USA

US – good employment situation but hardly any sign of wage pressure

All in all, the employment situation in the United States is very good. The rate of unemployment has halved since the end of 2010 and the average number of unemployed persons in 2016 is likely to have fallen below the eight million mark again for the first time since 2007. In the course of the current year, as in previous years, we are seeing very moderate wage increases only, despite the quite good situation meanwhile on the labour market. Wage momentum appears to be capped by the sustained intake of returnees. Based on our calculations, the influx from the hidden reserves will continue next year too. We anticipate an unemployment rate of 4.8 percent next year and wage increases of around two and a half percent. Nonetheless, the reduction in unemployment and hence the decline in the unemployment rate is likely to progress at a somewhat slower pace than in…

Central banks – when the exception becomes the monetary policy rule

Almost a decade after the start of the financial market crisis, the big industrialised nations still find themselves in an exceptional situation when it comes to monetary policy. In view of weak economic growth, ongoing disinflation and shocks exogenous to the market, such as the Brexit vote, three of the four major central banks are relying on “extraordinary” monetary policy measures – the ECB, BoJ and BoE. Criticism has been voiced that the central banks’ decision to take extremely expansionary measures is not purely the result of external circumstances. The central banks’ asymmetrical response functions (to economic cycles) are also said to have favoured these developments. The duration and scope of QE measures mean that they hardly deserve the attribute of “extraordinary” any longer. Instead, it looks like they might become the new monetary policy rule. The US central bank already stopped taking unconventional measures two years ago. Nonetheless, the…

IMF lowers its growth forecast only marginally but points to considerable risks

The International Monetary Fund (IMF) recently made a slight downward revision to its growth forecast for the global economy in its annual July update. According to the latest IMF forecast, global output will accelerate at the same pace this year as last year, by an average 3.1 percent. Next year, the Washington-based institution expects the pace to accelerate somewhat more strongly to 3.4 percent which would then bring it in line with the year 2014. The main reason for the slightly subdued growth outlook is the British vote to leave the European Union. According to this base scenario, the fallout for the global economy and above all for the industrialized countries will only be „very“ limited, and can even be expected to have hardly any statistical impact. It would almost seem as though the forthcoming Brexit posed no real risk to the global economy at all, with the IMF offering…

US labor market: Good June figures but overall deceleration in the employment trend

The official Employment Situation Summary, published last Friday by the US Bureau of Labor Statistics (BLS), confirmed the picture of a still robust employment trend. The fact that the unemployment rate is likely to decline at a far slower pace this year than in the previous year is essentially commensurate with our expectations and has therefore not come as a surprise. However, the June report also confirms that the employment trend in the USA appears to have passed its peak. This year so far, the monthly average increase in persons employed has amounted to around 170,000 compared with the same period a year earlier when the number of persons employed grew by around 220,000 persons. In 2014 the monthly increase even came close to a quarter million in the first half-year. Against this backdrop, the increase in the unemployment rate from 4.7 to 4.9 percent should not give cause for…

Fed in no hurry

Fed Chairman shifting the focus more on structural problems Fed Chairman Yellen adopted a very cautious tone again during yesterday’s speech to the US Congress over whether to tighten the monetary reins further. Signs of economic improvement can be noted in a number of sectors but these are being accompanied by developments that give cause for concern. In particular the lack of dynamism on the US labour market needs to be closely monitored. All in all, however, Ms. Yellen expects the current bout of weakness to be temporary. The Fed Chairman also stressed the need for a slow approach in the new cycle of interest rate increases due to the stiff headwind facing economic development. A comparison of the various speeches held by Ms. Yellen reveals a slight change in the monetary accent within the Fed in recent months. The central bank is evidently shifting the focus away from cyclical…

US economy: robust momentum – no less

The US economy started the current quarter with strong momentum, as was evidenced by the data to hand on retail sales and international trade, as well as construction. The rise in industrial production is also particularly positive. After a weak start to the year, the world’s largest economy therefore appears to have returned to its growth path again. Our economic growth forecast for this year is unchanged at around two percent. The situation in the individual economic sectors shows that the US central bank (Fed) definitely has scope at present to raise interest rates. As in previous years, the absence of growth in the first quarter fuelled concerns about the robust nature of the US economy. A look at the last ten years shows that the United States has once again assumed the role of growth driver in the group of developed nations, even after the global financial and economic…

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