US economy added 187,000 jobs in July; UK economy caught ‘in low-growth trap’ – business live | Business

Pay growth in July was faster than expected, in a boost for US workers.

The jobs report shows that average hourly earnings for all employees on private nonfarm payrolls rose by 14 cents, or 0.4%, month-on-month in July to $33.74. Economists had expected a rise of 0.3%.

On an annual basis, average hourly earnings have increased by 4.4%, beating forecasts of a slowdown to 4.2%.

That might cause the Fed some concerns, as its policymakers ponder whether they have raised US interest rates high enough to drive out inflation.

Newsflash: The US economy added fewer new jobs than expected last month.

The US non-farm payroll rose by 187,000 in July, data just released shows, below forecasts of an increase of 200,000.

June’s NFP has been revised down too, from +209,000 to +185,000, while May’s has been cut by 25,000, from +306,000 to +281,000, meaning fewer jobs were created in the spring than we thought.

The U.S. Bureau of Labor Statistics has also reported that the unemployment rate fell to 3.5%, down from 3.6% in June.

They add:

Job gains occurred in health care, social assistance, financial activities, and wholesale trade.

The financial markets are eagerly awaiting the latest US jobs report, due on the half-hour.

July’s Non-Farm Payroll is expected to show that the US economy added around 200,00 new jobs last month, slightly down on the 209,000 new hires recorded in June.

June’s jobs gain was the weakest since December 2020.

Economists will also be watching the latest pay figures, for signs that higher interest rates are cooling the labor market.

Hourly earnings are expected to slow to 4.2% year-on-year from 4.4% previously but continue to rise month-on-month. The unemployment rate is also expected to remain at a long-term low of 3.6%.

Analysts at FxPro point out that eleven out of the last twelve labour market reports have exceeded expectations – with last month’s being a rare miss.

They add:

A second worse-than-expected report in a row could crystallise the market pressure and become the first signal of a trend reversal.

The wage rate is also important for the dollar’s momentum: a better-than-expected reading is a reason for the Fed to tighten policy, which is positive for the dollar. Weak wage growth and strong employment can revive the appeal of risky assets to the detriment of the US dollar.

Joanna Partridge

In the City, shares in outsourcing group Capita have tumbled by over 14% after it reported a loss this morning, partly due to the costs of a cyber attack.

Capita reported a pre-tax loss of £67.9m for the first half of this year, down from a £100,000 profit in H1 2022. It said the loss was due to “business exits, non-core Portfolio goodwill impairment and costs associated with the Group’s cyber incident”.

That attack, Capita revealed this morning, will cost up to £25m.

The group is still recovering from the attack by the Black Basta ransomware group, which hacked its Microsoft Office 365 software and accessed the personal data of staff working for the company and dozens of clients.

Capita confirmed on Friday that “some data was exfiltrated” from its IT systems but added that this was less than 0.1% of its server estate. More here.

In a blow to growth hopes, shipping giant AP Møller-Maersk has warned of a longer and deeper contraction of global trade than previously expected.

Maersk predicted this morning that global container volume growth will contract by between 1% and 4% this year. It had previously forecast volumes of between +0.5% and -2.5%.

It blames:

…muted global macro-economic growth given continued pressure from higher interest rates and potential recessionary risk in Europe and the US.

Maersk ships goods around the world, so is a handy barometer of global economic developments.

Chief executive Vincent Clerc said he saw no sign that the destocking which has curbed global trade activity would end this year.

Clerc told a media briefing:

“We had expected customers to draw down inventories around the middle of the year, but so far we see no signs of that happening. It may happen at the beginning of next year.”

“Consequently, the uptick in volumes we had expected in the second half of the year has not occurred.

World food prices rise in July

Joanna Partridge

The price of essential ingredients is rising again around the world as the ongoing conflict in Ukraine, political events, and unpredictable weather are impacting crops and the transport of foodstuffs such as cereals.

The rice price index hit its highest level in almost 12 years in July, after rising 2.8% last month alone, according to the UN’s international food price index. The increase came after India banned exports of non-basmati white rice on 20 July, in a bid to curb domestic food inflation after heavy rains hit crops in the world’s largest exporting nation.

The UN’s Food and Agriculture Organization (FAO) said the move had amplified “upward pressure already exerted on prices by seasonally tighter supplies and Asian purchases.”

Rice prices have continued to climb on global commodity markets in recent days, with exporters reporting that Indian parboiled prices hitting a record high this week, as demand shifted to this grade, which is not subject to export restrictions.

Traders in Thailand and Vietnam, the world’s second and third largest rice exporting countries, have also been looking to re-negotiate prices of August rice shipments, Reuters reported earlier this week, to take advantage of rising prices.

The cost of wheat also made their first monthly climb in nine months in July, the UN FAO found, because of uncertainty about Ukrainian grain exports since Russia decided to terminate the Black Sea grain deal last month, which had guaranteed safe shipment from Ukraine’s sea ports. Russia’s subsequent attacks on Ukrainian port infrastructure on the Black Sea and Danube river pushed international wheat prices up by 1.6% last month according to the UN food price index.

The price of vegetable oils soared by 12% last month compared with June, marking the first increase after seven months of falls, as international prices of sunflower, palm, soy and rapeseed oils all rose. Sunflower oil prices surged by 15% month-on-month over worries about exporting the product out of Ukraine.

Lengthy spells of dry weather in large producers Canada and the US have also added pressure to wheat prices.

Overall, international food prices rose slightly – by just 1.3% – in July, and remain some 12% lower than the FAO’s food price index a year earlier, as the cost of sugar slid, and there were small falls in the prices of dairy and meat, all of which should ease some pressures on consumers amid stubbornly high food price inflation in many countries.