Evelyn Reynolds

Saudi Minister of Investment Khalid al-Falih pushed back against skepticism over the country’s economic diversification plan.
Al-Falih said that part of Riyadh’s offering to foreign investors is the Saudi-coined initiative of “green shoring,” which seeks to decarbonize supply chains in areas with renewable energy resources.
“Green shoring is basically saying you need to do more of the high energy processing [and] manufacturing value add in areas where the materials, as well as the energy, are [located],” al-Falih said.

Khalid Al-Falih, Saudi Arabia’s investment minister, during the Bloomberg New Economy Forum in Singapore, on Wednesday, Nov. 8, 2023. 
Bloomberg | Bloomberg | Getty Images

Saudi Minister of Investment Khalid al-Falih pushed back against skepticism over the country’s economic diversification plan, as Riyadh touts “green shoring” investment opportunities to woo foreign financing.
“There was many people who doubted the vision, the ambition, how broad and deep and comprehensive it is, and whether the development of a country like KSA who is so dependent for so many decades on a commodity business like oil would be able to do what we are aspiring to do with Vision 2030,” al-Falih told CNBC’s Steve Sedgwick on Saturday at the Ambrosetti Forum in Cernobbio, Italy.

One of the largest economies in the Middle East and a key U.S. ally in the region, Saudi Arabia has been shoring up investments in a bid to materialize Crown Prince Mohammed bin Salman’s Vision 2030 economic diversification program, which spans 14 giga-projects, including the Neom industrial complex.
Under this initiative, Riyadh seeks to pivot away from its historical dependence on oil revenues — which the International Monetary Fund now sees rising until 2026, before starting to descend — and hopes to draw financial flows in the domestic economy exceeding $3 trillion, as well as push foreign domestic investment to $100 billion a year by 2030.
The Saudi minister on Saturday said that, eight years into manifesting Vision 2030, the kingdom is now “more committed, more determined” to the program and has already implemented or is about to complete 87% of its targets. Critics of the plan have previously questioned whether Riyadh will successfully deliver on its goals by its stated deadline.
In recent years, the kingdom has been attempting to liberalize its market and improve its business environment with reforms to its investment and labor laws — but has also formulated less popular requirements for companies to set up their regional headquarters in Saudi Arabia to access government contracts.
The number of foreign investment licenses issued in Saudi Arabia nearly doubled in 2023, the IMF noted, with government data pointing to a 5.6% annual increase in net flows of foreign direct investment in the first quarter.

Concerns have nevertheless lingered over the potential uncertainty and unpredictability of the kingdom’s legal framework and its dispute resolution system for foreign investment. Al-Falih insisted that Saudi Arabia boasts predictability, as well as domestic political and economic stability.

‘Green shoring’

The Saudi investment minister said that part of Riyadh’s offering to foreign investors is the Saudi-coined initiative of “green shoring,” which seeks to decarbonize supply chains in areas with renewable energy resources.
“Green shoring is basically saying you need to do more of the high energy processing [and] manufacturing value add in areas where the materials, as well as the energy, are [located],” al-Falih said, adding that Saudi Arabia has the logistics, capital and infrastructure to achieve this.
Under Vision 2030, the world’s largest oil exporter aims to achieve net-zero emissions by 2060. Along with its neighbor, the United Arab Emirates — which hosted the 2023 gathering of the annual U.N. Conference of the Parties — Riyadh has been a high-profile presence at climate summits, but has still drawn questions over its commitment to decarbonization.
Riyadh — along with other members of the Organization of the Petroleum Exporting Countries oil alliance — has repeatedly called for the simultaneous use of hydrocarbons and green resources in order to avoid energy shortages throughout the global transition to net-zero emissions.
Some climate activists have also criticized Saudi Arabia’s promotion of solutions like carbon capture and storage (CCS) technologies as a smokescreen to push ahead with its lucrative oil business.
As part of “green shoring,” Saudi Arabia sets out to “address global supply chain resilience issues” and “build a new global economy that is certainly moving more electric, as we bring the copper, as we bring the lithium, the cobalt, the other critical materials, rare earth metals, as we address semiconductor shortages, green fertilizers, green chemicals,” al-Falih stressed. More

After surviving the “terrible prophecies,” Europe’s economy must face the challenges of the war in Ukraine and navigating trade ties with China, EU’s Paolo Gentiloni says.
The EU’s economy underwent “overall a weak growth, but nothing of the terrible prophecies that we heard in the last two or three years: recessions, blackouts, divergence, divisions in Europe in front of Russia’s invasion,” Gentiloni said in an interview with CNBC’s Steve Sedgwick at the Ambrosetti Forum.
The European Union must “support Ukraine, keep the doors of international trade open, which is not accepting China’s position, of course, we abandon our ingenuity in the trade relation with China,” he noted.

The European Union has successfully avoided the “terrible prophecies” that threatened its economy in recent years, but must still contend with Russia’s war in Ukraine and a tenuous trade relationship with China, outgoing European Commissioner for Economy Paolo Gentiloni said Saturday.
The bloc’s economy underwent “overall a weak growth, but nothing of the terrible prophecies that we heard in the last two or three years: recessions, blackouts, divergence, divisions in Europe in front of Russia’s invasion,” Gentiloni said in an interview with CNBC’s Steve Sedgwick at the Ambrosetti Forum at Cernobbio, on the shores of Italy’s Lake Como.

A former prime minister of Italy, Gentiloni has served as the European Commissioner for Economy under EC President Ursula von der Leyen since December 2019. The European Commission is responsible for the 20-nation euro zone’s economic strategy and legislation — such as tariffs — while the European Central Bank oversees the region’s monetary policy and interest rate decisions.
Gentiloni will not be returning for a second term as commissioner following Von der Leyen’s tumultuous re-election as president — but he has laid out the economic picture that awaits his imminent successor.
“The economy is growing, slowly, but growing. And the risks of differences among the European Union, that was very high when the pandemic happened, are very limited,” he noted. “The bad part of the story is that if we don’t raise out capacity in terms of competitiveness, if we don’t make enormous progress in what we call the capital markets union, and if we don’t address the challenge of defense … if we don’t do that, well, the new situation of the world will appear very difficult for Europeans.”
Resurging from the Covid-19 pandemic, Europe has been battling a cost-of-living crisis and high-inflation environment exacerbated by Russia’s February 2022 invasion of Ukraine and energy supply tightness following sanctions against Moscow. The euro zone’s economy has expanded in the first half of this year, with flash figures showing better-than-expected gross domestic product growth of 0.3% in the three months to the end of June, compared with the previous quarter.
In its spring forecasts, the European Commission projected the EU’s GDP will swell by 1% in 2024 and by 0.8% in the euro area, with respective growth of 1.6% and 1.4% in the two regions in 2024. At the time, the Commission flagged growth on the back of accelerated private consumption, declining inflation and a strong labor market, but also broader geopolitical risks amid ongoing conflicts in Ukraine and the Middle East.

Amid a drop in inflation, the ECB in June took the first step to ease monetary policy since 2019, trimming the central bank’s key rate to 3.75%, down from a record 4% where it has been since September 2023. As of Friday, markets had fully priced in another ECB rate cut in its forthcoming meeting of Sept. 12.  

The Chinese relationship

Looking ahead, Europe must now weather the dual storm of close-call elections in key trade partner the U.S. in November, and frictions in its trade relationship China. The EU has come into Beijing’s crosshairs following the bloc’s June decision to impose higher tariffs on Chinese electric vehicle imports that were found benefit “heavily from unfair subsidies” and pose a “threat of economic injury” to EV producers in Europe.
Gentiloni on Saturday stressed that trade diplomacy with China and the war in Ukraine must top the agenda of challenges facing a new Commission — and that they are more pressing concerns than the advent of a potential second U.S. administration under former President Donald Trump.
The European Union must “support Ukraine, keep the doors of international trade open” but also “abandon our ingenuity in the trade relation with China. But this does not mean that we can accept the idea that international trade and international trade rules [are] over,” Gentiloni noted.
He downplayed the economic impact of a Trump victory in November, adding, “I think that a change in the U.S. administration, meaning Trump winning the election, of course it will not be welcome in Brussels, but I don’t think that the change would be enormous in terms of economic relations.”

Winds of change

Gentiloni has yet to announce his next steps after departing from the Commission, at a time when Europe and its legislative body face a rising wave of far-right support.
“You should never organize your next role when you are having a role. But of course I will give my contribution to European affairs and maybe also to Italian politics and Italian affairs,” he said Saturday.
The leftist politician was unlikely to garner the support of Italian Prime Minister Giorgia Meloni, who has nominated Minister for European Affairs Raffaele Fitto from the ranks of her right-wing Brothers of Italy party to join the new EU executive.

Far-right factions gained substantive ground in the latest European election, leading the right-wing prime minister of Hungary — which currently holds the presidency of the EU Council — Viktor Orbán to question whether a van der Leyen Commission is appropriate, given the political sentiment.
“The core of the difficulty is the following: the previous Commission proved to be very much unsuccessful, in terms of competitiveness, of European economy, migration, stopping the war. So generally speaking, it was an unsuccessful Commission,” the Hungarian leader told CNBC’s Sedgwick on Friday, noting that a decision was taken to “create the same Commission, basically.”
He added: “So I have [a] great belief that [people] can change and be able to deliver better performances than they have done previously. But [is is] difficult to think so. So I try to support the Commission as much as we can, but being a rational man, I think we neglected the desire of the voters for change, and the same establishment [is] still in position in Brussels, and it’s not good.”

— CNBC’s Katrina Bishop contributed to this report. More

The unemployment rate for Black workers fell to 6.1% in August from 6.3% in July.
The jobless rate slipped for both Black men and Hispanic women.
The labor force participation rate held steady for white workers but decreased for Black and Asian workers.

An attendee takes information about a California State job at a City Career Fair hiring event in Sacramento, California, on June 5, 2024.
David Paul Morris | Bloomberg | Getty Images

The unemployment rate for Black workers fell in August, according to data released Friday by the Department of Labor.
In August, Black workers saw their jobless rate fall to 6.1% from 6.3% in the month prior. This trend was in line with the overall unemployment rate for the country, which ticked down to 4.2% in August from July.

On the other hand, unemployment for white workers held steady at 3.8%. The jobless rate also rose for Asian and Hispanic workers. For the former, it increased to 4.1% from 3.7%. For the latter, it crept higher to 5.5% from 5.3%.
Black men experienced a big month-to-month drop in unemployment, with their jobless rates falling to 5.9% from 6.6%. On the other hand, the unemployment rate held steady at 5.5% for Black women.

While Hispanic women saw their jobless rate fall to 5% from 5.4%, unemployment rates for their male counterparts climbed to 4.8% from 4.4%. The unemployment rate for white men also ticked higher to 3.6% from 3.5%, while it was unchanged at 3.4% for white women.
Diving into the employment-to-population ratio for female prime-age workers, or those ages 25 to 54, paints a very optimistic view of the labor market, according to Elise Gould, senior economist at the Economic Policy Institute.
“The employment-to-population ratio for women’s prime-age workers remains at a quarter-century high,” she told CNBC. “This remains very strong, even if there is still a little bit of softening in other measures.”

“It makes sense we’ll see some weakness now that we’re approaching full employment,” Gould added.
Last month, the labor force participation rate — the percentage of the population that is either employed or actively seeking work — remained unchanged at 62.7%.

Among white workers, the rate steadied, while it fell to 62.7% from 63.2% for Black workers. Within Asian workers, the participation slipped to 65.4% from 65.7%, and rose among Hispanic workers to 67.8% from 67.3%.
— CNBC’s Gabriel Cortes contributed to this report.
Correction: The unemployment rate for Black women held steady at 5.5%. A previous version misstated the percentage.

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“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Fed Governor Christopher Waller said.
His remarks followed a weaker-than-expected nonfarm payrolls report Friday that added to belief that the pace of hiring is weakening.

Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, DC, US, on Friday, March 22, 2024. A trio of central bank decisions this week sent a clear message to markets that officials are preparing to loosen monetary policy, reigniting investor appetite for risk.
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Federal Reserve Governor Christopher Waller on Friday backed an interest rate cut at the upcoming central bank policy meeting in less than two weeks, and indicated he’d be open to a substantial reduction if necessary.
“Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” Waller said in remarks prepared for the Council on Foreign Relations in New York.

Other policymakers recently have advocated easing policy soon, but this is one of the clearest indications it will happen at the Sept. 17-18 Federal Open Market Committee meeting. Waller repeated verbiage that Fed Chair Jerome Powell used in late August — that the “time has come” for adjustments to monetary policy.
“Determining the pace of rate cuts and ultimately the total reduction in the policy rate are decisions that lie in the future,” Waller added. He noted that he is “open-minded about the size and pace of cuts” and said, “If the data suggests the need for larger cuts, then I will support that as well.”
His remarks followed a weaker-than-expected nonfarm payrolls report Friday that added to the belief that the pace of hiring is weakening. The Labor Department reported job growth of 142,000, higher than July but still below the 161,000 Dow Jones forecast.
Waller did not specify how much he thinks the Fed should cut or how frequently. But he said he is open to the possibility that it may need to be aggressive in keeping the labor market afloat as inflation moderates toward the central bank’s 2% goal.
He noted that if the labor market deteriorates more quickly than expected, the Fed should react with larger cuts, which he said would lead to “a greater likelihood of achieving a soft landing.”

“Furthermore, I do not expect this first cut to be the last. With inflation and employment near our longer-run goals and the labor market moderating, it is likely that a series of reductions will be appropriate,” he said.
Futures market pricing following the jobs report tilted toward a greater likelihood of a quarter percentage point rate reduction this month. But it also indicated more aggressive moves later in the year, with a half-point move in November and possibly another in December, according to the CME Group’s FedWatch measure.

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The August jobs report came in weaker than expected.
Employment growth by different industries showed a mixed bag for the U.S. economy.
The growth was led by leisure and hospitality and health care and social assistance.

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The August jobs report came in weaker than expected, and employment growth by different industries showed a mixed bag for the U.S. economy.
The growth was led by leisure and hospitality and health care and social assistance, with each category adding more than 40,000 jobs, according to data from the Bureau of Labor Statistics.

If private education is included with the health-care group, as some economists do, that category would have grown by 47,000 jobs.
Elsewhere in the report, related categories of jobs saw conflicting data. Construction was a bright spot, growing by 34,000 jobs, but manufacturing shed 24,000 jobs. Professional and business services ticked up by 8,000 jobs, but information lost 7,000.
“The job growth is coming really from only three places right now: leisure and hospitality, health and education services, and government. … We’re just not seeing a lot of growth in business and professional services, and I think that is indicative of an economy that’s slowing down,” former Department of Labor chief economist Betsey Stevenson said on CNBC’s “Squawk Box.”
Even some of the stronger categories showed a slowdown, at least temporarily. The health-care subsector added 31,000 jobs, or about half its average over the prior 12 months, according to the Bureau of Labor Statistics.

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The U.S. economy created slightly fewer jobs than expected in August, reflecting a slowing labor market while also clearing the way for the Federal Reserve to lower interest rates later this month.
Nonfarm payrolls expanded by 142,000 during the month, up from 89,000 in July and below the 161,000 consensus forecast from Dow Jones, according to a report Friday from the Labor Department’s Bureau of Labor Statistics.

At the same time, the unemployment rate ticked down to 4.2%, as expected.
The labor force expanded by 120,000 for the month, helping push the jobless level down by 0.1 percentage point, though the labor force participation rate held at 62.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons edged up to 7.9%, its highest reading since October 2021.
The household survey, which is used to calculate the unemployment rate and is often more volatile than the survey of establishments, showed employment growth of 168,000.The balance, though, tilted towards part-time employment, which increased by 527,000, while full-time fell by 438,000.

Markets showed little initial reaction to the data, with stock futures holding negative and Treasury yields also lower.
While the August numbers were close to expectations, the previous two months saw substantial downward revisions. The BLS cut July’s total by 25,000, while June fell to 118,000, a downward revision of 61,000.

“I don’t like this a whole lot. It’s not disaster, but it’s below expectations on the headline, and what really bothers me is the revisions,” said Dan North, senior economist for North America at Allianz Trade. “This is certainly going the wrong way.”
From a sector standpoint, construction led with 34,000 additional jobs. Other substantial gainers included health care, with 31,000, and social assistance, which saw growth of 13,000. Manufacturing lost 24,000 on the month.
On wages, average hourly earnings increased by 0.4% on the month and 3.8% from a year ago, both higher than the respective estimates for 0.3% and 3.7%. Hours worked edged higher to 34.3.

The report comes with markets on edge over the next step for the Fed, which has been on hold with rates since July 2023 after having enacted a series of sharp increases to bring down inflation.
Heading into the release, markets had been pricing in a 100% probability that the Fed will start cutting rates when it meets Sept. 17-18. The only question was how much.
Following the payrolls release, futures market pricing tilted towards a half percentage point cut, according to the CME Group’s FedWatch gauge.
“For the Fed, the decision comes down to deciding which is the bigger risk: reigniting inflation pressures if they cut by 50 [basis points] or threatening recession if they only cut by 25 [basis points],” said Seema Shah, chief global strategist at Principal Asset Management. “On balance, with inflation pressures subdued, there is no reason for the Fed not to err on the side of caution and frontload rate cuts.”
The recent narrative for the economic data has indicated continuing growth but a slowdown for the labor market. Payrolls processing firm ADP reported Thursday that private companies added just 99,000 jobs in August, while outplacement firm Challenger, Gray & Christmas reported that layoffs surged in August and hiring had hit its slowest year-to-date pace going back to at least 2005.
The BLS report indicated that the private sector added 118,000 jobs for the month, up from 74,000 in July. Government jobs increased by 24,000.
Most Fed officials have indicated that they also see rates coming down. In his pivotal annual speech at the Fed’s Jackson Hole, Wyoming conclave, Chair Jerome Powell proclaimed that “the time has come” to adjust policy, though he provided no specifics for what that meant.
In a speech Friday morning, New York Fed President John Williams endorsed rate cuts.
“With the economy now in equipoise and inflation on a path to 2 percent, it is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” Williams said in remarks before the Council on Foreign Relations in New York.
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