Take Two: US Q2 GDP revised up; Eurozone inflation falls sharply

02 September 2024 (3 min read)

What do you need to know?

The US economy grew by 3.0% annualised in the second quarter (Q2), higher than the previous official estimate of 2.8% and marking a significant acceleration from the 1.4% growth in Q1. The increase was mainly fuelled by strong consumer spending and business investment. Federal Reserve Chair Jerome Powell cemented hopes of a September interest rate cut in a speech at the recent Jackson Hole economic policy symposium. As inflation shows signs of stabilising and the labour market cools, Powell said the “time has come for policy to adjust”.

Around the world

Eurozone annual inflation fell sharply to 2.2% in August – a three year low - from 2.6% in July, raising expectations the European Central Bank will cut interest rates again in September. Core inflation, excluding energy, food, alcohol and tobacco eased to 2.8% from 2.9%. Meanwhile, business sentiment among companies in Germany, the Eurozone’s largest economy, fell for the third consecutive month. The closely watched Ifo Business Climate Index dropped to 86.6 in August from 87.0 in July, as expectations became more pessimistic, reflecting declining orders and weak investment.

Figure in focus: 4.2%

Jobs in the US clean energy sector increased by 4.2% last year – up from 3.9% in 2022 – more than twice the 2.0% rate of employment growth the country saw as a whole. According to a new US Department of Energy report, altogether, some 142,000 jobs were created in clean energy, accounting for more than half of new jobs across the wider energy sector. Sectors which enjoyed significant growth included renewable energy and zero-emission vehicles as well as transmission, distribution and storage. The report attributed the boost partly to record investments in climate, clean energy and manufacturing under President Joe Biden.

Words of wisdom

Low-altitude economy: An emerging industry centred around manned and unmanned aviation services within airspace below 1,000 metres. China aims to establish itself as global leader in this sector, with plans to create a so-called ‘City of Sky’ over the next three years. The project intends to create a comprehensive industrial ecosystem within Shanghai, encompassing research, development, manufacturing and commercial applications of low altitude aircraft, such as delivery drones and low-altitude transport. The industry could help reduce the environmental impact of aviation while cutting transport and delivery times and boosting economic growth.

What’s coming up?

A spate of final Purchasing Managers’ Indices (PMIs) for August are published this week, beginning with manufacturing PMIs for the Eurozone, China, Japan and the UK on Monday followed by the US on Tuesday. Services and composite PMIs follow later in the week. On Wednesday, the Bank of Canada meets to set interest rates while on Friday, the Eurozone publishes a third estimate for Q2 GDP growth and the US issues employment figures.

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