The U.S. economy added 916,000 jobs last month and the unemployment rate fell to 6 percent, in the strongest indication yet that the labor market is finally working its way back to pre-pandemic norms as the number of vaccinations continues to rise.
The hiring and employment data, released Friday by the Bureau of Labor Statistics, firmly beat economists’ predictions of 675,000 positions added.
While the latest unemployment rate is far removed from its April peak of 14.8 percent, it is still much higher than its pre-pandemic level of 3.5 percent, which was the lowest in almost 50 years.
“It actually seems like the economy can reopen because the pandemic is getting under control,” said Glassdoor Senior Economist Daniel Zhao, citing the pace of vaccinations.
The U.S. is now averaging close to 3 million vaccinations a day, with more than one-quarter of all U.S. adults having already received at least one dose and 16 percent fully vaccinated, according to the Centers for Disease Control and Prevention.
Economists and Federal Reserve officials have long stressed that widespread vaccination is the key to economic recovery.
“In a nutshell, it’s a combination of better developments on Covid, particularly the vaccines, and also economic support from Congress,” Fed Chairman Jerome Powell told NPR’s “Morning Edition” in a live interview last month. “That’s going to enable us to reopen the economy sooner than might have been expected.”
President Joe Biden’s sweeping proposal to revamp the nation’s infrastructure could also go some way toward helping those whose lives were upturned by the pandemic, economists say.
“The U.S. hasn’t seen significant federal investment in over 60 years since the interstate highway system was built. Big boosts from the rescue plan and the recovery act will help those hardest hit by the pandemic and recession to get to the other side in better shape,” said Yelena Maleyev, economist at Grant Thornton.
Biden has said the plan could create millions of jobs.
“If we act now, in 50 years people are going to look back and say, ‘This was the moment that America won the future,'” Biden said on Wednesday, when he unveiled the details.
A heady mix of pent-up demand, substantial savings and improving consumer confidence all mean the economic recovery could even be “better than expected,” said Mark Hamrick, senior economist at Bankrate, noting the importance of “increases in the pace and supply of Covid-19 vaccinations, continuing federal stimulus payments and the reopening of the economy across the country.”
However, economists caution that, while better numbers lie ahead, there is still a long way to go. The economy would need to add around 950,000 jobs a month for the next 10 months to return to pre-pandemic levels.
“A year into the recession, the labor market is still down 9.5 million jobs from where it stood immediately before the Covid-19 shock. If we add in jobs that should have been created over that time to absorb new workers, we’re facing a jobs shortfall today of nearly 12 million jobs,” said Elise Gould, senior economist at the Economic Policy Institute.
Canadian dollar notches biggest gain in a month as stocks rally
The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Thursday as investor sentiment picked up and domestic data showed that retail sales fell less than expected in July.
World stock markets rallied and the safe-haven U.S. dollar retreated from one-month highs as worries about contagion from property developer China Evergrande eased and investors digested the Federal Reserve’s plans for reining in the stimulus.
Canada is a major exporter of commodities, including oil, so the loonie tends to be particularly sensitive to investor appetite for risk.
“The assumption here is that (Fed interest) rate hikes are still a long way out and so equities markets can still perform with accommodative financial conditions,” said Mazen Issa, senior FX strategist at TD Securities in New York.
“Consequently, currencies that have a higher beta to the equity market, like the CAD, can do alright.”
U.S. crude oil futures settled 1.5% higher at $73.30 a barrel, while the Canadian dollar was trading up 0.9% at 1.2653 to the greenback, or 79.03 U.S. cents.
It was the currency’s biggest advance since Aug. 23. It touched its strongest level since last Thursday at 1.2628.
Canadian retail sales dipped 0.6% in July, compared with expectations for a decline of 1.2%, while a preliminary estimate showed sales rebounding 2.1% in August.
Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries.
The 10-year touched its highest level since July 14 at 1.335% before dipping to 1.330%, up 11.6 basis points on the day.
(Reporting by Fergal Smith; Editing by Nick Zieminski and Peter Cooney)
China Vows Better Policy Support to Economy as Headwinds Mount – BNN
(Bloomberg) — Chinese policy makers reiterated the need to fine-tune economic policies as the world’s second-largest economy faces increasing headwinds from virus outbreaks and high commodity prices.
Policy should be preemptive and coordinated across cycles, the State Council, the equivalent of China’s cabinet, said in a statement after a meeting chaired by Premier Li Keqiang Wednesday. Governments at all levels should maintain the continuity and stability of macroeconomic policies and enhance their effectiveness, while also do a good job in preventing and controlling virus cases, it said.
Efforts are needed to better coordinate fiscal, financial and employment policies in order to “stabilize reasonable expectations by the market,” it said.
China again vowed to make sure the economy is operating within a reasonable range, with further measures to boost consumption, guiding private capital to play a better role in expanding investment, and ensuring stable growth in foreign trade and foreign capital, according to the statement. While the employment situation is stable this year, efforts are still needed to maintain employment and help companies, it said.
The economy took a knock in August from stringent virus controls and tight curbs on property. While China’s Covid zero approach helped to quickly quash the infections, retail sales growth suffered, slowing to 2.5% in August.
Facing the continued commodity boom, the State Council also pledged to use more market-based measures to stabilize commodity prices and ensure supplies of power and natural gas during the winter.
©2021 Bloomberg L.P.
UAE Says It's Unwinding Pandemic Stimulus as Economy Recovers – Bloomberg
The United Arab Emirates has begun winding down an economic support program launched in response to the coronavirus pandemic as the economy shows signs of gradual recovery, the central bank said in a statement.
The reduced reserve requirements for banks won’t change for now and neither will the lower loan-to-value ratio required for first-time home buyers seeking mortgage loans, the bank said. The loan deferral component of the Targeted Economic Support Scheme will expire by the end of 2021 with financial institutions able to carry on tapping a collateralized 50-billion-dirham ($13.6 billion) liquidity facility until the middle of 2022, in line with earlier guidance.
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