US economy grew amid Chinese turmoil

Last week the People's Bank of China cut its key lending rate by 0.25 percentage points to 4.6% in an effort to calm stock markets after two days of turmoil. It is the fifth interest rate cut since November and will take effect today. The People's Bank said that the interest rate cut was to reduce "the social cost of financing to promote and support the sustainable and healthy developments of the real economy". It also acted to increase the flow of money in the economy by cutting the amount of cash banks must keep in reserve, effectively freeing them to lend more cash. Amid the Turmoil of the Chinese share market The US economy grew more than expected in the second quarter on bigger gains in consumer and business spending shows the US is back on track and gives further optimism on the Federal Reserve hiking rates. The US released strong growth figures in the shape of its preliminary GDP figure. Gross domestic product, the value of all goods and services produced, rose at a 3.7 percent annualized rate, exceeding all estimates In another major data release, the US also released positive jobs data with unemployment claims falling to a three week low. Demand for skilled workers is picking up as the unemployment rate falls, Convincing hiring managers to keep staffing levels consistent with sales. Pay raises, alongside strengthening job security will help to provide a bigger boost to consumer spending in the US which accounts for almost 70 percent of the economy. Another report Thursday from the Commerce Department showed a bigger advance in household purchases in the second quarter than previously estimated. A 3.1 percent increase in spending helped boost gross domestic product to a 3.7 percent gain in the three months ended in June. Stanley Fischer, the Fed’s vice chairman, stated that it was “too early to tell” whether there’s a compelling case for a September rate hike. Still, in a speech over the weekend, he noted that inflation is still below the Fed’s goal of 2 percent, a rate determined best for “price stability and maximum employment.” However, Fischer closed his statements by stating that “because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening.” Which effectively is a signal that rates can be raised even before the inflation of target of 2% is met. Bank of England Governor Mark Carney said on Saturday that a slowdown in China's economy could push down further on inflation but it did not change, for now, the central bank's position on when and how it might increase interest rates. Speaking at an annual U.S. central banking conference in Jackson Hole, Carney reiterated his view that the recovery in Britain's economy "will likely put the decision as to when to start the process of gradual monetary policy normalization into sharper relief around the turn of this year." Manufacturers are also increasing their vigilance in key markets in light of growing risks and uncertainty in the global economy, according to a new survey of almost 300 companies published by EEF, the manufacturers’ organisation. The survey showed that 47% of companies are concerned about the possible sharp slowdown in China, of which 10% are reviewing their business plans. U.K mortgage approvals also showed an increase in July to their highest level in 17 months. Banks approved 46,033 mortgages for house purchases; this is the highest number we have seen since February 2014. That was up from 44,802 in June and up 11 percent from 12 months ago It was a fairly quiet news week in Europe with uncertainty regarding greeces Debt repayment calming down. German retail sales beat expectations gaining 3.3 per cent year-on-year despite Eurozone confidence being shaken by the Greek debt crisis. Monthly figures showed retail sales jumping by 1.4 per cent from June to July, according to figures released by Germany’s statistical office Destatis.