US Labour Market Defies Uncertainty as Asia's Economies Hold Up
The US labour market is showing signs of strength, defying uncertainty from the Iran war and inflationary pressures. According to data released last month, hiring gains were dispersed across various sectors, with manufacturing, construction, and other goods producers outpacing the services economy. This trend may be linked to a surge in investment dollars into artificial intelligence.
The August jobs report exceeded expectations, with payrolls rising by the most in five months and the jobless rate holding at 4.1%. The service sector also expanded in August, bolstered by strong demand and a pickup in business activity. New orders growth accelerated to its fastest pace since early 2023.
In contrast, Asia's economies are holding up despite the conflict in the oil-rich Middle East. India's economy expanded faster than expected in the April-June quarter, while China's factory activity improved more than forecast. However, the risks ahead for these economies remain, particularly with regards to construction and services industries.
Meanwhile, European inflation quickened to its highest level in almost three years, cementing the case for an interest-rate hike by the European Central Bank next week. UK Prime Minister Andy Burnham faced a £12 billion ($16.2 billion) problem due to the global selloff in government bonds.