The report by ADP (Automatic Data Processing) showed that American companies created 135,000 new jobs in the private sector in September. Although job growth remained relatively solid, it was lower than analysts' average expectations. Moreover, the increase in the number of jobs in the previous month, at a revised 157,000, was significantly lower than initially reported at 195,000. The ADP employment figures are based on a survey of around 400,000 US companies with around 23 million employees and are regarded as an indication of the official labor market report from Washington, which was eagerly awaited on Friday.
The World Trade Organization (WTO) in Geneva granted the US the right to impose USD 7.5bn per year in punitive tariffs on EU imports following years of illegal EU subsidies to aircraft manufacturer Airbus. In an initial reaction, the EU Commission warned that US punitive tariffs were counterproductive and that both sides should try to reach a fair agreement. The US and Europe have been arguing at the WTO for 15 years about the billions in government subsidies for Airbus and Boeing.
After the Dow Jones Industrial Index on Wall Street dropped by nearly 600 points at times, the downward trend on the Asian stock markets continued today. In Tokyo, the Nikkei 225 and the Topix each fell by around 2%, additionally burdened by the strengthening yen. The focus was on export-driven sectors such as electronics manufacturers and carmakers.
The leading German economic research institutes are much more pessimistic in their autumn forecasts published yesterday than in spring. In the new autumn report, economists expect GDP growth of +0.5% for 2019, compared with +0.8% in the spring forecast. The institutes also significantly lowered their forecast for 2020 and now only expect growth of +1.1% (previously +1.8%). The background for the more cautious estimate is above all the noticeable weakening or recession in industry as a result of the ongoing trade conflict. Responsible for the weak development are the declining global demand for capital goods, which the German economy specializes in exporting, political uncertainty and structural changes in the automotive industry. However, even though the economic downside risks are currently high, the institutes do not currently expect a broad economic crisis. The German Institute for Economic Research (DIW), which was in charge of the joint forecast, commented that the German economy is currently still expanding at all, primarily due to the continuing buying mood of private households, which is supported by the good wage settlements, tax relief and expansion of state transfers.
In view of the more fragile global outlook, the Economic Research Centre (KOF) of ETH Zurich has revised its growth forecasts for the Swiss economy for 2019 and 2020 downwards. For the current year, the KOF still expects gross domestic product (GDP) to grow by +0.9% compared to the previously forecast +1.6%. It has also lowered its growth forecast for 2020 to +1.9% after +2.3% so far. In recent months, the international environment for the Swiss economy has deteriorated further and, in addition to the unresolved trade dispute between the US and China, protectionist measures by the US against the EU are also threatening. The KOF also expects continued appreciation pressure on the Swiss franc. After a further interest rate hike by the ECB, the SNB will cut interest rates even lower into negative territory before the end of the year.
The Swiss National Bank (SNB) sees the need for negative interest rates against the background of continuing geopolitical uncertainties – above all the trade conflict and the Brexit – and the resulting increased danger of an appreciation of the Swiss franc. Negative interest rates are “absolutely necessary and essential” for Switzerland, commented SNB Board Member Andrea Maechler. How long the SNB would have to hold on to the negative interest rates is currently difficult to estimate.
|09:15||SP||Markit Composite PMI||52.6|
|09:45||IT||Markit Composite PMI||50.3|
|09:50||FR||Markit Composite PMI||51.3|
|09:55||GE||Markit Composite PMI||49.1|
|10:00||EZ||Markit Composite PMI||50.4|
|10:30||UK||Markit Composite PMI||50.2|
|11:00||EZ||Retail Sales (y/y)||+2.2%|
|15:45||US||Markit Composite PMI||51.0|
|16:00||US||ISM Non-Manufacturing PMI||56.4|
|16:00||US||Durable Goods Orders (m/m)||+0.2%|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: firstname.lastname@example.org
Source: LGT Bank (Switzerland) Ltd.
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