Charting the Global Economy: China Services Activity Weakens

(Bloomberg) — A gauge of service-sector activity in China weakened last month, underscoring the precarious nature of the nation’s recovery.

Separate data showed the euro-area economy barely expanded in the second quarter, which may feed policymakers’ worries about stagflation taking hold. Meantime, South Africa’s economy grew by more than expected in the period, driven by finance and manufacturing.

China’s housing crisis has engulfed the country’s private developers, producing record waves of defaults and leaving a shrinking group of survivors. Out of the nation’s top 50 private-sector developers by dollar bond issuance, 34 have already suffered delinquencies on offshore debt, according to Bloomberg-compiled data.

Japan’s households cut back spending in July as persistent inflation continued to erode purchasing power, adding pressure on the government to ramp up aid when it unveils a fresh batch of economic measures in coming weeks.

Europe

Britain’s residential property market slump deepened, with figures from two of the top mortgage lenders indicating home prices falling at the fastest pace since 2009 and warnings of worse to come.

The euro-area economy barely grew in the second quarter as new data showing a dismal performance for exports forced a downward revision in overall growth numbers for the region. The report provides the European Central Bank with harder evidence of the weakness taking hold in the euro-zone economy, a week before policymakers prepare to decide whether another interest-rate increase is warranted to tame inflation.

South Africa’s economy grew faster than expected in the three months through June. Finance and manufacturing, which make up more than a third of GDP, were the main drivers of the growth, supporting the view that many big businesses are adapting and insulating themselves from the nation’s chronic shortage of electricity.

Mexico’s annual inflation eased roughly in line with expectations in August, as the central bank says it’s not yet ready to discuss lowering record high borrowing costs given the “complex and uncertain” global outlook.

US

US employment gains will slow significantly and be more concentrated across few sectors in the decade through 2032 as population growth moderates, fresh government estimates show. The Bureau of Labor Statistics sees the economy adding almost 4.7 million jobs, or 0.3% annually. That’s well shy of the 1.2% annual increase in the decade that ended in 2022.

The extraordinary wage growth enjoyed by Americans who switched jobs during the pandemic has finally disappeared. Wages for so-called “job switchers” rose 5.6% over the last year, while those for “job stayers” rose 5.2%, according to Atlanta Fed data. The difference between the two was narrowest since September 2020, before a tightening labor market sent wages for both groups soaring.

The return-to-office debate is far from settled, leaving questions about the role of offices, the integration of work and life, and the measurement of productivity and pay. How it plays out carries significant economic consequences: McKinsey Global Institute estimates that pandemic shifts could erase as much as $1.3 trillion of real estate value in big cities around the world by 2030.

Poland delivered a bigger-than-expected rate cut ahead of an election, while Chile’s central bank slowed the pace of its easing cycle as inflation heads toward target. Israel’s central bank kept interest rates unchanged, breaking with the US Federal Reserve’s last decision to tighten policy. Officials in Australia, Canada and Malaysia also held.

—With assistance from Eamon Akil Farhat, Matthew Boesler, Matthew Boyle, S’thembile Cele, Max de Haldevang, Emma Dong, Shuiyu Jing, John Liu, Dorothy Ma, Yoshiaki Nohara, Zoe Schneeweiss, Alex Tanzi and Fran Wang.