Resilient US economy defies predictions

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of a slight easing of labour market pressure in the US, but the long predicted recession still seems far away.But first in the week ahead, it will get started slowly with the US currently on its long end-of-summer Labor Day weekend. We won't see them back in international financial markets until Wednesday, NZT. Then they will deliver their ISM Services PMI, factory order data, and foreign trade data. Elsewhere, Australia and Canada will announce interest rate decisions. Also, inflation rates will be released in Turkey, South Korea, the Philippines, Mexico, and Russia. GDP growth figures will be released for Australia, South Africa, and Switzerland. Additionally, we will get service sector PMI readings for China from their private Caixin series..Over the weekend their August non-farm payroll report showed that American labour markets are still expanding although not as fast as previously.The US economy added +187,000 jobs in August, compared to the downwardly revised +157,000 in July and more than market expectations of +170,000. These are the headline, seasonally-adjusted changes. It was the third consecutive month with job gains falling below 200,000, indicating a gradual easing of American labour market conditions, largely attributed to the Federal Reserve's significant interest rate hikes aimed at cooling inflation. There is a downshift, but it is a smooth one - so far at leastHowever as regular readers know we also look at the original data and that rose +268,000 to 156.4 mln people on company payrolls, a new record high and up +3.0 mln from a year ago. Meanwhile there are 161.4 mln employed when you also account for the unincorporated self-employed, up +2.7 mln in a year, so that indicates a shift into company jobs. It is this overall longer-term and sustained surge in employment that is making the American economy so resilient.Over the past year, average weekly earnings rose +4.0%, and while that is still rising faster than inflation, it is at a slightly slower pace than in previous months.Meanwhile, the widely-watched ISM factory PMI 'improved' slightly, meaning it contracted less. In fact it has now contracted for a tenth consecutive month. Recall on Friday the internationally-benchmarked Markit PMI came in with a very similar result. Basically their factory sector is in a shallow trough and analysts are suggesting it will climb out of it from here.Also in a trough is the Canadian economy. Their Q2 GDP data was released over the weekend and it did not grow from Q1. It is however now +2.2% higher than year-ago levels.In China, the Caixin factory PMI surprised with a small expansion, when a small contraction was anticipated. Given the official factory PMI out earlier showed a contraction, this is a double surprise. The Caixin survey has been volatile about the 50 point mark for a number of months now. Their survey noted a rise in new orders overall and the downturn in new export orders easing. This wasn't what the official factory survey found however. But both surveys noted that selling prices