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U.S. Jobs Report Disappoints: Labor Market Cooling Signals Fed’s Cautious Path Ahead

U.S. Jobs Report Misses Forecast: Weak Nonfarm Payrolls Signal Labor Market Cooling

By James Hyerczyk | Updated: September 5, 2025, 13:18 GMT

The latest U.S. employment data shows signs of a cooling labor market. In August, nonfarm payrolls grew by 22,000. This number falls far short of the 75,000 jobs that market experts predicted. The report shows slower job gains and casts doubt on the strength of the U.S. economy and on the Federal Reserve’s money policy path.

Labor Market Momentum Slows Sharply

On Friday, the August data came out. The numbers show job creation was much weaker than expected. The unemployment rate edged up to 4.3% from 4.2%. This small rise shows weaker worker activity.

Even with a small payroll gain, average hourly pay grew 0.3% to $36.53. Yearly, wages increased by 3.7%. The labor force participation rate held at 62.3%. This rate stays lower than last year and shows little change in worker engagement.

Sector Performance Reflects Uneven Job Growth

Most new jobs came in health care and social assistance. Health care added 31,000 jobs while social assistance added 16,000 jobs. In health care, this total is lower than last year’s monthly average of 42,000 jobs. Most gains in social assistance came from family services positions.

At the same time, several sectors lost jobs. These losses balanced the small gains in some areas:

  • Federal government jobs fell by 15,000. This drop has been steady since January.
  • Jobs in mining, quarrying, and oil and gas extraction decreased by 6,000.
  • Manufacturing lost 12,000 jobs. Within this field, transportation equipment manufacturing lost 15,000 jobs because of strikes.
  • Wholesale trade dropped by 12,000 jobs over three months, with a total decline of 32,000 jobs.
  • Construction lost 7,000 jobs.
  • Professional and business services reduced by 17,000 jobs.
  • Financial activities cut 3,000 jobs.

On a brighter note, retail trade added 10,500 jobs. Leisure and hospitality gained 28,000 jobs, and transportation and warehousing added 3,600 jobs.

Workforce Indicators Suggest Tepid Labor Market Confidence

Long-term unemployment rose to 1.93 million people. This group now makes up more than one-quarter of all unemployed. New job seekers dropped by 199,000 after gains in the previous month. This fall may point to less confidence among those looking for work.

The employment-population ratio stayed at 59.6%. This flat figure shows that the share of Americans with jobs remains unchanged.

Market and Policy Implications

The weak jobs data and the rise in unemployment send a clear signal. The U.S. labor market is losing steam. This trend may affect the whole economy. It hints at lower consumer spending, which might slow economic growth.

For the Federal Reserve, the weak data may support a cautious approach in policy decisions. Slower job growth cools the rise in wages and prices. The central bank might pause any further hikes in interest rates to keep the recovery on track without deepening a slowdown.

Financial markets reacted by buying assets sensitive to rate changes such as U.S. Treasuries and technology stocks. At the same time, the U.S. dollar showed a weak trend as traders expect a gentler response from the Fed soon.

Summary

  • Nonfarm payrolls grew by 22,000 in August, a number much smaller than the forecast of 75,000.
  • The unemployment rate increased from 4.2% to 4.3%.
  • Average hourly pay increased by 0.3% to $36.53 while yearly wage growth was 3.7%.
  • Labor force participation held at 62.3%.
  • Job gains were seen in health care and social assistance while losses hit the federal government, manufacturing, and mining sectors.
  • Long-term unemployment and a drop in new job seekers point to less trust among those hunting for work.
  • Market views favor a gentle Fed approach, a stance that pushed rate-sensitive investments up and put pressure on the U.S. dollar.

This report shows that the U.S. labor market is weak. It highlights the hard path ahead for policy makers and investors in these changing times.

About the Author:
James Hyerczyk is a U.S.-based technical analyst and educator with more than 40 years of market analysis and trading experience. He studies chart patterns and price moves and has written two books on technical analysis.

The information here is for learning and informational purposes only and does not count as financial advice. Please do your own research and consult a financial advisor before making any decisions.

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France’s Confidence Vote: A Tipping Point for Budgetary Stability?

France: Upcoming Confidence Vote Adds to Budgetary Uncertainty Amid Political Fragmentation

September 5, 2025 – By Thomas Gillet, FXEmpire

France now faces political and economic doubts as a confidence vote nears on September 8, 2025. Prime Minister François Bayrou called this vote over a multi-year budget plan set forth in July. Disagreements in parliament and strong opposition add to worries about the country’s fiscal path.

Political Landscape Clouds Budget Prospects

The vote comes as France readies a debate on its 2026 budget. The plan seeks to save €44 billion (roughly 1.5% of GDP). Parties on the left, such as the Socialist Party, and groups on the far right, like Rassemblement National, take a stand against these savings. Together, these groups hold 298 seats, which is more than the 289 seats needed for a majority. This fact makes it hard for the government to gain support.

If the vote does not pass, the government could collapse for the second time in less than a year. President Emmanuel Macron would then face the task of naming a new prime minister—possibly the fifth in four years—or calling for early legislative elections. An election might lead to a divided parliament where extreme far-left or far-right forces control the votes. Such a split would keep lawmakers at odds.

Economic Implications and Fiscal Challenges

Political deadlock also slows plans to lower France’s budget deficit, which stood at 5.8% of GDP in 2024. The government hoped to reduce this figure to 5.4% in 2025 and 4.6% in 2026. Still, changes made to win parliamentary backing might keep the savings measures small. Scope Ratings now predicts the deficit may only fall to 5.6% in 2025 and then to 5.3% in 2026. Government borrowing costs are on the rise. Net interest payments are expected to grow from 3.6% of government revenue in 2024 to about 4% in 2025. This level matches Belgium’s at 3.8% but stays below Spain at 5.2% and the United Kingdom at 6.6%. Ten-year government bond yields have reached 3.5%, a figure seen in both Spain and Italy. This climb shows that investors worry about France’s fiscal health.

Scope Ratings expects France’s debt-to-GDP ratio to keep growing, reaching around 122% by 2030. This outcome exceeds the government’s target of 117% by 2029. Political splits and modest budget cuts drive this steady rise in debt.

Outlook and Upcoming Risks

A positive result in the confidence vote could mean short-term progress on budgets. Yet, politics remain divided. Local elections in March 2026 and presidential elections in April and May 2027 add to the tension. These events may slow agreement on needed economic changes.

France’s outlook in the midterm stays constrained by a divided parliament. Political doubt may block steps to cut the deficit. The upcoming vote stands as a key moment that will shape French fiscal policy and political calm in the near term.

About the Author:
Thomas Gillet is a Director in Sovereign and Public Sector Ratings at Scope Ratings. His work focuses on sovereign credit analysis and fiscal policy. Senior analyst Brian Marly helped produce this report.

For a complete view of today’s economic events, visit FXEmpire’s economic calendar.

This article is for informational purposes only and should not be taken as financial advice. Readers should do their own research and consult professionals before making any investment decisions.

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UK Retail Sales Surge Challenges BoE Rate Cuts as GBP/USD Climbs to Morning High

UK Retail Sales Data Challenges Bank of England’s Rate Cut Expectations; GBP/USD Hits Morning High

By Bob Mason, Updated September 5, 2025, 06:17 GMT+00:00

UK retail sales grew last month, and this growth troubles plans for easing money policy. Consumer demand stays high, and that value makes traders doubt when rate cuts will come. The British pound moves up against the US dollar as markets adjust.

Robust Retail Sales Signal Resilient Consumer Spending

UK retail sales climbed 0.6% from June to July. Sales rose from 0.3% in June, and this beat forecasts of a 0.2% jump. Annual sales touched 1.1%, up from 0.9% the month before. Data show store-free sellers and clothing shops performing well. New items, mild weather, and busy events like UEFA Women’s EURO 2025 all help sales.
Consumer spending stays strong even when prices rise and the job market slows. Retail data like these may push up prices, which makes shops slow to cut rates.

Inflation and GDP Paint a Mixed Economic Picture

The sales report comes after recent numbers that put the Bank in a hard spot. UK inflation went from 3.6% in June to 3.8% in July. Core inflation moved slightly from 3.7% to 3.8%. These rates stand high against the Bank’s 2% goal. UK GDP grew 0.4% in June after a 0.1% fall in May.
Job numbers fall too. The Monthly Decision Maker Panel showed a 0.5% drop in jobs over the three months ending in August. Firms cut staff as they face higher costs in national insurance and minimum wages.

BoE’s Rate Cut Strategy in Question

The Bank sees a hard balance. Weak jobs might allow cuts, yet steady spending makes price rise more likely. Governor Andrew Bailey said he is less sure now about when or how fast cuts will come.
Markets now put a 25-point drop on hold until April 2026. Strong retail sales do not change this view much.

GBP/USD Reacts Positively to Retail Sales Strength

Before the sales news, the GBP/USD briefly reached $1.34187. When the sales came in, the pair moved up. It hit $1.34689 at its peak and closed near $1.34661, up about 0.25%. This move shows traders now expect slower steps toward easing in the near term.

What’s Next for UK Economic Data and BoE Policy?

Traders now watch for more UK reports. GDP numbers are set for September 12, employment figures come on September 16, and inflation data follows on September 17. These reports will shape the Bank’s next moves.
Some experts hesitate but think a rate cut could come sooner. ING points to a drop as early as November 2025, though high inflation might push that date back.

Conclusion

UK retail sales in July add weight to the Bank of England’s tough task. A weaker job market sits beside strong consumer spending and high inflation. That mix may hold back rate cuts. The British pound now stands stronger as investors wait for more data to clear the picture.

Stay tuned for updates on global money trends and central bank moves.

About the Author

Bob Mason brings over 28 years of financial industry work. He covers currencies, commodities, alternative assets, and stocks with a focus on European and Asian markets. His work has reached global rating agencies and large banks.

This article is meant to give information and should not be seen as investment advice.

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Escalating Trade Tensions and Market Volatility: China’s Strategy as 90-Day Truce Nears Its End

China: Trade Tensions Rise as Truce Nears Expiry, Markets Face Fresh Risks

By Bob Mason — September 4, 2025, 04:21 GMT

The 90-day trade war pause between the United States and China ends in October. Tensions grow and new risks shake global markets. China shows signs of worry as unemployment climbs, consumer demand fades, and investors act with care on Mainland and Hong Kong exchanges.

Strengthening BRICS Ties and Global Trade Changes

At the recent SCO Summit, China built stronger ties with BRICS nations. Leaders from Russia, India, and North Korea met here. This move shifts China’s focus away from depending on the US in trade. President Xi Jinping spoke of using the shared strength of SCO members to boost trade and investment. His words stressed the power of their large markets and matched economic roles.

The US did not like the outcome. President Trump made a sarcastic comment. He said, "give my warmest regards to Vladimir Putin and Kim Jong Un, as you conspire against the United States of America." His tone pointed to a tougher US stance after months of calm.

Changing Trade Paths and Export Shifts

After the US extended the truce in August, China’s trade hopes grew for a full agreement. Meetings between Chinese negotiator Li Chenggang and US officials did not bring clear progress. Trade tensions came back as the truce nears its end in October.

China now tries to widen its export markets. It targets Southeast Asia and nearby regions to make up for fewer shipments to the US. Leland Millar, CEO of China Beige Book, said in a Bloomberg interview that China pushes its exports into new markets. His words show that China sells goods at lower prices in these countries. The move sends extra capacity into markets that seem weak in money and politics.

Mounting Economic Pressures

Exports rose by 7.2% in July, compared to 5.8% in June. Yet, data from the private sector shows caution. The August PMI data pointed to higher input costs and tougher competition. This squeeze on profit led many firms to cut staff.

Unemployment joined the concern. The overall rate went from 5.0% in June to 5.2% in July. Youth unemployment jumped to 17.8%, up from 14.5%. These changes may cut household spending and hurt consumer confidence. Retail sales growth also slowed to 3.7% in July, down from 4.8% in June. In response, Beijing started a consumer loan subsidy program to boost household spending and the domestic economy.

Market Reactions and Outlook

On September 4, financial markets reacted with losses. The CSI 300 and Shanghai Composite indexes fell by 2.24% and 1.71%. Hong Kong’s Hang Seng Index dropped by 1.2% in early trading. Investors worry about falling margins, weak external demand, and rising unemployment.

Reports say Chinese regulators may act to cool the stock market. They are thinking of removing bans on short selling. They also may add rules to limit speculative trading.

Even with this turbulence, Mainland markets still show year-to-date gains. The CSI 300 and Shanghai Composite have increased by about 10.4% and 11.5%. The Hang Seng Index has nearly a 25% gain, outpacing major global indexes like the Nasdaq Composite.

What Lies Ahead?

With the truce deadline near, all eyes turn to upcoming trade talks and the next economic reports. The services sector may soon show more signs of pressure or recovery. Finding a balance between handling trade risks and boosting local spending will be key for Beijing in the short term.

Investors and policymakers watch to see if new stimulus can slow the downward slide or if hotter US-China tensions will push markets into more risk in the weeks before the truce ends.

For continuing updates on China’s economic path and global market news, stay tuned to FXEmpire.

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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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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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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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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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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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China’s Growth in Jeopardy: Mexico’s Tariff Move Signals a New Trade Crisis with the US

China Risks Growth Setback as Mexico Joins US in Trade Crackdown

By Bob Mason | Published August 28, 2025, 03:41 GMT+00:00

China’s economy faces more strain this quarter. Mexico now plans tariffs on Chinese goods, and the US stays firm with its own tariffs. These moves may stop Beijing from hitting a 5% GDP growth target by the end of 2025. The actions add a new side to long-standing US-China trade tension. They may cut trade routes and slow export activity.

Mexico’s Tariff Plans Amplify Trade Pressures on China

The US and China set a pause in their trade war but keep high tariffs. The US holds around a 55% tariff on Chinese imports. At the same time, China keeps a 10% tariff on American goods. China has so far sidestepped a proposed 145% tariff on goods sent directly to the US. Yet, the US now uses a plan that touches other nations by taxing goods that pass through them.

Mexico now will raise tariffs on products from China. Mexico plays an important role in China’s auto industry, serving as a key place for manufacturing and export. Chinese car makers like BYD, Chery, and MG Motors have spent over $700 million in Mexico. New tariffs on Chinese exports to Mexico, mixed with the existing US tariffs on imports from Mexico, may cut interest for Chinese car parts and vehicles meant for North America.

Mexico stands as the top source of US auto imports. This fact makes the trade route very important for China’s auto market.

Potential US Influence on Mexico’s Trade Policy

Observers note that US trade rules work not only on China directly but also on nearby nations. In July, the US set a 40% tariff on goods that travel via Vietnam and a 19% tariff on Indonesian products. Such taxes have touched Chinese exports that go through Southeast Asia. Even as Chinese exports grew 7.2% in July with help from demand in Southeast Asia, these taxes might hit future trade numbers.

Mexico’s tariff move comes after reports that the US government is thinking about tighter rules on goods that do not come directly. These rules may make it hard for China to send its products around existing tariffs.

Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis, said, "Rerouting will be much harder in the second half [of 2025]. That will hit Chinese exports indirectly. The government has been working on plans for a tougher period ahead."

Trade Talks and Market Responses

Trade barriers have grown as China and the US prepare for new talks. China’s main trade negotiator Li Chenggang will soon travel to Washington to discuss steps that may shape ties between the two nations.

Even with these strains, Beijing backs its policies. Mainland China’s stock indices – the CSI 300 and the Shanghai Composite – reached year-to-date highs before a drop on August 27. On that day, the CSI 300 fell by 1.49% and the Shanghai Composite dropped by 1.76%. Both indices later regained ground on the morning of August 28 with increases of 1.19% and 0.58%, respectively. They have outperformed the US Nasdaq Composite in 2025, though they still follow Hong Kong’s Hang Seng Index, which has risen 24.8% this year.

Market watchers now focus on upcoming economic reports. They await the National Bureau of Statistics’ private sector Purchasing Managers’ Index (PMI) on August 31 and September 1. These surveys will show if tariffs are weighing on China’s manufacturing sector. If the PMI numbers show a drop, new government aid plans from Beijing might help push the stock market higher.

Looking Ahead: Economic Headwinds and Policy Responses

China must now balance outside press with its goal for steady growth. The nation’s use of indirect trade routes has softened the impact so far. But Mexico’s rising tariffs and new rules on goods passing through third countries now cut that protection.

The outcome of the upcoming US-China trade talks and any new plans from Beijing may decide if China keeps its growth pace in 2025 or must adjust its targets.

For ongoing updates on China’s trade policies and market trends, readers can monitor real-time reports and consult economic calendars provided by FXEmpire.

About the Author:
Bob Mason has over 28 years of experience in the financial industry, covering currencies, commodities, and equity markets with a focus on European and Asian economies.

This article is intended for informational purposes and should not be taken as financial advice. Readers are encouraged to conduct their own research before making any investment decisions.

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