What's going on?
Data out on Friday showed the US economy was topped up with a more-than-expected 850,000 jobs in June – the biggest gain in 10 months.
What does this mean?
It’s true that the unemployment rate unexpectedly ticked up last month. But the US economy is benefiting from both the lifting of restrictions and a successful vaccination program, not to mention trillions of dollars in economy-boosting measures from the country’s government and central bank. The data also suggests restaurants and bars are starting to have more success recruiting workers to keep up with the reopening of the economy. That might have something to do with the higher wages they’re offering to attract new hires, with Friday’s data showing a 2.3% increase in average hourly earnings in the leisure and hospitality industry versus the month before.
Why should I care?
For markets: Bad news is good news.
Investors were happy about the jobs report on Friday for two main reasons. For starters, the report showed an easing in the labor market shortage that’s been holding back the jobs market in the last few months. And second, there are still almost 7 million fewer jobs in the US economy than there were before the pandemic. That doesn’t sound great, sure, but as long as the US central bank is contending with low employment, it’ll keep propping up markets with low interest rates.
Zooming out: Eat the rich.
Companies aren’t just dealing with higher wage costs, they’re now potentially facing higher taxes too: 130 countries just signed up to the tax agreement first reached last month by the world’s seven leading developed nations. The historic agreement will force the biggest companies – including Big Tech – to pay at least $100 billion a year more in taxes, with a lot more going to the countries where they actually do business instead of where they’re based.