Financial and Monetary Systems

US business activity stalls, German GDP expected to shrink, and other economics news to read this week

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Top economy stories: US business activity stalls in September; German GDP forecast to contract this year; and more.

Top economy stories: US business activity stalls in September; German GDP forecast to contract this year; and more. Image: Unsplash/Upal Patel

Joe Myers
Writer, Forum Agenda
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  • This weekly round-up brings you the latest stories from the world of economics and finance.
  • Top economy stories: US business activity stalls in September; German GDP forecast to contract this year; Singapore announces new funding to help with cost-of-living crisis.

1. US business activity stalls in September

US business activity has been practically at a standstill this month, with the services sector growing at its slowest pace since February, while new order activity dropped to its lowest level this year.

S&P Global's US Composite PMI index dipped to a reading of 50.1 in September, with 50 marking the line between expansion and contraction.

"PMI data for September added to concerns regarding the trajectory of demand conditions in the US economy following interest rate hikes and elevated inflation," said S&P Global Market Intelligence Principal Economist Siân Jones.

S&P Global Flash US PMI.
Historical US PMI trends. Image: S&P Global

It comes following second-quarter GDP growth of 2.1% – a number that was left unrevised after the country announced its third GDP estimate for April-June.

However, revised government data show that US GDP was weaker than previously thought in every first quarter from 2020 to 2022.

2. German GDP predicted to shrink this year

The German economy will shrink this year, according to forecasts from five economic institutes.

They predict a 0.6% decline in GDP, marking a deterioration from a forecast for 0.3% contraction made earlier this year.

"The most important reason for this revision is that industry and private consumption are recovering more slowly than we expected in spring," said Oliver Holtemoeller, head of the macroeconomics department at the Halle Institute for Economic Research.

However, the downturn is not expected to last. For 2024, the forecast rises to 1.3% growth, followed by a 1.5% expansion in 2025.

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3. News in brief: Stories on the economy from around the world

Thailand has raised its key interest rate – the eighth such rise in a row. It now stands at a 10-year high of 2.5%.

Australia's inflation rate hit 5.2% in the year to August, up from 4.9% in July. The increase was largely driven by fuel prices, Reuters reports.

The Eurozone economy is likely to contract this quarter and growth is seen as an increasingly distant prospect, a new survey suggests.

Singapore has announced new funding to help households with the cost of living, with a package worth up to S$1.1 billion ($802 billion). It comes on top of S$1.5 billion of support announced earlier this year.

House prices in the United States have risen to a record high, bringing increases for this year to more than 5%.

Spanish inflation has increased for a second straight month, rising to 3.2% largely as a result of electricity and fuel costs.

German inflation, meanwhile, is on course to slow, according to regional figures. In North Rhine-Westphalia, inflation in September dropped to 4.2% on the year, compared to 5.9% in August.

A revision of UK GDP data suggests the country's GDP has grown more than previously estimated since the pandemic. The UK's economy was 1.8% larger in the second quarter of this year compared with the final quarter of 2019, the Office for National Statistics says.

Vietnam's economy grew 5.33% on the year in the three months to the end of September, driven by growth in manufacturing and exports.

The European Central Bank is exploring the use of AI to help monitor and understand inflation.

4. More on finance and the economy on Agenda

Africa is soon set to have the world's largest working-age population. It also has significant natural resources and a growing consumer class. How can the continent take advantage of its diversity and strengths to boost economic growth?

Access to financial services might have improved, but financial literacy is still lagging behind. A recent series of roundtables, hosted by the World Economic Forum and the University of Cambridge, offered insights and lessons on building literacy.

What will drive job creation and shape the workforce of the future in Central Asia? Green jobs and investment in upskilling and reskilling will be key.

Related topics:
Financial and Monetary SystemsGeo-Economics and PoliticsEconomic Growth
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Contents
1. US business activity stalls in September2. German GDP predicted to shrink this year3. News in brief: Stories on the economy from around the world4. More on finance and the economy on Agenda

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