Concerns that the US could be sliding towards a recession spurred a global sell-off, which accelerated after a poor employment report yesterday showed that the country's jobs market was cooling fast, pushing up the unemployment rate.
Economists fear the US economy could be weaker than the Federal Reserve realised, and could potentially force the central bank into a sharp cut in borrowing costs next month or even an emergency rate cut before that- to stimulate demand.
"The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable and will increase speculation that the Fed will kick off its loosening cycle with a 50 bp [basis-points - half a percentage point] cut or even an intra-meeting move," said Stephen Brown, the deputy chief North America economist at Capital Economics.
The jobs report added to anxiety over data this week showing weakness in the US manufacturing sector, and disappointing results from the semiconductor maker Intel, which hammered its shares. The techfocused Nasdaq index fell almost 3% in early trading and was on course for a correction - 10% off its record high - after the latest US non-farm payroll report showed only 114,000 jobs created last month, compared with 175,000 expected by analysts. The US unemployment rate rose to 4.3%, up from 4.1% in June.
This story is from the August 03, 2024 edition of The Guardian.
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This story is from the August 03, 2024 edition of The Guardian.
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