areas such as industry characteristics, investment in r & d and innovation. differences in the timing and extent of past structural reforms in euro area countries are also a source of diversity. to give you an example, the netherlands undertook labour market reforms much earlier than the largest euro area countries. this enhanced its flexibility and increased its ability to adjust to a wide range of shocks. in some other countries, short - term shocks may have had more persistent effects on growth differentials owing to slow adjustment processes caused by the presence of structural rigidities. differences in fiscal policies and other national policies can also give rise to diverse economic situations. there is an additional source of diversity that may be working its way through the system. after the launch of the euro, some countries suddenly benefited from lower short and long - term interest rates, as well as easier access to more competitive credit markets. this encouraged the purchase of durable and non - durable goods, as well as housing, albeit to differing extents in the various euro area countries. this was equivalent to a one - off shock immediately after the launch of the euro. all in all, the degree of diversity observed in the euro area is not substantially different from that seen in the united states. and neither is it substantially different from that seen within the national borders of several large economies ( such as germany, italy and spain ), which is a continuation of historical patterns. diversity in perspective diversity within the euro area should be put in perspective, and i shall now look at three main types of divergence. whenever possible, i will compare the euro area with the united states, as the world ’ s only other industrialised economy of a comparable size. a ) inflation dispersion in the euro area declined considerably in the 1980s and 1990s and is now on a par with that of the united states. impressive progress has been made, and inflation dispersion among euro area countries has broadly stabilised at a low level since the launch of the euro. to give you an example, the unweighted standard deviation of annual hicp inflation rates still stood at around 6 percentage points in late 1990, but this rate has broadly stabilised at around 1 percentage point since the launch of the euro. this dispersion level is similar to that of the 14 us metropolitan statistical areas ( msas ), but is somewhat higher than that of the four us census regions. although such comparisons are subject to some well - known caveats, i would argue that inflation dispersion in the euro

, in the aggregate, remain healthy. the increase was fairly broad based across goods categories. while many online retailers offered discounts last month, this was not a dominant factor in the solid results. although manufacturing output fell in july and the august institute for supply management manufacturing survey pointed to weak production and new orders, the similar survey for the larger, nonmanufacturing sector was consistent with a modest expansion of activity. as for the labor market, on balance, the data that we have received in the past three days indicates to me that the labor market is continuing to soften but not deteriorate, and this judgement is important to our upcoming decision on monetary policy. as i said earlier, wednesday's report on job openings in july was consistent with a moderating labor market. meanwhile, the four - week moving average of initial claims for unemployment insurance has risen gradually since january but has changed little on net in the past two months, with initial claims remaining fairly low. the jobs report for august, released this morning, supported the story of ongoing moderation in the labor market. after rising to 4. 3 percent in july, the unemployment rate ticked down to 4. 2 percent in august. taking a longer perspective, the unemployment rate over the past 16 months has increased gradually but fairly steadily from 3. 4 percent to 4. 2 percent in today's release. payrolls rose by 142, 000 in august compared with 89, 000 in july, leaving the three - month average payroll gain at 116, 000, compared with the 267, 000 average in the first quarter and 147, 000 in the second. accounting for revisions to the jobs numbers that we received in august, that level is a bit below what i see as the breakeven pace for job creation that absorbs new entrants to the workforce and keeps the unemployment rate constant. 2 2 / 5 bis - central bankers'speeches july marked the first time that the three - month average unemployment rate has increased by at least a half of a percentage point above its 12 - month low, which was 3. 6 percent in july 2023. this breached a threshold established by the sahm rule, which observes that when this has occurred in the past, it has been a reliable indicator of the economy entering a recession. while this is a correlation that certainly bears attention, i want to make a few cautionary points about relying on such rules in deciding that a recession has begun. as we have seen in the recent past