United States:
U.S. Jobless Claims Fall to 49-Year Low Despite Federal Shutdown
Filings for U.S. unemployment benefits fell last week to the lowest level since 1969, signaling the labor market remains tight despite the partial federal-government shutdown. Jobless claims declined 13,000 to 199,000 in the week ended Jan. 19, bucking economist forecasts for an increase, Labor Department figures showed Thursday. The four-week average, a less-volatile measure, decreased to 215,000, the lowest since early November. The surprise drop indicates how reluctant employers are to fire workers, with the strength overshadowing the shutdown affecting one-quarter of the government. In any case, the closure is seen reducing economic growth the longer it drags on. Initial filings by federal employees jumped by about 15,000 to 25,419 on an unadjusted basis in the week ended Jan. 12, reflecting the third week of the shutdown that’s caused pay to halt for hundreds of thousands of workers. Those figures aren’t included in the headline claims number, which reflects state unemployment-insurance programs. Analysts caution that it may take more time for the shutdown to be fully reflected in the report, and data on federal employees are reported with a lag.
Europe:
ECB Keeps Policy Unchanged to Battle Economic Slowdown
The European Central Bank pledged to keep interest rates at record lows at least through the summer after policy makers met amid rising concern about the region’s growth outlook. The decision on Thursday came just hours after a report signaled the euro area’s economic slowdown is set to drag on, with the region beset by political strife and global risks such as mounting trade protectionism. Economists and investors have cut their forecasts, questioning the relative optimism President Mario Draghi expressed last month when he announced the end of bond purchases. “The biggest risk right now is that we talk ourselves into a recession,” Natixis Chief Executive Officer Jean Raby said in a Bloomberg interview at the World Economic Forum in Davos. “The environment from the monetary-policy standpoint is likely to stay relatively stable and benign.” The euro was little changed near a three-week low after the report. It traded at $1.1349 at 1:46 p.m. Frankfurt time, down 0.3 percent.
Draghi will hold a media briefing at 2:30 p.m. in Frankfurt, where the focus will be on the Governing Council’s assessment of the risks to growth. A survey of purchasing managers published earlier Thursday showed German manufacturing shrinking for the first time in four years, dragging the euro-area economy into its worst performance since 2013. Earlier this week, the International Monetary Fund cut its global growth forecast, blaming softening demand across Europe. Germany and Italy saw the biggest revisions after stricter emissions tests slashed car production in the region’s largest economy and a budget spat between Rome and Brussels boosted sovereign borrowing costs. Economists predict the ECB will lower its outlook when projections are updated in March, and have extensively discussed in the run-up to Thursday’s meeting whether the recent spate of disappointing data will prompt policy makers to describe risks to growth as tilted to the downside.
Asia:
Wall Street Titans Embrace Saudi Bid for Rehabilitation at Davos
As Davos delegates walk to their meetings, they’re overlooked by the largest billboard in town. The message mixes confidence and defiance — “Invest Saudi: The Future-Forward Economy.” Only three months ago, the global elite largely shunned Saudi Arabia’s own version of Davos after the murder of Jamal Khashoggi. Now, Riyadh is using the real thing to attempt a reconciliation with the business world, making nice in the Swiss mountain resort’s universal language: money. Plans for economic reform, big capital market deals and global investments mean A-list bankers and executives are inclined to listen. At an event where success is often measured by who’s seen at a reception or speaks on a panel, the Saudis aren’t getting the cold shoulder any more. James Gorman, the head of Morgan Stanley, spoke on Thursday in a debate alongside two Saudi ministers. And the likes of Jamie Dimon of JPMorgan Chase & Co. and John Flint of HSBC Holdings Plc attended the annual Davos party thrown by Saudi oil giant Aramco, according to a person present. “We don’t have any problem,” Amin Nasser, Aramco’s CEO, said when asked about the impact of the Khashoggi crisis. It’s a view largely shared by other members of the Saudi delegation to the World Economic Forum.
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