Economic Overview

This week, The Economist published an overview of the previous weeks economic headlines. Here are the overviews:

Economic and financial indicators
America's Federal Reserve held its benchmark interest rate at 5.25%, marking its first pause in two years of tightening. Meanwhile, productivity growth slowed: output per hour rose at an annual pace of 1.1% in the second quarter, compared with 4.3% in the first. As a consequence, unit labour costs outstripped expectations, rising by 4.2%, at an annualised rate, in the second quarter, up from 2.5% in the previous quarter.

American job growth was weaker than expected in July. Employers (excluding farms) added 113,000 jobs to the payrolls, and the unemployment rate rose to 4.8%, from 4.6% in June.

In Japan core machinery orders increased by 8.9% in the second quarter, signalling future capital spending. Bank lending rose by 2.2% in the year to July. It was the fastest increase in more than ten years.

Germany's industrial production declined by 0.4% in June, after a 1.5% gain the month before. The country chalked up a merchandise trade surplus of €13.3 billion ($16.8 billion) in June. In June 2005 the surplus was €16.7 billion.

In Britain industrial production fell by 0.2% in the second quarter, despite an increase of 0.6% in manufacturing output. The country's trade deficit in goods and services narrowed to £4 billion ($7.4 billion) in June, from £4.7 billion in May.

Emerging-market indicators
China's trade surplus reached a record $14.6 billion in July, surpassing June's total of $14.5 billion. Exports grew by 23% in the year to July.

Indonesia's central bank cut its key interest rate by half a percentage point to 11.75%, after a quarter-point trim in May and another in July. Thanks to surprisingly low inflation so far this year, it is confident it can meet its inflation target of 7-9% for 2006.