5 Things You Need to Know to Start Your Day

Good morning. China reports the slowest services sector growth this year, Goldman gets more optimistic about the US economy, and the huge fi [View in browser]( [Bloomberg]( Good morning. China reports the slowest services sector growth this year, Goldman gets more optimistic about the US economy, and the huge financial consequences of getting return-to-office right. Here’s what’s moving markets. China Recovery China’s services sector saw the [slowest monthly growth so far this year]( in August, according to a survey, adding to a series of disappointing data. Our analysis says Beijing is increasingly at risk of missing its growth target of about 5% for this year, and it’s unlikely to release a stimulus package to drive growth like it did in the global financial crisis in 2008-09. President Xi Jinping instead wants to control debt, and to shrink the [property sector’s share]( of the economy. A weaker GDP trend in China, the world’s second-largest economy, would have an impact on almost every country, according to the IMF. Find out [why China is avoiding using its “bazooka”]( this time in our QuickTake. Goldman Optimism Goldman Sachs now sees [less of a chance the US will slide into recession]( as cooling inflation and a still-resilient labor market suggest the Federal Reserve may not need to raise interest rates further. The bank now sees the probability of a US recession at 15%, down from 20% previously and well below a Bloomberg consensus of 60%. Why so optimistic? “First, real disposable income looks set to reaccelerate in 2024 on the back of continued solid job growth and rising real wages,” says Jan Hatzius, chief economist at Goldman. “Second, we still strongly disagree with the notion that a growing drag from the ‘long and variable lags’ of monetary policy will push the economy toward recession.” Return-to-Office Three and a half years after workers were sent home en masse to limit the spread of Covid, companies, employees and governments are still trying to figure out the rules of corporate life. Asian and European workers have largely returned to offices at a faster pace than their counterparts in the Americas, and in the US policymakers have stayed largely silent, leaving bosses and employees to navigate the changes on their own. The stakes are huge: McKinsey Global Institute [estimates that]( pandemic shifts could erase as much as $1.3 trillion of real estate value in big cities by 2030. [Today’s Big Take takes a look at return to work]( around the world and its significant financial consequences. Dollar Surge The dollar is sitting close to a [six-month high]( as Treasury yields push higher and traders consider whether US interest rates may stay higher for longer. The Bloomberg Dollar Spot Index rose 0.4% after US government bonds reopened lower after Monday’s holiday. US markets are set to open down after data from China caused stocks to retreat in Europe and Asia. Crypto assets used for liquid staking, where tokens are pledged to help operate blockchains in exchange for rewards, [are up 292%]( and nearing a record high after a surge of investment. Coming Up… Shares in troubled shared office space lessor WeWork will trade today for the first time since its reverse stock split became effective. Data on July's factories orders is due at 10 a.m. New York time, with economists expecting a drop. The US Senate returns from recess as concerns mount over the health of Republican Leader Mitch McConnell. Is the American consumer flush with cash or about to go broke? Are the excess, Covid-era savings gone? Will elevated mortgage rates and student-loan payments hurt US growth in the last quarter of this year? Share your views in the latest [MLIV Pulse survey](. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [China’s slowdown]( means it may never overtake the US economy - Lab-grown stones put De Beers’ diamonds into [pricing free fall]( - China wants [$40 billion fund]( to drive domestic chipmaking - OpenAI’s Sam Altman is first to get an [Indonesian “golden visa”]( - Why Putin and Kim Jong Un’s bromance is a [threat to the world]( - Obesity drug Wegovy [arrives in the UK]( at a fraction of US prices - Novo Nordisk [overtakes LVMH]( as Europe’s biggest company - China’s top chipmaker surprises with [advanced smartphone chip]( And finally, here's what Joe’s interested in this morning Friday's jobs report was okay. The pace of job creation came in a little bit ahead of expectations. However, there was a meaningful jump in the unemployment rate to 3.8% from 3.5%. The increase wasn't caused by a surge in layoffs, but rather a rise in the participation rate. In other words, there was an increase in the number of people looking for jobs last month who didn't find one. This has been the theme of the labor market lately: Low Firing, Cool Hiring. It's not just in the Non-Farm Payrolls report that we're seeing it. Other labor market data show a similar theme. Last week's Initial Jobless Claims number came in at just 228K (low firing). However the JOLTS report showed a substantial drop in the number of current Job Openings (cool hiring). Private sector data shows the same thing. As LinkedIn economist Guy Berger [noted last week](, the company's own data shows a continued decline in what it calls its Hiring Rate. So a big question for the Soft Landing thesis is whether we can see a meaningful decline in the pace of job gains or hiring, without that simply being a phase that precedes a substantial pickup in layoffs. In the meantime, outside of firing and hiring, there are other signs of cooling that we've seen lately. Average Hourly Earnings seem to be decelerating, which you would expect as competition to find workers eases. This is also in line with the declining Quits Rate, which is back to pre-pandemic levels. Last week we also got a generally encouraging PCE report. Here's a [good thread from Jason Furman]( breaking down what is the Fed's preferred measure of inflation. There are a number of signs that things are cooling. Others can debate how long these conditions will last, or how cold things can get. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](