US jobs remain resilient despite high inflation

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Good evening,

Despite high inflation and a historically tight labour market, US employment remains surprisingly resilient. Today’s US non-farm job payrolls reported 261,000 new jobs were added to the economy in October defying expectations for a significant slow down in hiring. This comes after the Federal Reserve decided on a fourth consecutive 0.75 percentage point rate rise on Wednesday leading to a sharp jump in short-term government bond yields.

Still, the US unemployment rate increased by 0.2 per cent to 3.7 per cent, just above its pre-pandemic low. The rate of Americans employed or seeking employment failed to improve as it steadied at 62.2 per cent. In response, equities rallied in early trading adding pressure on the Fed to continue its aggressive action to curb inflation. Antoine Bouvet of ING said Friday’s job data was “the icing on the cake” after Fed chair Jay Powell’s “hawkish turn” and high inflation.

While the Fed looked for 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 fuelled by the invasion of Ukraine. There was sunnier news for EU nations with the employment rate increasing by 0.3 percentage points to 74.8 per cent between the first and the second quarter of the year, according to Eurostat.

Elsewhere post-pandemic flexible working is spreading despite the energy crisis driving workers back to the office. For those still WFH, virtual communication can still be shaky. Could “profit for purpose” be a solution? It’s certainly inspiring a new generation of founders with a faith. Meanwhile, poor health has been blamed for over-50s withdrawing from the labour market, but new data indicates that in fact the key driver is people choosing to retire early.

For more on your country, our new global inflation tracker maps inflationary pressures around the world.

Need to know: the economy

Recession looms for the UK as economic activity in the construction sector shrunk at the fastest pace in almost two years in October. UK private wealth portfolios are down by nearly a third.

The Bank of England increased interest rates by 0.75 percentage points to 3 per cent on Thursday, matching levels last seen at the tail-end of the 2008 financial crisis. Rates have increased sharply as central bankers look to raise the cost of borrowing to rein in inflation.

CPI inflation was 10.1 per cent in September, with projections it will rise to 11 per cent in the final quarter of the year. Figures are lower than expected, with the central bank suggesting it would have risen higher without the UK government’s energy price guarantee.

The International Energy Agency sounded the alarm over gas supplies next year, warning European leaders against becoming complacent amid a fall in commodity prices. IEA head Fatih Birol said European efforts to fill storage facilities could be undermined next year by growing demand for liquefied natural gas in a rebounding China.

Global latest

The battle to save Japan’s falling yen continues, attempting to defy global markets. But the costs and risks are rising on Tokyo’s trading floors. Our Big Read delves into central bank governor Haruhiko Kuroda’s gamble on a royal flush of macroeconomic outcomes as the solution.

A new deal between Tigray and government forces was announced on Wednesday, a huge breakthrough in the two-year Ethiopian civil war. It followed eight days of peace talks between Tigray People’s Liberation Front and the government of Ethiopian prime minister Abiy Ahmed.

Ahead of COP27, the UN warned the world was “far off track” of the $340bn developing countries need each year by 2030 to adapt to climate change. It urged rich countries to create a “credible road map” to deliver $40bn in support.

The extent of the impact on business from China’s zero-Covid policy was laid bare with Lenovo posting its first sales decline in more than two years. But it has continued to operate its Chinese plants, unlike Foxconn whose staff fled its largest iPhone factory.

The grim reality of life under lockdown in China was revealed by FT Shanghai correspondent Thomas Hale, who produced a compelling report about his forced confinement on a secret island quarantine facility.

Need to know: business

Glencore were ordered to pay £276.4mn for “endemic” bribery and corruption across their mining and commodities network to secure access to oil in African countries.

Amid Big Tech’s economic slump, Amazon said it would pause new hires in its corporate workforce. Meanwhile, Stripe and Lyft added to the staff cull among US tech companies. Beyond Silicon Valley, Deloitte axed half of its UK executive team in a move that cuts female representation.

At the height of the UK’s gilt market crisis last month, British supermarket operator J Sainsbury created a £500mn loan facility for its pension scheme to prevent assets being sold at the wrong time.

Carmakers BMW and Stellantis posted surging revenues on Thursday despite supply chain issues hampering production. The reverse applied to UK rival Aston Martin, where unfinished vehicles more than doubled quarterly losses and hampered turnround efforts.

Science round up

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

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

In the race to vaccinate, China’s CanSino Biologics shares rose as much as 70 per cent in Hong Kong after the use of an inhaled Covid-19 vaccine, claimed to improve protection, was approved in 13 cities across Jiangsu province. Moderna has cut its forecast for Covid-19 vaccine sales, but Pfizer raised its forecast by $2bn.

World climate pledges were criticised for over reliance on tree planting and land restoration by the University of Melbourne’s Climate Futures initiative. Meanwhile, the House of Commons public accounts committee found the UK government’s emission data reporting was inconsistent.

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

Get the latest worldwide picture with our vaccine tracker

Some good news

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

Dr Khushi Vyas of Imperial College told Disrupted Times: “Precision imaging is shaping the future of advanced cancer care. By allowing for fast and precise diagnosis at a cellular-level during cancer surgery, our technology could potentially enhance clinical decision-making leading to more effective cancer surgeries, curbing re-operation rates and improving patient outcomes.”