:
U.S. Jobless Claims Decline as Harvey Impact Fades in Texas
Applications for unemployment benefits in the U.S. unexpectedly declined last week as the Hurricane Harvey-related surge in Texas filings continued to reverse, Labor Department figures showed Thursday.
HIGHLIGHTS OF JOBLESS CLAIMS (WEEK ENDED SEPT. 16)
- Jobless claims declined by 23k to 259k (est. 302k)
- Continuing claims increased by 44k to 1.98m in week ended Sept. 9 (data reported with one-week lag)
- Four-week average of initial claims, a less-volatile measure than the weekly figure, rose to 268,750 from 262,750 in prior week
Key Takeaways
Applications for unemployment insurance last week were estimated for South Carolina and the Virgin Islands. While Irma smashed into Florida’s west coast on Sept. 10, its effect on the job market in the Sunshine State was modest — up an unadjusted 5,133 from the previous week — compared with Harvey’s impact on Texas. Claims in Texas declined by an unadjusted 23,549 last week. Swings in the figures may continue for several weeks, following the pattern seen after major storms such as Sandy in the Northeast in 2012. Hurricane Maria made landfall in Puerto Rico on Wednesday. The volatility in jobless applications will probably prove temporary as those in storm-affected areas return to work. The Atlantic hurricane season has nonetheless upended a trend that saw dismissals near the lowest level in more than four decades. Subdued filings were a sign employers were averse to firing people amid a shortage of qualified workers.
Asia:
S&P Cuts China’s Credit Rating, Citing Risk From Debt Growth
S&P Global Ratings cut China’s sovereign credit rating for the first time since 1999, citing the risks from soaring debt, and revised its outlook to stable from negative. The sovereign rating was cut by one step, to A+ from AA-, the company said in a statement late Thursday. The analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. would be unlikely to avoid default should the nation default on its sovereign debt. “China’s prolonged period of strong credit growth has increased its economic and financial risks,” S&P said. “Although this credit growth had contributed to strong real gross domestic product growth and higher asset prices, we believe it has also diminished financial stability to some extent.” The downgrade, the second by a major ratings company this year, represents ebbing international confidence that China can strike a balance between maintaining economic growth and cleaning up its financial sector. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
Europe:
Corporate debt may take bigger slice of QE pie as ECB tapers
The ECB may consider scaling back purchases of corporate bonds more slowly than those of government debt when it starts tapering its massive stimulus scheme, partly because the bank is nearing self-imposed limits on what it can buy. The European Central Bank has signalled it is ready to pull back from its 2.3 trillion euro ($2.8 trillion) extraordinary stimulus beginning in January 2018 and will start to work out the details at its monthly meeting in October. Many economists expect monthly asset purchases to fall to 40 billion euros ($48 billion) from 60 billion now. But even under this scenario, the ECB is expected to run close to the ceiling on debt it can hold in some countries, including Germany, in the first half of next year. The corporate bond buying program remains well under its limits by contrast. Some policymakers argue the program, which has exceeded expectations in both volumes and effectiveness, gets cash to the sectors in greatest need and could be ramped up.