Initial jobless claims surged by 62,000 to a two-year high of 298,000 in the week ending September 2 as a result of increased filings from hurricane-impacted Texas. The four-week moving average (considered a more reliable measure of unemployment trends) rose by 13,500 to 250,250. The four-week moving average for continuing claims slid 4,000 to 1.95 million in the week ending August 26.
- The latest Federal Reserve’s (Fed) Beige Book reflected continuing, but modest, economic expansion. Limited wage growth suggests that inflation will likely remain below the Fed’s 2% target for the near future.
- Factory orders declined by 3.3% in July, led by decelerating gains in aircraft orders. Core capital-goods orders gained 1%, a sign of strengthening business investment. Shipments edged 0.3% higher, while wholesale inventories increased by 0.2%.
- Non-farm productivity was upwardly revised to 1.5% in the second quarter, modestly exceeding expectations. Output climbed by 4%, while labor costs inched 0.2% higher. Despite the higher revision, soft productivity figures could continue to limit economic growth.
- The trade deficit climbed to $43.7 billion in July from $43.5 billion in June. Imports fell by 0.2% as demand for autos and industrial goods decreased, while exports fell by 0.3%, partly driven by reduced overseas demand for U.S. consumer goods. A widening trade deficit is a headwind to economic growth.
- Mortgage-purchase applications rose by 1% in the week ending September 1, as declining rates attracted homebuyers. Refinancing activity, which is highly rate-sensitive, gained 5% in the same period.
- The European Central Bank (ECB) left interest rates unchanged in September and confirmed that its asset-purchase program will remain at €60 billion per month through year-end—and longer if necessary. ECB President Mario Draghi emphasized the need for patience as inflation hovers below the ECB’s target level and volatility in the euro continues to drive policy uncertainty.
- Industrial production in the U.K. grew by 0.2% but remained sluggish in July as a result of increased manufacturing output, particularly in transport equipment and machinery.
- China reported a $42 billion trade surplus in August. Both imports and exports slowed from the levels reported for July.
- Revised data show that Japan’s second-quarter gross domestic product expanded by 0.6%—the sixth consecutive quarterly gain— but below the preliminary estimate reported in August. Private consumption was strong, while net exports detracted.
- Outstanding consumer credit (which measures non-mortgage debt) jumped 5.9% in July after expanding by 3.9% in June. Nonrevolving credit (which includes student and car loans) surged 6.9%, while revolving credit (largely credit card debt) registered a slower 3.2% gain.
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