Canadian housing starts climb 15.8% in July - CMHC - Reuters

OTTAWA, Aug 11 (Reuters) - Canadian housing starts rose in July as groundbreaking increased on multiple-unit and single-family urban homes, data from the national housing agency showed on Tuesday, as the market continued to bounce back from the COVID-19 crisis.

The seasonally adjusted, annualized rate of housing starts rose to 245,604 units from a revised 212,095 units in June, the Canadian Mortgage and Housing Corporation (CMHC) said. Economists had expected starts to dip to 210,000.

Gasoline, portfolio management fees boost U.S. producer prices in July - Reuters News

Producer price index increases 0.6% in July

PPI falls 0.4% on year-on-year basis

Core PPI rises 0.3%; gains 0.1% year-on-year

By Lucia Mutikani

WASHINGTON, Aug 11 (Reuters) - U.S. producer prices increased by the most in more than 1-1/2 years in July, but the overall trend in producer inflation remained subdued amid signs the economy's recovery from the COVID-19 recession was faltering.

The Labor Department said on Tuesday its producer price index for final demand increased 0.6% last month, driven by a surge in portfolio management fees and rising costs for gasoline. That was the biggest gain since October 2018 and followed a 0.2% decline in June. In the 12 months through July, the PPI dropped 0.4% after falling 0.8% in the 12 months through June.

Economists polled by Reuters had forecast the PPI would rise 0.3% in July and decrease 0.7% on a year-on-year basis.

The government reported last Friday that the economy created 1.763 million jobs in July after a record rise of 4.791 million in June. Only 9.3 million of 22 million jobs lost between February and April have been recouped. At least 31.3 million people are on unemployment benefits.

The economy, which entered recession in February, suffered its biggest blow since the Great Depression in the second quarter, with gross domestic product dropping at its steepest pace in at least 73 years.

U.S. stock index futures were trading mixed. The dollar .DXY slipped against a basket of currencies. Prices of U.S. Treasuries were down.

Excluding the volatile food, energy and trade services components, producer prices increased 0.3% last month after a similar rise in June. In the 12 months through July, the core PPI edged up 0.1%. The core PPI ticked down 0.1% on a year-on-year basis in June.

The Federal Reserve tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target. The core PCE price index increased 0.9% on a year-on-year basis in June. July's core PCE price index data will be released at the end of this month.

In July, wholesale food prices fell 0.5% as the cost of meat dropped 8.0%. Food prices decreased 5.2% in June. Wholesale gasoline prices increased 10.1% after advancing 26.3% in June. Goods prices shot up 0.8%. That followed a 0.2% rise in June.

Excluding food and energy, goods prices climbed 0.3% in July after inching up 0.1% in the prior month.

The cost of services rebounded 0.5%, the largest rise since April 2019, after dropping 0.3% in June. Services were boosted by a 7.8% surge in portfolio fees. That followed a 2.2% advance in June. There were also in increases in wholesale prices for machinery, automobiles and parts, long-distance motor carrying and legal services.

But prices for airline tickets fell 7.0%. The cost of motel and hotel accommodation also declined.

The cost of healthcare services increased 0.4%. Those healthcare and portfolio management costs feed into the core PCE price index.

China's new bank loans fall more than expected but broad credit growth quickens - Reuters News

July new loans 992.7 bln yuan vs f'cast 1.20 trln yuan

July M2 money supply +10.7% y/y, vs f'cast of +11.1%

July TSF growth quickens to 12.9% from 12.8% in June

PBOC to keep policy accommodative amid virus pandemic

By Judy Hua and Kevin Yao

BEIJING, Aug 11 (Reuters) - New bank lending in China fell more than expected in July from the previous month, but broad credit and liquidity growth quickened as the central bank sought to support a gradual economic recovery.

Chinese banks extended 992.7 billion yuan ($142.82 billion) in new yuan loans in July, down sharply from 1.81 trillion yuan in June and falling short of analysts' expectations, according to data released by the People's Bank of China (PBOC) on Tuesday.

Analysts polled by Reuters had predicted new yuan loans would fall to 1.20 trillion yuan in July. The new loans were lower than 1.06 trillion yuan a year earlier.

Wen Bin, senior economist at Minsheng Bank in Beijing, said banks tend to lend less into the second half after rapid credit expansion in the first half due to policy stimulus.

Household loans, mostly mortgages, fell to 757.8 billion yuan in July from 978.8 billion yuan in June, while corporate loans dipped to 264.5 billion yuan from 927.8 billion yuan.

A stronger-than-expected rebound in activity in the second quarter has reduced the urgency for the PBOC to ease policy further, but it will keep conditions accommodative to support the recovery, sources have told Reuters. (Full Story)

The central bank has already rolled out a raft of easing steps since early February, including cuts in reserve requirements and lending rates and targeted lending support for virus-hit firms.

China dropped its annual growth target this year for the first time since 2002 and pledged more government spending as the COVID-19 pandemic badly hurt the world's second-biggest economy.

Broad M2 money supply in July grew 10.7% from a year earlier, central bank data showed on Tuesday, below estimates of 11.1% forecast in the Reuters poll. It rose 11.1% in June.

Outstanding yuan loans grew 13.0% from a year earlier compared with 13.2% growth in June. Analysts had expected 13.2% growth.

QUICKENING TSF GROWTH

Annual growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy that includes off-balance sheet forms of financing, quickened to 12.9% in July from 12.8% in June.

Analysts watch the annual change in the TSF closely to gauge the underlying support for economic activity, given the volatile new lending figures.

Julian Evans-Pritchard, at Capital Economics, expected a further acceleration in broad credit growth in coming months.

"Admittedly, the deceleration in bank loans suggests that loan quotas are no longer being loosened, which could remain a drag on broad credit growth," Evans-Pritchard said in a note.

"But stronger investment demand on the back of the ongoing economic recovery should prop up issuance of corporate bonds and equity, and government bond issuance will remain rapid for the remainder of the year."

Authorities have been leaning more heavily on fiscal stimulus to weather the downturn, cutting taxes and issuing local government bonds to fund infrastructure projects.

German investor sentiment improves in August as recovery hopes rise - Reuters News

BERLIN, Aug 11 (Reuters) - Investor sentiment in Germany picked up more than expected in August, a ZEW survey showed on Tuesday, reflecting hopes that Europe's biggest economy is on the road to recovery after the devastation caused by the coronavirus pandemic.

The ZEW survey of investors' economic sentiment rose to 71.5 from 59.3 points the previous month, far exceeding a forecast for 58.0 in a Reuters poll of economists.

"Hopes for a speedy economic recovery have continued to grow," said ZEW President Achim Wambach.

Experts were much more downbeat about current conditions, however. The index tracking those dropped to -81.3 points from -80.9 the previous month. That compared with a Reuters consensus forecast of -68.8 points.

The German economy shrank by 10.1% in the second quarter, its steepest rate on record as consumer spending, company investment and exports collapsed at the peak of the COVID-19 pandemic, wiping out nearly 10 years of growth.

Wambach said assessments from individual sectors showed that experts expect a general recovery, especially in domestic sectors. "However, the still very poor earnings expectations for the banking sector and insurers regarding the coming six months give cause for concern," he added.

The government hopes its more than 130 billion euro ($153.17 billion) stimulus package will help a return to growth. It expects the economy to shrink by 6.3% this year and expand 5.2% in 2021.

"Signs of a strong economic recovery in the summer are continuing," said LBBW economist Uwe Burkert. "However, the danger of an expectation bubble, triggered by massive fiscal and monetary policy impulses, which mainly boost financial markets, is not off the table," he added.

UK job losses hit decade-high, worse seen ahead - Reuters News

Employment down by 220,000 in second quarter

Tax data shows payrolls down by 730,000 since March

Unemployment rate holds at 3.9%

Inactivity up as people don't look for work

Pay falls by most in a decade

Vacancies rise in July

By William Schomberg and David Milliken

LONDON, Aug 11 (Reuters) - The number of people in work in Britain has suffered the biggest drop since 2009 and signs are growing that the coronavirus will take a heavier toll on the labour market as the government winds down its huge job-protection scheme.

Led by a record plunge in the self-employed, 220,000 fewer people were working in the three months through June, official figures showed on Tuesday.

Separate tax data for July showed that the number of staff on company payrolls had fallen by 730,000 since March, sounding the alarm about a potentially much bigger rise in joblessness.

Mounting job losses are expected as Britain winds down its job-retention scheme, which has covered around one in three private-sector jobs. It is due to close at the end of October.

"A real concern is that this is just the first wave of bad news for the jobs market," said Gerwyn Davies, senior labour market adviser at the Chartered Institute of Personnel Development.

"The fact that reduced hiring rather than increased firing of permanent staff is the main cause of the jobs slowdown to date bodes ill for the coming months if more employers turn to redundancies as a last resort."

Finance minister Rishi Sunak said the government's support programmes were working but job losses were inevitable.

"I've always been clear that we can't protect every job, but ... we have a clear plan to protect, support and create jobs to ensure that nobody is left without hope," he said.

A string of companies plan layoffs, ranging from British Airways ICAG.L and London's Evening Standard newspaper to retailers WH Smith SMWH.L and Selfridges.

The unemployment rate unexpectedly held at 3.9%. But that reflected more people who had given up looking for work and therefore were not considered unemployed, and 300,000 people who said they were working but getting no pay, the Office for National Statistics said.

Economists polled by Reuters had expected the unemployment rate to rise to 4.2%. Last week, the Bank of England forecast the jobless rate would hit 7.5% at the end of this year.

BoE Deputy Governor Dave Ramsden told The Times the central bank still had "significant headroom" to ramp up its huge bond-buying stimulus programme again if needed. (Full Story)

The ONS is expected to announce on Wednesday that Britain's economy has fallen into a recession with a 21% slump in the size of the economy in the second quarter.

Tuesday's figures showed the number of self-employed people fell by a record amount in the three months to June, led by older workers. The number of employees rose - something the ONS said was partly accounted for by workers reclassifying themselves as employed.

The number of people claiming universal credit - a benefit for those on low pay as well as the unemployed - rose to 2.689 million in July, leaping by 117% from March.

Pay fell by the most in more than 10 years in the April-June period, down 1.2%, reflecting how workers on the job retention scheme receive 80% of their salary. Excluding bonuses, pay fell for the first time since records began in 2001.

However, there was a small increase in job vacancies in the three months to July as small businesses took on staff to meet coronavirus guidelines, the ONS said.