US unemployment rate rose to 3.8% in August

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• The Bank of England’s chief economist says dealing with Liz Truss’s “mini” Budget was like swimming with crocodiles.

• Ukraine announced that it has built a new long-range aerial weapon that can hit targets 700km away, just days after missile strikes inside Russia.

• UK house prices fell at the fastest annual pace since 2009 in August as the impact of higher interest rates left many first-time buyers unable to afford a mortgage.

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Good evening.

The US unemployment rate unexpectedly rose to 3.8 per cent in August — the latest sign that the US economy is cooling. This may fuel speculation that the Federal Reserve will hold back from future interest rate rises at their November meeting.

Investors hailed a possible Goldilocks scenario in which inflation comes under control without causing a recession. The US economy added 187,000 new non-farm roles in August, according to data from the Bureau of Labor Statistics today, marking the third consecutive month of gains below 200,000.

“If the Fed could have put together their ideal employment report, it would look something like today,” said Andrew Hollenhorst, an economist at Citi. Though he added: “We should be careful about looking at one month of data and saying we’re all clear.”

Since the report, Wall Street futures rose and the dollar slipped with S&P 500 futures and Nasdaq 100 futures both adding 0.6 per cent. Elsewhere, Europe’s Stoxx 600 index added 0.3 per cent while Germany’s Dax fell 0.1 per cent.

This comes a day after eurozone core inflation fell to 5.3 per cent in August from 5.5 per cent in July. London’s FTSE 100 rose 0.3 per cent, led by energy and basic material groups including BP, Shell and Glencore.

Earlier this week, labour department data showed that job openings dropped in July to the lowest level in more than two years. There were 8.8mn job vacancies in July, down from 9.2mn in June, according to the Job Openings and Labor Turnover Survey released on Tuesday.

Need to know: UK and Europe economy

The UK economy by the end of 2021 was 0.6 per cent larger compared with pre-pandemic levels instead of 1.2 per cent smaller, according to new data from the Office for National Statistics released today.

Has the UK hit stagflation? High inflation coupled with a stagnating economy has resulted in contradictory economic data in the UK in recent months. While consumer confidence is up, unemployment is starting to climb and purchasing managers’ indices have dropped to their lowest level since January 2021.

In one British state school near Manchester, the headteacher tells the FT about the “jam” kids (his name for children whose families are “just about managing”) who hang back after lunchtime to ask the dinner ladies for scraps — unable to afford lunch but not qualifying for free meals.

In Ireland, manufacturers’ activity levels rose for the first time in six months, increasing to 50.8 in August from 47 in July, according to the AIB Manufacturing Purchasing Managers’ Index.

UBS yesterday reported that their state-sponsored takeover of scandal-ridden rival Credit Suisse has broken industry records with a $29bn gain. The co-president of Switzerland’s Social Democratic Party, Cédric Wermuth, called the takeover the “deal of the century”.

Eurozone inflation has edged down. While overall inflation remains unchanged at 5.3 per cent in the year to August, according to the EU’s statistical office report yesterday, prices excluding energy and food cooled. This comes ahead of the ECB’s September 14 meeting when it will face the decision to risk raising interest rates further.

Need to know: Global economy

In China, authorities stepped up measures to support the renminbi by cutting the amount of foreign currency that financial institutions are required to hold in reserve. Beijing and Shanghai also strengthened the country’s housing market by lowering minimum mortgage interest rates for first-time homebuyers.

This comes after yesterday’s announcement that foreign investors sold an unprecedented $12bn worth of Chinese stocks in August, and as vacancies rise in China’s most exclusive office buildings.

The FT revealed an intricate paper trail yesterday that shielded Adani Group investors’ identities from regulators. This follows an explosive report in January in which the Adani Group was accused of running the “largest con in corporate history”. The value of the group’s 10 listed companies dropped by $4.2bn after the opaque offshore structures were exposed.

In Japan, the government is planning a record ¥7.7tn ($54bn) in annual defence spending to expand its fleet and missile capabilities to counter rising military threats from China and North Korea.

Need to know: business

Tesla launched its “refreshed” Model-3 upgrade on Friday with the starting price of an increased Rmb259,900 ($35,900). Mass production at Tesla’s Shanghai gigafactory is expected to begin in September.

US hedge fund Millennium Management has amassed a $320mn bet against Mexican billionaire Carlos Slim’s América Móvil after an 18 per cent fall in the company’s share since May.

Shares in Europe’s largest copper producer Aurubis fell 17 per cent this morning following the company’s late Thursday announcement that it is investigating a suspected conspiracy related to the disappearance from its inventories of metals worth hundreds of millions of euros.

Insurer Direct Line is to refund customers £30mn after admitting it overcharged some of them for their home and motor cover. This comes after Aviva’s Adam Winslow was appointed as Direct Line’s new chief executive earlier this week.

Science round-up

AI dominates the science round-up this week with the UK Home Office looking to increase police use of controversial facial recognition technologies to track and find criminals. According to a document released on Wednesday, new biometric systems could be deployed nationally over the next 12 to 18 months.

Meanwhile, Chinese technology groups Baidu and ByteDance launched their AI chatbots to the public yesterday as Beijing rushes to deliver China’s answer to Microsoft’s OpenAI.

The US should restrict sales of Nvidia chips, which assist in training advanced AI systems, to buyers who agree with safe and ethical uses of AI. That’s according to Mustafa Suleyman, the chief executive of Inflection and co-founder of DeepMind.

Climate engineering advocates say that reflecting solar radiation back into space can help cool a warming planet, but opponents worry the technique is wasteful, ineffective and even dangerous.

The new Covid-19 sub-variant BA. 2.86 has prompted English health authorities to bring forward the autumn booster vaccination programme. The rollout will now start on September 11 for care home residents, the clinically vulnerable and those aged 65 and over. Canadian virologist Angela Rasmussen worries that “we haven’t seen the end of this virus” as new Covid sub-variants emerge.

Learning from those suffering from long-term health problems caused by the 9/11 attacks, including lung disease and PTSD, can teach us about those suffering from long Covid.

Strains of the “notoriously challenging” pathogen Acinetobacter baumannii, which have become resistant to antibiotics over the past few decades, prey on hospital patients and leave doctors feeling powerless. Now, an AI may have identified a potential new antidote to the so-called superbugs.

Something for the weekend

Try your hand at the range of FT Weekend and daily cryptic crosswords.

Some good news

One of the world’s rarest, and now luckiest, turtles is returning home to Texas after she found herself in much colder waters and washed up 4,000 miles away on a north Wales beach.