US jobless edges up to 9.6%

In the US, the jobless rate edged up to 9.6% in August from July’s 9.5%. Overall employment in August dropped by 54,000 – about half the amount expected by economists. Private employment, considered a better gauge of labour market health, rose by 67,000 after a revised gain of 107,000 in July.

The minutes of the Federal Open Market Committee meeting indicated that the Federal Reserve is poised to further ease monetary policy through an expansion in its balance sheet should growth and employment fail to pick up.

On a positive note, US consumer spending in July rose at the fastest pace in four months, supported by a small gain in incomes. The Institute for Supply Management manufacturing index rose more than expected to 56.3 last month, from 55.5 in July.

In the euro area, the European Central Bank left rates at a record low of 1% for the 16th month in a row. A member of the governing council said that while Europe is facing a modest economic growth outlook, it is not at risk of a double dip back into recession.

Inflation pressures as measured by the Consumer Price Index slowed in August to 1.6% year-on-year, down from 1.7% in July. The unemployment rate was unchanged at 10% of the workforce for the fifth consecutive month.

In the manufacturing sector, the Purchasing Managers Index (PMI) for August dropped to 55.1, from 56.7 in July. However, this was revised up from an earlier flash estimate of 55, and recorded the 11th month of expansion.

Meanwhile, the services sector index was revised up to 55.9, from the previous estimate of 55.6. Retail sales rose by a less-than-expected 0.1% in July, mainly due to higher sales of food, drinks and tobacco, after rising 0.2% in June.

In the UK, the manufacturing sector PMI fell to 54.3 in August – the lowest level in nine months – from a downwardly revised 56.9 in July. This was much lower than the expected level of 57, and was mainly due to the weakest expansion in new orders for over a year.

In construction, output rose 8.5% between April and June, its best rate since 1982. But according to the forward-looking PMI, the growth is likely to slow as the index fell to 52.1 in August from 54.1 level registered in July. Although this reading was the sixth consecutive reading above the 50-level, it was much lower than the 53.2 level forecast by various economists.

The services sector PMI fell more than expected to 51.3 in August, the lowest level since April 2009, from 53.1 in July.

This article has been prepared by Bank of Valletta plc for your general information only.