Summary:
1. As US job growth slows, unemployment rises.
2. US President Biden acknowledges the slowdown in job growth.
3. The Japanese yen hits a 7-month high as fears of the US economic slowdown and recession persist.
4. Goolsbee says the Fed won’t overreact to single-month numbers.
US job growth slows, and unemployment rises.
US nonfarm payrolls (NFP) rose seasonally by 114,000 in July, with the previous two months’ figures revised downward, and unemployment unexpectedly rose for the fourth straight month to 4.3%, suggesting the labor market is deteriorating faster than other data suggests. This raises concerns about deteriorating business conditions and the possibility of an economic recession. During the employment survey period, Hurricane Beryl disrupted power in Texas, which could cause lower-than-expected job growth. Average hourly earnings rose 0.2% last month after rising 0.3% in June. The market expects an interest rate cut by the Federal Reserve in September.
US President Biden acknowledges the slowdown in job growth.
US President Joe Biden commented on the July non-farm payrolls (NFP) report, noting that nearly 16 million jobs have been created since he and Vice President Harris took office, the average unemployment rate is lower than any administration in the past 50 years, employment is growing more and more gradually, and business investment remains strong.
Japanese Yen Hits 7-Month High as Fears of US Economic Slowdown and Downturn Continue
The Japanese Yen hit a mid-January high against the US Dollar at the opening of the Asian session today, continuing market moves that began last week after weak US employment data raised fears of a recession and increased expectations of aggressive interest rate cuts from the Federal Reserve. Furthermore, weak earnings reports from technology companies led to sharp declines in global stocks and declines in oil prices and high-yielding currencies as investors sought cash safety. The selloff continued on Monday, sending US Treasury yields and stock indices lower.
Goolsbee says the Fed won’t overreact to numbers in one month.
After the weaker-than-expected nonfarm payrolls (NFP) report, Federal Reserve Chairman Austan Goolsbee said the Fed’s job is to see where the data is “at the bottom” and move in a “steady” manner. However, he noted that if interest rates remain tight for an extended period of time, every aspect of employment needs to be considered, and if unemployment is going to rise above neutral rates, that’s the kind of pressure on the other side of the mandate that the Fed has to respond to. Economic conditions will determine the timing and size of rate cuts.
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