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US unemployment claims near 49 year low; German private investment faces a slow down

Oct 5 • Morning Roll Call • 124 Views • No Comments

In a rather quiet day regarding the economic events, investors were mainly monitoring the unemployment claims coming from the US. The reading came positive, with the initial unemployment claims dropping by 8k, coming at a seasonally adjusted 207k for September, marking a near to 49-year low. The labor market is currently viewed as being almost at full employment, which is improving the wage growth. This could assist is supporting the US consumer spending as the $1.5 trillion tax cut stimulus of Trump administration diminishes.

The economist have forecasted that claims would come at 214k. It is important to mention that the claims data does not have any bearing on the employment report for September that we are expecting today. According to Reuters survey conducted, the economists believe that the nonfarm payrolls most probably increased by 185k in the previous month, after rising 201k in August, while the unemployment rate is forecasted to drop to 3.8%.

From Europe, on Thursday we have seen the BdB banking association lowering the growth forecast for 2019 for Germany based on trade conflicts and weak emerging market. A substantial slowdown in private investment has been evident in the German economy and the banking association is now expecting the Europe’s largest economy to grow by 1.8% instead of the previously expected 1.9%. As per Christian Ossig, BdB Managing Director, due to the escalation of trade conflict and the difficulties that some emerging countries are currently facing, the world economy is looking at a global threat of sliding toward dangerous territory, nevertheless the assumption is that the risks will remain manageable. In addition, he has added that the German economy would remain stable, even though the growth rates are lower than the 2.2% in 2018.

According to Reuters, as the exports have weaken, the German economy has been depending on private consumption and government spending, while the services sector acted as cushion against slowing the manufacturing output. In addition to the BdB banking association lowering the growth forecast, the German government had also lowered the forecast for 2018 to approximately 2.0%, as it has been evident that the companies have not been investing enough so as to achieve higher growth rates due to the lack of skilled workers to increase their output.

 

ECONOMIC CALENDAR EVENTS FOR OCTOBER 5th 

JPY Average Cash Earnings y/y

AUD Retail Sales m/m

EUR German Factory Orders m/m

EUR German PPI m/m

CAD Employment Change

CAD Unemployment Rate

CAD Trade Balance

USD Average Hourly Earnings m/m

USD Non-Farm Employment Change

USD Unemployment Rate

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