over 2 years ago • 3 mins
The US economy added a better-than-expected 943,000 jobs in July, but employers still can’t seem to find enough staff to turn this into a real honeymoon period.
What does this mean?
Even more hotels, bars, and hotel bars reopened their doors last month, so it was no surprise to see the leisure and hospitality sector responsible for the biggest increase in job numbers: 380,000 of them, to be precise. And while we’re on good news, the unemployment rate dropped by half a percentage point to hit a post-pandemic low of 5.4%.
But let’s not get ahead of ourselves: there are still almost 6 million fewer jobs than there were before the outbreak, and employers are struggling to fill a record number of vacant positions. That’s urging them to woo new starters with higher wages and signing bonuses – so much so that average hourly earnings rose for the second month in a row.
Why should I care?
For markets: Bond investors aren’t pleased.
These strong figures presumably mark a step toward the Federal Reserve’s (the Fed’s) goal of “substantial” progress in the labor market’s recovery. That might lead the Fed to start thinking seriously about scaling back its $120 billion-a-month bond-buying program. And since that would eliminate a major source of demand for US government bonds, investors sold them off on Friday.
The bigger picture: All play, no work.
For all the efforts to win over job hunters, the labor force participation rate – a measure of the share of Americans who are employed or looking for work – barely moved last month. There could be a few reasons for that: would-be employees might be nervous about catching the virus, they might have more demanding childcare responsibilities than before the pandemic, or they might just be getting more generous unemployment benefits than the money they’d earn working for a living.
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Maersk reported better-than-expected quarterly results late last week, with the Danish giant’s cargo ships popping up almost everywhere you look.
What does this mean?
Demand for just about everything has been surging as economies bounce back from the pandemic, but your made-in-China iPhone doesn’t magically fly into your local Apple store: booming demand for goods means booming demand for international transport. That’s caused shipping costs to skyrocket, with one widely watched indicator of freight rates up fourfold in just a year. It’s also caused Maersk to click its heels together with glee: container shipping makes up three-quarters of the company’s revenue, which led the company to report a better-than-expected 60% jump in sales last quarter compared to the same period last year. It was also just what the company needed to raise its 2021 profit forecast by almost 50%.
Why should I care?
For markets: Looks good for the economy.
Maersk also upped its previous forecasts and said it’s now expecting global container demand to grow as much as 8% in 2021, primarily thanks to higher expected export volumes from China to the US. That should help reassure investors who are feeling anxious about the global economy: the firm handles a fifth of containers shipped globally, which makes it a bellwether stock for global trade and broader economic activity. So if Maersk is doing well, it’s a good sign for everyone else.
Zooming in: There are plenty more fish on the land.
Maersk had one other update to share with investors on Friday: the company announced that it had spent around $1 billion buying two parcel shipping companies, and hinted there would be more acquisitions to come. It’s all part of Maersk’s grand plan to diversify away from maritime shipping and expand into land-based deliveries, meaning it can now ship goods from factory to shop floor.
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