FXTRADING Economic Data Summary (Asia-Pacific | 08/10)

US Labor Market Weakness Exceeds Expectations

US employment data for July came in significantly weaker than market expectations. Nonfarm payrolls not only failed to increase but instead declined by 23,000, far below the market forecast for an increase of 85,000. Meanwhile, previous employment figures were revised sharply lower, with May job growth revised from 129,000 to 63,000 and June growth revised from 57,000 to just 20,000. The two-month total was reduced by 103,000 jobs, indicating that previous market assessments of the resilience of the US labor market may have been overly optimistic.

From the employment structure perspective, job losses were mainly concentrated in local government, education, and retail sectors, while healthcare employment continued to expand and provided some support to overall employment. Although the unemployment rate fell from 4.2% to 4.1%, the labor force participation rate declined from 61.5% to 61.4%, marking a cumulative decline of 0.7 percentage points since the beginning of the year. FXTRADING analysis believes that the US labor market is entering a phase of low hiring and low growth. The seemingly stable unemployment rate has not concealed the continued weakening of employment momentum, and future economic performance will depend on changes in corporate hiring behavior.

Canadas Labor Market Rebounds Strongly

Canada‘s labor market performed significantly better than expected in July, with employment increasing by 75,100 jobs, well above market expectations of 17,800 and much higher than June’s gain of 18,200. The employment rate edged up to 60.9%, while the unemployment rate declined from 6.5% to 6.4%, reaching the lowest level since July 2024 and marking the third consecutive monthly decline, with a cumulative decrease of 0.5 percentage points since April.

From an industry perspective, employment growth was driven by several private-sector areas. Wholesale and retail trade added 21,000 jobs, finance, insurance, real estate and rental services gained 18,000 positions, professional, scientific and technical services added 17,000 jobs, and construction employment increased by 16,000. However, employment in public administration and agriculture declined by 15,000 and 9,600 respectively, partially offsetting the overall gains. FXTRADING analysis believes that Canadas labor market has shown strong short-term resilience, with improving employment gains boosting economic confidence, but slower wage growth means the central bank still needs to balance growth and inflation risks.

UK Economic Activity Returns to Expansion

UK economic activity improved in July, with the services sector returning to expansion. The S&P Global Services PMI rose from 48.8 in June to 52.1, while the Composite PMI increased from 49.3 to 52.2, indicating that business activity returned to growth for the first time since April. A recovery in consumer spending and stronger demand for technology services were key drivers, while manufacturing output also recorded its strongest increase since September 2024.

However, UK business employment declined for the 22nd consecutive month, matching the longest period of job losses on record, indicating that companies remain cautious about hiring. Meanwhile, new orders returned to growth after five consecutive months of decline, and business confidence improved for the second straight month, reaching its highest level since February. However, geopolitical risks and demand uncertainty continue to limit the pace of business expansion. FXTRADING analysis believes that the UK economy is gradually moving away from its previous weakness, but the delayed recovery in the labor market remains a major challenge.

Eurozone Producer Cost Pressures Ease

The Eurozone Producer Price Index (PPI) fell 0.3% month-on-month in June, in line with market expectations, reversing the 0.2% increase recorded in May. The annual growth rate also slowed from 5.9% to 4.6%. The decline was mainly driven by lower energy prices, with producer prices for energy falling 1.5% month-on-month, making energy the primary factor behind the overall decline in PPI and indicating that supply-side inflation pressures are easing.

Excluding energy factors, industrial cost pressures in the Eurozone remained on an upward trend. Data showed that prices for intermediate goods increased by 0.3%, while capital goods and durable consumer goods prices both rose by 0.2%. FXTRADING analysis believes that producer-side inflation in the Eurozone is gradually cooling, but core cost pressures remain, and the European Central Bank still needs to monitor price developments rather than assuming inflation risks have been resolved solely based on lower energy prices.