10 Things You Need To Know: September 7, 2022
Key data releases this week include: ISM Services (Tue), Beige Book (Wed), consumer credit (Thu), and household change in net worth (Fri).
Haver
September 2, 2022
Nonfarm payrolls increased 315,000 (3.8% y/y) during August following a 526,000 July rise. Payrolls rose 293,000 in June, revised from 398,000. Expectations had been for a 300,000 rise in the Action Economics Survey. The unemployment rate rose to 3.7% in August from 3.5% in July.
Bloomberg
September 6, 2022
The US service sector expanded in August at the fastest pace in four months amid a pickup in business activity and new orders, while price pressures continued to ease. The Institute for Supply Management’s services index edged up to 56.9 from 56.7, data showed Tuesday. The median forecast called for the gauge to soften to 55.3.
Haver
August 30, 2022
The Conference Board U.S. Consumer Confidence Index rebounded 8.3% (-10.4% y/y) to 103.2 in August after a 3.2% decline to 95.3 in July (-2.7%; 95.7 initially). The August reading registered the first monthly gain since April’s 0.9% and matched May’s index level, but it was still below 115.2 last August. A reading of 97.4 had been expected in the Action Economics Forecast Survey.
Financial Times
September 5, 2022
The European Central Bank is turning away from concerns about how rate hikes could harm the region’s economy in favor of focusing on inflation to guide monetary policy. The newly-hawkish views being expressed by rate setters have convinced many economists that the ECB will raise rates on Thursday by 0.75 percentage points.
Oxford Economics
September 6, 2022
China’s gross domestic product will grow an average 4.5 percent over this decade, meaning China will take longer than other Asian economies such as Korea and Taiwan to catch-up with living standards in the developed world. Annual growth will further slow to around 3 percent on average between 2030-40.
Barron’s
September 5, 2022
U.S. GDP contracted at an annualized 1.6% in the first quarter and 0.6% in the second, but underlying trends don’t suggest the economy is in a recession. “When I look at the underlying dynamics [of the economy], be it corporates, be it households and consumers, the real economy doesn’t look so bad outside of inflation,” says Sonal Desai, CIO of Franklin Templeton Fixed Income.
Reuters
August 30, 2022
New York Fed chief John Williams said the Fed needs to get its benchmark rate above 3.5% and leave it there until at least the end of 2023. Meanwhile, Cleveland Fed President Loretta Mester said, “My current view is that it will be necessary to move the fed funds rate up to somewhat above 4% by early next year and hold it there. I do not anticipate the Fed cutting the fed funds rate target next year.”
Capital Economics
September 2, 2022
The odds of a recession in the U.S. are rising although, on balance, we still expect a period of weak growth rather than an outright contraction. If we are wrong and a recession drives the unemployment rate up more significantly, then that would only increase our conviction that both headline and core inflation will fall more rapidly than the Fed currently believes, paving the way for rate cuts before the end of next year.
Bloomberg
September 5, 2022
OPEC+ agreed to make a token oil supply cut for October, a surprise move that shows the alliance is seeking to stabilize global markets after a faltering economic backdrop triggered the longest price rout in two years. The group will reduce production by 100,000 barrels a day next month, taking output back to August levels.