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PPI Plummets: New Data Fuels Expectations for Fed Rate Cut in September

Surprise Drop in Producer Price Index Bolsters Expectations for September Federal Reserve Rate Cut

By James Hyerczyk | Updated: September 10, 2025, 13:06 GMT

In a surprising turn, U.S. wholesale data for August shows the Producer Price Index (PPI) dropping. This drop makes many think that the Federal Reserve may cut rates in its next meeting.

Key Highlights:
• U.S. wholesale prices fell by 0.1% in August, while experts had predicted a 0.3% rise.
• Core PPI, which leaves out food and energy costs, also fell by 0.1% against a forecast of 0.3%.
• Equity and bond markets reacted well, as S&P 500 futures climbed and Treasury yields dropped.
• The 10-year Treasury yield slid to 4.068%, and the 2-year yield dropped 1 basis point to 3.529%.
• CME FedWatch now shows traders fully expecting a Fed rate cut in September.

Weaker Wholesale Inflation Supports a Soft Monetary Outlook

U.S. wholesale prices fell by 0.1% last month. The Bureau of Labor Statistics found that this drop did not match economists’ views of a steady rise. The core PPI’s drop shows that price pressures eased when food and energy are not counted. This fact made investors gain hope and push up equity futures, while bond prices did well as yields dropped.

A 0.2% decline in service prices, including a 1.7% drop in trade services, added to the change. Prices in machinery and vehicle wholesaling fell by 3.9%, which suggests prices in these sectors are easing. In contrast, prices for goods edged up a small 0.1%. Energy costs fell by 0.4%, while food prices ticked up 0.1%. Core goods prices, which leave out food and energy, rose by 0.3%. The numbers point to softer price movements in the goods market.

Tariff Effects and Labor Market Dynamics Under Scrutiny

Inflation stays above the Fed’s 2% goal. Fed leaders note softer rises in rents and wages as a sign that they can be patient. Tariffs set in the past still affect some goods; for example, tobacco prices grew by 2.3%. Recent labor data showed close to one million fewer new jobs in the year ending March 2025. Some worry about this drop even as Fed officials call the job figures “solid.” Such points add extra steps to the Fed’s choice on interest rates.

Implications for Upcoming Fed Policy and Market Outlook

This unexpected drop in the PPI makes many investors and analysts believe that the Fed will lower interest rates in September. Market watchers now wait for Thursday’s Consumer Price Index (CPI) report, which may back this view. If consumer inflation shows similar softness, it may push market views toward not just one, but perhaps more rate cuts in the near future.

Soft inflation and mixed signals from the labor market have made equities rise and Treasury yields fall. If current patterns hold, markets may get ready for a looser monetary policy that supports growth.

About the Author

James Hyerczyk is a U.S.-based technical analyst and educator. He brings over 40 years of experience in market analysis and trading. He studies chart patterns and price moves, has written two books, and has worked in both the futures and stock markets.

For more timely updates on market forecasts, economic news, and financial trends, visit FXEmpire.com.

Disclaimer: This article is for educational and informational purposes only and does not mean to serve as investment advice. Readers should check details and speak with a financial advisor before making any investment decisions.

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Key Insights from the Latest PPI Inflation Report: What It Means for Markets and the Fed

5 Key Takeaways from the Latest U.S. Producer Price Inflation Report

The new U.S. Producer Price Index report brings surprising numbers. It shows changes that spark talks on inflation and Fed policy. Here is a detailed look at the report and its impact on the economy and markets.

Unexpected Decline in Producer Prices

In August, the PPI—measuring wholesale price shifts—fell by 0.1%. This drop marks the third time this year that prices have fallen instead of risen. Many Wall Street experts expected a 0.3% rise. The core PPI, which leaves out food and energy changes, also dropped by 0.1%. In contrast, a core measure that leaves out trade services in its count went up by 0.3%.

Market and Political Reactions

Low inflation numbers now push markets to see a rate cut soon. President Donald Trump said on Truth Social,
"No Inflation!!! ‘Too Late’ must lower the RATE, BIG, right now. Powell is a total disaster, who doesn’t have a clue!!!"

The market showed only slight moves.

  • Stocks: Saw small gains after the report.
  • Treasury yields: Fell by a little.

Investors now watch closely as the next major report comes.

Inflation Fundamentals Show Good Signs

Policy experts study not only the main inflation number but also the smaller details. Here, the report shows that the service sector—making up about 80% of U.S. GDP—went into a 0.2% drop. The prices of goods, which face more global and tariff effects, increased by only 0.1%. These signs point to a cooling of inflation pressures.

Eyes on Tomorrow’s Consumer Price Index

Investors and policy makers now turn to the Consumer Price Index report. It is set for release on Thursday at 8:30 a.m. ET. The CPI gives a broad look at consumer prices. Along with the PPI, it helps shape the Fed’s view on inflation. Experts expect the CPI to rise around 0.3% in August. This will be the final big inflation data point before the Fed makes a policy choice, and its timing may shape market ideas and policy plans.

Expert Perspectives on the Report

Leading economists now share what they see in the report:

  • Chris Larkin, Managing Director at E-Trade:
    “Tomorrow’s CPI will carry more weight, but today’s PPI print essentially rolled out the red carpet for a Fed rate cut next week. After last week’s jobs report, the market was already expecting the Fed to begin an easing cycle, so it remains to be seen how much of a near-term impact this will have on sentiment.”

  • David Russell, Global Head of Market Strategy at TradeStation:
    “The worst-case scenario on inflation isn’t playing out. The doves will be happy to see the year-over-year number back below 3 percent. Combined with the weak jobs data recently, this keeps us on track for rate cuts. However, the speed and intensity might depend more on the big consumer index tomorrow morning.”

  • Andrew Hollenhorst, Citigroup Economist:
    “Inflationary pressure in PPI appears to be muted overall. We see nothing in this report (or its implications for core PCE) that would dissuade Fed officials from cutting 25 basis points in September and proceeding to cut 25 basis points at each upcoming policy meeting.”

What’s Next?

The report shows a drop in wholesale inflation pressure. With the CPI report close at hand, all eyes stay on the Federal Reserve. Many now expect a cycle of rate cuts after a long period of tightening. The upcoming CPI and future Fed moves will help set the course for the U.S. economy in the months to come.

Stay tuned to CNBC for live updates and expert analysis as more inflation data unfolds and market reactions evolve.

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China Faces Rising Deflation Fears Amid Weak Trade Data as Markets React Positively

China Faces Growing Deflation Risks as Trade Data Slows; Hang Seng Index Shows Gains

By Bob Mason
Updated: September 10, 2025, 02:28 GMT

China’s economy shows signs of deflation. Trade numbers weaken. Consumer demand stays low. The signs point to growth that may slow down. The Hang Seng Index climbs in Hong Kong. This rise brings hope that a new government plan may help.

Key Economic Indicators Signal Deflation Risks

China’s Consumer Price Index dropped 0.4% compared to last year in August. It was expected to drop only 0.2%. Prices did not move from month to month. This fact suggests low buying levels. Unemployment rises. Households spend less. Problems in the real estate field and a slow pickup in credit add to the low spending.

The Producer Price Index fell 2.9% compared to last year in August. In July, the drop was 3.6%. The numbers match expert views. The result shows that factory and wholesale price pressures may ease a bit.

Divergent Consumer and Producer Price Trends

Consumer prices fall to low levels as demand suffers. Factory prices hold their fall to a slower pace. Two trends show different sides of the economy. The manufacturing scene gains some hope as the RatingDog Manufacturing PMI grows. It went from 49.5 in July to 50.5 in August. New order gains hit their fastest rate since March. These changes help stop eight straight months of falling average prices.

Trade Data Paints a Bleaker Picture

Exports grew 4.4% compared to last year in August. This rate slows down from July’s 7.2% jump. The United States saw shipments fall by 33%. Trade challenges push exporters toward tougher price cuts. This change may cause prices to drop further. Tariffs and extra taxes mix into this risk.

Market Response and Policy Outlook

Investors watch the news with hope that new plans come soon. The Hang Seng Index climbs 0.60% to 26,094 early in the day. The Mainland China CSI 300 ticks up by 0.05%. The Shanghai Composite Index falls by 0.02%. Investors set their eyes on data coming on September 15. Retail sales, factory data, and job numbers matter now. The government faces more pressure to use well-targeted fixes. Low spending and unemployment call for clear plans.

Outlook

China shows signs of slow growth. Some parts of the economy recover. Other parts slip into deflation. A government plan may help steady things across the board before the Politburo meets later this month. With a weak world market and low local spending, Beijing’s next steps will be vital in stopping deeper deflation.

About the Author:
Bob Mason works in financial markets over 28 years. He studies currency, commodities, and stocks with a focus on economies in Europe and Asia.

This report uses data available on September 10, 2025. It serves for information and does not give investment advice.

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Inflation Surge Expected: Key Reports Could Shape Fed’s Interest Rate Decisions

Key Inflation Reports This Week Expected to Show Prices Still on the Rise

This week, inflation data comes out. The data aims to show that prices in the U.S. keep climbing. The rise in prices may not stop the Federal Reserve from easing its policy in the next meeting.

Upcoming Inflation Data: What to Expect

The Bureau of Labor Statistics sets two reports:

  • Producer Price Index (PPI) for August (Wednesday)
  • Consumer Price Index (CPI) for August (Thursday)

Economists from Dow Jones expect that both reports will show prices growing by about 0.3% each month. This rise shows up in the overall index and the core CPI, which leaves out drug and energy prices.

If these numbers stick:

  • The annual headline CPI will hit 2.9%, the highest rate since January 2025.
  • This rate goes up by 0.2 percentage points from July.
  • The core CPI stays near 3.1%.

Implications for Federal Reserve Policy

Prices rise. This shift makes it seem that the Fed might pause on cutting its benchmark interest rate next week. Two points stand out:

  1. Core Inflation Stability
    Core inflation stays steady by leaving out food and energy. This pattern hints that main price pressures stay low.

  2. Effects of Tariff-Related Goods
    The expected price rise comes mostly from goods like autos, furniture, and clothing. These items are a small share of the vast $30 trillion U.S. economy. Many Fed officials see these price hikes as one-time moves that will not keep prices high.

Policymakers now look at these numbers with care. They may choose to focus on signals in the jobs market that might call for lower interest rates to support growth.

Economic Context: Weakening Jobs Market and Tariff Effects

James Knightley, Chief International Economist at ING, said, “In aggregate, it’s still hotter than the Fed would like to see… The U.S. is predominately a service sector economy,” and stressed that one must view the market as a whole instead of focusing only on top-line numbers.

At the same time, Goldman Sachs economists note that the trend in underlying inflation might fall further. Easing costs in the housing rental market and slower rises in labor costs point in this direction. Still, this trend has downside effects. Slower home values and flat wages might cut down what people can spend, which can lead to a push for lower rates.

Knightley commented, “When you get that combination [of price concerns, incomes, and wealth], those three things coming together are pretty toxic for the growth story.” This mix makes the Fed more careful about the future.

Producer Prices as an Inflation Indicator

The Producer Price Index appears before the CPI. This report gives an early look at cost pressures. After a 0.9% jump in July, analysts expect a softer rise in August, hinting that cost pressures on companies might ease.

Markets and policymakers now watch closely. They check if inflation pressures stick and what move the Federal Reserve will choose as it deals with tariffs, shifts in the job market, and changing buying conditions.

Stay tuned to CNBC for live updates and in-depth analysis as the inflation reports are released this week.

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Massive Job Growth Revision Raises Eyebrows: 911,000 Jobs Lost in Latest Labor Report

U.S. Job Growth Revised Significantly Downward Through March 2025, Highlighting Economic Uncertainty

The U.S. labor market shows a big drop in job growth. The data now cuts nonfarm payroll jobs by 911,000 for the 12 months before March 2025. Wall Street had seen a drop between 600,000 and one million jobs, so the new number is worse than experts expected.

What the Revision Reveals

The report uses complete sets of data. It pulls records from the Quarterly Census of Employment and Wages and tax returns. This method brings job numbers close together for a better view of the market. The drop of 911,000 jobs is more than 50% larger than the change seen last year. Last year’s revision was the biggest drop since 2009. The change shows a softening in the market that had not been seen before. Although the numbers go back 18 months, recent counts raise fresh concerns. The summer months of June, July, and August 2025 had a monthly payroll gain of only 29,000 jobs. That small increase does not help keep unemployment steady.

Sector-Wise Impact

The new job counts fall across many sectors. The most affected areas show these drops:

  • Leisure and Hospitality: down by 176,000 jobs
  • Professional and Business Services: down by 158,000 jobs
  • Retail Trade: down by 126,200 jobs

Most private sectors lose jobs in the new report. In contrast, transportation with warehousing and utilities see a slight rise. Government jobs fall as well, by about 31,000 compared with earlier numbers.

Political and Economic Context

Critics now question how the BLS gathers its data. The smaller job counts have raised hints at trouble. The issue caught the White House’s eye after previous low counts and unsatisfactory job reports. In July 2025, a report that cut the job number further led President Donald Trump to choose a new BLS leader. He picked economist E.J. Antoni from the Heritage Foundation over then-commissioner Erika McEntarfer. Yet, data in August still shows weakness. For example, the June job count now shows a drop of 13,000 jobs. This is the first decrease since December 2020. While monthly numbers come from quick surveys, these annual changes use large amounts of data. They serve as a clear sign of the economy’s state.

Looking Forward

The current figures are preliminary. More changes will come when the final report is released in February 2026. For example, the 2024 report first reduced job counts by 818,000 before settling at a 598,000 drop. Out of about 171 million workers, a loss of 911,000 jobs makes up nearly 0.6% of the total. Even a small percentage can have deep political and economic impact. Weak signs in the job market back President Trump’s calls for Federal Reserve rate cuts to boost the economy in these uncertain times.

Stay updated with CNBC for more detailed analysis on the labor market and economic trends.
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China’s Economic Ambitions Amidst Deepening US Trade Strain: A Strategic Shift for Global Trade?

China Prepares for Global Economic Shift Amid Deepening US Trade Tensions

Date: September 9, 2025

By Bob Mason

Economic tension grows between the United States and China. Beijing shifts its trade approach. New numbers show US tariffs hitting Chinese exports. This hit puts pressure on growth and trade models.

US Tariffs Slash Chinese Exports

Exports slow in August. Shipment growth sits at 4.4% year-on-year, down from 7.2% in July. Exports to the United States see a 33% drop. US tariffs hit hard. Imports from the US fall 16%. Tariffs under a 90-day trade break add strain. Export levels hit their lowest point since January 2025. Early moves to ship more goods now lose effect. Analysts point to rising trade risks.

Trade Patterns Show Mixed Signals

Trade outside the US paints a complex picture. Exports to ASEAN rise by 9.7% from January to August 2025. EU shipments climb 4.3%. South Korea and Japan also see growth. These gains partly balance the 13.5% drop to the US. Other tariff rules add problems. Vietnam now holds a 40% tariff on goods heading to the US. Indonesian goods face a 19% tax. Rerouting goods becomes harder.

Natixis Asia Pacific’s chief economist Alicia Garcia Herrero sees a tougher period ahead. She says rerouting problems will hit exports in the later months. Beijing plans changes as a response.

Trade Law Reforms and Strategic Shifts

China now studies a trade law change. It would be the first update since 2004. Sources say new rules may bring clearer limits on cross-border services. The rules may also back newer digital and green trade systems. The Vice Commerce Minister points to new land and sea trade links with ASEAN. The goal is to keep supply chains strong amid trade pressures.

Economic Risks and Labor Market Concerns

The drop in export demand may spread inside China. Youth job numbers jump from 14.5% in June to 17.8% in July. Overall, unemployment grows to 5.2%. A weaker job market may slow spending. Economist Mohamed A. El-Erian of Queen’s College in Cambridge says these numbers call for stronger government action in reworking how the economy grows.

Market Reactions and Global Relations

Chinese stock markets cool off from 2025 highs. The CSI 300 and Shanghai Composite fall about 0.7% in September. Yet, they compare well with the Nasdaq Composite year-to-date. A 90-day US-China trade break holds for now. Still, trade gains do not match real progress. Beijing turns to partners like India and Russia. At the recent Shanghai Cooperation Organization summit, leaders such as Russia’s Vladimir Putin and India’s Narendra Modi joined the talks. These moves show that China seeks more global ties amid rising US tensions.

Looking Ahead: Inflation, Retail Sales, and Policy Measures

Soon, investors watch new economic reports. Inflation numbers come on September 9. Retail sales and industrial output reports arrive on September 15. Weak retail and factory numbers, along with deflation risks, may test the 5% GDP target for 2025. Beijing plans focused stimulus to support jobs and spend. Success in these moves and in trade talks will shape China’s path for the end of the year.

China stands at a turning point as it deals with stronger US trade pressure and its own plans for change. The coming months may shape China’s redirect on trade and growth while managing global ties and market risks.

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Trump’s Rolex Invitation at U.S. Open Raises Eyebrows Amid Swiss Tariff Controversy

Trump Attends U.S. Open with Rolex CEO Amid Newly Imposed Swiss Tariffs

In a surprising shift at the 2025 U.S. Open, President Donald Trump stood beside Rolex CEO Jean-Frederic Dufour. A 39% tariff hit Swiss imports just weeks earlier. The tariff now burdens Switzerland, home to the famed watchmaker.

Presence at the U.S. Open Final

On Sunday, September 7, 2025, Trump watched the men’s singles final. Italy’s Jannik Sinner and Spain’s Carlos Alcaraz competed at the USTA Billie Jean King National Tennis Center in New York City. Trump sat in a midcourt box run by Rolex. Rolex sponsors the tournament.

Trump brought family and top White House staff. Treasury Secretary Scott Bessent and Press Secretary Karoline Leavitt attended with him. NBC News noted the details. The Associated Press reported that Rolex invited Trump—a move that raised many questions after the tariff was set.

Tariff on Swiss Watch Imports

Weeks before the match, the Trump team set a 39% tariff on Swiss goods. This tax now affects Swiss watchmakers like Rolex. The rate is higher than taxes on imports from other European nations. The tariff came after trade talks with the U.S., the European Union, and the United Kingdom.

Market analyst Luca Solca from Bernstein wrote in a client note. He mentioned that a last-minute tariff deal did not occur. He predicted that Swiss watchmakers might push up prices to cover the new tax. Solca also noted that early shipments may keep prices steady for a few months.

Corporate Interaction and Strategic Alliances

Trump joined the exclusive suite run by Rolex. His meeting fits a pattern of connecting with major companies. After his return to office, he met with leaders from top tech firms at the White House. This step shows his plan to build ties with business.

This event marked Trump’s first U.S. Open visit since 2015. It signals his renewed interest in high-profile sports and business events.

About Rolex and U.S. Open Tickets

Rolex began in 1905 and is based in Geneva, Switzerland. It is known worldwide for its luxury watches. U.S. Open final tickets come at a high price. General admission starts at about $800, while seats near the action cost much more.

Summary:

  • President Trump joined the 2025 U.S. Open final with the Rolex CEO weeks after a 39% Swiss import tariff was set.
  • The tax may push up prices for Swiss watchmakers like Rolex.
  • Trump was with family and senior White House officials in a Rolex-run midcourt box.
  • This is Trump’s first U.S. Open visit since 2015 and fits his plan to meet with major companies after returning to office.

This link between politics and established brands like Rolex shows a careful balance of trade rules and corporate talks.

Stay tuned for more updates on trade, luxury items, and the links between politics and business.

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Skyrocketing Job Market Anxieties: New York Fed Survey Reveals Record Low Worker Confidence in Job-Moving Opportunities

Worker Confidence in Finding a New Job Hits Record Low, New York Fed Survey Shows

The New York Federal Reserve released the Survey of Consumer Expectations on Monday. The survey shows worker confidence is low. Here, workers believe they stand only a 44.9% probability to find a new job if they lose the one they have. This drop of 5.8 percentage points from July marks the survey’s lowest level. The survey has run since June 2013. ### Lowest Job-Finding Probability Since 2013

Workers once quit with high hopes during the "Great Resignation" in 2021-22. At that time, nearly 4.5 million quits occurred each month. In July 2025, only 3.2 million quits happened. The data, provided by the Bureau of Labor Statistics, shows a decline of more than 5% from the same period in 2024. ### Labor Market Dynamics and Slowed Mobility

Elizabeth Renter, a senior economist at NerdWallet, said,
"Consumers feel low about job-finding chances. It is hard to get work now. Employers hire little, and workers stay in their current jobs for security."

During the pandemic, many workers moved between jobs. Jobs were available at a rate of two openings per worker in some sectors. Now, the market slows down:

  • Hiring has dropped a lot.
  • More workers wait than there are job slots.
  • Employers check costs before adding new staff.

As a consequence, few workers leave on their own. The Fed survey finds:

  • The chance of leaving a job in the next year is near 18.9%.
  • Expectations that the unemployment rate climbs in 12 months are at 39.1%. This value is 1.7 percentage points higher than in July and above the 12-month average.

Recent Labor Market Weakness

The Bureau of Labor Statistics shared new numbers this week. In August, only 22,000 new jobs appeared. This total falls short of the expected 75,000. June’s job growth was revised to a loss of 13,000 jobs. This marks the first drop since December 2020. The official unemployment rate climbed to 4.3%, while a broader measure, which counts discouraged and underemployed workers, rose to 8.1%. These levels last appeared in October 2021. ### Market Expectations and Fed Policy Outlook

Many analysts and market watchers see signs of a soft labor market. Some predict the Federal Reserve might cut interest rates in the meeting on September 17. This change would be the first since December 2024. The move aims to spur economic activity and help the labor market.

With the labor market facing these issues, worker sentiment and confidence stay key for a clear view of the broader economic path.

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Europe at a Crossroads: Tackling Growing Economic Challenges and Striving for Competitiveness

Europe Faces Mounting Challenges Amid Struggles to Implement Solutions

By Sophie Kiderlin & Holly Ellyatt, CNBC
Published: September 8, 2025

Europe now deals with problems that grow over time. Political leaders note the issues, and business leaders see them pile up. They try to fix the issues, yet their work falls short. Experts at the Ambrosetti Forum spoke up. They gathered in one place, and each voice pointed to a fragile state. Old problems tie together with politics, the economy, and society.

Accumulating Challenges Threaten Europe’s Stability

Arancha González Laya, who once led Spanish foreign affairs and now guides Sciences Po University, compared Europe’s state to a build-up similar to bad cholesterol. Each small issue does not shock on its own. Still, when they join, they sweep in harm over Europe’s long life. "One day you will discover that you have a heart attack," she said.

Markus Kerber, a former German State Secretary and advisor, compared Europe to a rabbit caught in headlights. He said the continent sits still as the world changes fast around it. He pointed out that the old global order has fallen apart and left Europe with few signs of what to do next. He noted the rise of a group led by the United States, China, India, the European Union, and Russia. In this new mix, Europe does not hold the right tools to act quickly.

Economic Competitiveness: A Lingering Concern

One main worry is Europe’s work in the world economy. Analysts and leaders agree that the continent has lagged in the reforms needed to boost its world trade role, especially when compared with parts of the U.S. and Asia.

Reports from 2024 by former Italian Prime Ministers Mario Draghi and Enrico Letta list a set of issues that harm Europe’s money matters:

  • A heavy load of rules that stops new ideas
  • A divided single market that cuts work short
  • Energy prices that push up industrial costs
  • Slow growth and work that widen the gap with the U.S.

The Draghi report said, “Europe’s households have paid the price in foregone living standards.” Each family feels the drop, as real income per person in the U.S. has grown almost twice as much as in the EU since 2000. Data from the International Monetary Fund shows that the EU’s slice of global GDP (by buying power) fell from 27.5% in 1980 to just 14.1% in 2025. This drop shows how Europe has lost ground.

Efforts and Calls for Reform

Even as these issues grow, European leaders stick to plans for change. Valdis Dombrovskis, the EU Commissioner for Economy and Productivity, explained that projects like the “Competitiveness Compass” come from the work of Draghi and Letta. This plan targets tasks such as:

  • Narrowing the gap in new ideas
  • Using the EU single market to its full size
  • Cutting red tape and simplifying rules

“These aims are set on the EU agenda and are now at work,” Dombrovskis told CNBC.

Yet, many call for bolder moves. Carlos Cuerpo, Spain’s Minister of Economy, Trade and Business, stressed that delays in reforms must end. He urged a shift from waiting to doing, with clear steps based on the competitiveness plan from recent years. “Competitiveness is a medium-term task that must show up in day-to-day choices and quick actions,” Cuerpo said. “This is the hardest, yet most needed part of our work.”

Europe’s Path Forward

Experts and leaders at the Ambrosetti Forum agree: Europe sees its own troubles—from political strains to slow economic pace. Fixing these problems calls for fast and ongoing reform. A strong will on all sides and a clear view of a nimble, modern Europe are at the core of these plans.

As the world changes, how Europe adapts and competes will shape its role on the global stage.

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Related Topics:

  • Europe’s Economic Outlook
  • Global Political Order Shifts
  • EU Single Market Reform
  • International Trade Competitiveness

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China’s Export Decline: A Six-Month Low Sparks Market Reactions and Economic Concerns

China’s Exports Drop to Six-Month Low, Falling Short of Forecasts; Impact Seen in Hang Seng Index and Australian Dollar

September 8, 2025 — By Bob Mason

China’s exports slowed in August. Growth touched its weakest pace since January 2025. The numbers did not meet most experts’ numbers. This slower pace sent shocks into nearby markets. The Hang Seng Index in Hong Kong fell, and the Australian dollar felt the strain from ties with China.

Export Slowdown Details

New trade numbers show China’s exports grew 4.4% year-on-year in August. This rate is much slower than July’s 7.2% rise. The 4.4% figure missed most experts’ 5% prediction. This gap stoked fears about lower demand from abroad. Imports also slowed. They rose 1.3%, far below the expected 3% rise and down from a 4.1% increase last month.

The drop comes partly as sellers rushed to ship goods before U.S. tariffs began. The tariffs have changed trade paths. Southeast Asian partners now fill in as supply hubs. In one case, a trade pact in Vietnam brings a 40% tariff on goods in transit. In another, Indonesian goods face a 19% fee when shipped to the U.S.

Broader Economic Indicators and Expert Views

China’s Manufacturing Purchasing Managers Index made a small gain from 49.5 in July to 50.5 in August. The new number shows that production activity barely stayed in neutral territory. New export orders have fallen for five months in a row. These orders show that demand for goods remains low. Meanwhile, new business in services has grown at the fastest rate since May 2024. This growth shows some strength in the service sector.

Alicia Garcia Herrero, Chief Economist for Asia Pacific at Natixis, warned that export growth may shrink further. She said export growth could slow to 2-3% in Q3 2025 and drop to 1% in Q4. She noted that simple goods like furniture, clothing, footwear, and toys can be made in many places. Garcia Herrero mentioned that even bicycles meant for export to America are sold cheaply on Chinese websites, a sign of too many goods available.

Market Reaction

After the trade numbers came out, markets reacted fast. The Hang Seng Index in Hong Kong rose briefly to 25,545 points before falling slightly to 25,435. By the morning of September 8, the index was a bit higher at 25,515 points. Hopes for a U.S.-China trade deal and extra policy help gave some support. In contrast, stocks in Mainland China showed weakness. The CSI 300 dropped by 0.26% and the Shanghai Composite fell by 0.09%.

The Australian dollar (AUD/USD) also reacted. The pair fell from $0.65674 to a low of $0.65546 soon after the numbers came out. The AUD/USD then recovered a bit. By the morning of September 8, it closed near $0.65624. This reaction reflects Australia’s strong trade links with China. About one-third of Australia’s exports and more than half of its trade-to-GDP depend on China. These ties make the currency sensitive when new data appears.

Looking Ahead: Beijing’s Policy Moves and Inflation Data

Market watchers will keep a close eye on Beijing now that the Standing Committee of the National People’s Congress begins its sessions on September 8. Many hope that new steps will be taken to support growth in difficult times.

Key inflation data comes on September 10. The consumer price index and producer price index will show how weak export demand and tougher global competition affect prices. If prices fall, companies may face tighter margins and a change in market mood.

About the Author:
Bob Mason has more than 28 years of experience in the finance world. He has worked with global rating agencies and multinational banks. His work covers currencies, commodities, alternative assets, and global stocks with a focus on European and Asian markets.

For a detailed economic calendar, market forecasts, and trading strategies, visit FXEmpire’s resources.

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