G7 Macro: The US small firm NFIB business survey fell to 91.2 in August. Although the month-on-month decline was one of the largest in some time, the level of business sentiment remains above the year’s lows. Today, the main event will be the US August CPI release. Consensus forecasters expect CPI to rise 0.2% MoM, leading to a reduction in annual inflation from 2.9% to 2.5% YoY. However, the same increase in the core series will leave core CPI inflation unchanged at 3.2%. The UK also releases a barrage of activity data including monthly GDP numbers for July.

South Korea: The jobless rate unexpectedly fell to a record-low 2.4% in August (vs 2.5% in July, market consensus 2.6%), trending down from the recent peak of 3.2% in December. The labour participation rate remained at 64.2% for a second month. Despite weak domestic growth conditions, the labour market appears to have tightened, but we don’t think this is necessarily a sign of recovery in domestic activity. Most of the job gains are in service industries, where wages are typically lower than in manufacturing. Also, in terms of contract type, temporary and daily work increased, while regular work decreased. Therefore, we believe that household income conditions may not have improved as much as the solid headline figure suggests. We believe that the BoK will pay attention to these details, and concerns about weak domestic demand are likely to lead to its first rate cut in October.

By industry, manufacturing shed jobs (-31k) partially due to summer labour strikes. Construction added jobs (23k) for the first time in seven months. Among the service sectors, the most notable gain came from professional/scientific and technical activities which added 44k jobs, mostly related to the IT sector (not manufacturing, but platform services and software engineering types of employment) and business facility management & support services (26k) also added jobs. Meanwhile, health and social work (-46k) shed jobs for the first time in five months, which is probably related to the on-going strike by doctors. Real estate lost jobs (-14k) for the third month in a row, reflecting weak property market conditions and accommodation/eating out (-12K) and recreation (-5K) jobs also fell, suggesting household leisure-related activity softened.

By status of worker, wage-earned employment rebounded for the first time in four months. Yet, regular employment fell (-65k) while temporary (contracts less than 1 year) and daily (contracts less than 1 month) rose 56k and 18k respectively.