Eurozone GDP falls less than estimated in second quarter. Revised data from Eurostat revealed on Tuesday that the eurozone economy contracted less than initially estimated in the second quarter, albeit the rate of decline was the most since the data series began in 1995, as the coronavirus containment measures took their toll. Gross domestic product, or GDP, in the countries that share the euro currency contracted by 11.8 percent in the second quarter of 2020 compared with the previous quarter, Eurostat said. However the contraction was less than the 12.1 percent initially estimated. GDP had contracted by 3.7 percent in the first quarter. Compared with the same period of 2019, seasonally-adjusted GDP decreased by 14.7 percent.
ECB leaves rates unchanged. The European Central Bank (ECB) has left interest rates at their current record-low levels as it assesses the trajectory of the currency bloc’s recovery. The central bank left its main deposit rate at minus 0.5 percent. That means banks who deposit money at the ECB are charged to do so. Furthermore, the Pandemic Emergency Purchase Programme (PEPP) – through which the ECB has flooded markets with cash during the pandemic – will stay at its current level of €1.35 billion. The central bank said it “continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner”. ECB president Christine Lagarde announced a slight improvement to the bank’s 2020 growth forecasts for the eurozone. She cited improving consumer demand. She also said the bank was closely monitoring the rising euro.
US unemployment falls following strong jobs growth. A closely watched report released by the US Labor Department last week showed another sizeable increase in US employment in August, albeit the pace of job growth continued to decelerate from the record spike seen in June. The Labor Department said that non-farm employment surged by 1.371 million jobs in August after spiking by a downwardly revised 1.734 million jobs in July and soaring by 4.781 million jobs in June. The strong job growth in August was partly due to the hiring of 238,000 temporary census workers, which contributed to a significant increase in government employment. The continued job growth contributed to a much bigger than expected drop in the unemployment rate, which fell to 8.4 percent in August from 10.2 percent in July. Economists had expected the unemployment rate to edge down to 9.8 percent.
German July trade figures point to slow recovery. German exports continued to recover from the virus-related slump in July but still lagged far behind pre-pandemic levels, official data showed on Tuesday. Exports climbed by 4.7 percent, slower than the 14.9 percent increase seen in June. This was also weaker than the five percent increase expected by economists. The July data marked the third consecutive month-on-month jump in German exports following steep declines in March and April when coronavirus lockdowns battered trade and disrupted supply chains around the world. Underlining the tough recovery ahead, exports were still 11 percent lower in July than in the same month a year earlier while imports were down 11.3 percent.
China's inflation eases, tempered by food prices. China's consumer inflation eased in August alongside slowing growth in food prices. Consumer price inflation in the world’s second largest economy slowed to 2.4 percent in August from 2.7 percent in July, government data revealed on Wednesday. The rate came in line with expectations. On a monthly basis, consumer prices went up by 0.4 percent. Driven by slower growth in pork prices, food price inflation eased to 11.2 percent annually. Pork prices rose by 52.6 percent from last year, following an 85.7 percent rise in July. Core inflation, which excludes food and energy prices, held steady at 0.5 percent in August.