Hurricane Harvey boosts U.S. jobless claims to more than two-year high
The number of Americans filing for unemployment benefits jumped to its highest level in more than two years last week amid a surge in applications in hurricane-ravaged Texas, but the underlying trend remained consistent with a firming jobs market. The surge in claims reported by the Labour Department on Thursday offered an early glimpse of Hurricane Harvey’s impact on the economy. The storm, which unleashed unprecedented flooding in Houston, disrupted oil, natural gas and petrochemical production and forced a temporary closure of refineries. Economists say Harvey could put a dent in third-quarter gross domestic product, but expect lost output to be recouped in the October-December period. Initial claims for state unemployment benefits surged 62,000 to a seasonally adjusted 298,000 for the week ended Sept. 2, the highest level since April 2015, the Labour Department said on Thursday. The weekly increase was the largest since November 2012. A Labour Department official said last week’s data had been impacted by Hurricane Harvey. Unadjusted claims for Texas surged 51,637 last week as some people found themselves temporarily unemployed. That accounted for 95.6 percent of the increase in unadjusted claims last week. Claims for Louisiana were also affected by Harvey, though they only increased 258.
ECB Keeps Stimulus Unchanged as Investors Await Draghi Insight
The European Central Bank opted to keep its stimulus settings unchanged for now as officials started cautiously sketching out the future of their quantitative-easing program. Policy makers maintained asset purchases at 60 billion euros ($72 billion) a month until December, and reiterated their pledge to increase the size or duration if the economy worsens. They left interest rates unchanged and repeated that they expect borrowing costs to stay at present levels until well past the end of net asset buying. Attention now turns to President Mario Draghi’s press conference at 2:30 p.m. in Frankfurt, when he’ll be pressed for insight into the Governing Council’s first formal talks on next year’s strategy. Draghi had for months put off any official discussion over the path of QE beyond 2017, amid concerns over low inflation and the potential market disruption at any hint of an exit. That changed this week; Governing Council members were presented with documents exploring scenarios including different combinations for the volume and length of asset purchases, according to euro-area officials familiar with the matter.
China’s old growth model keeps slowdown at bay
China’s economy continues to defy expectations for a slowdown, buoyed by strong global demand for its exports and a resilient property market – despite a government pledge to crack down on rising risks. Beijing’s efforts to consolidate and restructure its industrial sector is paying dividends as profits rise, while strong fiscal spending and sustained infrastructure investment have ensured domestic demand stays strong. Manufacturing surveys last week showed factories continued to enjoy strong price gains, while demand remained strong with big increases in new business. All this means there is a good chance China’s growth will accelerate for the first time in seven years after growing at a 26-year low of 6.7 percent last year. The economy grew 6.9 percent in the first half of this year. “One factor is government investment; another is the impact from property,” said Wang Jun, senior economist at China Centre for International Economic Exchanges (CCIEE), a Beijing-based think-tank. “A resilient property market is a very important factor behind the stronger than expected economic growth, which is still from traditional drivers.” Wang expects China’s economy to grow 6.8 percent this year, beating the government’s target of around 6.5 percent.