Fed Sees Modest to Moderate Growth in US Economy The American economy had a modest to moderate pace of expansion in September until earlier in October. This occurred amid the hurricanes that hit the some U.S. regions, while the Fed stated that the latest readings of the US economy were issued yesterday, but still showed several hints of rising inflation. Moreover, the Federal Reserve said that the surge of hurricanes Harvey and Irma happened during the polling period which might have an unfavorable effect towards the economic growth in third quarter. As the report shows three out 12 Fed’s districts, including Atlanta, Dallas, and Richmond, suffered from major disaster from the storms. The Fed Reserve of Dallas, particularly, Houston, was badly affected and did not anticipate for a critical disruption in the long-term. Moreover, the report further underlined the Fed’s major issue which is the insufficient evidence for the increasing inflation amid the need of finding competent laborers. Excess demands were very drastic in healthcare and service positions, construction, skilled manufacturing, and transportation. Hence, these shortages constrain the growth of the business, according to the Fed. Nevertheless, it failed to lift wages higher and further resulted in slight changes in the overall selling prices in some regions, indicating an increase in manufacturing input costs. As for the Fed, there is nothing new about rumors on strong economic development and employment, however, there are widespread price pressures that followed which triggered probability that inflation will be fixed at the low level as the policymakers did not understand clearly the reasons behind. The current target inflation of the Fed downgraded to 1.3 percent versus the initial objective at 2 percent. On the other hand, Fed Chair Janet Yellen is expecting inflation to bounce back while the central bank is in the process of raising interest rates again by the end of the year.
World Economy’s Best Performance in Ten Years Boosted by China The strong economic development of China boosted the global economy that has been perking up on its most excellent performance in 10 years. The world’s second-largest economy announced on Thursday the expansion of 6.8 percent during the third quarter, after central bank governor Zhou Xiaochuan contemplated about the 7 percent pace for the second half over the weekend. Moreover, due to hints about the prospect of a sharp decline in 2018 could fade away, the economists of Goldman Sachs upgraded their projection by 6.5 percent increase next year. Indications of growth were clearly seen in Asia on Thursday, as the central bank of South Korea further raise its economic growth outlook for the current year, and exports from Japan attained double digits for three months straight in September, while the unemployment rate in Australia reduced surprisingly. The International Monetary Fund (IMF) has lifted its forecast for the United States, China, Europe, and Japan, stating that the global economy is performing at its fastest pace in a decade. The Washington-based IMF predicted the world economy will expand by 3.6 percent in 2017 and 3.7 percent in 2018, showing growth of 0.1 percentage point against the earlier estimate, with the Asian region contributed 63.3 percent for the development. The renewal of China’s import demand became the major support throughout Asia, coupled with the strong recovery in Asian exports to EU and US that made an upswing around the globe, according to chief Asia-Pacific economist Klaus Baader from Société Générale SA. Also, Zhou mentioned that the impetus for China’s acceleration in the second half is derived from the household consumption which was indicated in the statistics issued yesterday. While the retail sales grew by 10.3 percent last month earlier this year. Aside from consumption, the Chinese data includes government expenditure that provided 64.5 percent growth from Q1 to Q3 of 2017 which shows 2.8 percentage points higher versus the same period in 2016.
Unemployment Rate in France Drop in September The total unemployment figures of France reduce in September based on the records from the Labour Ministry issued on Tuesday. This encourages French President Emmanuel Macron to execute further efforts to improve the job market. The number of unemployed individuals in the mainland France was lowered down by 64,800 last month, this is the largest decrease since 1996. The 1.8 percent drop after a month and 0.5 percent within a year resulted in a total of 3,475,600 jobless people which is the lowest level from the month of April. The improvement was achieved due to reform efforts by Macron’s leadership that created more jobs and increased growth. President Macron is considering the reduction of unemployment in the country down to 10 percent for years, overhauling the rules of labor industry last month. This could be followed by some changes in unemployment benefits and professional training subsequently. The business confidence of France also perked up since Macron’s victory in May elections. The French politician pro-business reform agenda tend to shift company’s activities upwards in order to manage robust demand, according to a survey published on Tuesday morning. Moreover, the emergence of new businesses led companies to hire additional workers in October which could regulate rising backlogs, hence, this is the fastest pace recorded in a decade based on the monthly purchasing managers survey. On the other hand, industrial firms reported that their efficiency is moving towards the highest levels prior the outset of 2008-2009 global financial crisis indicated in a quarterly survey by the INSEE statistics agency on Tuesday. The expanding number of companies seems struggling to keep up with the demand. There are 32 percent of managers who admitted facing some congestion in the production system. This could be a positive indicator for the job markets considering that companies are forced to take more laborers in order to cope the demands of the client, therefore, reducing the unemployment rate.
US Economy Supported by Trade and Inventories The American economy unanticipatedly sustained the rapid momentum in Q3, as the inventory investment increased and the smaller trade deficit eased off the impact from hurricanes towards the fall in consumer expenditure and curbed in construction. The country’s GDP gained 3.0 percent at an annualized rate during the months of July until September, which further strengthened the robust business equipment spending as mentioned by the Commerce Department on Friday. While goods inventories for sale added nearly three-quarters of percentage point growth during the previous quarter and the improved GDP underlines the economic health. This excludes the inventory investment, the economy was able to advance by 2.3 percent rate against the slow down by 2.9 percent during the second quarter. The estimates for domestic demand also declined to 2.2 percent versus 3.3 percent obtained in Q2. The United States acquired 3.1 percent growth during the second quarter, and this was the first time that the U.S growth reached higher than 3 percent for two consecutive quarters. Forecasts from economists show that GDP will increase by 2.5 percent in the third quarter. According to the US administration, it seems difficult to determine the effect of hurricanes Harvey and Irma towards the GDP in the third quarter. Initial evaluation indicates that the subsequent storms generated losses amounted to $US10.4 billion of government-owned fixed assets and $US121.0 billion ($A157.8 billion) worth of privately owned fixed assets. Inventories cumulated from firms came in at $US35.8 billion in the Q3, which boosted inventory investment by 0.73 percentage point to GDP growth in the said quarter. The inventories contributed an output of more than tenth of percentage point in the previous period. While economists are expecting for a decent expansion from inventories in the last quarter. Despite the drop in the fourth quarter and surpassed the sharpest decline in imports for three years which led to a smaller trade deficit and provided four-tenths of percentage point to economic development. Trade supported the output for three quarters in a row.
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German Investor Confidence Rose According to Sentix The German investors sentiment had increased, reaching its highest level for this month. The country is the largest economy in the eurozone that managed a global economic expansion based on the statement of Sentix issued on Monday. The survey was released since the EU obtained a fast-pace economic recovery subsequent to a prolonged period of slow economic growth, the development period was supported by the dynamic money-printing programme of the ECB. Moreover, this raises concerns regarding bond bubbles and property within the cluster of rich countries. The economic sentiment index of Germany by the research group Sentix showed an upsurge of 42.4 versus 37.7 in October based on 1,000 investors who responded to the survey. Broader euro indices and the world economy arrive at 10-year highs. European Sentix index gained 34 points in November compared with the 29.7 in October, overcoming analysts expectations and reaching its all-time high since July 2007 EUSTCS=ECI. Forecasts for other improvements of the European economy climb to 22.8 against 18.3 earlier.
Trump’s Approval Rating Declined: CNN poll The American citizens have high approval rating to the US economy prior the Sept. 11, 2001 attacks, but the public’s confidence towards President Donald Trump has declined based on a new report. According to the result from CNN survey on Wednesday, there are 40 percent respondents who believe that Trump was able to fulfill his job and other election promises, indicating an 8 percent fall from April. In addition to it, the 40 percent stated that Trump has the capacity to improve what the country needs as to the total of 49 percent after the voting. The declivity was brought by Republican and independents in general. Since November 2016, the Republicans who say that Trump is able to perform the much-needed change of the US was reduced by 10 percent. On the other hand, there is a 9 percent decrease for independents. Nevertheless, there are 68% of respondents who consider the US economy healthy, the total was 11 percent higher before the inauguration of D.Trump. Contrarily, 59 percent expects for a better economic health in 2018. While 30 percent thinks Trump could further unify the country and not disunite it and 43 percent projected that he will strengthen the bond of the country in November 2016. The United States presidential approval rating gained 36 percent since the beginning of the week, this is the lowest score since he was designated in office. The CNN polling conceived during November 2 to 5 with 1, 021 adults as a random sample. The margin of error (plus or minus) is 3.6 percentage points.
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VAT Returns of Small Firms Incorporates to UK GDP Calculation The Office for National Statistics evaluates the British economy by overhauling its way which includes huge VAT amounts from smaller companies for the first time. In the previous survey, the gross domestic product of the country was mainly based on the turnover of 45,000 largest firms. Since December, the data from the third of Britain’s 1.8m VAT returns will also be included in the turnover for the calculation of official GDP results. With this, assessing UK economic growth will have dramatic changes for this could provide further insights from particular areas and industries. A higher proportion of VAT returns involves small businesses with a total of 98pc of UK companies. In the past estimates of GDP, pubs and restaurants sectors, particularly "food and beverage service activities" have high levels according to the 172 monthly poll and 28,000 tax returns. According to the ONS, a much more detailed data will provide a comprehensive output of pubs, restaurants and takeaways and restaurants among various regions. The first new estimate encompasses VAT returns coming from small and medium businesses including 100 or fewer headcounts. While survey for large companies will remain to be part of the data gathering and ONS’s report. As there is only 20 percent of smaller firms in the UK economy, which means that the data accumulated by the national statistical institute will be more accurate but the overall GDP result could possibly be not altered despite its inclusion because major firms have a greater impact. Based on the perspective of PwC’s Economist John Hawksworth, it would be better if the Statistics authority will release GDP forecast “ with and without (the) use of the new VAT data" respectively, in order for the public to understand the difference. On the other hand, ONS chief economist Nick Vaughan announced that including additional information will be a gradual process.
