Euroland GDP, U.S. Labor Stats, and Lots More Data to Absorb This Friday – Currency Thoughts
Euroland GDP, U.S. Labor Stats, and Lots More Data to Absorb This Friday
September 5, 2025
The first U.S. jobs report since the chief of the Bureau of Labor Statistics got replaced after weak July numbers arrives in less than an hour. Jobs in July grew a lower-than-forecast 73 thousand, which is about what analysts are anticipating for August, but the startling surprise a month ago was a combined 258k reduction to the May and June figures that left the average May-July monthly increase at a mere 35k and down from 127k in February-April and 232k in November-January. This time analysts are also looking for a 0.1 percentage point uptick of the jobless rate to 4.3% and somewhat lower on-year wage growth of 3.7%.
The dollar overnight and in advance of the jobs report has weakened by 0.3% against the euro, sterling, Swiss franc, Korean won and Mexican peso, 0.4-0.5% relative to the Aussie and New Zealand currencies, and 0.2% versus the yen and Canadian dollar.
A weaker U.S. labor market increases the odds of a Federal Reserve interest rate cut later this month. The ten-year U.S. Treasury and German bund yields slid a basis point further overnight, and comparable British, Japanese, French and Spanish yields are two basis points softer. Bitcoin and gold prices have jumped 1.4% and 0.6%, while oil is 0.8% lower.
Stock markets closed up 1.4% in Hong Kong, 1.3% in Taiwan, 1.2% in China, 1.0% in Japan and 0.5% in Australia but flat in India. European share prices and most U.S. stock futures so far are little changed. The Nasdaq got a boost from an announced long-term compensation package for Elon Musk at Tesla that could yield as much as $1 trillion if ambitious targets for the companies market value and operating trends are met.
The third estimate of second quarter GDP growth in the euro area shows a 0.1% quarterly non-annualized increase (same as the prior estimate) but a marginally lower 1.5% year-on-year advance. The most notable revision among member countries involved Germany to a quarterly decline of 0.3% from -0.1% estimated earlier. Italian quarterly growth was also negative (-0.1%) but French and Spanish GDP increased by 0.3% and 0.7%. Employment in the common currency bloc rose 0.1% on quarter and 0.6% from 2Q 2024.
Selected quarterly growth estimates at other European economies in the second quarter include 1.3% in Denmark, 1.2% in Croatia, 0.6% in Greece, 0.5% in the Czech Republic, but 0.1% in the Nethelands and Switzerland, and -0.7% in Iceland.
German industrial orders had been projected to post a moderate rise in July but instead sank 2.9%, shared somewhat equally between drops of 2.5% in domestic demand and -3.1% in foreign orders. This was the third straight monthly decline and left orders 3.4% below their year-earlier level.
British retail sales rose 0.6% on month and 1.1% on year in July. The British Halifax house price index was just 2.2% above a year earlier, which was its smallest 12-month rate of increase in 14 months.
Italian retail sales flat-lined July but were 1.8% above their year-earlier level.
France posted a fourth straight monthly current account deficit in July, but the EUR 2.07 billion shortfall was smaller than June’s imbalance.
Austrian wholesale prices in August fell 0.6% on month and were just 0.2% above a year earlier. The 0.9% on-year drop in Cypriot consumer prices as the biggest on-year decline in 52 months and a stark contrast to the 10.9% on-year rise in September 2022. Estonia CPI inflation of 6.1% last month was at a 25-month high and up from 2.5% in June 2024.
Swiss consumer confidence weakened to a 4-month low in August.
In Japan, household spending in July rose 1.7% on month and 1.4% on year. A 4.1% 12-month jump in average nominal wages in July (+0.5% inflation-adjusted) strengthened speculation that the next Bank of Japan interest rate hike may be coming soon. But a 17-month low in Japan’s July index of coincident economic indicators supports a more cautious opinion.
Filipino consumer price inflation accelerated from 0.9% in July to a 5-month high of 1.5% in August. Taiwanese CPI inflation of 1.6% last month constituted a 4-month high.
In other news, President Trump wants to change the Defense Department’s name back to its pre-WW2 label of Department of War. The U.S. tariff on auto imports from Japan was lowered to 15% from 27.5% after the U.S.-Japanese trade deal was completed.
Just in: The August jobs report is another bust. Non-farm payroll jobs went up only 22k, less than a third of the market consensus forecast, and June-July’s change in jobs revised down a combined 21k. The four-month average monthly growth in jobs during the middle third of 2025 was just 33.5k. Outside of health and social services, job growth weakness has been very broadly spread. The jobless rate as anticipated climbed to 4.3%, a 46-month high, and combined un- and underemployment reached a 4-year high of 8.1%, up from 7.7% in June. Labor market participation of 62.3% was 0.1 percentage point higher than in July but down from 62.8% last September. Growth in average hourly earnings of 0.3% from the prior month and 3.7% year-on-year matched expectations.
Canada’s August batch of labor market figures was arguably worse that the U.S. numbers. Canadian employment, which was projected to rise slightly, instead tumbled 65.5k on top of a 40.8k slide in July. Since employment in the much larger U.S. economy is 7.59 times greater than in Canada, a two-month decline of 103.3k in Canadian employment is akin in severity to a 807k plunge in the U.S. or a monthly average job loss of 403k. Unemployment in Canada increased 0.2 percentage points to 7.1% in August, a level last experienced in August 2021 and up from 4.8% in July 2022. Canadian wage growth ticked up to 3.6% from 3.5% on-year in the prior month.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British and Italian retail sales, Euroland GDP and employment, Japanese household spending, U.S. and Canadian job statistics in August 2025
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