US economy lost 23,000 jobs in July in surprise blow to Trump – business live

Key events

The US private sector did add jobs in July, points out consultancy Capital Economics:

The underlying picture in the private sector was somewhat better, but still far from strong. Private payrolls grew by 30,000, led by pockets of strength in construction (+22,000) and healthcare and social assistance (22,600), although employment growth in the latter continued to slow relative to its average.

These gains were partially offset by sizeable declines in retail trade (-19,400), nondurable goods manufacturing (-13,000) and financial activities (-14,000).

The start of school holidays is probably responsibly for the 50,000 drop in employment in local government education last month.

And bars and restaurants may have cut back on jobs as the FIFA World Cup reached its conclusion.

Carson Group’s chief macro strategist Sonu Varghese explains:

“Headline payrolls were really disappointing, with 23,000 jobs lost in July. But the weakness was concentrated in local government, largely due to school-calendar seasonal effects, and leisure and hospitality as the World Cup boost rolled off.

The bigger picture is that unemployment fell to 4.1%, its lowest in a year. Combined with low initial jobless claims, that suggests the labor market remains in solid shape despite the volatility in payrolls.”

Is AI a factor behind drop in jobs?

Could AI be to blame for the drop in US employment last month?

Kyle Rodda, senior financial market analyst at Capital.com, suggests the rise of AI bots could be a factor, saying:

The interesting dynamic is the drop in the jobless rate. Another function of falling participation and the fact that data comes from a different survey.

At a higher level, there could be the fingerprints of AI in this jobs report too: employers possibly replacing workers with bots. We will have to dig into the details and wait for future data to get a clearer picture of that though.

Nic Puckrin, a former Goldman Sachs analyst, says:

On top of this, consumer confidence has crumbled and AI is swallowing thousands of white-collar jobs. So, when you look under the hood, the US economy is looking far more anaemic than the numbers suggest.

Ordinary Americans are in a tough spot, while the Federal Reserve must decide whether to sacrifice employment to control inflation or vice versa.”

According to outplacement firm Challenger, Grey & Christmas, AI has been the top reason given for layoffs in the last five months.

The US labor force participation rate, which measures how many people are either in work or looking for a jobs, has dropped.

The labor force participation rate slipped to 61.4%, which explains how the unemployment rate could fall even though the number of jobs also declined.

Dollar dented by bad jobs report

The dollar is falling too.

The dollar index, which tracks the greenback against a basket of other currencies, is down 0.4% today.

That’s lifted the pound up by half a cent to $1.35.

Odds of September rate rise are falling

Such a bad jobs report is sending ripples through the financial markets.

Traders are rushing to slash bets on a rise in US interest rates next month, concluding that the Federal Reserve won’t want to tighten policy when the economy is shedding jobs.

The rate futures market has now priced in just a 43.9% chance of Fed tightening in September, compared with 57% before the jobs report, Reuters flags.

The latest Household Survey Data, just released, also shows what’s going on in the US labor market.

Here’s a flavour:

Among the major worker groups, the unemployment rates for teenagers (12.1 percent) and people who are Hispanic (4.6 percent) declined in July. The jobless rates for adult men (3.9 percent), adult women (3.7 percent), and people who are White (3.6 percent), Black (6.3 percent), or Asian (4.0 percent) showed little or no change over the month.

Among the unemployed, the number of people on temporary layoff increased by 153,000 to 921,000 in July. The number of permanent job losers changed little at 1.7 million.

In July, the number of people jobless less than 5 weeks edged down to 2.0 million and is down by 344,000 over the year. The number of long-term unemployed (those jobless for 27 weeks or more) edged down over the month to 1.8 million but changed little over the year. The long-term unemployed accounted for 25.5 percent of all unemployed people in July.

Where jobs were lost, or created, last month

Here’s the details of where jobs were lost across the US economy last month.

Employment in local government education declined by 50,000 in July.

Retail trade lost 19,000 jobs in July, including a 21,000 drop at warehouse clubs, supercenters, and other general merchandise retailers and a 5,000 drop in employment at gasoline stations and fuel dealers.

Employment in financial activities fell by 14,000.

But….employment in health care continued its upward trend, rising by 22,000

Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation and warehousing; information; professional and business services; social assistance; leisure and hospitality; and other services.

Fewer jobs created in May and June than first thought

Not only did the US economy lose jobs in July, it created fewer jobs than first thought in May and June.

The change in total nonfarm payroll employment for May has been revised down by 66,000, from +129,000 to +63,000, and the change for June was revised down by 37,000, from +57,000 to +20,000.

US economy lost 23,000 jobs in July

Newsflash: The US economy shed jobs last month.

The US nonfarm payroll shows a fall of 23,000 jobs in July, startling economists who had expected a rise of around 80,000.

Employment declined in local government education and retail trade, the US Bureau of Labor Statistics reports, but continued to rise in health care (a steady provider of jobs for Americans).

However, the US unemployment rate dipped to 4.1% in July, down from 4.2% reported last month, suggesting people dropped out of the labor force.

Financial markets could rally if today’s US jobs report is weaker than expected, and cuts the chances of interest rate rises.

That could push up shares in London, as well as in New York. The UK’s FTSE 100 index is near a record high today, at 10,947 points.

Markets brace for US jobs report

It’s nearly time for the final major economic news of the week – the US jobs report for July.

Economists are expecting to see a pick-up in hiring last month. The non-farm payroll is expected to have increased by around 80,000 in July, ahead of the 57,000 incresed reported in June.

We get the report in just over half an hour – 1.30pm UK time, or 8.30am in New York.

Matthew Ryan, head of market strategy at global financial services firm Ebury. says today’s jobs report has “huge importance” given that markets are completely torn down the middle as to whether or not the Federal Reserve will raise rates in September.

Ryan explains:

Consensus points to no change in the unemployment rate and a job creation number around the 80k mark.

“While we think that this would be solid enough to confirm that the jobs market remains in a “low hire, low fire” state, we do not think that it would be enough to validate the hawkish dissenters at the July FOMC meeting.

“Instead, a print in that range would likely reinforce the case for patience, shifting the market’s focus onto developments in the Iran conflict and the upcoming CPI prints.”

Motoring groups are hopeful that the jump in UK fuel costs could be peaking.

RAC head of policy Simon Williams says:

“Drivers will be relieved to know that the fuel price rises of recent weeks appear to be slowing down and should hopefully top out over the weekend.

Since 6 July the average price of petrol has gone up 11p a litre adding £6 to the cost of a full tank (£89). Diesel has been even harder hit, going up 17p a litre since 9 July which has made a fill-up up nearly £10 more expensive at £100.

“The change in drivers’ forecourt fortunes has been brought about by crude oil falling to around $80 a barrel this week, having briefly gone above $100 in late July before then settling at $90 until the end of the month. Providing there are no more shocks to the oil price from the conflict, the picture at the pumps for petrol particularly looks optimistic.”

Boeing 737 Max operators told to check fuselages for cracks

Elsewhere in the transport world, the US aviation regulator has ordered inspections of the fuselages of Boeing 737 Max planes for possible cracks in a component.

The Federal Aviation Administration airworthiness directive will affect an estimated 471 aircraft and follows reports of cracks in earlier Boeing models.

The inspections, which will start from September, follow a similar FAA regime for previous Boeing 737 Next Generation models dating back to 2021.

Cracks were found in a component called the bear strap – sheets supporting the fuselage around the exit doors – on the older planes. The FAA said on Thursday that no such cracks have yet been found in 737 Max craft but that the similar design and build process makes the model susceptible to developing them.

More here:

Volkswagen’s board chairman Hans Dieter Pötsch has declared the struggling carmaker “is at a historic crossroads”.

Pötsch said.

“For the sake of the company and its sustainable competitiveness, everyone must now step up and take responsibility,”

“The longer decisions are delayed, the bigger the problems will become,” he added.

Pötsch, who is also the chair of Porsche – VW’s largest shareholder – was speaking after Porsche reported a 14.5% drop in earnings in the first half of the year.

VW is looking to cut up to 100,000 jobs, as it tries to fend off rising competition from China.

Another threat to food production this year is that grass growth is unusually weak.

Grass growth in the UK is almost half its average level for 2019-24, new data from the the Energy and Climate Intelligence Unit (ECIU) today shows, following very weak rainfall this summer.

That risks leaving farmers with a shortage of feed, which could force them to spend more on imported feed.

Tom Cantillon, senior analyst for carbon and land at the ECIU, explains:

European heatwaves and El Niño fears push up sugar prices

Sugar prices were also driven up by the summer heatwaves in July, and fears of El Niño disruption.

The UN FAO reports that its sugar price index rose by 5.6% last month.

It says:

The increase was mainly driven by concerns about the potential impacts of persistent hot and dry weather on crop yields in the European Union and of El Niño-related weather conditions on production prospects in key producing countries in Asia.

Sugar prices were also pushed up by expectations of stronger demand for ethanol in Brazil, due to a temporary change to add more ethanol to gasoline.

Vegetable oil prices rose by 2% in July, to their highest level since June 2022.

This was driven by higher palm and soy oil prices, the UN’s FAO reports, saying:

International palm oil prices rose for the second consecutive month, following a brief decline in May, largely underpinned by firm demand from Indonesia’s biodiesel sector and higher crude oil prices, which outweighed downward pressure from seasonally higher production in Southeast Asia.

Similarly, world soy oil prices increased, underpinned by persistently robust feedstock demand in the United States of America and stronger global import demand amid greater price competitiveness.

S unflower and rapeseed oil prices dropped, but the FAO adds that renewed tensions in the Black Sea region prevented them falling further.