US interest rate cuts & SA unemployment stats

Wealth

US interest rate cuts & SA unemployment stats

The US Federal Reserve Board cut interest rates a quarter of a percentage point on Wednesday, the first reduction in over a decade. On the local front, SA’s official unemployment rate jumped to 29% in the second quarter of the year, the highest jobless rate since the start of 2008. 

As the economic newsroom was rather busy the past week, only the highlights are discussed here. 

The US Federal Reserve Board cut interest rates a quarter of a percentage point on Wednesday, the first reduction in over a decade. Fed Chairman Jerome Powell played down the odds of multiple additional rate cuts to come. Equities fell and the yield curve flattened in the wake of Powell’s remarks, as investors tempered expectations for further downward adjustments in rates.

Frustrated at the slow pace of trade talks and citing China’s failure to purchase large quantities of US agricultural products and halt the shipment of fentanyl to the United States, President Donald Trump announced 10% tariffs, effective 1 September, on approximately $300 billion in US imports from China not already subject to a 25% levy.

The US economy added 164 000 new jobs in July, while the unemployment rate held steady at 3.7% and wages grew at an annualised 3.2% rate.

On the local front, SA’s official unemployment rate jumped to 29% in the second quarter of the year, the highest jobless rate since the start of 2008. The total labour force increased by 476 000 to 23 million. The total number of people who are not economically active currently stands at 15.5 million.

Foreigners are ditching South African assets at the fastest pace on record as concern mounts that the government will lose its last investment-grade rating. The rand lost 3.44% against the USD to trade at around R14.78. Moody’s has expressed optimism regarding government’s efforts to stabilise Eskom’s debt, but raised the alarm about a host of financial and operational challenges affecting the entity.

Some good news in conclusion is that the Absa purchasing managers’ index (PMI), compiled by the Bureau for Economic Research, increased to 52.1 in July from 46.2 in June. It is also the first time since December 2018 that the index is above 50, which indicates expansion. This could be an indication of some economic growth ahead. 


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SECURITAS – Wealth Management



























Market data provided by I-Net | News article provided by Securitas with 4D Wealth


Fanie WassermanB. Com (Hons)(UJ), PDFP (UOVS), CFP®fanie@securitas.co.za
Johan SteynRFP®082 680 9510johan@securitas.co.za
Albert van der LindeB. Com (US), B. Com (Hons)(UP)076 087 3084albert@securitas.co.za
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