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Edward Bell - Senior Director, Market Economics
Published Date: 13 September 2023
Labour market data from the UK showed some cooling in demand for workers with the three-month change in employment falling to -207k for the period ending July, down from -66k a month earlier. The number of job vacancies also fell in August to 0.989m, its lowest level since June 2021. The labour pool also edged lower, keeping the unemployment rate relatively contained at 4.3%. However, while the headline labour numbers suggest a cooling off in the labour market, wage growth remained elevated. Average weekly earnings ex-bonuses accelerated to 8.5% y/y from 8.2% in the prior three-month period which will likely firm up the argument for the Bank of England to carry out an additional rate hike when the MPC meets later this month.
Germany’s ZEW survey of investor expectations improved in September to -11.4 from -12.3, better than market expectations. The assessment of current conditions remained very negative at -79.4, weakening month/month. Recent data from Germany’s economy has been highly disappointing with industrial production and factor orders underperforming market expectations while inflation remains elevated. The European Commission expects that Germany’s economy will contract by 0.4% in 2023 before improving to 1.8% next year, the slowest among its EU peers.
Inflation in India slowed much more than markets had expecting, rising by 6.8% y/y in August and down from 7.4% a month earlier. A deceleration in food price inflation looks to have been behind the slower price growth with food prices rising by 9.9% in August compared with almost a 12% gain in July. Food prices could flare up again as monsoon rains have been lower than normal as a result of the El Nino weather occurrence. That could lead to smaller staple crops and keep inflation above the RBI’s target band.
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