Although the global economy continues to slow, the labour markets are still showing few signs of deterioration, note Guy Wagner and his team in their latest monthly market report "Highlights".
“In the United States, the sharp slowdown in job creation in the third quarter was not accompanied by a surge in jobless claims, suggesting that although companies are hiring less, they are not yet laying people off,” says Guy Wagner, Chief Investment Officer (CIO) of the asset management company BLI - Banque de Luxembourg Investments. ”In the eurozone, the unemployment rate remains on a downward trend, despite the year-on-year decline in manufacturing activity since March.”
In the eurozone, the unemployment rate remains on a downward trend, despite the year-on-year decline in manufacturing activity since March. Guy Wagner
The still weak real estate sector weighs on China’s economic growth
In China, the persistent weakness of property investment, which accounts for over 30% of total investment, is weighing on economic activity as a whole, also affecting the labour market. “In Japan, the general weakness of external demand is likely to have an increasingly strong impact on the level of industrial production. Overall, a likely slowdown in service activities, following the weakness already seen in the manufacturing sector, could trigger a more marked deterioration in the labour markets in the months ahead,” believes the Luxembourgish economist.
The rise in oil prices could soon put the brakes on the disinflationary trend
Although most price indicators are continuing to slow, the rise in oil prices could soon put the brakes on the disinflationary trend that has been in place since the start of the year. In the United States, headline inflation rose from 3.2% in July to 3.7% in August. In the eurozone, headline inflation fell from 5.2% in August to 4.3% in September.
ECB raised its key rates for the tenth time in a row
In line with expectations, the US Federal Reserve left the target range for the federal funds rate unchanged at 5.25% - 5.50% at its September meeting. While Chairman Jerome Powell did not rule out further tightening of monetary conditions, his main message was to suggest the prospect of permanently higher interest rates, dampening hopes of significant monetary easing in 2024. In the eurozone, the European Central Bank raised its key rates for the tenth time in a row, taking the refinancing rate from 4.25% to 4.5%. President Christine Lagarde suggested that interest rates had now reached a sufficiently high level which, if maintained for long enough, should allow inflation to return to the 2% target.
Stock markets weaken in September
Overall, most stock prices fell in September, affected by the rise in long-term yields following the Federal Reserve's more restrictive guidance for 2024. “In terms of sectors, energy, benefiting from the rebound in oil prices, recorded by far the best monthly performance. Alongside energy, finance was the only sector to post a positive performance, while technology, real estate and consumer discretionary suffered the biggest declines,” concludes Guy Wagner.