Jobs in the USA
The Department of Labor released employment numbers this week indicating that the world’s largest economy added about 173 000 jobs. Although the figure is below the 217 000 jobs that had been predicted the unemployment rate has dropped to just 5.1%. Later this month the federal reserve could elect to raise interest rates. Strong employment numbers could encourage the Fed to raise rates despite slowing growth in China. The stock market reacted negatively to the news as a rate rise would make borrowing more expensive and reduce the amount of cash in the market.
The European Central Bank has decreased its growth and inflation projections for 2015 and 2016. Growth in the eurozone will hover at 1.5% in 2015, and 1.7% in 2016, estimates that were reduced from 1.7% and 1.9% respectively. The reduced forecasts are a consequence of the euro crisis and slowing growth in China.
The IMF this week said that slowing growth in China and stock market uncertainty pose a threat to the global economy. Repercussions beyond China’s borders have been greater and more damaging than previously predicted. Stock markets across the world have reacted negatively to China’s uncertainty and the commodities like oil and copper have been battered by lower than expected demand from China.
More exports from the US
The US trade deficit with the rest of the world dropped 7.4% amounting to a total of 41.9bn low according to official figures. Strengthening economic performance has boosted exports from the US (particularly cars) while imports dropped by 1%. Trade balances are a vital determining factor behind exchange rates.
Canadian economy shrinking
It was confirmed by Statistics Canada on Tuesday that Canada’s economy shrank in the first half of the year. Conventionally a recession is defined as two or more successive quarters of negative GDP. Low oil prices, prolonged uncertainty in the EU and China’s recent slowdown are all factors behind Canada’s struggling economy. Just 12 000 jobs were created in August as the unemployment rate increased to 7%. The TSX is also fell 5.7% over August.
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