December 4, 2022

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US jobs remain resilient despite high inflation

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Despite high inflation and a historically tight labor market, US employment remains surprisingly resilient. Today’s US nonfarm payrolls report said the economy added 261,000 new jobs in October, beating expectations of a significant slowdown in hiring. This comes after the US Federal Reserve announced a fourth straight rate hike of 0.75 percentage points on Wednesday, prompting a sharp rise in short-term Treasury yields.

Still, the US unemployment rate rose 0.2 percent to 3.7 percent, just above its pre-pandemic low. The rate of Americans employed or looking for a job did not improve, as it stabilized at 62.2 percent. In response, stocks rallied in early trade, increasing pressure on the Fed to continue its aggressive measures to contain inflation. ING’s Antoine Bouvet said Friday’s jobs data was “the icing on the cake” after Fed Chair Jay Powell’s “hawkish turnaround” and high inflation.

While the Fed expected a “soft landing” for the US economy on Thursday, the Bank of England forecast two bleak scenarios for the UK economy. BoE Governor Andrew Bailey blamed soaring gas prices fueled by the invasion of Ukraine. There was sunnier news for EU nations, with the employment rate rising 0.3 percentage points to 74.8 percent between the first and second quarters of the year, according to Eurostat.

Elsewhere, post-pandemic flexible working is spreading, even as the energy crisis is driving workers back into the office. For those who are still WFH, virtual communication can still be shaky. Could “Profit for Purpose” be a solution? It certainly inspires a new generation of founders with a belief. Meanwhile, poor health has been blamed for the over-50s withdrawing from the labor market, but new data shows the main reason is actually people choosing to retire early.

To learn more about your country, our new global inflation tracker maps inflationary pressures around the world.

Good to know: the economy

The UK faces a recession as economic activity in the construction sector contracted in October at its fastest rate in almost two years. UK personal wealth portfolios are down by almost a third.

The Bank of England raised interest rates by 0.75 percentage point to 3 percent on Thursday, a level last seen at the end of the 2008 financial crisis. Interest rates have risen sharply as central bankers try to raise borrowing costs to curb inflation.

CPI inflation was 10.1 percent in September and is forecast to rise to 11 percent in the final quarter of the year. The numbers are lower than expected, with the central bank suggesting they would have been higher had it not been for the UK government’s energy price guarantee.

The International Energy Agency sounded the alarm over next year’s gas supplies and warned European leaders not to become complacent amid a drop in commodity prices. IEA chief Fatih Birol said European efforts to fill storage facilities next year could be undermined by growing demand for liquefied natural gas in a recovering China.

Global latest

The battle to save the falling Japanese Yen continues, trying to defy the global markets. But the costs and risks on Tokyo’s trading floor are rising. Our Big Read looks at Central Bank Governor Haruhiko Kuroda’s gamble on a royal deluge of macroeconomic outcomes as the solution.

A new deal between Tigray and government forces was announced on Wednesday, a major breakthrough in Ethiopia’s two-year civil war. Eight days of peace talks followed between the Tigray People’s Liberation Front and the government of Ethiopian Prime Minister Abiy Ahmed.

Ahead of COP27, the United Nations warned that the world is “far off course” on the $340 billion that developing countries need each year through 2030 to adapt to climate change. It called on rich countries to create a “credible roadmap” to provide $40 billion in support.

The magnitude of the business impact of China’s zero-Covid policy became clear as Lenovo reported its first sales decline in more than two years. But it has continued to operate its Chinese factories, unlike Foxconn, whose employees have fled its largest iPhone factory.

The grim reality of life under lockdown in China was revealed by FT Shanghai correspondent Thomas Hale, who penned a compelling account of his forced detention at a secret island quarantine facility.

Good to know: business

Glencore has been ordered to pay £276.4m for “endemic” bribery and corruption in its mining and commodities network to secure access to oil in African countries.

Amid Big Tech’s economic slump, Amazon said it would pause hiring of its corporate workforce. Meanwhile, Stripe and Lyft contributed to downsizing at US tech companies. Away from Silicon Valley, Deloitte has cut half its UK leadership team to reduce female representation.

At the height of the UK gilt market crisis last month, UK supermarket operator J Sainsbury created a £500m credit facility for its pension scheme to prevent ill-timed asset sales.

Automakers BMW and Stellantis posted rising earnings on Thursday, despite supply chain problems hampering production. The opposite was true at British rival Aston Martin, where unfinished vehicles more than doubled quarterly losses and hampered turnaround efforts.

Science completes

A UK-led study has found magic mushrooms to have a “significant” effect on the treatment of depression, paving the way for psilocybin’s regulatory approval.

Biotech company Verge Genomics has started one of the first human trials of a drug discovered using artificial intelligence to analyze brain tissue.

In the race to the vaccine, shares of China’s CanSino Biologics in Hong Kong rose as much as 70 percent after the use of an inhaled Covid-19 vaccine said to improve protection was approved in 13 cities in Jiangsu province. Moderna lowered its forecast for Covid-19 vaccine sales, but Pfizer raised its forecast by $2 billion.

The global climate pledges have been criticized by the University of Melbourne’s Climate Futures initiative for relying too heavily on tree planting and land restoration. Meanwhile, the House of Commons Public Accounts Committee found that the UK government’s reporting of emissions data was inconsistent.

An FT special report on chemicals and manufacturing looks at the challenges of large-scale production of green hydrogen and the pitfalls of green plastic.

Covid cases and vaccinations

Total cases worldwide: 628.3 million

Total doses administered: 12.9 billion

Get the latest worldwide picture with our vaccine tracker

Some good news

Researchers at Imperial College London are testing an exciting new tiny microscope to improve breast cancer detection. Endomicroscope technology could provide real-time images of cells at unprecedented speed.

dr Imperial College’s Khushi Vyas told the Disrupted Times: “Precision imaging is shaping the future of advanced cancer treatment. By enabling rapid and accurate diagnosis at the cellular level during cancer surgery, our technology could potentially improve clinical decision-making, leading to more effective cancer surgeries, lower reoperation rates and improved patient outcomes.”

US jobs remain resilient despite high inflationEndomicroscope examining breast tissue in laboratory © Imperial College London

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