about 3 years ago • 3 mins
This isn’t the holly jolly Christmas the US had planned: fresh data out on Friday showed the States added just 245,000 new jobs in November – far fewer than economists predicted ❄️
What does this mean?
That figure is bleak, but investors might not actually have paid much attention to it: the update didn’t include employment data from the last two weeks of November. That means they’re still missing crucial clues about hiring in the lead-up to the all-important holiday shopping season, which helps indicate how the retail industry’s doing this quarter.
The unemployment rate did fall from 6.9% in October to 6.7% last month, sure, but that’s not worth getting excited about either 🤷♀️ That’s because it was partly driven by a drop in the number of Americans who count themselves among the workforce. In other words, when fewer people declare themselves available for work, the percentage of those who are working appears to rise.
Why should I care?
The bigger picture: Labor force be with you.
62% of the adult US population is currently in the “labor force” – that is, in a job or looking for one. That’s around 2% lower than in February, and near its lowest level since the ‘70s 💼 And while labor force participation usually drops in a recession, there are no guarantees it’ll bounce back like in past downturns: the pandemic has forced some boomers into early retirement and some parents into full-time childcare, after all. That’s worrying: workers are the building blocks of an economy, and a dwindling number of them risks the US’s growth next year and beyond.
Zooming out: Nope-ioids.
The US’s 62% labor force participation is much lower than both the UK and eurozone’s roughly 80% rates 🌎 Some economists have blamed the difference on America’s workforce-crippling opioid epidemic – and if they’re right, solving that crisis could bring people back into gainful employment and help boost economic growth too.
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OPEC+ – the group of major oil-producing countries and their allies – agreed late last week to add 500,000 barrels to their collective daily output, starting in January 📆
What does this mean?
First, some background: earlier this year – after a price war in which Saudi Arabia and Russia ramped up oil production and pushed down its price – OPEC+ agreed to lower its output for a while. There wasn’t much need for the slippery elixir at the height of the pandemic, after all – not with the global economy having all but ground to a halt.
As part of the agreement, OPEC+ said it’d start boosting oil production by 2 million barrels a day in stages – first in the summer, and next in January 🛢 But since the global economy still isn’t firing on all cylinders, OPEC’s settled on upping production by a quarter of that. Of course, no increase at all might’ve been even better…
Why should I care?
For markets: With friends like these…
The price of an oil future hit its highest level in nine months last week, partly because less fresh oil than expected should raise the value of what’s left. That’s especially true because demand for the black ambrosia is booming in Asia, given that growth is getting back to its winning ways – particularly in China 🇨🇳 And since OPEC+ reached this compromise without too much fuss, analysts are more optimistic than normal that the countries who usually don’t stick to these kinds of agreements will do this time around.
The bigger picture: Betting on a brighter tomorrow.
By upping oil production, OPEC+ is essentially betting that the worst of the dip in global economic activity is in the rear-view mirror, and that growth – and with it demand for oil – will pick up next year 🤞 If it’s right, oil-dependent industries like construction and travel will start to recover – boosting oil’s price, balancing OPEC+ nations’ budgets, and restoring oil companies’ profits.
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