The noise
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The US labour market showed continued strength on Thursday, as private hiring surged, and unemployment filings remained low. Data from the ADP Research Institute indicated US companies added almost half a million jobs in June, the highest addition in over a year. Job cuts also fell to an eight-month low, with the most recent data release leading analysts to see an increasing likelihood of a soft-landing scenario.
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Russia and Saudi Arabia are planning to further reduce oil production, raising prices, as the two most powerful members of Opec+ are scrambling to raise funds for state run projects. Russia are looking to fund their war effort in Ukraine, and Saudi Arabia want to strengthen their economy through a major investment programme. Russia announced they would implement a production cut of 500,000 barrels per day next month, while Saudi Arabia is extending their production cut of one million barrels per day for July into August.
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Global vehicle-tech company ZF have signed a €1.5bn contract with a pioneering sustainable Swedish startup H2 Green Steel. This seven-year binding agreement will provide them with low carbon steel and is a massive step forward in terms of near zero emissions steel. H2 Green Steel are industry pioneers and in the process of building the world's first large scale fossil-free steel plant in Sweden, aiming to use electricity from completely renewable sources and with the goal to produce five million tons of near fossil-free steel by 2030.
The numbers
The nuance
US payrolls, the measure for how many jobs have been created in the US economy, have grown by over 1.5 million in the first five months of 2023 alone. In a period of rapidly increasing interest rates, one would not expect to see such a strong and resilient jobs market. Those made redundant this year have seen the period they remain unemployed shorten compared to previous years. Coupled with one unemployed person for every 1.6 vacancies, one can start to see why analysts expect the Federal reserve to continue hiking interest rates.
The underlying data from the ADP Research institute report suggests however that the numbers are inflated by seasonal factors, such as students picking up summer jobs. On the other hand, the resignation rate rose by the most in nine months, showing that workers are still confident that they will be able to secure another job. Many economists are now expecting a couple more rate hikes before the end of the year, with opportunities for returns to persist as central banks look to cool their domestic economies.
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