The Chinese turmoil is the main challenge ahead  One last word about China and the recent market turmoil: this latest episode may have the characteristics of a regime switch towards a permanent, lower output, driven by a structural real estate overhang, chronic industrial overinvestment (45% of GDP) financed by a (collapsing) shadow banking system.
The labor market tightened further with unemployment rate edging down to 2.8%, the lowest level in more than 20 years. Overall inflation pressure remained moderate, and underlying consumer price inflation remained unchanged at 2.4% in Q2 2018.