Economy.com Daily Update: August 1, 2024

Today's Economy

Inflation’s sustained moderation means risks have shifted to the labor market.

The nation undergoes its typical election-season expansion and contraction.

The Bank of England implemented its first rate reduction of the cycle.

We look for the economy to have added 150,000 jobs, on net, in July.

Commentary

Round two of Trump’s trade war would put Europe in the line of fire.

The service inflation rate is now stuck at an even higher level than earlier this year.

The Federal Reserve is setting the stage to loosen monetary policy in the coming months.

Student loan dynamics have shifted since the pandemic and risks have declined across the board.

Today's Economic Indicators

Indonesia
Consumer Price Index
Jul. 2024: 2.1% y/y
Indonesia’s headline inflation cooled to 2.1% y/y in July from 2.5% in June as food inflation eased.

Italy
Unemployment
Jun. 2024: 7.0%
In June, Italy’s unemployment rate came in higher than expected, at 7% versus our forecast of 6.8%.

Hong Kong SAR (China)
Retail Sales
Jun. 2024: -9.7% y/y
Hong Kong’s retail sales fell 9.7% year over year in value terms in June, close to our expectations of a 9.2% y/y drop.

Euro Zone
Unemployment
Jun. 2024: 6.5%
June's euro zone unemployment rate inched higher to 6.5%, but the increase and volatility in underlying data suggest it might be revised.

United Kingdom
Monetary Policy and Minutes
Aug. 2024: 5%
At the August meeting, the Bank of England lowered the policy rate by 25 basis points to 5%, in line with our baseline forecast, the consensus, and financial market expectations.

United States
Challenger Report
Jul. 2024: 25,885
Layoffs remain low, despite recent labor market softening.

United States
Jobless Claims
July 27: 249,000
Weekly unemployment insurance claims in the U.S. rose to 249,000 in the week ended July 27.

Chile
Monthly Economic Activity Indicator
Jun. 2024: 0.1% y/y
Economic activity continued to report low annual growth in June, dragged down by a significant contraction in industrial production.

United States
Productivity and Costs
2024Q2: 2.3%, q/q, SAAR
In the second quarter, U.S. labor productivity increased 2.3% annualized, according to the Bureau of Labor Statistics’ preliminary estimate.

United States
Construction Spending (C30)
Jun. 2024: -0.3% m/m
In June, construction spending in the U.S. totaled $2.148 trillion at an annualized rate.

United States
St. Louis Fed Financial Stress Index
July 26: -0.60
U.S. financial market stress moved higher in the week ended July 26, with the St.

United States
ISM Manufacturing Index
Jul. 2024: 46.8
U.S. manufacturing activity contracted again in July.

United States
Natural Gas Storage Report
July 26: 18 bil cubic feet
Gas storage rose by less than analysts were anticipating, which could push up on gas prices somewhat.

Peru
Consumer Price Index
Jul. 2024: 2.1% y/y
Inflation in the Lima metropolitan area, a barometer of price pressures at the national level in Peru, pushed lower in July.

South Korea
Consumer Price Index
Jul. 2024: