Week ending 2nd July 2021.

Despite all the focus on this week’s US employment report, unfortunately it was again difficult to get a clear picture of the US employment market.

While it was positive that the data reading showed, as we forecast in our last Market Update, a big jobs gain, it wasn’t sufficient to suggest the US economy was making substantial and sustainable progress:  although 850,000 jobs were added in June (the biggest increase in nearly a year), unfortunately not only did the average weekly hours worked fall to 34.7 in June, the May reading was also revised lower.

However, at the risk of appearing Pollyannish, given the US employment market recovery still has a long way to go (as even now there are 6.8m less Americans in work than before the coronavirus outbreak), the Fed is likely to keep US interest rates low for the foreseeable future – especially given the potential supply chains disruptions that could be caused by the current spread of the Delta coronavirus variant.

It is likely to be a very quiet week ahead as we have just four US trading days and very little in the way of economic data.  Of most interest will be UK GDP for May; UK industrial and manufacturing production; Chinese CPI and PPI inflation; and the minutes from the last Fed monetary meeting held on 16 June 2021.

Investment Management Team

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