httpvh://www.youtube.com/watch?v=tQ0FZPgERGU

The latest labour market figures were released yesterday for the UK and showed that employment was up by 286,000 in the three months to July. This sounds wonderful but in reality the workforce also grew by a similar amount, which means the actual level of unemployment only fell by 8,000. Also the claimant count rose for the first time since the snow in January by 2,300. All this combines to indicate that the labour market seems to be turning even before the spending cuts. The retail sales data out this morning may however reveal a nice rise in volumes and the surveys have been upbeat, even with the outlook on household incomes. Average earnings also picked up a tiny bit in July, the annual rate rose from 1.3% to 1.9%, but this is still very low and if unemployment rises further this is likely to be under extreme pressure.

Mervyn King spoke out about the necessity of the spending cuts yesterday, saying that public borrowing is ‘clearly unsustainable’ and that he supports the government’s ‘clear and credible’ deficit reduction plan. Interestingly this was only the second speech made by a Bank Governor to the TUC in its whole 142 year history.

Greece’s finance minister has strongly rejected the theory that Athens will default and restructure its debts, saying that this would break the eurozone.  He told the Financial Times; “People fail to see the costs to both Greece and the eurozone of a restructuring: the cost to its citizens, the cost to its access to markets… It would be a fundamental break to the unity of the eurozone.”

The SNB are releasing the interest rate at lunchtime which will likely remain unchanged. The global slowdown might prompt Swiss GDP growth to slow to about 1% in 2011 which will only make interest rates rise slightly, if at all, next year. Eurozone CPI came out yesterday and had fallen 1.7% to 1.6% and showed that core inflation was very low at 1%.

Yesterday’s Empire State Manufacturing survey in the US fell to +4.1 in September from +7.1 yesterday but despite this new orders rebounded and shipments improved.  However, the manufacturing sector still appears to growing at a much slower pace than it was in the first half of the year. The Philly Fed index is set to rebound today which would leave it at a level of modest growth, rather than falls, in manufacturing input.

Today is another busy day for data kicking off with the UK’s retail sales for August coming out at 9:30 this morning, as mentioned, as well as CBI at 11am. They are followed by the EU Trade Balance at 10am. The US are going full throttle today, apart from the PPI and Philly Fed you might want to keep an eye on  Net Long-term TIC flows showing the in and out flows of the financial resources in the US.