Full story: The US added another 315,000 jobs in August
Dominic Rushe
The US added another 315,000 jobs in August as the jobs market remained strong amid signs of a worsening economy.
The US jobs market lost 22m jobs in early 2020 at the start of the pandemic but roared back after the Covid lockdowns ended. It has remained strong despite four-decade high rates of inflation and slowing economic growth. In July, the US unexpectedly added 528,000 new jobs, restoring employment to pre-pandemic levels.
The unemployment rate ticked up to 3.7% in August from 3.5% in July but is still close to a 50-year low.
The remarkable strength of the jobs market has spurred the Federal Reserve to sharply increase interest rates in the hopes of cooling the economy and bringing down prices.
Key events
Food producer warns of ‘price shock’ as carbon dioxide price quadruples
Sarah Butler
One of the UK’s biggest chicken producers has warned food security could be under threat and shoppers exposed to a “price shock” after a more than threefold surge in the price of carbon dioxide (CO2).
Pig farmers, soft drink producers, brewers and bakeries are also being hit by the increase in the cost of the gas, which is used to stun animals before slaughter, as well as in packaging and as an ingredient.
Ranjit Singh Boparan, who owns 2 Sisters Food Group and the turkey processor Bernard Matthews, called on the government to take rapid action and consider price capping the CO2 market to ensure supply as the price rise would add £1m a week to his businesses’ costs.
There’s nothing Goldilocks-like about the latest US manufacturing data, though.
Factory orders fell 1% in July, much worse than the 0.2% gain expected, led by a 1.9% drop orders for non-durable goods.
That’s suggests weakening demand for manufactured goods, as economic growth weakens. But that could also cool the pressure on the Fed to tighten policy.
ING: August employment report paints a very positive picturIt’s a “Goldilocks US jobs report” says ING’s chief international economist James Knightley.
There are broad-based jobs gain despite the US falling into a technical recession, with payrolls up 315,000.
And the unemployment rate picked up because more people were seeking a jobs, due to the rising cost of living and higher wages, together with rapidly receding Covid caution.
Knightley says:
The August employment report paints a very positive picture regarding the current state of the US economy with solid jobs growth yet signs that supply strains are easing as workers return to the labour force.
With wage growth coming in lower than expected it points to a slower pace of rate hikes after September’s expected 75 basis point move.
Dutch bank ING says the US jobs report out today was the optimal outcome.
The US added 315k jobs in August, but it seems supply strains are easing as workers return to the labour force. Wages are growing less than expected.
This suggests a slower pace of rate hikes after Sept.
— Nick Hedley (@nickhedley) September 2, 2022 Yellen: oil price cap help deliver major blow for Russian financesAlthough G7 finance ministers have agreed to “finalize and implement” a cap on the price of Russian oil, we don’t yet know what the cap will be, or which other countries might support it.
US Treasury secretary Janet Yellen says it will be implemented ‘in the weeks to come’, and hurt Russia’s finances [the US itself banned Russian oil imports back in March].
“Today, the G7 took a critical step forward in achieving our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine.
By committing to finalize and implement a price cap, the G7 will significantly reduce Russia’s main source of funding for its illegal war, while maintaining supplies to global energy markets by keeping Russian oil flowing at lower prices. While we’ve seen energy prices ease in the United States, energy costs remain a concern for Americans and continue to be elevated globally. This price cap is one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and globally from future price spikes caused by global disruptions.
Today’s action will help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy. We have already begun to see the impact of the price cap through Russia’s hurried attempts to negotiate bilateral oil trades at massive discounts.
I look forward to working with our G7 allies – as well as new coalition partners – as we move quickly to finalize the implementation of the price cap in the weeks to come.”
Markets rally after US jobs reportStocks have pushed higher as investors welcome today’s US jobs report.
The slightly stronger-than-expected jobs growth may ease concerns that the US risks a recession, while the slowdown in wage growth and higher unemployment rate may indicate inflation will cool off.
The Dow Jones industirla average has gained 157 points, or 0.5%, to 31,813 points in early trading.
In London, the FTSE 100 index of blue-chip shares has jumped 90 points, or 1.3%, recovering more of Thursday’s losses.
Bond prices have rallied too, pulling down yields, as traders anticipate that US interest rates may not be ratcheted up as fast as feared.
Implied US interest rates slip as much as 10 bps after the August jobs report.
Terminal rate seen in Q1 next year down to 3.85%, Dec 2023 rate down to almost 3.40%.
40 bps of easing priced into the 2023 curve, back up from around 30 bps earlier this week. pic.twitter.com/NcyffN39ej
— Jamie McGeever (@ReutersJamie) September 2, 2022 ⚠️ YELLEN SAYS G7 FINANCE MINISTERS’ PRICE CAP WILL HELP DELIVER MAJOR BLOW TO RUSSIA’S FINANCES, HINDER ITS ABILITY IN UKRAINE WAR -STATEMENT
– Reuters via t.co/ymHY6x3NYD
— PiQ (@PriapusIQ) September 2, 2022 US jobs report: what the experts sayThe 315,000 increase in US payrolls last month is good news, says John Leiper, chief investment officer at Titan Asset Management:
Non-Farm Payrolls takes on greater importance this week in the wake of Jerome Powell’s Jackson Hole speech. 315k new jobs added during the month is good news and came in slightly above our expectations.
Further, more people have rejoined the workforce and as a result wage growth came in lower than expected with average hourly earnings at 0.3% versus 0.5% in July. That’s higher than policy makers will be comfortable with but is moving in the right direction and plays into an emerging narrative that labour-driven inflation may be peaking.
Bottom line, these are positive numbers but will do little to change the 75bp versus 50bps rate hike. All eyes now turn to the next US inflation print on September 13th.
Janet Mui head of market analysis at wealth manager Brewin Dolphin, says Job creation remains relatively robust:
“The US unemployment rate surprisingly rose from 3.5% to 3.7% which is an uncomfortable read at first sight. However, it remains at a near historic low and was driven by an increase in labour force participation (meaning more people were in the labour force working or looking for work) which is good news for policymakers.
“Job creation remains relatively robust and above economists’ expectations, while wage growth is a tad slower than expected. Overall, this is a good set of data and underpins a resilient and tight job market.
Today’s report does little to change the Fed’s hawkish resolve but is modestly supportive of the peak US inflation narrative”.
Simon Harvey, Head of FX Analysis at Monex Europe, predicts that wage growth could come slow…which could ease the pressure to raise interest rates.
With economic conditions likely forcing more economically inactive individuals back into the labour market, today’s report suggests that downward pressure may soon start to be exerted on historically high wage growth.
Should this occur in subsequent labour market reports, it will ease the emphasis on the Fed to aggressively tighten policy, as they currently wish to reduce labour demand to diminish its effects on wage growth in an historically tight labour market, and in turn, the persistence of inflation.
Japan’s finance minister Shunichi Suzuki has welcomed the G7 financial leaders’ agreement that a price cap should be set on Russian oil exports.
Suzuki has called for the scheme to be implemented quickly, and told reporters in Toyko that the cap should help temper surging energy prices and inflation (via Reuters).
G7 finance ministers agree to Russian oil price capFinance ministers from the Group of Seven advanced economies have agreed to implement a price cap on Russian crude oil and petroleum products.
G7 ministers have confirmed the decision in a joint statement.
The initial price cap will be based on range of technical inputs and the price level will be revisited as necessary, said the ministers, adding:
“We aim to align implementation with the timeline of related measures within the EU´s sixth sanctions package.
The moveis aimed at slashing revenues for Moscow’s war in Ukraine but keeping crude flowing to avoid price spikes.
UK chancellor Nadhim Zahawi has said the move will curtail Vladimir Putin’s ability to fund the Ukraine war, reports Sky News’s Tamara Cohen.
“We will curtail (Russian President Vladimir) Putin’s capacity to fund his war from oil exports by banning services, such as insurance and the provision of finance, to vessels carrying Russian oil above an agreed price cap,”.
Exclusive:
G7 finance ministers have agreed a price cap for Russian oil, in a virtual meeting this lunchtime, @skynews can confirm.
Chancellor Nadhim Zahawi has said: “We will curtail Putin’s capacity to fund his war from oil exports…
— Tamara Cohen (@tamcohen) September 2, 2022 “…by banning services, such as insurance and the provision of finance, to vessels carrying Russian oil above an agreed price cap.
“We are united against this barbaric aggression and will do all we can to support Ukraine as they fight for sovereignty, democracy and freedom”
— Tamara Cohen (@tamcohen) September 2, 2022 Here’s some great snap reaction and analysis to the US jobs report:
The job market is falling back to trend:
Aug’s #JobsReport shows 315,000 job gains, slower & more consistent w/ softer spring gains, moderating after Jul’s blockbuster report
The unemployment rate rose to 3.7 percent, but on the back of strong labor force gains.
— Daniel Zhao (@DanielBZhao) September 2, 2022 In August, most jobs were added in education and health services and professional and business services. While govt jobs increased by 7,000 in August, they remain 645,000 below pre-pandemic levels, a concerning phenomenon for those workers and the vital services they provide. pic.twitter.com/wMoqhfZhNg
— Elise Gould (@eliselgould) September 2, 2022 In two months, the US economy lost 21.991 million jobs.
In the 28 months since then, it has made back 22.231 million jobs.
— Eddy Elfenbein (@EddyElfenbein) September 2, 2022 Full story: The US added another 315,000 jobs in August
Dominic Rushe
The US added another 315,000 jobs in August as the jobs market remained strong amid signs of a worsening economy.
The US jobs market lost 22m jobs in early 2020 at the start of the pandemic but roared back after the Covid lockdowns ended. It has remained strong despite four-decade high rates of inflation and slowing economic growth. In July, the US unexpectedly added 528,000 new jobs, restoring employment to pre-pandemic levels.
The unemployment rate ticked up to 3.7% in August from 3.5% in July but is still close to a 50-year low.
The remarkable strength of the jobs market has spurred the Federal Reserve to sharply increase interest rates in the hopes of cooling the economy and bringing down prices.