Daily Brief: Even 372,000 More Jobs Can’t Save The US Economy

Daily Brief: Even 372,000 More Jobs Can’t Save The US Economy

over 1 year ago3 mins

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Data out on Friday showed that the US added more jobs than expected last month.

What does this mean?

The US had replaced pretty much all the jobs it lost in the early days of the pandemic by May, which might be why economists were expecting the number of new jobs to level off last month. Oh ye of little faith: the US added 372,000 jobs in June – over 40% more than economists were expecting. That means available workers are getting harder and harder to come by, with almost two job openings for every unemployed American. On the plus side for you, it’s continuing to force companies to put their best foot forward, which might be why average hourly wages were 5.1% higher last month than they were in June 2021.

US jobs

Why should I care?

For markets: The Fed’s permission structure.

Make no mistake: the US economy is in dire straits. In fact, the jobs thing is probably just going to make matters worse, with Friday’s data likely to encourage the Federal Reserve (the Fed) to hike rates by 0.75% again later this month. After all, the central bank said this week that it might need to get even more aggressive to stop inflation from becoming entrenched, with some Fed members arguing that rates should be close to 3.5% by the end of the year.

The bigger picture: What goes around comes around.

Any economic slowdown is going to impact the jobs market sooner or later, and there are signs it’ll be sooner: a number of companies – mainly in the tech industry and interest-rate sensitive sectors like real estate – announced layoffs in June. And if those Americans have less cash to spend as a result, other companies might start to feel the pinch too – in turn leading them to reduce the size of their teams. That might be why the Fed is estimating that the unemployment rate will go from 3.6% today to 4.1% in 2024.

US unemployment

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Airlines Need Big Jets Again, And Rolls-Royce Is Here For It

Rolls-Royce image

Aircraft engine manufacturer Rolls-Royce said late last week that it’s finally seeing signs of a recovery in big jet demand.

What does this mean?

Much of Rolls-Royce’s revenue comes from the manufacture and servicing of engines for Boeing and Airbus’s large aircraft. But since they’re mostly used for international flights, and since it’s those flights that have been slowest to recover from the pandemic, that segment of Rolls’ business has been languishing. Now, though, there are signs of life, with recent reports suggesting that some airlines are thinking about putting in new orders for jumbo jets for delivery from 2025 onward. Airbus, for example, just said it might up production of its best-selling A350 jet sooner than expected, which means it’ll be calling Rolls to work its magic.

Rolls-Royce stock
Source: Google Finance

Why should I care?

The bigger picture: This time, it’s personal.

This shift in demand is a promising indication that the aviation industry is well and truly getting back on its feet. And there’s more: data from the International Air Transport Association (IATA) last week showed that international flights have been back with a vengeance this summer, with traffic 326% higher in May than the same time last year. So even though Chinese domestic traffic fell 73% on the back of its lockdowns, overall global traffic was nearly twice what it was in May 2021.

Air traffic

Zooming out: Rolls is the Tesla of the skies.

The aviation industry accounts for about 3% of global carbon emissions, with its emissions having risen 2% a year since 2000. If it carries on at this rate, the sector could account for a fifth of total emissions by 2050. So Rolls is looking into a solution: it’s built a battery-powered plane that can fly at more than 300mph, while Siemens and Airbus are developing their own electric aircraft too.

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