Afternoon summary
Time for a recap
U.S. President Joe Biden has declared that June’s non-farm payroll report, showing continued, but slowing, job growth is “Bidenomics in action”.
In a statement, Biden declared:
“We are seeing stable and steady growth. That’s Bidenomics - growing the economy by creating jobs, lowering costs for hardworking families, and making smart investments in America.”
Nonfarm payrolls increased by 209,000 jobs last month, the smallest gain since December 2020, while April and May’s reports were revised down to show 110,000 fewer jobs created than expected.
Wage growth strengthened, rising 0.4% in the month. But there was also a rise in part-time work, suggesting demand weakened.
The US dollar has lost ground, and is now down 0.7% against a basket of currencies today, and at a two-week low against the yen.
Bond and equity markets are calm, after a volatile selloff on Thursday, with economists predicting US interest rates will be raised again later this month.
Charles Hepworth, investment director at GAM Investors, says:
“In the month of June, the US added 209,000 people to the non-farm workforce on the previous month. This number came in just under most forecasts of a 230,000 gain, but is still probably not what the Fed wants to see if it intends to continue pausing rate hikes.
“Average hourly earnings were also up more than expected, rising 0.4% on the month and showing a 4.4% advance year-on-year. The broader unemployment rate fell to 3.6%. The US economy looks far from softening. All these factors mean interest rate hikes are back on the agenda. We expect the Fed to raise rates at its meeting later this month.”
In other news today…
Travellers catching ferries from Dover faced queues of up to two hours on Friday as traffic built up at border posts.
The Kent port said passengers should expect waits of up to two hours for coaches and 90 minutes for cars, as traffic built up in the morning.
Ferries were operating normally, and passengers are allowed to catch subsequent sailings.
A combination of the sun, the start of school holidays in parts of the UK, and a school teachers’ strike offering parents a potential long weekend may have contributed to the pressure on the port.
UK house prices experienced their biggest annual fall in 12 years, according to Halifax.
Prices fell by 2.6% year-on-year, in the latest sign that soaring interest rates on mortgages is bringing a halt to the housing boom.
UK mortgage rates have continued to rise, as the financial markets expect UK interest rate to rise to 6.5% by early next year, up from 5% today.
Half of older adults who left the UK workforce amid mass redundancies in the first year of the Covid pandemic ended up falling into relative poverty, according to the Institute for Fiscal Studies (IFS).
The estimated £4.8bn cost of HS2’s endangered Euston terminus could balloon further unless the government becomes “clear what it is trying to achieve”, the public accounts committee has warned.
Air traffic control managers in mainland Europe are planning to strike this summer, potentially exacerbating disruption to holiday flights should French strikes continue.
South East Water, which left thousands of households without running water last month spent more on dividends and servicing its debt pile over two years than investing in infrastructure, it has emerged.
And….the last Ford Fiesta will leave the assembly line today, marking the end of an era for a model that sold 22m vehicles globally and is the UK’s all-time bestselling car.
Have a lovely weekend. GW
Here’s Erik Norland, Senior Economist at CME Group, on the jobs report:
“NFP surprised on the downside by 131K jobs net of revisions to previous months’ numbers, but the overall number wasn’t necessarily weak with wage growth surprising on the high side and unemployment, which is calculated from a separate survey, coming in at 3.6%. The economy still added 209K jobs in June.
Thursday’s JOLTS survey showed that there were 9.8 million job openings at the end of May, about three million than there were in late 2019 before the pandemic. This implies the possibility of strong demand for workers in the months ahead, even if economic activity slows in response to the Fed’s rate hikes.”
