U.S. jobless claims fall as labour market tightens further
The number of Americans filing for unemployment benefits fell last week, pointing to a tightening labour market that likely keeps the Federal Reserve on course to announce plans next month to start reducing its massive bond portfolio. Initial claims for state unemployment benefits decreased 5,000 to a seasonally adjusted 240,000 for the week ended July 29, the Labour Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had forecast claims falling to 242,000. Claims have now been below 300,000, a threshold associated with a healthy labour market, for 126 straight weeks. That is the longest such stretch since 1970, when the labour market was smaller. The labour market is near full employment, with the jobless rate at 4.4 percent. Economists believe that labour market tightness will encourage the Fed to announce a plan to start offloading its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September.
Euro zone businesses outran British firms at start of second half
Businesses across the euro zone started the second half with robust growth, outpacing British counterparts which are struggling to regain momentum as consumers keep their hands in their pockets, surveys showed. Signalling the bloc’s positive readings could continue into August, new orders rose, backlogs of work were built up and firms increased headcount. But British services firms’ expectations for the year ahead were among the weakest since late 2012. “We are expecting growth to be a little stronger in the second half than in the first in the UK, whereas in the euro zone we are expecting it to be a little weaker,” said Ben May at Oxford Economics. “So they converge but there is a modest outperformance by the euro zone in the second half — a relatively sustained period of outperformance which hasn’t been particularly common over recent years.” IHS Markit’s final composite Purchasing Managers’ In
China eyes widening yuan band amid reform pressures: sources
China’s central bank is considering a widening of the yuan’s trading band after a major Communist party meeting this year, a largely cosmetic move that would burnish its reform credentials as official policy focuses on reducing debt. The People’s Bank of China could widen the yuan trading range to allow it to rise or fall 3 percent against the dollar from the daily mid-point rate set by the central bank, up from the current 2 percent, according to four sources familiar with internal policy discussions. That would allow the central bank to argue the yuan’s liberalization was on track, and could be useful in trade talks with Washington, but tight controls on capital outflows and the level at which the yuan starts trade each day reduce its impact, the sources said. “A yuan band widening is possible. There could be some internal consensus on this,” said one source who advises the government on policy. “But the impact won’t be big – it may just be a gesture to express the commitment to long-term market reform.” Indeed, there seems to be little immediate pressure to widen the band – the yuan has never tested the 2 percent daily limit that was introduced in March 2014.