U.S. jobless claims drop to near six-month low
The number of Americans filing for unemployment benefits fell to near a six-month low last week, pointing to a further tightening in the labour market that could encourage the Federal Reserve to lay out a plan to start unwinding its massive bond portfolio. Labour market strength was corroborated by other data on Thursday showing manufacturers in the mid-Atlantic region sharply increased hours for workers in August amid a jump in new orders and unfilled orders. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 232,000 for the week ended Aug. 12, the Labour Department said. That was the lowest level since the week ended Feb. 25 when claims fell to 227,000, which was the best reading since March 1973. Data for the prior week was unrevised. It was the 128th week that claims remained below 300,000, a threshold associated with a robust labour market. That is the longest such stretch since 1970, when the labour market was smaller. The unemployment rate is 4.3 percent.
ECB Officials Voiced Concern Over Risk of Euro Overshooting
European Central Bank officials said they’re worried that the euro might strengthen more than justified by an improving economy. “While it was remarked that the appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-a-vis the rest of the world, concerns were expressed about the risk of the exchange-rate overshooting in the future,” the account of the July 19-20 policy meeting released by the ECB on Thursday showed. “In this context, the point was made that, looking ahead, the Governing Council needed to gain more policy space and flexibility to adjust policy and the degree of monetary policy accommodation, if and when needed, in either direction.” The single currency has gained 11 percent against the dollar this year and 17 percent on a trade-weighted basis as an economic recovery spreads through the 19-nation region. That appreciation highlights the challenges policy makers face as they head for a gradual exit from monetary stimulus.
Global Economy Looks Set for a Year of Faster, Firmer Growth
The world economy looks well on its way to a year of faster, firmer growth after rising at its most rapid pace in 2 1/2 years in the second quarter. The expansion is broad based as long-time laggards Japan and the euro area perk up. Even more encouraging: The gains look sustainable because they’re not generating much in the way of inflation or other excesses that frequently presage a downturn, economists said. “The global economy is in better shape than it has been in several years,” said Torsten Slok, chief international economist at Deutsche Bank AG in New York. “We just don’t see what would be a trigger for a recession.” He called it a “Goldilocks” scenario for stock market investors, with the economic recovery solid enough to generate higher corporate profits but not so fast as to lead to a rapid pickup in inflation and interest rates. The MSCI ACWI Index of stocks from emerging and advanced economies has risen in the past five quarters, its longest stretch of gains since the 2007-08 financial crisis.