Overseas Headlines – July 07, 2017


U.S. Hiring Accelerates While Wage Growth Stays Flat

U.S. hiring picked up in June while wage gains disappointed yet again, a mix that may continue to be a puzzle for the economy and policy makers, Labor Department figures showed Friday.


  • Payrolls rose 222k (est. 178k); April-May revisions added 47k jobs
  • Unemployment rate, derived from a separate survey of households, rose to 4.4% (est. 4.3%) from 16-year low of 4.3%
  • Average hourly earnings rose by 0.2% m/m (est. 0.3% rise); up 2.5% y/y (est. 2.6%)

Key Takeaways

While payroll gains were broad-based and boosted by the biggest jump in government jobs in almost a year, wages were below forecasts, even with the jobless rate close to the lowest since 2001. Sustained hiring in June is evidence of the kind of labour-market resiliency that could eventually lead to a stronger acceleration in wages. At the same time, the month’s data could also reflect a new graduating class and the summer’s seasonal workers joining the labour force — some likely welcomed by employers who are struggling to find workers. The data suggest the job market is attracting people off the sidelines, as the size of the labour force and number of unemployed people increased, indicating more people are actively looking for work. The number of people who went from out of the labour force to employed rose to 4.7 million, the highest in data going back to 1990. While wage growth is running below the peak of previous expansions, the figures may be depressed by weak productivity and the retirement of high-earning Baby Boomers, according to economist Stephen Stanley of Amherst Pierpont Securities LLC.




Strong rise in German industrial output signals solid second quarter growth

German industrial production rose more than expected in May, data showed on Friday, boosting expectations that factories will support growth in Europe’s biggest economy in the second quarter. The surprisingly bullish figures are the latest in a batch of strong data that are likely to help Chancellor Angela Merkel and her conservatives burnish their economic credentials before a Sept. 24 federal election in which she will seek a fourth term. Industrial output jumped by 1.2 percent on the month in May, data from the Economy Ministry showed. That was the fifth consecutive monthly increase and easily beat the consensus forecast in a Reuters poll for a 0.3 percent gain. The upturn was driven by a surge in energy production and factories producing more capital and consumer goods. “The trend in the industrial sector is clearly pointing upwards,” the ministry said, adding that the upswing in manufacturing had broadened since the beginning of the year. The bright picture was also mirrored in the less volatile three-month comparison: Industrial output rose by 2.1 percent from March to May, with construction jumping by 6.1 percent. “The sector is now set to grow by 2 percent in the second quarter – we haven’t seen anything like this since 2010,” Bankhaus Lampe economist Alexander Krueger said. The output data comes on the heels of bullish sentiment indicators such as the Ifo index, which showed business morale hit a record high in June.




China premier: economy to maintain steady growth but faces difficulties

China’s economy will maintain steady and improving momentum in the second half of this year, but it still faces many difficulties, state radio quoted Premier Li Keqiang as saying on Friday. China’s economic achievement in the first half was “hard won”, Li told a meeting. “We should firm our confidence, but also prepare to cope with challenges,” he was quoted as saying. China will maintain proactive fiscal policy and prudent monetary policy and keep macro-economic policies stable, Li said. The government would appropriately expand aggregate demand and expand effective investment, especially private investment, he added. Li told the World Economic Forum in June that China was capable of achieving its full-year growth target and controlling systemic risks despite challenges. The government aims for economic growth of around 6.5 percent this year. The economy grew 6.9 percent in the first quarter. A raft of data in coming weeks is expected to show steady growth in the world’s second-biggest economy, but government measures to rein in the housing market and debt risks are likely to drag on activity over the next few quarters.