US job growth slows sharply in July; unemployment rate rises to 4.2%
Nonfarm payrolls increased by 73,000 jobs last month after rising by a downwardly revised 14,000 in June, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday (Aug 1).
Economists polled by Reuters had forecast payrolls increasing by 110,000 jobs after rising by a previously reported 147,000 in June. The unemployment rate rose to 4.2 per cent from 4.1 per cent in June.
Estimates ranged from no jobs added to an increase of 176,000 positions. The Federal Reserve on Wednesday left its benchmark interest rate in the 4.25 per cent to 4.50 per cent range.
Fed Chair Jerome Powell's comments after the decision undercut confidence that the central bank would resume policy easing in September as had been widely anticipated by financial markets and some economists.
Though Powell described the labour market as being in balance because of supply and demand both declining simultaneously, he acknowledged this dynamic was "suggestive of downside risk".
Job growth has slowed amid uncertainty over where President Donald Trump's tariff levels will eventually settle.
Trump on Thursday slapped dozens of trading partners with steep tariffs ahead of a Friday trade deal deadline, including a 35 per cent duty on many goods from Canada.
The White House's immigration crackdown has reduced labour supply, as has an acceleration of baby boomer retirements.
The reduction in immigration flows means the economy now needs to create roughly 100,000 jobs per month or less to keep up with growth in the working-age population, economists estimated.
The decline in the unemployment rate to 4.1 per cent in June was in part due to people dropping out of the labour force. July's increase still left the jobless rate in the narrow 4 per cent to 4.2 range that has prevailed since May 2024.
Financial markets have pushed back an anticipated September rate cut to October. But with tariffs starting to raise inflation, some economists think the window for the Fed resuming policy easing this year is closing.
Others, however, believe the central bank could still cut rates in September, especially if the BLS' preliminary payrolls benchmark revision next month projects a sharp drop in the employment level from April 2024 through March this year.
The Quarterly Census of Employment and Wages data, derived from reports by employers to the state unemployment insurance programs, has indicated a much slower pace of job growth between April 2024 and December 2024 than payrolls have suggested.
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Business Times
an hour ago
- Business Times
India aghast at Donald Trump's ‘dead' economy jibe, 25% tariffs
[MUMBAI] Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump's sharp remarks and a surprise 25 per cent tariff rate earlier this week. While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump's comments and criticising Indian Prime Minister Narendra Modi for not speaking up. It started with Trump saying that India's trade barriers were the 'most strenuous and obnoxious', in a Truth Social post on Jul 30. He added the US may also impose a penalty for New Delhi's purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them 'dead economies' in another post. With no imminent trade deal, the 25 per cent tariffs kicked in as at Friday. India is hardly alone in facing Trump's trade wrath, and not the subject to the very highest rates, but the news left business and political leaders wondering how to cope with the fallout. 'Blunt-force' message 'Overnight, the US-India trade equation shifted from tense to turbulent,' said Akshat Garg, assistant vice-president at Choice Wealth, a Mumbai-based financial services firm. The levies 'feel less like structured policy and more like a blunt-force political message'. Complicating the narrative around the India trade deal, or the lack of it, was the US pact with its traditional rival Pakistan that came through on the same day. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up As the US released rates across the world on Aug 1, India's relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. 'The biggest blow is that Pakistan and Bangladesh got a better rate than us,' V Elangovan, managing director at SNQS Internationals, an apparel maker in the southern Indian manufacturing hub of Tirupur, told Bloomberg News. 'We were expecting something in the 15 to 20 per cent range.' India's annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbours on an equal footing, despite India's larger military and economy. The events of this week have cemented that impression further in the eyes of some Indian observers. When the tariff rate news first dropped in late Wednesday evening in India, Ashish Kanodia recalls being 'very disturbed'. A director at Kanodia Global, a closely held exporter that gets over 40 per cent of its revenue from the US selling home fabrics to toys, the entrepreneur already has two of its largest US customers seeking discounts to make up for the levy. 'The next six months are going to be difficult for everyone,' Kanodia said, adding that profit margins will be squeezed. If the pain continues for 'months and months', he said that he will have to start cutting his workforce. The US is India's largest trading partner, with the two-way trade between them at an estimated US$129.2 billion in 2024. Compared with India's 25 per cent, Bangladesh was subjected to a 20 per cent tariff, Vietnam got a 20 per cent levy and Indonesia and Pakistan each received 19 per cent duties. 'We know that we have got a deal that is worse than other countries,' said Sabyasachi Ray, executive director at The Gem and Jewellery Export Promotion Council. 'We will take it up with the government.' Trump's actions mark a 180-degree turn for New Delhi's hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others. Trump had called India's Prime Minister Narendra Modi 'my friend' in a Feb 14 post on X and the bond between the two countries 'special'. India is now weighing options to placate the White House, including boosting US imports, Bloomberg News reported, citing sources familiar with the matter, and many hope that the bilateral relationship and the tariff rate can still be improved. 'It is a storm in the India-US relationship at this moment, but I think there's a good chance that it will go away,' Vivek Mishra, deputy director of the Strategic Studies Programme at Delhi-based Observer Researcher Foundation, told Bloomberg News. Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a US-India trade deal continue. Negotiating tactic Jewellery businesses 'are worried but they are not panicking' because they hope a more favourable deal can be worked out, said Ray of the gems export body. 'The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing 'seems like a knee-jerk reaction', according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. 'This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said. BLOOMBERG
Straits Times
3 hours ago
- Straits Times
India reels from the shock of Trump's onslaught
NEW DELHI – President Donald Trump's new list of tariffs on half the world's countries sent the United States' trading partners scrambling to understand how their businesses will be affected. India got the bad news a day earlier – its goods face a tariff of 25 per cent or more – but the extra time was hardly enough to adjust to the fresh chaos. Indian negotiators had not expected to conclude a meaningful deal in time to meet Mr Trump's revised deadline of Aug 1. But they did expect to be treated as well as their neighbours, and to keep haggling with US officials until October or November, when Mr Trump was invited to visit India as part of the Quad defense group, which brings together four big democracies – India, the United States, Japan and Australia – with a shared interest in standing up to China. Instead, they were fed a heap of insults and injuries. Along with the 25 per cent rate, one of the highest in Asia and only a point lower than what was threatened on 'Liberation Day' in April, India was informed that its existing trade barriers are 'strenuous and obnoxious'; it will be charged an untold penalty for buying Russian oil; it is a 'dead economy.' It's archrival Pakistan was praised and promised an oil exploration deal. Hurt feelings aside, the results are confusing. Two of the biggest categories of exports to the United States from India are personal electronics, worth about US$14 billion a year, and pharmaceuticals, worth US$10 billion. Mr Rajesh Sharma, executive director of India Cellular and Electronics Association, said smartphones were exempted from these tariffs; so did executives at pharmaceutical companies. But on Aug 1, after reading the executive order, the Global Trade Research Initiative in New Delhi concluded the opposite. India's stock markets dipped on the news for two days running. Indian and international banks wrote notices warning that the country's generally hard-charging economic growth is likely to slow measurably as a result of the tariffs. Then there are the unknown tariffs. On July 6, Mr Trump wrote that countries aligned with the Brics group, of which India is a founding member, would incur an additional 10 per cent penalty. Then on July 14, he said that, if Russia didn't make peace with Ukraine within 50 days, he would punish its trading partners with 'secondary tariffs' of 100 per cent. That figure is making Indians worry anew. Mr Trump added 'plus a penalty' to the 25 per cent rate imposed on India, for buying Russian oil and weapons. Ms Shashi Tharoor, a prominent member of the opposition, spoke to an Indian news agency about the possible impact. 'There's even talk of a 100 per cent penalty,' he said, 'which will destroy our trade with America.' There is evidence that Indian buyers of Russian oil were already pulling back before the executive order. 'Indian refiners have reduced Russian crude purchases this week,' said Ms Sumit Ritolia, an analyst at Kpler, which tracks shipping and commodities. They were already 'looking to further diversify, amid rising concerns over potential US sanctions,' having spent years taking advantage of discounted Russian oil to reduce their imports from the Persian Gulf. Reducing the United States' trade deficit is one of the Trump administration's goals, so persuading India to buy more American oil and gas would make sense. Last year, India exported US$45.7 billion more goods to the United States than it imported. It spent about three times as much importing oil. If a third of that were redirected to American sources, their bilateral trade would be evened out. Mr Trump's angry barrage of social media has complicated further negotiations. The breakdown of trust between Mr Narendra Modi, India's prime minister, whom Mr Trump called his 'true friend,' the US president is likely to make it harder to complete any deal, analysts say. Indian news outlets have reported that Mr Trump wanted to iron out some outstanding issues, after four rounds of direct talks between the two sides, in a phone call with Mr Modi. The Indian government was anxious to avoid any of his last-minute surprises. The US commerce secretary accused India of 'slow-rolling' its trade negotiations. Indian officials and analysts say the friction is caused by a fundamental difference of approach. Mr Trump has a penchant for quick, top-down dealmaking. India's bureaucracy moves at a methodical pace, especially when it comes to opening up the agriculture market, which is politically sensitive. India's recently concluded trade deal with Britain took three years of talks, under two British prime ministers. On Aug 1, India's Foreign Ministry released a statement that put on a brave face. 'India and the United States share a Comprehensive Global Strategic Partnership,' established in 2013 between President Barack Obama and then-Prime Minister Manmohan Singh, 'anchored in shared interests, democratic values and robust people-to-people ties.' The ministry stuck to principles, revealing no plan for breaking through Mr Trump's hard line. 'This partnership has weathered several transitions and challenges,' the statement said. 'We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward.' NYTIMES
Straits Times
4 hours ago
- Straits Times
World economies reel from Trump's tariffs punch
Sign up now: Get ST's newsletters delivered to your inbox The tariffs are a demonstration of raw economic power that Mr Donald Trump sees putting US exporters in a stronger position. WASHINGTON - Global markets reeled on Aug 1 after President Donald Trump's tariffs barrage against nearly all US trading partners as governments looked down the barrel of a seven-day deadline before higher duties take effect. Mr Trump announced late on July 31 that dozens of economies, including the European Union , will face new tariff rates of between 10 and 41 per cent. However, implementation will be on Aug 7 rather than July 31 as previously announced, the White House said. This gives governments a window to rush to strike deals with Washington setting more favorable conditions. Neighbouring Canada, one of the biggest US trade partners, was hit with 35 per cent levies, up from 25 per cent, effective on Aug 1– but with wide-ranging, current exemptions remaining in place. The tariffs are a demonstration of raw economic power that Mr Trump sees putting US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. Stock markets in Hong Kong, London and New York slumped as they digested the turmoil, while weak US employment data added to worries. Top stories Swipe. Select. Stay informed. World Trump deploys nuclear submarines in row with Russia World 'Optimistic' Bessent says US has makings of a deal with China Asia Asia-Pacific economies welcome new US tariff rates, but concerns over extent of full impact remain Singapore Man in SAF custody after allegedly vaping on bus while in army uniform Asia 'Like me? Approach me directly, okay?': Inside a matchmaking event for China's wealthy Opinion America is tearing down another great public institution Opinion Quiet zones in public spaces can help people recharge in the city Singapore Man arrested for allegedly shoplifting twice at Changi Airport Mr Trump's actions come as debate rages over how best to steer the US economy, with the Federal Reserve this week deciding to keep interest rates unchanged, despite massive political pressure from the White House to cut. Data on Aug 1 showed US job growth missing expectations for July, while unemployment ticked up to 4.2 percent from 4.1 per cent. On Wall Street, the S&P 500 dropped 1.6 per cent, while the Nasdaq tumbled 2.2 per cent. Mr Trump raised duties on around 70 economies, from a current 10 per cent level imposed in April when he unleashed 'reciprocal' tariffs citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner. Any goods 'transshipped' through other jurisdictions to avoid US duties would be hit with an additional 40 per cent tariff, the order said. But Mr Trump's duties also have a distinctly political flavour, with the president using separate tariffs to pressure Brazil to drop the trial of his far-right ally, former president Jair Bolsonaro. He also warned of trade consequences for Canada, which faces a different set of duties, after Prime Minister Mark Carney announced plans to recognise a Palestinian state at the UN General Assembly in September. In targeting Canada, the White House cited its failure to 'cooperate in curbing the ongoing flood of fentanyl and other illicit drugs' – although Canada is not a major source of illegal narcotics. By contrast, Mr Trump gave more time to Mexico, delaying for 90 days a threat to increase its tariffs from 25 per cent to 30 per cent. But exemptions remain for a wide range of Canadian and Mexican goods entering the United States under an existing North American trade pact. Mr Carney said his government was 'disappointed' with the latest rates hike but noted that with exclusions the US average tariff on Canadian goods remains one of the lowest among US trading partners. With questions hanging over the effectiveness of bilateral trade deals struck – including with the EU and Japan – the outcome of Mr Trump's overall plan remains uncertain. 'No doubt about it – the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II,' said Ms Wendy Cutler, senior vice president of the Asia Society Policy Institute. On Aug 1, Mr Trump said he would consider distributing a tariff 'dividend' to Americans. Notably excluded from on Aug 1's drama was China, which is in the midst of negotiations with the United States. Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but have agreed to temporarily lower these duties and are working to extend their truce. Those who managed to strike deals with Washington to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union.
