US private sector employment soared in September, as employers added 230,000 jobs after adding an upwardly revised 168,000 jobs in August, according to Automatic Data Processing Inc. This is the highest hiring rate since February and is a much bigger than expected increase in private sector jobs than expected. Economists had predicted that employment would increase by about 185,000 jobs.

The report reflects strong job growth in both the goods-producing and service-providing sectors and cements hopes for another interest rate hike by the Federal Reserve in December. US bond yields soared on the news.

In the meantime, eurozone retail sales unexpectedly fell for the second consecutive month in August, implying that economic growth in the currency bloc has yet to bounce back significantly from a slowdown in the first half of the year. Sales decreased by 0.2 per cent month-on-month, following a drop of 0.6 per cent in July. Economists had forecast a 0.2 per cent increase for August. In 2017, strong exports underpinned eurozone economic growth to a decade-high pace, but weakening overseas sales have been behind this year’s loss of momentum.

Finally, the UK services sector Purchasing Managers’ Index (PMI), published by IHS Markit, declined to 53.9 in September from 54.3 in August. However, it remained above the 50 level, meaning that the sector is still expanding. The report signals that higher levels of business activity were attributed to a solid growth in new work and competitive pricing strategies. But it also notes that Brexit concerns and heightened economic uncertainty are exerting significant constraints on growth. The report shows that cost burdens rose sharply in September, driven by higher wage bills and rising fuel prices. On the other hand, prices charged by service providers increased at the slowest rate in just over one year.

This report was compiled by Bank of Valletta for general information purposes only.

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