Business

WASHINGTON — America's jobs engine downshifted in August as employers unexpectedly held back hiring across major industries, another sign that the world's largest economy is cooling off, government data showed on Friday.

As the numbers were released early on Friday, President Donald Trump, whose record as a job creator could pale ahead of next year's election, renewed his attacks on the US central bank, which he blames for failing to stimulate the economy fast enough.

The surprisingly soft result confirmed that labor markets in 2019 have slowed from their brisk pace last year, amid a protracted trade dispute with China that has dragged down global commerce, fuelled business uncertainty and driven US manufacturing into recession.

Employers added a still-solid 130,000 net new positions for the month, far lower than analyst forecasts, while the jobless rate held steady at 3.7 per cent for the third month in a row, according to Labour Department estimates.

Figures for May and June were also cut by a total of 20,000 positions, bringing the rolling, three-month average to 156,000, well below the 241,000 seen in August last year.

The report did bring some good news, however: Wages continued to rise, suggesting consumer spending — which is almost single-handedly supporting US economic growth — will continue.

The share of the working-age population with a job rose to its highest level since the depths of the Great Recession in December 2008.

"The softening in job growth should surprise no one. But it doesn't mean the economy is headed toward a recession right away," economist Joel Naroff told clients in a note.

Economists on Friday also pointed out that August numbers are frequently revised upward in later months. 

Amid weak investment by companies and mounting fears of a recession, employers also say they are struggling to find qualified workers to fill open positions.

'Oh, well...' 

The slower jobs numbers should also support a Federal Reserve (Fed) decision later this month to cut interest rates, as markets widely expect it will do for the second time this year.

Late Thursday and early Friday, Trump took to Twitter to fire off the latest of many attacks on the US central bank, which he said had raised interest rates too quickly last year.

"They were WAY too early to raise, and Way too late to cut — and big dose quantitative tightening didn't exactly help either," said Trump, who has advance access to the jobs report before its public release.

"Where did I find this guy Jerome?" he said, referring to Fed Chairman Jerome Powell, whom he prompted to central bank chairman.

"Oh well, you can't win them all!"

Speaking on Friday at the University of Zurich, Powell said he and fellow policymakers tuned out Trump's political taunts.

But Powell welcomed the report's figures on rising wages.

"Our labour market is in quite a strong position. For a year and a half, we've been at half-century lows in unemployment," he said.

"I think today's labour market report is very much consistent with that story."

Workers got a bump in pay, as hourly wages rose 11 cents on average, putting them up more than 3 per cent, year-on-year, for the 13th month in a row.

But within the August jobs details there were other causes for concern. 

About a quarter of August hires came from the government itself as federal authorities ramped up staffing to conduct next year's census.

Private-sector employers added only 96,000 jobs in August, well below the 145,000 which economists had forecast.

In the dominant service sector, the retail, transportation and utilities industries all shed jobs for at least the second month in a row.

Work forces also shrank in the mining sector, likely suffering from a dip in oil prices.

Hiring was cut in half from July in the education and health industries and was flat for auto manufacturers and information services as well as leisure and hospitality.

Wall Street appeared unimpressed with the numbers. The Dow Jones Industrial Average was up about 0.3 per cent.

BEIJING — China and the United States will resume trade talks in Washington in early October, Beijing said on Thursday, allaying fears that new punitive tariffs would lead to a breakdown in the protracted negotiations.

The world's two biggest economies have been embroiled in a tense year-long tariffs row, which escalated on September 1 when both sides swapped fresh levies on goods worth hundreds of billions of dollars.

The talks were supposed to have resumed this month but China's commerce ministry said Vice Premier Liu He, Beijing's pointman on trade, agreed to October in a phone call with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Thursday.

Commerce ministry spokesman Gao Feng said at a regular news briefing that there would be "comprehensive preparations" for the meetings by both sides and that the next round of negotiations would "strive to achieve substantive progress".

The news will be seen as a sign of optimism in a trade war that has weighed on the global economy and stock markets while also shaking diplomatic relations between the two global powers.

Equities in Asia jumped on Thursday, with Shanghai adding 1 per cent and Tokyo up more than 2 per cent.

Top officials last met in Shanghai in July for discussions that were described as "constructive" but ended with no announcements.

US President Donald Trump soon afterwards said he would increase tariffs on more than half-a-trillion dollars' worth of imports, prompting Beijing to respond with fresh tariffs on US goods worth $75 billion. Those were the levies that kicked in this month.

Tensions continued to mount over the summer, with Trump earlier this week accusing Chinese negotiators of holding out for a better deal in hopes he will be voted out in next year's presidential elections.

He has also claimed China is being forced back to the negotiating table because of the country's slowing economy.

In an editorial on Thursday, the state-run China Daily newspaper warned that the "good atmosphere" built in Shanghai had "largely evaporated as a result of the US administration flip-flopping on its promise to bring bilateral ties back on the right track".

Policy tools 

Officials in Beijing on Wednesday discussed new measures to keep the country's economy growing in the face of an "increasingly complicated and challenging external environment", according to an official statement.

Policy tools proposed at a State Council executive meeting chaired by Premier Li Keqiang include cuts to the amount of cash banks must keep in reserve to encourage more lending, especially to smaller and medium-sized businesses. An increase in the use of local government bonds to finance infrastructure projects was also put forward.

This week economists cut their forecasts for China's economic growth in 2020 to below 6 per cent as a result of increasing risks from the tariff war with the US.

But while Trump points to China's weakening economy, observers pointed out that a survey Tuesday showed the US manufacturing sector had contracted for the first time in three years.

At the recent Group of Seven meeting in France, Trump spoke of new communications between US and Chinese negotiators — giving financial markets a brief boost — though China's foreign ministry said it was unaware of such contacts.

This week Beijing said it had lodged a complaint against the US with the World Trade Organisation (WTO), the day after the new tariffs came into force.

While the US-China negotiations began in earnest in January and seemed at first to make progress, they were abruptly called off in the spring by Trump.

They resumed in June at the highest levels on the margins of the G-20 summit meeting in Osaka, Japan, when Trump met his Chinese counterpart Xi Jinping.

But in its complaint to the WTO, Beijing accused the new US tariffs of "seriously violating the consensus reached by the leaders of our two countries in Osaka".

LONDON — The pound rebounded on Wednesday, but gains were capped by investor anxiety after Brexit turmoil sent the currency tumbling and set the stage for a potential snap UK election next month.

Having dived on Tuesday to $1.1959 — the pound's weakest level since 1985 except for a 2016 "flash crash" — it has since rallied on rising hopes that Britain will not exit the European Union without a deal.

The pound shot back above $1.22 on Wednesday, an increase of 1 per cent from late Tuesday. 

"Sterling was thrown a lifeline by a parliament determined to avoid a no-deal Brexit," said analyst Connor Campbell at trading firm Spreadex, but he also injected a note of caution.

"The complicating factor here, and the reason that sterling's gains... are not even greater, is the potential for a general election."

Prime Minister Boris Johnson headed into a fresh Brexit showdown in parliament on Wednesday after being dealt a stinging defeat over his promise to get Britain out of the EU at any cost next month.

The Conservative leader has threatened to seek an early general election if lawmakers vote against him again on Wednesday and force him to seek a three-month Brexit extension from Brussels.

Many economists argue that a no-deal departure would hammer the British economy, which risks already falling into recession this quarter.

British business activity shrank in August, slammed by weakness in the key construction, manufacturing and services sectors, a key survey showed Wednesday.

The purchasing managers' index (PMI) for all UK sectors dropped to 49.7 from 50.3 in July, according to IHS Markit, which compiles the data.

A figure below 50 indicates contraction.

"The PMI surveys are so far indicating a 0.1-per cent contraction of GDP in the third quarter," which would mean Britain had fallen into recession, noted Chris Williamson, chief business economist at IHS Markit.

Britain's economy unexpectedly shrank in the second quarter of the year.

The official definition of recession is two successive quarters of economic contraction.

LONDON — The British pound tumbled on Tuesday to the lowest level against the dollar in almost three years, as the UK faces a possible general election amid Brexit turmoil. 

Sterling struck $1.1959 around 07:50 GMT, as British Prime Minister Boris Johnson faces a rebellion by his own lawmakers over his Brexit strategy that could result in an early general election next month.

It was the pound's lowest level since October 2016, when sterling dived to a 31-year trough at $1.1841 in a so-called "flash crash" just a few months after Britain's referendum vote in favour of leaving the European Union.

On October 7, 2016, the pound crashed 6.1 per cent against the dollar to hit its lowest level since 1985 before quickly rebounding. 

"Ignoring the flash crash, we are very much in uncharted waters here," Neil Wilson, chief market analyst at Markets.com, said on Tuesday. 

"We could feasibly see $1.15 or even $1.10 in the coming weeks if traders decide to move against the pound." 

By mid-afternoon in Europe, the pound had come off its early lows.

The fate of Brexit hung in the balance as the UK parliament prepared for an explosive showdown with Johnson that could end in a snap election.

Members of the prime minister's own Conservative Party are preparing to join opposition lawmakers in a vote to try to force a delay to Britain's exit from the EU if Johnson cannot secure a divorce deal with Brussels in the next few weeks.

The UK leader insists that Britain will leave the EU with or without a deal on October 31.

Weak pound impact 

Markets fear that a no-deal Brexit could be disastrous for the British economy, at least in the short term, and could plunge the country into recession. 

While the pound's weakness makes imports into Britain more expensive, for example oil which is traded in dollars, it cheapens exports.

Sterling's heavy falls have meanwhile helped to boost London's benchmark FTSE 100 index, as it features many multinationals earning overseas.

However, a general election could see the main opposition Labour party win power, led by Jeremy Corbyn whose policies are widely regarded as being unfriendly towards business.

"It would appear sterling traders are in no mood to hang around for the result... in parliament," Craig Erlam, senior market analyst at Oanda trading group, told AFP on Tuesday.

"Given all the confusion on what could follow, it seems there is no good near-term outcome. We either have an increased risk of no-deal, the possibility of a Corbyn government or more uncertainty. 

"It would appear traders don't view any of these options as being particularly favourable for the pound," Erlam added.

Elsewhere on Tuesday, the China-US trade impasse was playing on equity markets.

While President Donald Trump has said negotiations between the world's top two economies would take place soon, a report said they were having trouble agreeing a schedule for any meeting.

In commodities trading, oil prices extended losses on concerns about data showing a lift in output from OPEC and Russia, despite a pledge from them to reduce production.

BEIJING — China said on Monday it had lodged a complaint against the United States with the World Trade Organisation (WTO), one day after new tariffs imposed by Washington on billions of dollars of Chinese goods came into force.

The world’s two biggest economies have been embroiled in a bruising year-long trade war which escalated further on Sunday when both sides moved ahead with fresh tit-for-tat levy hikes.

“These American tariffs seriously violate the consensus reached by the leaders of our two countries in Osaka,” Beijing’s commerce ministry said, referring to trade discussions in the Japanese city in June.

“The Chinese side is strongly dissatisfied and resolutely opposed to that. In accordance with relevant WTO rules, China will firmly safeguard its legitimate rights and interests,” the ministry added in a statement published on its website.

The complaint has been lodged with the WTO body for dispute settlement, the ministry said.

Washington’s latest levies on imports from China took effect on Sunday as it stepped up a high-pressure campaign aimed at compelling Beijing to sign a new trade deal.

The additional tariffs affected a portion of the $300 billion in goods from the Asian giant that so far had been spared.

Beijing has said it will retaliate by targeting $75 billion in US goods, beginning in part on September 1.

The trade dispute has rattled markets and hit growth across the globe, and trade negotiations between the two countries have been at an impasse for months.

US President Donald Trump and China’s leader Xi Jinping had agreed to “fully engage” on trade when they met in Osaka during the G-20 summit in Japan.

But at the recent G-7 meeting in France, Trump spoke of new communications between US and Chinese negotiators — giving financial markets a brief boost — while China’s foreign ministry said it was unaware of such contacts.

LONDON — Bank of England (BoE) Governor Mark Carney has suggested that a virtual currency, modelled on Facebook’s Libra, could one day replace the dollar as king of the foreign exchange market.

The BoE chief aired vague proposals for a so-called “Synthetic Hegemonic Currency” at the recent Jackson Hole Symposium of central bankers.

Here is a brief assessment of why the greenback is losing its lustre and the outlook for Carney’s proposed new digital currency, which would be supported by major central banks around the world.

Why dollar dominance? 

The dollar has been the world’s reference currency since the Bretton Woods agreement in 1944, when various key units were fixed to the value of the greenback. It has retained its global supremacy ever since, thanks to the economic and political clout of the United States.

“The dominant currency is always that of the world’s biggest political power,” noted Philippe Waechter, head of research at Ostrum Asset Management.

The dollar accounted for almost 62 per cent of global foreign exchange reserves in the first quarter of 2019, according to the International Monetary Fund.

The European single currency was second with 20.2 per cent, while China’s yuan comprised only 2 per cent despite the country’s rise to the rank of the world’s second biggest economy behind the US.

Why is greenback 

losing appeal? 

Although the dollar has lost its sparkle owing to globalisation and the changing world economic order, gyrations in the US unit still impact economies elsewhere.

“US developments have significant spillovers onto both the trade performance and the financial conditions of countries even with relatively limited direct exposure to the US economy,” Carney said at the recent bankers’ meet in Wyoming.

When the greenback appreciates, so do repayments for many emerging nations because their debts tend to be denominated in dollars.

The BoE chief, who steps down in January, added: “In the longer term, we need to change the game.”

Central bank role? 

The public sector, in the form of central banks, could instead provide the best support for a new virtual currency, according to Carney.

“It is an open question whether such a new [cryptocurrency] would be best provided by the public sector, perhaps through a network of central bank digital currencies,” he said.

Yet central bankers and world leaders alike remain anxious over the current crop of virtual currencies because they are unregulated.

US President Donald Trump himself has lashed out at Bitcoin and Libra for being “based on thin air” and having no standing or dependability — unlike the dollar.

Commentators believe Washington is unlikely to allow the greenback to lose its cherished status as the world’s premier reserve currency. 

“The United States will simply not allow it to happen without a fight. Nobody in its position would,” said Rabobank analysts.

What about Libra? 

The BoE governor, meanwhile, made explicit references to Libra — a future cryptocurrency unveiled by social media giant Facebook in June.

Carney avoided all mention of Bitcoin, which is the world’s most popular digital unit but has been plagued by volatility.

Libra, which aims to launch in the first half of 2020, will be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

Yet, Libra has also attracted the ire of central bankers owing to its origin in the private sector.

“Central banks are a little annoyed by this [Facebook] bid to privatise currency,” said Agnes Benassy-Quere, a researcher at the Paris School of Economics.

Whereas Bitcoin is decentralised, Libra will be co-managed by 100 partner firms including Facebook itself.