What’s Going On Here?Data out on Thursday showed 4.8 million jobs were added in the US last month, but something isn’t quite adding up… What Does This Mean?The jobs report back in May left investors with more questions than answers, what with miscalculations in the unemployment rate (in reality, it was closer to 16.4% than the 13.3% reported). So the hope was that June’s data would show once and for all whether the US economy was recovering, or if it was still hobbled by the pandemic.
No such luck: the 11.1% unemployment rate in June was still full of mistakes, and would’ve been 12.1% if reported correctly. Still, more jobs were added than economists predicted, and the drop in unemployment was bigger than expected too. That makes sense: life in parts of the US has all but returned to normal, and plenty of people have already started going back to work. Why Should I Care?The bigger picture: Don’t get too comfortable.
To keep the economic recovery on track, workers need to be able to… well, work. That’s especially true of the services industry – like hospitality and leisure – which contributes most of the US’s economic growth. But with reports on Wednesday of a record number of new US coronavirus cases, and hospitals in hotspots like Texas hitting capacity, it’s possible renewed lockdowns are on the cards. That’d likely derail US stocks following one of their best quarters ever, which seemed to “price in” a relatively smooth recovery.
Zooming out: The training wheels are coming off.
Less controversial figures were released in Europe on Thursday: the region as a whole saw the unemployment rate rise to 7.4% in May. And in contrast to the US, some economists reckon that figure will get even worse as job safeguarding programs expire. Seeing as UK companies have fired over 11,000 people this week, you can kind of see their point… | 