Hot US labour data fuel rate rise expectations

0

This article is an on-site version of our Disrupted Times newsletter. Register here to get the newsletter straight to your inbox three times a week

Good evening,

A positive run of jobs data in the US has allayed some concerns about a downturn in the world’s largest economy.

A more than expected 528,000 messages were created in July, up from 398,000 the month before, with the unemployment rate slowly falling from 3.6 percent to 3.5 percent, the lowest level since the start of the pandemic.

Today’s numbers follow last week’s GDP data, which shows the economy has contracted for the second quarter in a row, raising concerns that the US is slipping into recession – a status that has not yet been confirmed – although the government maintains that it is still in good shape. Federal Reserve Chairman Jay Powell warned against paying too much attention to GDP value, arguing that interest rates could rise further without triggering a slump.

Separate data from yesterday showed that the number of people claiming unemployment benefits last week reached 260,000, the highest in more than six months, suggesting that the labor market was beginning to cool.

Several major companies have recently announced they will be cutting jobs, including retail giant Walmart, real estate agency Robinhood, media companies Netflix and Twitter, and electric car maker Tesla. Tech groups Meta and Google parent Alphabet have announced a hiring delay.

US Treasuries and stock futures sold off after today’s more positive news, as traders bet on the Fed continuing its aggressive series of rate hikes.

“The unexpected acceleration in non-agricultural wage growth in July, along with the continued decline in unemployment and renewed rise in wage pressures, make a mockery of claims that the economy is on the brink of recession,” Michael said. Pearce, senior US economist at Capital Economics. “All the details [of the report] appear to support the Fed’s continued aggressive rate hikes.”

Latest news

For current news updates, visit our live blog

Need to know: the economy

Europe and Asia battle each other to secure gas supplywith the risk of further price increases that could increase the cost of living for consumers.

bank of England Governor Andrew Bailey defended his strategy after the central bank raised interest rates by 0.5 percentage points to 1.75 percent yesterday, the highest level since the global financial crisis. The BoE said the country will enter a prolonged recession later this year, with inflation at 13 percent by the end of the year. It has been criticized by hopeful Prime Minister Liz Truss and the FT editorial staff, who said it should be more forceful.

Latest for UK and Europe

UK fuel poverty activists react to regulator Ofgem’s move to change the energy price cap every three months instead of twice a year. Meanwhile, income data for low-income households showed the country’s poor social mobility. scammers who had exploited the fears of victims of the coronavirus are now chasing those affected by the cost of living crisis.

The number of British companies in “critical financial distress” has increased by more than a third in the past year. British construction Activity fell for the first time since early last year as rising inflation and interest rates take their toll.

Ukraine has requested that the easing of the Russian blockade on grain exports be extended to other products, such as metals.

A survey by the European Central Bank showed: Eurozone consumers increasingly bleak, with inflation expected to remain above 2 percent over the next three years and the economy to contract by 1.3 percent over the next 12 months.

Worldwide last

Rising tensions over the Taiwan Strait have highlighted the risks to global supply chains as cargo ships and airlines are disrupted by China’s military exercises. The Strait is the main shipping route between China and Japan, the world’s second and third largest economies, and also transports manufactured goods from Asia’s factories to world markets.

Map of Taiwan showing China's military fire drills in March 1996 and August 2022

India has raised its key interest rate by half a percentage point to 5.4 percent to try to curb rising inflation, which is currently at 7 percent.

Sergio Massa, the third person in charge of Argentina’s economy in just a month, pledged to bring fiscal order and regain market confidence through a new “super ministry”. His first measures include ending printing money to fund the budget, building dollar reserves and “reworking” state subsidies.

The recent Japanese invention of sunstroke insurancethough eye-catching as a piece of commercial innovation, it tells a disturbing story about the status of the country’s “retirees,” writes Leo Lewis, Asia’s editor-in-chief.

A review in the Reserve Bank of AustraliaThe way they deal with rising inflation is being closely watched by central bankers around the world accused of policy and communication failures.

Need to know: business

Recent unrest in financial markets was reflected in declining profits and slowing new business at UK investment platform Hargreaves Lansdown and outflows from Pimco, the world’s largest credit-focused fund manager.

Lufthansa said wealthy passenger demand would deliver “significantly higher” profits in the coming quarters, despite the current state of chaos in the industry.

Profit at Glencore, one of the biggest winners of the commodity market turmoil, more than doubled in the first half of the year. Coal accounted for nearly half of the record $18.9 billion in adjusted profit.

Bayerthe German drug and chemicals group, doubled its growth forecast for 2022 after rising food prices boosted demand for seeds and herbicides.

Profit at Toyota, the world’s largest automaker, nearly halved to ¥579 billion ($4.3 billion) in the second quarter, thanks to rising costs and pandemic lockdowns in China. In the meantime, Rolls Royce has warned of the effect of rising inflation and supply chain problems.

UK retail bellwether Next one raised full-year earnings forecast after warm weather boosted in-store sales in the first half. There is also hope for online retail. Innovation editor John Thornhill examines an Indian e-commerce network enabling millions of small merchants to connect with suppliers, customers and delivery companies to take on Amazon.

US media companies have been hit by a “perfect storm” of trouble, losing nearly $400 billion in market value this year. Warner Bros Discovery said the “spend, spend, spend” streaming era was coming to an end as it reported a quarterly loss of $3.4 billion. Demand for ads remains strong, according to WPPthe world’s largest ad group, even if investors weren’t convinced.

FC Barcelona was previously declared “clinically dead” by the president after years of high spending on players combined with the stadium’s forced closure during the pandemic. Sports editor Josh Noble considers whether a new release of spending will help regain past glory or simply pile up more financial problems for the future.

You see a snapshot of an interactive image. This is most likely due to you being offline or having JavaScript disabled in your browser.

Science overview

Covid infections in the UK, while still at high levels, have fallen for the second week in a row, raising hopes that the latest wave – powered by the BA.5 variant – has peaked.

The US shifts focus to monkeypox after declaring the outbreak a public health emergency yesterday and appointing a new team to improve access to tests, vaccines and treatments. The country is responsible for about a quarter of the 22,100 worldwide infections from the virus, which spreads through skin-to-skin contact and mostly occurs in West and Central Africa.

Two reports cast doubt on the UK’s aim to create a “scientific superpowerwithout a better focus on results and more spending on research and development. A lack of lab space also threatens the life sciences boom in Oxford and Cambridge.

US President Joe BidenThe positive test for Covid, just three days after announcing he was negative, has thrown the spotlight on “rebound” cases of patients who received Paxlovid, which has been praised for preventing some of Covid’s worst effects in elderly patients or patients with pre-existing conditions.

Japan grapples with the biggest coronavirus outbreak since the start of the pandemic, fueled by children and adolescents who have not been fully vaccinated.

Covid cases and vaccinations

Total number of worldwide cases: 575.8 mn

Total Doses Administered: 12.4 billion euros

Get the latest global photo with our vaccine tracker

What good news

The tram is back! Dozens of cities across Europe are reintroduction of trams, reducing congestion and pollution, as well as reclaiming urban centers in a new golden age for transit. (Reasons to be merry)

Tram in Birmingham city center
A tram runs through Birmingham, UK, host city of the Commonwealth Games © Kirsty Wigglesworth/AP

Have you seen any good news stories you want to share with FT readers? Comment below or email us disruptedtimes@ft.com.

The work — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work and career editor Isabel Berwick. Sign Up here

The climate graph: explained — Understand the week’s key climate data. Sign Up here

Thanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here receive future numbers. And share your feedback with us at disruptedtimes@ft.com. Thank you