Eurozone inflation stagnates in August ahead of ECB September meeting. Initial estimates by European statistics agency Eurostat showed on Thursday that inflation in the 19 counties that make up the eurozone stopped falling in August as energy prices held up but underlying inflation eased. Consumer prices increased by 5.3 percent in August compared with the same month last year, keeping the same pace as the previous month, even though economist had predicted inflation should continue falling. However, core inflation, which excludes volatile food and energy prices, inched down to 5.3 percent, from 5.5 percent in July. The August inflation data were among the most important data points ahead of the European Central Bank’s governing council meeting in two weeks’ time. Another 25-basis point rise can be expected given that the ECB has been stating over recent months that doing too little is worse than doing too much in terms of hikes.

Fed Chair Powell warns that rates could rise further. In a much-awaited speech at the Federal Reserve’s (Fed) annual economic policy summit in Jackson Hole, Federal Reserve Chair Jerome Powell called for more vigilance in the fight against inflation, warning that there could be more interest rate hikes. While Powell reaffirmed the Fed's inflation target of two percent, he called it "challenging" to know when monetary policy is restrictive enough to "know in real time when such a stance has been achieved." Powell’s message essentially was that the status quo it is not good enough. The Fed is likely to raise rates unless the economic growth falters and the tight labour market weakens considerably. "Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy," Powell said.

German consumer confidence is expected to decline in September. German consumer confidence is predicted to weaken in September, reversing August’s improvement and reflecting worsening income expectations and prospects for the country’s economy. Results by market research firm GfK showed on Tuesday that their forward-looking consumer confidence index dropped by 0.9 points to -25.5 for September, after a very small increase was registered for the month of August reading versus July. Europe’s largest economy is struggling, suffering from a deepening downturn in manufacturing output, with data last week showing that the industrial giant recorded no growth in the second quarter. "The chances that consumer sentiment can sustainably recover before the end of this year are dwindling more and more," Rolf Burkl, a consumer expert at GfK, said.

Japan’s jobless rate rises. The unemployment rate in Japan increased for the first time in four months in July, while an indicator of labour demand weakened slightly. The seasonally adjusted unemployment rate increased to 2.7 percent in July compared to June, higher than forecasts of 2.5 percent and June's 2.5 percent. Separate data that gauges the outlook for labour market demand showed that the jobs offers-to-applicants ratio worsened for the sixth time this year and imply that were 129 jobs available for every 100 applicants. “Looking at a leading indicator, the number of job openings in the manufacturing sector has been in a downward trend recently,” Kota Suzuki, an economist at Daiwa Securities said. “This is likely due to the impact of declining overseas demand.”

In case of any queries, please email us on [email protected] or call on 2275 3857.