Charting the Global Economy: UK payrolls slide, inflation rises

The UK labor market continued to weaken last month and inflationary pressures mounted on higher energy costs.

In the euro area, private-sector business activity expanded modestly even as a gauge of the French economy sank deeper into contraction territory. Economic growth in Japan disappointed as capital spending declined.

Meanwhile, US public debt outstanding topped $40 trillion for the first time, while a lack of urgency from lawmakers to tackle a yawning fiscal deficit helps explain at least some of the recent increase in Treasury yields.


Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:

Europe

UK employers shed more workers in July and job vacancies hit a fresh five-year low as demand for staff remained tepid in the face of heightened uncertainty from events at home and abroad. Job vacancies dropped further to 707,000 in the May to July period, the lowest since 2021.

UK inflation accelerated in July after energy bills surged, ending a short period of respite for hard-pressed British households. Consumer prices rose 2.9% from a year earlier, up from a 15-month low of 2.6% in June. The jump largely reflects a 13% rise in the price cap that sets household energy bills. Services inflation, a gauge of domestic pressures watched by the Bank of England, cooled to 3.4% from 3.6% with airfares driving the decline.

Private-sector activity in the euro area unexpectedly improved slightly in August, thanks to the strongest manufacturing growth in more than four years. Still, the region’s two largest economies both fell short of estimates. While Germany stayed well above the growth threshold, France sank deeper into contraction.

Sweden’s central bank held borrowing costs steady for a twelfth month and repeated it’s ready to tighten policy this year if the Iran war triggers a pickup in inflation. The Riksbank kept its key interest rate on Thursday at 1.75%, the lowest level in the European Union.

US

Total US public debt surpassed $40 trillion for the first time, and has now surged by a third in less than five years, as US lawmakers continue to shrug off calls to contend with historically wide fiscal deficits. The news on Wednesday came hours after Treasury Secretary Scott Bessent made a fresh attempt to rein in long-term borrowing costs from multi-year highs — a notable component of the growth in debt. The Treasury said it’s ramping up a buyback program for longer-dated securities, in an announcement that sent yields lower.

New home construction in the US declined in July as single-family starts slid to the slowest pace since 2022. The slide in starts points to a housing market that has struggled to gain momentum against a backdrop of higher mortgage rates and elevated home prices.

Asia

Japan’s economic growth unexpectedly slowed in the three months through June, a result that may complicate the Bank of Japan’s policy communications as it weighs the timing of its next rate increase.

Japan’s budget requests for next year are set to hit a record that may overstate the pace of fiscal expansion, as Prime Minister Sanae Takaichi seeks to pack more spending into the initial plan rather than leaning on supplementary budgets later in the year.

China is doubling down on a targeted program that’s tapping fiscal resources to drive borrowing by businesses and consumers, with new measures set for launch in the rest of the year as economic growth veers below the government’s annual target.

Emerging Markets

President Javier Milei lowered inflation and poverty in Argentina, while eliminating its budget deficit. But the nation’s labor market is still mired in the crisis he was elected to confront. For a second straight year, the South American economy is growing yet employment is falling in the formal sector, where workers have a salary, benefits and healthcare.

Brazil’s economic activity fell more than expected in June, adding to signs that months of ultra-tight monetary policy is cooling demand and also boosting the case for another interest-rate cut in September.

World

Longer-maturity bonds are at the epicenter of investor angst about everything from inflation to the debt-laden artificial-intelligence boom — and governments are paying the price. Sovereign borrowing rates are surging around the world. Yields on 30-year US Treasuries rose to the highest since 2007 this week, while French borrowing costs hit the loftiest since 2008 and their German peers traded at 2011 levels.

In addition to Sweden, Indonesia, Uruguay and Egypt kept interest rates unchanged this week, while Iceland raised them for the third time this year.