Charting the global economy: US Job Growth exceeds projections

(Bloomberg) --The US labour market gathered momentum last month with hiring gains dispersed throughout most sectors.

The report indicates the job market is powering through uncertainty from the Iran war and pressure from inflation. Federal Reserve officials will likely read it as bolstering the argument for raising interest rates, though next week’s consumer price data will prove key to the central bank’s decision later this month.

Meanwhile, Asian economies are holding up despite the conflict in the oil-rich Middle East, while inflation quickens in Europe.


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

US

US job growth in manufacturing, construction and other goods producers is outpacing that of the larger services economy, likely reflecting the cascade of investment dollars into the artificial intelligence buildout. The figures help explain an August jobs report that exceeded expectations, with payrolls rising the most in five months and the jobless rate holding at 4.1%.

The service sector expanded in August by the most in six months, bolstered by strong demand and a pickup in business activity. New orders growth accelerated to the fastest pace since early 2023 while a measure of business activity was the strongest since 2022, according to the Institute for Supply Management.

Europe

Euro-area inflation quickened to the highest level in almost three years, cementing the case for an interest-rate hike by the European Central Bank next week. Consumer prices rose 3.3% from a year ago in August, the highest since September 2023.

UK Prime Minister Andy Burnham was confronted by the harsh reality of Britain’s weak public finances on his return to parliament as the global selloff in government bonds left him facing a £12 billion ($16.2 billion) problem. Gilts yields surged to the highest levels in decades this week, adding to the government’s interest expenses.

Swiss inflation accelerated far more than analysts anticipated to the fastest pace since September 2024, suggesting a weaker franc is feeding through to the economy. The pickup in inflation will be welcomed by policymakers in a country where consumer-price growth has often been feeble and even turned briefly negative last year.

Asia

Asia’s economies from India to Malaysia and Australia defied all worst-case scenarios to post solid growth last quarter, as governments moved quickly to secure energy supplies and tapped relatively healthy balance sheets to cushion households. A global boom in artificial intelligence also proved to be timely.

India’s economy expanded faster than expected in the April-June quarter, easing fears that the Iran war would weaken growth and underscoring the resilience of Asia’s third-largest economy. Manufacturing and financial services helped drive growth.

China’s factory activity improved more than forecast while staying in contraction in August, as a worsening slump in construction and the poor performance of the services industry highlight the risks ahead for the economy at home.

Japan’s Defense Ministry is seeking record spending of around $56 billion in the fiscal year starting in April, and the final bill could be considerably larger as Prime Minister Sanae Takaichi prepares to launch a new military buildup plan later this year.

Emerging Markets

Venezuelan bonds have jumped since the Trump administration moved to take control of a huge swath of the country’s oil reserves, with investors factoring in the prospect of higher crude production as they await a debt restructuring that could top $200 billion.

South African business sentiment dropped to a two-year low in the third quarter, reflecting elevated uncertainty as conflict in the Middle East rages on and domestic demand falters.

World

The New Zealand central bank raised interest rates for a second straight meeting. Officials in Canada, Malaysia and the Dominican Republic left interest rates unchanged. Israel lowered rates for a third straight time, while Kazakhstan also reduced them.