Top 3 Economic Stories of the Week

Labour Market Cooldown in the US

The Department of Labour August Jobs report displayed a 0.1% increase in the US unemployment rate, as the statistic climbed to 4.3%. The disappointing UR reading comes off the back of US employers creating only 22,000 employment opportunities due to the last few months being lacklustre for US firms with business investment declining by 0.9% in Q2 of 2025 - as reported by the US Bureau of Economic Analysis. The cooling labour market across multiple sectors such as manufacturing, wholesale trade, and construction suggests that Trumps tariff policies are weighing on business confidence - leading some to question whether the Federal Reserve will look towards even more aggressive rate cuts beyond a now almost certain 0.25% rate reduction, in the hope of encouraging business investment.

Asia Faces Price Slumps

Concerning trends revealed themselves across Asia this week. To juxtapose the inflationary pressure seen across the pond in the US - some of the largest economies in Asia, including China, are looking at the dangerous prospect of deflation. The causation is believed to be a combination of falling commodities, excess supply of Chinese goods, and slowing wage growth due to labour force participation being on the rise. The dangerous cycle that deflation can initiate includes delayed spending, leading to economic stagnation. The problems Asia face due to the deflationary pressures is unlikely to be completely contained within the continent, with a possibility of affects on commodity exporters and trade dependent economies. Look out for China's August inflation data when it is released in the coming days for the most up to date data.

OPEC Raise Oil Output Once More

OPEC+ announced that it will increase its crude supply by 137,000 barrels per day from the beginning of October. Another OPEC supply increase will entail lower oil prices, helping lower prices at the pump for consumers. However oil exporters have raised concerns about revenue worries. For example, countries such as Nigeria saw their crude export oil revenues fall by 17% YoY, in Jan-Feb 2025 according to Radarr Africa. The recent initiative from OPEC to gradually unwind output comes after the group tightened supply in 2023 and 2024.

Policy Updates

The Federal Reserve (USA)

All eyes are on the September 16-17 FOMC meeting where the Federal Reserve are likely to cut interest rates by 0.25%, although we can not say for certain they will do so. Fed officials have suggested that a gradual approach will take place and decisions will be data dependent. Some analysts expect additional cuts in October and December. Economists have stressed the need for The Fed to consider the balance between supporting growth and managing inflation expectations due to tariffs raising prices for American consumers. Market reactions to growing expectations around rate cuts included Treasury yields falling to 5 month lows and weakening of the Dollar with the U.S. dollar index falling by 0.48% to 97.767.

European Central Bank

Economists believe that the ECB are likely done with rate cuts as inflation looks to be holding stable around the 2% target. Meanwhile, the ECB has kept its deposit rate at 2.0%. While European bond markets would usually be heavily focused on ECB policy decisions, at the moment markets are focused on sovereign risk, as political instability within France could affect government bond prices.

Trump Trade Policy Throughout the Week

US Tariffs are now at the highest levels since 1934. Trump threatened the EU with retaliatory tariffs in response to an approximately $3.5bn fine that the EU hit google with. Trump deemed the competition related fine to be "very unfair". Analysts and commentators see the tariff threat as significant as Trump is now using tariffs as a weapon to respond to policy measures outside of trade.

EU-US Trade Deal

EU steelmakers have been pleading for tariffs to be imposed on cheap imports - particularly from China to prevent the collapse of the industry. EU steel imports reached 24 million tonnes in 2024. Meanwhile, EU exports to the US are in danger due to Trumps tariffs. In addition, MEPs continue to oppose the EU-US trade deal which was announced in July. The deal proposes a 15% tariff to be imposed on all European goods to the US and gets rid of EU tariffs on US cars and other industrial goods, and if it were to be agreed upon, would harm the competitiveness of European firms.

Industry Spotlight - Tech

As this is the first week of Policy&Price weekly economic reports, I thought it may be interesting to take a look at a specific industry every week, wrap up their earnings reports, and consider where the industry may be headed. For the first week, I've analysed arguably the most important industry of our time (especially with the rise of AI), the technology sector.

This week, Salesforce earning reports displayed that the US firm beat revenue and EPS estimates with $10.24B and $2.91 EPS. However, the Fortune 500 enterprise saw share price fall by 5% after the company reported that its adoption of AI had been sluggish, signalling that investors may need to wait longer for AI to actually make an impact on earnings.

DocuSign's earning report was even better than expected with a Q2 revenue of $800.6M. Furthermore investors watched as DocuSign's shares increased by 6% due to the AI innovation by the company as DocuSign CEO Allan Thygesen noted that "Q2 was an outstanding quarter, with AI innovation launches and recent go-to-market changes leading to strong performance across the eSignature, CLM, and IAM businesses.". Therefore, earning reports and share price indicated a positive Q2 for the e-signature leader.

Overall, the sector is seeing exciting innovation in the field of AI which could bring huge long turn returns as businesses look to incorporate AI into their operations to become more efficient, but investors continue to raise concerns about minimal revenue flowing from AI firms, which questions the possibility of monetising AI investments.