Charging the Global Economy: The Power of America’s Labor Market Ahead

Article content

(Bloomberg) – Strong September jobs growth in the US reduced the likelihood of another big cut in interest rates from the Federal Reserve.

Inflation in the euro area has fallen back below the European Central Bank’s target rate and a flurry of Iranian missiles at Israel is increasing the country’s risks. Crude oil prices rose this week on fears that Israel’s response would include targeting energy infrastructure.

Article content

Here are some charts from Bloomberg this week on the latest developments in the global economy, markets and world politics:

US

U.S. job growth last month beat all estimates, the unemployment rate fell sharply and wage growth accelerated, allaying concerns that the labor market is weakening. Payrolls increased by 254,000 in September and earnings for the past two months were revised higher. The unemployment rate fell to 4.1% and growth in average hourly earnings was the strongest since May.

As the historic floods wrought by Hurricane Helene recede across the US Southeast, the region is facing a humanitarian, economic and environmental crisis of staggering scope, with consequences that could last for years. Parts of the region are still struggling to reopen roads and reconnect electricity.

Service providers grew in September at the fastest pace since February 2023, driven by a surge in orders and strong business activity. The survey suggests that the economy was on a strong footing at the end of the third quarter.

In Europe

Eurozone inflation fell below the European Central Bank’s 2% target for the first time since 2021 – supporting investors’ bets that interest rates could be cut sooner than previously expected. Concerns about the economy, on the other hand, are on the rise – especially down to the growing levels of the German manufacturing industry.

Article content

Article content

France is planning nearly 60 billion euros ($66.4 billion) in spending cuts and tax hikes next year as Prime Minister Michel Barnier seeks to pare a widening budget deficit and bolster investor confidence in the country. President Emmanuel Macron also approved a temporary tax on the country’s biggest companies, underpinning his new government strategy as it reflects a shift in his pro-business stance.

In Asia

China’s factory employment continued to contract while the services sector contracted in September, as policymakers prepared to revive an economy facing challenges across the board.

South Korean semiconductor stocks fell at the fastest clip since 2009 last month in a sign of continued demand for high-performance memory chips used in artificial intelligence development.

Japan’s factory output fell in August, adding to signs that the country’s economic recovery may lose momentum in the third quarter, a worrying sign for the country’s new prime minister.

Emerging Markets

Benjamin Netanyahu has vowed to retaliate against Iran after it fired about 200 missiles at Israel, sparking an escalation of hostilities that world powers fear could escalate into a Middle East war. Iran said its latest move was in retaliation for Israel’s devastating attacks on Lebanon-based Hezbollah, Tehran’s most important proxy group.

Article content

The world

Crude oil posted its biggest weekly increase in more than a year on fears that Israel may decide to strike Iran’s oil facilities in retaliation for the missile attack.

With the last traces of global inflation fading, the shift to lower borrowing costs is set to maintain momentum as the economy heads into a new year full of unknowns. Now that the Fed has joined rich-world peers in cutting interest rates, persistent concerns about consumer prices are increasingly poised to give way to concerns about global growth, according to Bloomberg Economics.

Droughts, rains and fires from Asia to the Americas are fueling concerns about crop yields, driving up food prices that can eventually flow into higher grocery bills. The Bloomberg Agriculture Spot Index – which includes nine major commodities – has had a monthly gain of more than 7%, the most since Russia invaded Ukraine in early 2022.

Colombia cut interest rates to two-year lows, while the Dominican Republic, Mozambique and Iceland also saw cuts. Poland, Romania and Tanzania left prices unchanged.

—Courtesy of Gerson Freitas Jr., William Horobin, Ocean Hou, Charlotte Hughes-Morgan, Sam Kim, John Liu, Michael Mackenzie, Henry Meyer, Ari Natter, Marissa Newman, Yoshiaki Nohara, Ilena Peng, Augusta Saraiva, Josh Saul, Zoe Schneeweiss , Bernadette Toh, Alexander Weber and Keira Wright.

Article content