Job Openings Plummet to Pandemic-Low Levels, Signaling Labor Market Weakness

Job Opening Data Dips to Pandemic-Era Lows, Signaling Cooling Labor Market

September 3, 2025 — U.S. job openings fall to low levels. Recent data shows a drop seen only since COVID began. This change points to a labor market that now slows down.

The Bureau of Labor Statistics released the latest Job Openings and Labor Turnover report. The report shows job listings near 7.18 million for July. This is only the second time since 2020 that openings fall under 7.2 million. The similar drop last occurred in September 2024 when numbers sat just above 7.1 million.

Key Highlights:

  • July job openings: 7.18 million
  • Economists’ expectation: about 7.4 million (from a Dow Jones poll)
  • Lowest reading: since September 2024
  • Comparison: levels seen in the early pandemic days

This drop did not meet economists’ predictions. The report shows hints that hiring may slow after many months of signs that job offers were dying down.

Heather Long, Chief Economist at Navy Federal Credit Union, noted, "This marks a turning point in the labor market. It is a crack in the system." She added, "The data proves that the job market is frozen and it is hard for anyone to find work right now."

What This Means for the Economy

Fewer job listings can signal that employers act with more care in uncertain times. Fewer openings may slow wage rise and job gains. A slowing labor market could also affect how much consumers spend, a key part of economic growth.

Investors and policymakers will study the next reports to gain a clearer view. Key upcoming data include:

  • Weekly jobless claims report (due Thursday): It gives a near-term look at layoffs and unemployment.
  • Monthly jobs report (due Friday morning): It shows a full picture of employment, job loss, and wage shifts across the nation.

Ongoing Labor Market Watch

The labor market has stayed in focus since the pandemic. COVID first shook jobs in many ways. Now, the drop in job openings hints that the market may grow more slowly or start to settle. As new numbers come in, experts will watch these trends to adjust their plans on hiring, investing, and economic policy.

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China’s Services PMI Sparks Market Turbulence: Insights on AUD/USD and Hang Seng Trends

China Services PMI Shows Margin Challenges; AUD/USD and Hang Seng Fall

By Bob Mason
Updated: September 3, 2025, 02:42 GMT+00:00

China’s services sector grew in August. The latest Services Purchasing Managers’ Index (PMI) climbed to 53 from 52.6 in July. This rise signals economic progress and sparks hope for stronger GDP growth. Yet behind the headline, data show firm pressure on profit margins that affected markets. The Australian dollar (AUD) and the Hang Seng Index felt these effects.

Services Sector Growth and New Business Increase

China’s service data connect government moves and market action. New business grew at its fastest pace since May 2024. Export orders increased, and foreign demand helped push the sector upward. This link hints at a stronger third quarter ahead.

Still, the survey shows ongoing issues. Even with more new business, many companies cut workers for the second time in three months. Wage hikes and higher raw material prices kept input costs rising for the sixth month in a row.

Margin Squeeze and Price Pressure

A key point in the August PMI survey is the narrow profit margin that firms face. Input costs climbed, but price gains failed to match. Short ties between rising costs and falling output prices squeezed profit. Some firms reduced staff even as demand grew, which may affect both jobs and local spending.

A related indicator, the RatingDog China General Composite PMI, rose from 50.8 in July to 51.9 in August. This score, which pairs manufacturing and services data, shows growth can happen even as margin challenges stay linked to the rising costs.

Expert Insights

Yao Yu, founder of RatingDog, spoke on the numbers. He said:

“China’s service sector in August showed clear signs of progress. Still, the pressure on prices and profits hints that the recovery is not even. Even if this short-term rise supports business, the weight on profits might slow things down over time.”

He pointed to the need for better price passing and stronger local demand. These factors will decide if China’s recovery can hold.

Market Reaction: Hang Seng and AUD/USD Decline

Following the PMI data, markets reacted with caution. The Hang Seng Index first rose 0.85% to 25,713, then hit a brief peak of 25,741 before dropping to 25,535. By the morning of September 3, it held near 25,534 as investor feeling stayed mixed.

In foreign exchange, the AUD/USD pair moved sharply. The Australian dollar jumped to $0.65248 after the report. Soon it pulled back to $0.65209 as traders weighed the cost issues. Later that day, the pair lost 0.33% to $0.62752. Since Australia and China trade closely, these numbers remain linked, along with signals from US trade views.

Looking Ahead: US-China Trade Talks and a Wider View

Trade between China and the US stays at the center of market views. Talks with China’s trade lead Li Chenggang and US officials bring hope for change. Recent statements from ex-President Trump, who criticized India and others at a summit, might spark market shifts.

If lower tariffs come into play, firms could face less cost pressure and see more hiring. Strong hiring can boost local spending and help maintain GDP near 5% this year. More jobs would support both domestic markets and overall growth.

Conclusion

China’s services sector shows steady growth and a return to business activity. New business gains and strong export orders spur progress. Still, higher input costs, pressure on profit margins, and hiring cuts remind us of the challenges ahead. These factors have stirred market shifts and touched key markers like the Hang Seng and AUD/USD.

Investors and policymakers will keep an eye on whether companies can manage rising costs and pass prices effectively. They will also follow US-China trade talks, which will play a key role in China’s near-term market path.

For continuous updates on global markets and economic indicators, visit FXEmpire.

About the Author
Bob Mason has over 28 years of experience in the financial industry. He covers currencies, commodities, alternative assets, and global equities with a focus on European and Asian markets.

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Euro Zone Inflation Surges to 2.1% in August 2025: What It Means for the Economy and ECB Policy

Euro Zone Inflation Rises Slightly Above Expectation to 2.1% in August 2025

Eurostat shared flash data on September 2, 2025. The euro zone saw inflation jump to 2.1% in August. This move beat the 2.0% estimate from a Reuters poll. Economists had kept the rate steady from July.

Key Inflation Figures and Market Response

  • The headline inflation rate is 2.1%, a bit above the ECB’s target of 2%.
  • Core inflation stays at 2.3%. It leaves out fast-changing prices like those for food, energy, alcohol, and tobacco.
  • The services inflation rate drops a little to 3.1% from 3.2% the month before.

Shoppers face higher prices at supermarkets across the euro zone. Markets react; the euro slips 0.6% against the U.S. dollar near $1.1640, and the pan-European Stoxx 600 index drops 0.7% on Tuesday morning.

European Central Bank’s Interest Rate Outlook

In July, the ECB kept its key rate at 2%. Many now expect the bank to keep rates at the same level in September. Andrew Kenningham, Chief Europe Economist at Capital Economics, notes that the small rise in headline inflation will not shift the ECB’s plans soon.

“Most important for the ECB is that the services inflation fell from 3.2% in July to 3.1% in August. This is the lowest since March 2022 and shows that local price pressure is easing,” Kenningham said.

He adds that the bank will hold rates for a few more months while it reviews economic signs.

Economic Growth and Trade Developments

Eurostat reported modest growth of 0.1% in the second quarter compared to the previous quarter. This slow but steady growth, mixed with fewer trade worries after the July EU-U.S. trade deal, sets a careful stage for the region’s economy.

The new deal cleared many tariff issues. Some worry that a steady 15% duty on certain EU exports to the U.S. could still slow activity.

Expert Perspectives on Inflation and Monetary Policy

Irene Lauro, a euro zone economist at Schroders, sees a steady path ahead:

“With trade worries easing, the euro zone recovery may gain strength. Firms begin to borrow and invest more. The ECB will likely hold rates steady in September. The steady core inflation shows that a change in policy is not on the horizon. The bank will watch growth before making any move.”

What Lies Ahead?

Data and expert words make it likely that the ECB will keep rates unchanged at its next meeting. The small rise in headline inflation, paired with softer services inflation, suggests that price pressures in the euro zone may start to settle.

Investors and policymakers watch closely. They see that future economic growth, job numbers, and trade matter for both inflation and the bank’s policy in coming months.

Stay updated on economic developments and market movements with CNBC’s live coverage and detailed analysis.

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Navigating Economic Turbulence: China’s Struggle Between Growth Aspirations and Rising Unemployment

China Faces Tough Balancing Act: Growth Goals vs. Rising Jobless Pressure

By Bob Mason
Updated: September 2, 2025, 02:43 GMT+00:00

China now moves through a hard economic stage. The state aims for a 5% GDP rise. It sees more job losses, price cuts, and weak foreign demand. New facts show a mixed scene. Beijing must keep growth and job balance while handling global trade.

Manufacturing PMI Beats Hopes, Yet Problems Stay

China’s factory work gives some hope. The RatingDog China General Manufacturing Purchasing Managers’ Index jumped from 49.5 in July to 50.5 in August. The change to over 50 marks a move into growth. New orders reached high points unseen since March. Selling prices now hold steady after eight months of falls, easing worries of price drops.

Still, factories face high input costs. Input price rise hit a top mark since November 2024. These costs, plus ongoing job cuts, make work tough. Factory profits dropped 1.7% from January to July, and this fall continues from June.

EV Price Cuts and Job Losses Hit Profit Edges

A strong cost drop shows in electric vehicle makers. All top 20 EV brands had price slashes in July, as noted by China Beige Book. Price cuts squeeze profit edges. Companies now trim costs and reduce staff.

Job loss grows too. Overall unemployment edged up from 5.0% in June to 5.2% in July. More new college graduates crowd the job market. Youth job loss jumped to 17.8% in July, up from 14.5% in June.

Yet EV makers still post strong results. In August, NIO sent 31,305 vehicles—a 55.2% rise over last year. Xiaopeng Motors sent 37,709 units—a rise of 169%. September may show even more, as car buyers keep coming despite low prices.

Brian Tycangco, editor at Stansberry Research, views the fierce scene. He sees that a few Japanese and Korean brands—Toyota, Honda, Kia/Hyundai, and Vinfast—may stand strong. This may help local EV makers hold their ground.

Strengthening BRICS Ties to Ease US Trade Strain

Outside China, world demand stays weak. Trade talks, especially with the US, add strain. Beijing now works closer with BRICS nations like India, Russia, and Iran. The goal is to split from Western trade routes and ease US tariff strain.

At a recent meet, President Xi Jinping spoke on fair play and fair trade. He said nations must work more on trade, green energy, science, tech, and AI. This plan seeks to build stronger world trade links. It aims to give China and friends new trade paths. Yet, the US warns of tariff hits on BRICS nations that stray from using the dollar. An upcoming US election leaves more unknowns in trade talks.

Mainland Chinese Stocks Climb on Stimulus Hopes

Chinese stocks rise on news and new support steps. On September 1, the CSI 300 and the Shanghai Composite Index hit top levels for 2025. They rose by 0.60% and 0.46%, and the CSI 300 hit heights not seen since March 2022. The Shanghai Composite nears a 10-year top.

This year, both indexes increased about 15%. They did better than the Nasdaq but lag behind Hong Kong’s Hang Seng Index. Investor trust grows from hopes that Beijing’s steps will keep the growth going.

Some experts warn that gains may slow if new support stops, if trade fights grow, or if BRICS countries quarrel.

Looking Ahead: Services PMI and New Trade Talks

China’s near future depends on new stats and global moves. The RatingDog China General Services PMI, due on September 3, will show how strong the home market is.

Meanwhile, fresh US-China trade talks and more aid moves will shape how investors feel and what lies ahead. Leaders must work to keep growth, hold jobs, and face global doubts.

China works now to stay on course. Its mix of home changes and world ties will guide what comes next.

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The Strategic Restraint: Why Trump Hesitates to Enforce Sanctions on Russia Amid Ongoing Conflict

Why Does Trump Hold Back on Punishing Russia and Putin?

September 1, 2025 – CNBC Report by Holly Ellyatt

U.S. President Donald Trump has warned he will add more sanctions on Russia and its leader, Vladimir Putin, if Moscow does not start peace talks or call for a ceasefire in Ukraine. Though Russian forces move more and Moscow shows no sign of talks, Trump sits back from new harsh actions.

A Strategic Pause in Sanctions

Experts note that this pause is part of a deep plan. Chris Weafer, head of Macro-Advisory in Moscow, says Russia’s money is already squeezed by limits on its oil trade. More sanctions might push Russia’s budget beyond its limit, but these tough moves have not come yet.

Reasons Behind Trump’s Reluctance

Two main points shape Trump’s slow move:

  • Aiming to Mediate Peace: Trump shows a clear wish to be the one who brings the sides together. With the Nobel Peace Prize soon in early October, many think the president plans to win praise for solving the conflict by talks instead of force.

  • Worry Over Russia and China Growing Close: Some in the U.S. fear that if Russia is cut off by the West, it may turn closer to China. A bond between Russia and China could give Beijing better access to Russian energy, materials, military tools, and key territories in the Arctic. This closeness might bar the U.S. from important areas and boost China’s rank in the world.

Chris Weafer said, “Official voices in Washington do not want Russia to end up under China’s wing; they work to keep Russia active with the West.” This care shapes when and how harsh the sanctions will be.

Reaction from Ukraine and the West

Ukraine shows anger at what many see as missed limits and broken promises from Washington. Trump set a line with a ceasefire date on August 8, but the fighting did not stop. John Herbst, who once led U.S. ties with Ukraine and now heads the Atlantic Council’s Eurasia Center, said Trump’s delay has left Kyiv and European friends "gritting their teeth," waiting for the White House to see that Russia acts to avoid real impact.

The New Geopolitical Scene: China-Russia-India Relations

At the Shanghai Cooperation Organization summit on September 1, 2025, major eastern powers met. Leaders including Putin and Indian Prime Minister Narendra Modi joined with 20 other state heads.

Chinese President Xi Jinping called for an end to a "Cold War mindset" and asked for more help among states. At the summit, Putin spoke of a chance to form a new political and social order away from a usual Euro-Atlantic group. He felt that recent meetings with Trump and current talks may help bring peace to Ukraine.

Outlook

Sanctions remain a key tool in U.S. efforts to press Russia. Yet, the U.S. now faces a hard mix of pushing Moscow and stopping a deep Russia-China tie. The White House has not yet explained its next moves, leaving friends in Ukraine and around the world to wait.

For more on this developing story and other global news, subscribe to CNBC PRO and stay informed.

Key Takeaways:

  • Trump holds back new sanctions to play a role as a mediator and to discourage a closer Russia-China bond.
  • New limits might force Russia’s economy into more trouble but could also speed up its move toward China.
  • Ukraine and its European friends are upset with what they see as slow or missing action.
  • The SCO summit shows that power in Eurasia is shifting.
  • The U.S. faces a hard task in balancing pressure on Moscow with wider global ties.

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China’s Manufacturing Surge Sparks AUD/USD Rally and Stock Market Optimism

China Manufacturing Rebound Fuels AUD/USD Gains, Stocks Climb

September 1, 2025 — By Bob Mason

China manufacturing shocked the market this August when it quickly recovered. The rise pushed the Australian dollar up and lifted stock indexes like the Hang Seng. New data shows China’s economic pace amid global trade strains and home challenges.

China’s Manufacturing Expansion Surprises Traders

The RatingDog China General Manufacturing Purchasing Managers’ Index gave a score of 50.5 this month. This score passed the neutral line at 50, which marks the change from decline to growth. It rose from July’s 49.5 and beat economists’ prediction of 49.5. The survey showed a few clear trends:

  • Output rose for the second time in three months. This step came with rising local demand.
  • New orders increased quickly. They grew at the fastest pace since March and point to a boost in business moves.
  • Even as new orders picked up, export orders fell a bit. This drop continued for five months in a row and shows that the market outside stays tough.
  • Firms cut staff for the fifth month in a row. They act with care in hiring amid unsure times.
  • Higher material prices led to higher input costs. This marked the fastest rise since November 2024.
  • Some companies bumped up prices a little. This ended eight months of falling prices, although the average selling price stayed nearly the same.
  • Producer mood reached its best level since early 2025. This change came as many hoped for better conditions and more business growth.

Expert Insights on the Manufacturing Recovery

Yao Yu, founder of RatingDog, said the manufacturing sector helps the economic recovery even if the rise is uneven. He noted weak local demand, soft profits, and slow business bounce can cut the strength of the rebound. He also mentioned that rising costs keep pressure on profit margins in a competitive market.

Market Reaction: Australian Dollar and Hang Seng Index Rally

The good manufacturing data from China quickly touched money markets:

  • The AUD/USD pair fell at first to 0.65367 after the index came out. It soon climbed to 0.65442 and later edged up by 0.12% to 0.65436. With about one-third of Australia’s exports going to China, strong Chinese demand boosts Australia’s economy. This help comes as many expect the Reserve Bank of Australia to cut rates.

    In the July press talk, Governor Michele Bullock stressed how China’s trade terms and support moves could shield Australia from US tariff effects.

  • The Hang Seng Index acted in a similar way. It dropped briefly to 25,471 before rising to a peak of 25,609. At the time of the report, the index had climbed by 2.02% to trade at 25,585. This rise shows more investor hope because of the manufacturing rebound, even though risks remain.

Focus on Trade Talks and Support Measures

The drop in export orders still makes things hard. Last week, China’s top trade negotiator Li Chenggang met US officials. Work on trade deals may push outside demand and help China reach a 5% GDP rise in 2025. If trade talks slow or local demand stays low, Beijing may act with extra support to lift the economy. Such steps may help the Australian dollar and stocks listed in Hong Kong. On the other hand, if support does not come and external demand weakens more, these markets might feel the strain.

Looking Ahead

Market watchers now study China’s trade talks and any new domestic moves. Investors should keep up with the latest news and change plans as new data and political moves appear.

For those trading in this busy field, fast news and clear views can help capture new trends and avoid risks.

About the Author:
Bob Mason has over 28 years of experience in the financial sector, having worked with global rating agencies and multinational banks. His work covers currencies, commodities, alternative assets, and global equities with a special focus on European and Asian markets.

For more updates on economic indicators, forex trading strategies, and market forecasts, visit FXEmpire.

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Rising Sip: How Inflation Pushes the Price of the U.S. Open’s Honey Deuce Cocktail Above the Rest

Honey Deuce: How the U.S. Open’s Signature Cocktail Price Compares to Inflation

At the U.S. Open in New York, tennis fans crave a famous drink: the Honey Deuce. Its vodka base mixes with small honeydew pieces that clap like tennis balls. This cocktail ties with the match and cheer of a two-week event.

Rising Prices Amid Inflation Trends

Today, the drink costs $23. In 2015, it sold for $15—a change of 50% when you compare the two prices. The price held last year but had six jumps since 2012. CNBC checked the drink’s change with the overall cost rise tracked by the CPI.

From August 2015 to July 2025, the CPI climbed by about 36%. At the same time, the Honey Deuce price grew by about 53%. If it had moved with the general cost, you would find it at about $20.33 now. That is roughly $2.67 less than its current cost.

Outpacing Inflation and Other Alcoholic Beverages

This drink’s price grew more than that of other drinks served outside homes in U.S. cities, which went up by nearly 34% in ten years. The closer cost rise shows the Honey Deuce now stands higher than many of its drink mates.

The Impact on U.S. Open Revenue

Even at $23, the drink stays a crowd favorite. In 2024, fans bought over 550,000 Honey Deuce cocktails. Those sales brought in close to $13 million, as NBC New York reports. The U.S. Tennis Association did not share words about its pricing when asked.

Consumer Behavior in the Era of “Funflation”

The higher cost shows that many now pay extra for a unique fun time. Many watch prices again even as overall inflation slowed after COVID-19. They still choose travel, concerts, and live sports for a special day out.

Summary

  • Honey Deuce price in 2015: $15
  • Current Honey Deuce price: $23
  • Price increase since 2015: ~53%
  • Broader inflation (CPI) increase since 2015: ~36%
  • Alcoholic beverages price increase outside home: ~34%
  • Yearly Honey Deuce sales at U.S. Open: 550,000+
  • Revenue from Honey Deuce sales in 2024: Nearly $13 million

As the U.S. Open draws fans to New York, the Honey Deuce stands with the event. Its price change shows how inflation and the pull of unique moments shape spending at big sports shows.

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China’s Manufacturing Sector Struggles: NBS PMI Reports Woes Amid Trade Talks and Economic Uncertainty

China’s Manufacturing Sector Faces Continued Challenges Amid US Trade Talks and Mixed Economic Signals

August 31, 2025 – China’s manufacturing sector shows strain as it handles trade tensions with the United States. New data from the National Bureau of Statistics shows a steady drop in factory work. This drop makes the future of the economy less clear for the third quarter and for Beijing’s GDP goals.

Manufacturing PMI Reflects Fifth Month of Contraction

On August 31, the National Bureau of Statistics set the Manufacturing Purchasing Managers’ Index at 49.4 in August. The index barely moved up from 49.3 in July. It stays below 50. This is the fifth month with a loss. The small change points to ongoing struggles in the industrial sector.

The Non-Manufacturing PMI, which covers services and construction, climbed from 50.1 to 50.3. This small rise shows that service work grows a bit. Analysts warn that weak consumer spending might stop a stronger overall growth.

Key Manufacturing Indicators Reflect Mixed Trends

• The New Export Orders Index moved up 0.1 point to 47.2. The score stays low. It shows weak demand from abroad.
• The New Orders Index reached 49.5 after a small rise. This value shows low orders at home.
• The Employment Index dropped to 47.9. Fewer workers are keeping pace.
• Prices for raw materials jumped 2.2 points to 53.3. This rise may cut profit margins.

Even with small gains, factories must cope with higher costs and weaker order numbers at home and abroad.

Consumer Weakness Clouds Growth Outlook

Retail sales grew 3.7% in July over last year. They were 4.8% in June. This change shows that consumer spending is slowing down. Unemployment climbed from 5% to 5.2% in July. Youth unemployment jumped from 14.5% to 17.8%. Many new graduates add to the job search. Beijing has called for more support for businesses to train and hire new workers.

Economists see a hard cycle. Lower selling prices force factories to cut costs. This cycle puts pressure on wages and lessens the money people have to spend. Alicia Garcia Herrero, Chief Economist for Asia Pacific at Natixis, said:

"It is China’s manufacturing workers who lose out while exports and growth do not stop. If you need to export at a loss, do not export. The data will not show Chinese workers as the main victims because they might face unpaid leave or reduced hours."

Trade Talks and Market Reactions

Trade talks between China and the United States start again as these numbers come out. China’s top trade negotiator, Li Chenggang, met with several U.S. agencies last week. He went over ideas from past deals. Market players watch these talks for any sign that tariff strain might ease and trade might pick up.

Some investors wait for Caixin’s Manufacturing and Services PMI next week. This report looks at smaller, private companies, especially in coastal areas. It adds a view to the state-based National Bureau of Statistics data.

Market indices show mixed moves. Mainland China’s CSI 300 rose by 2.71%. The Shanghai Composite Index grew by 0.84%. These gains come from hope over a possible trade deal and extra support steps. In contrast, Hong Kong’s Hang Seng Index fell 1.03%, hurt by low industrial profits and shifts in Federal Reserve ideas. The AUD/USD pair went up 0.71% during the week and closed at $0.65360 as risk mood got better.

Implications and Outlook

China’s steady drop in manufacturing and slow growth in services make its goal of a consumer-led economy with a 5% yearly GDP growth hard to reach. The mixed PMI numbers point to a need for new support measures to fight trade strain and weak domestic demand.

Market watchers will keep an eye on the next Caixin data, future trade discussions, and new policy moves. These steps will shape the mood in Chinese stock and currency markets in the near term.

—
Bob Mason
Financial Markets Analyst and Reporter
Published August 31, 2025

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Big Six Banks Soar Amid Economic Uncertainty: Why CEOs Are Staying Cautious

Canada’s Big Six Banks Thriving Amid Trade Uncertainty, But Executives Remain Wary

By Naimul Karim | August 29, 2025

Canada’s major banks posted record profits this quarter. They show strong business conditions despite tense trade with the United States. Top executives hold back on celebrations. They worry about economic clouds ahead.

Strong Earnings Reflect Economic Resilience

Five of Canada’s largest banks beat analyst predictions. Major firms like the Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD) reached record profits. Rising revenues and fewer loan risks drove these results. The gains mark a strong economy even during a U.S. trade war.

Bank leaders, however, stay cautious. They see hope in rising non-essential consumer spending and a lower overall uncertainty than earlier in the year. Yet, they stress that the fragile Canada-United States-Mexico Agreement (CUSMA) remains very important.

Trade Agreement Critical to Stability

CUSMA acts as a shield from harsh American tariffs. The deal soon faces new talks. RBC CEO Dave McKay said, “If most CUSMA goods stay exempt, Canada will have low tariffs and the economy can stay steady.” McKay warned of risks if trade talks fail. He stressed dangers like falling consumer confidence, squeezing company profits, rising inflation, and weaker job markets. Such risks add uncertainty to monetary policy and capital flows.

Modest Growth Continues Amid Challenges

Darryl White, CEO of Bank of Montreal (BMO), said the Canadian economy is in its middle innings. Growth is moderate. “The economy moves at the pace we expect,” White said. “It is not too strong and is not in recession. Some areas slow down naturally.” This steady growth explains why banks show healthy loan activity despite risks.

Borrowers Front-Run Economic Conditions

Maria-Gabriella Khoury, Fitch’s senior director for North American banks, noted many borrowers seek credit early. They expect tougher times ahead. “They line up credit while the economy is stable, not waiting for a toll from tariffs,” she said. Both consumer and commercial loans rose more than expected. This suggests customers act before challenges hit. Still, Khoury warned that this optimism might last only one quarter as tariff talks progress.

Loan Growth Restrained, but Margins Improving

Analyst Shalabh Garg from Veritas Investment Research said bank loan growth stayed in the low single digits. Slower loan growth fits the modest pace of the overall economy. With deposits growing faster than loans, banks cut funding costs and widened net interest margins. Banks also set aside fewer funds for bad loans. Broadly stable unemployment rates further support this improved performance.

Outlook Remains Cautious

Canada’s largest banks continue to succeed in a changing landscape. Yet, executives remain careful. Ongoing U.S. trade policies and the potential for CUSMA renegotiation add risk. For now, leaders avoid premature celebrations.

As Canada faces these challenges, the banking sector’s performance stays a key signal of the country’s overall economic health.

Photo credit: THE CANADIAN PRESS/Andrew Lahodynskyj

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July Core Inflation Stays Steady at 2.9%: What It Means for Federal Reserve Policy and Consumer Spending

Core Inflation Hits 2.9% in July as Forecasted, Reinforcing Fed’s Cautious Tone

By James Hyerczyk
Updated: August 29, 2025, 13:25 GMT

In July 2025, the U.S. core Personal Consumption Expenditures price index showed a 2.9% rise over the past year. This key gauge, watched by many at the Fed, reached the number that many expected. The rise connects directly to the strong inflation pressure that tests the Fed’s price goal and policy.

Inflation Figures Signal Ongoing Price Pressures

The core PCE index cuts out the food and energy prices. It jumped 0.3% this month. This gain shows that core inflation is staying firm. The full PCE index, which brings all prices into view, went up 2.6% over the year with a 0.2% monthly gain.
These numbers tower over the Fed’s 2% target. The high pace links to the Fed’s idea that rates remain high for an extra span. The steady core inflation makes quick rate cuts unlikely.

Consumer Spending Strengthens Amid Inflation Concerns

Consumer spending forms a strong link in overall growth. In July, spending added $108.9 billion, a 0.5% increase. Spending on services climbed by $60.2 billion while spending on goods gained $48.7 billion. When price rises are removed, real spending climbed 0.3%.
The U.S. consumer sector stays strong and holds the economy up. Yet spending crept up faster than real disposable income, which only rose 0.2%. This gap may cause strain if wage growth does not follow or if price drops do not come soon.

Savings Rate Declines as Income Growth Lags Behind Spending

Personal income increased by 0.4% in July. This bump matched the rise in disposable income. Still, with spending outpacing income, the saving rate dropped from 4.6% in June to 4.4%. This drop ties to households using their savings to keep spending at its current level. Such a link may limit how much people can spend if high prices hold on.
Even though wage gains moved well, they did not match the jump in spending, and pressure on household budgets grows.

Federal Reserve’s Policy Outlook: Caution Prevails

Core inflation stays high. The 0.3% monthly rise in the core PCE builds into a yearly pace that keeps worries about prices alive. This pace supports the Fed’s plan to keep interest rates high for more time.
Policy makers lean on the need for price drops to become steady before cutting rates. Their approach remains careful and guided by new data.

Market Implications: Bonds Bearish, Equities Mixed

Market moves show care as the inflation data settles in. U.S. Treasury yields carry an upward pull because of the lasting inflation. Some market areas that feel high rates could have more strain. Stocks tied to consumer buying power might stand firm. In general, stocks sit in a narrow range until clear shifts in inflation or policy show up.

About the Author
James Hyerczyk is a U.S.-based technical analyst and teacher with over 40 years in market work. He studies chart shapes and price changes and has written two books on technical analysis. He works in both futures and stock markets.

Summary:
In July, core inflation rose by 2.9% over the past year. The number backs the Fed’s plan to keep high interest rates until price drops are firm. Consumer spending stays strong but grows faster than income, which cuts back on savings. The Fed’s careful tone means rate cuts are not near, and market moves may continue to link closely with inflation data.

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