Recruiters and jobseekers at a job fair in Sunrise, Florida. While an increasing number of Americans can now secure jobs, the Federal Reserve is more worried about inflation and is aggressively attempting to bring it down. AFP
Recruiters and jobseekers at a job fair in Sunrise, Florida. While an increasing number of Americans can now secure jobs, the Federal Reserve is more worried about inflation and is aggressively attempting to bring it down. AFP
Recruiters and jobseekers at a job fair in Sunrise, Florida. While an increasing number of Americans can now secure jobs, the Federal Reserve is more worried about inflation and is aggressively attempting to bring it down. AFP
Recruiters and jobseekers at a job fair in Sunrise, Florida. While an increasing number of Americans can now secure jobs, the Federal Reserve is more worried about inflation and is aggressively attemp

Why ‘sizzling’ US jobs data may mean more and bigger Fed rate rises


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A blowout US jobs report for July means the Federal Reserve will probably need to keep going with the most aggressive rate rises in decades to curb demand and inflation, economists say.

US employers added 528,000 jobs last month, more than all estimates, the unemployment rate fell to a five-decade low of 3.5 per cent, and wage growth accelerated, the Labour Department said.

“The good news is people can get jobs, the bad news is that inflation remains too high and our number one priority is to get that down,” San Francisco Fed president Mary Daly said on Friday on Fox News.

The data added impetus for the Federal Open Market Committee to raise interest rates by 75 basis points when it meets in September. This matches the moves it made in June and July as it works to cool an inflation rate that is running at a 40-year high.

The strong momentum could also suggest the central bank will need to keep rates higher for longer, contrary to market expectations for rate cuts in 2023.

The labour market is “still sizzling” and that can feed into inflation, said Diane Swonk, the chief economist at KPMG. “This argues for another 75 basis point hike by the Fed.”

Fed chairman Jerome Powell said last week that another large rate increase at the September meeting was possible. However, he gave no specific forward guidance and said future increases would depend on data. Investors interpreted the remarks as a pivot to a less aggressive posture and markets rallied in response.

Fed presidents this week have strongly countered that impression. They argued that the central bank was not intending a pivot away from aggressive increase and that it would take significant news to alter their position.

Friday’s jobs data, while important, was only one of four critical reports that will shape the FOMC decision next month. There will be one more employment print and two consumer-price index readouts, with the July data out on August 10. That report should show slowing inflation because of plunging gas and commodities prices.

“If we get to September with things being where they are today — and that’s a big if — 75 basis points and signals of the risk of another 75 basis points, that’s what you’ll see,” said Mohamed El Erian, chief economic adviser to Allianz.

Ultimately, it is the inflation data, which could also be affected by falling commodity prices and supply-chain improvements, that will decide the September move, said Julia Coronado, co-founder of MacroPolicy Perspectives and a former Fed economist.

The jobs data “would lean in favour of either a 75 basis-point hike or a longer hiking cycle, because we are not seeing moderating job growth", she said.

Ms Daly, who is not a voter on this year’s policy-setting committee, on Friday echoed remarks made earlier this week when she indicated she preferred a 50-basis-point increase in September.

“We don’t need to be too aggressive because we do already see signs of slowing,” Ms Daly said. “Interest rates rise, but it takes a while for them to move fully through the economy.”

“The July jobs report settles it — we are not in a recession. More importantly, it also means the Fed will likely have to hike by another 75 basis points in September. Hiring was broad-based across sectors, and there was no evidence of widespread layoffs," Bloomberg US economists said.

"The labour market has tightened even further from a high starting point. If there was any question of a dovish Fed pivot, this report has quashed it.”

Yields on two-year Treasuries surged in response to the jobs report, a reflection of the expected Fed rates over that period. Market pricing indicated a 75 basis-point increase to the Fed’s key rate is now seen as a more likely outcome at the central bank’s September meeting than 50 basis points.

Mr Powell has described the labour market as “tight to an unhealthy level". He has therefore been seeking a moderation to help to bring demand for products and services more in line with supplies that have been constrained by Covid-19 disruptions.

He and other Fed leaders are worried about the potential for a wage-price spiral, with higher wages feeding into inflation in a cycle that is hard to break.

“This number is so comprehensively strong with a pretty significant uptick in wages,” said Mark Spindel, chief investment officer at MBB Capital Partners in Chicago.

“Companies are paying up for labour. Income matters most. When you look at the breadth of the employment report, and the earnings, this is an enormous tailwind for income.”

The upper bound of the Fed’s benchmark is now at 2.5 per cent. Policy makers will have to ensure the target rate to the region is at 4 per cent and hold it there for some time to quell inflation and price expectations, said Randall Kroszner, a former governor at the central bank.

“You’ve really got to make sure that inflation and inflation expectations have come down and are out of the system,” said Mr Kroszner, an economics professor at the University of Chicago Booth School of Business.

After the jobs report, he said that a 75 basis-point increase “will be on the table for the next meeting".

The specs

Engine: four-litre V6 and 3.5-litre V6 twin-turbo

Transmission: six-speed and 10-speed

Power: 271 and 409 horsepower

Torque: 385 and 650Nm

Price: from Dh229,900 to Dh355,000

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2013 - Sebastian Vettel (Red Bull)

2014 - Lewis Hamilton (Mercedes)

2015 - Nico Rosberg (Mercedes)

2016 - Lewis Hamilton (Mercedes)

2017 - Valtteri Bottas (Mercedes)

About Seez

Company name/date started: Seez, set up in September 2015 and the app was released in August 2017  

Founder/CEO name(s): Tarek Kabrit, co-founder and chief executive, and Andrew Kabrit, co-founder and chief operating officer

Based in: Dubai, with operations also in Kuwait, Saudi Arabia and Lebanon 

Sector:  Search engine for car buying, selling and leasing

Size: (employees/revenue): 11; undisclosed

Stage of funding: $1.8 million in seed funding; followed by another $1.5m bridge round - in the process of closing Series A 

Investors: Wamda Capital, B&Y and Phoenician Funds 

Our legal columnist

Name: Yousef Al Bahar

Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994

Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers

The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

'Gehraiyaan'
Director:Shakun Batra

Stars:Deepika Padukone, Siddhant Chaturvedi, Ananya Panday, Dhairya Karwa

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Europe wide
Some of French groups are threatening Friday to continue their journey to Brussels, the capital of Belgium and the European Union, and to meet up with drivers from other countries on Monday.

Belgian authorities joined French police in banning the threatened blockade. A similar lorry cavalcade was planned for Friday in Vienna but cancelled after authorities prohibited it.

The specs
Engine: 2.4-litre 4-cylinder

Transmission: CVT auto

Power: 181bhp

Torque: 244Nm

Price: Dh122,900 

COMPANY%20PROFILE
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Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council

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Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory

COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3ENomad%20Homes%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3E2020%3Cbr%3E%3Cstrong%3EFounders%3A%20%3C%2Fstrong%3EHelen%20Chen%2C%20Damien%20Drap%2C%20and%20Dan%20Piehler%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20UAE%20and%20Europe%3Cbr%3E%3Cstrong%3EIndustry%3C%2Fstrong%3E%3A%20PropTech%3Cbr%3E%3Cstrong%3EFunds%20raised%20so%20far%3A%3C%2Fstrong%3E%20%2444m%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Acrew%20Capital%2C%2001%20Advisors%2C%20HighSage%20Ventures%2C%20Abstract%20Ventures%2C%20Partech%2C%20Precursor%20Ventures%2C%20Potluck%20Ventures%2C%20Knollwood%20and%20several%20undisclosed%20hedge%20funds%3C%2Fp%3E%0A
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From: Alberta, western Canada

Record fish: 56kg sailfish

Member of: International Game Fish Association

Company: Arabian Divers and Sportfishing Charters

Innotech Profile

Date started: 2013

Founder/CEO: Othman Al Mandhari

Based: Muscat, Oman

Sector: Additive manufacturing, 3D printing technologies

Size: 15 full-time employees

Stage: Seed stage and seeking Series A round of financing 

Investors: Oman Technology Fund from 2017 to 2019, exited through an agreement with a new investor to secure new funding that it under negotiation right now. 

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Director: Elie Semaan

Starring: Abdullah Boushehri, Laila Abdallah, Lulwa Almulla

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  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
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SPEC%20SHEET%3A%20SAMSUNG%20GALAXY%20Z%20FOLD%204
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Fines for littering

In Dubai:

Dh200 for littering or spitting in the Dubai Metro

Dh500 for throwing cigarette butts or chewing gum on the floor, or littering from a vehicle. 
Dh1,000 for littering on a beach, spitting in public places, throwing a cigarette butt from a vehicle

In Sharjah and other emirates
Dh500 for littering - including cigarette butts and chewing gum - in public places and beaches in Sharjah
Dh2,000 for littering in Sharjah deserts
Dh500 for littering from a vehicle in Ras Al Khaimah
Dh1,000 for littering from a car in Abu Dhabi
Dh1,000 to Dh100,000 for dumping waste in residential or public areas in Al Ain
Dh10,000 for littering at Ajman's beaches 

Updated: August 07, 2022, 3:30 AM