US job growth slows sharply in July, jobless rate rises
The US added 114,000 nonfarm jobs in July, much less than expected, as the jobless rate rose and average hourly earnings growth fell, all signs of an almost certain rate cut from the Federal Reserve next month.
Job gains followed downwardly revised gains of 179,000 in June and 216,000 jobs in May, the Bureau of Labor Statistics reported today. Gains were revised down by 29,000 for the two months.
Gains in July were well below the average 215,000 jobs added monthly for the prior 12 months.
The unemployment rate rose to 4.3pc from 4.1pc.
Fed policymakers this week kept their target rate unchanged at 5.25-5.5pc, a 23-year high, but Fed chief Jerome Powell said a possible rate cut was "on the table" for September should the data — especially easing inflation pressures and weakening labor market conditions — keep moving in the right direction.
After the jobs report today, the CME's FedWatch tool showed 67.5pc odds of a 50 basis point cut, and 32.5pc probability of a 25 basis point cut at the September meeting, compared with 22pc and 72pc odds, respectively, on Thursday.A rate cut in September would come less than two months before the November national election and would be the first cut since early 2020, when Covid-19 struck the US.
Job gains were led by health care, construction, transportation and warehousing.
Health care added 55,000 jobs, construction added 25,000 and transportation and warehousing added 14,000 jobs. Manufacturing added 1,000 jobs compared with losses of 9,000 jobs in June. Mining, which includes oil and gas exploration and production, shed 1,000 jobs.
Average hourly earnings rose by an annual 3.6pc, down from 3.8pc in June and the lowest since May 2021.
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Mexico 2Q GDP data, surveys point to slower economy
Mexico 2Q GDP data, surveys point to slower economy
Mexico City, 2 August (Argus) — Private-sector analysts have lowered estimates for Mexico's 2024 and 2025 gross domestic product (GDP) growth while raising inflation forecasts for both years, the central bank said Thursday. For a fourth consecutive month, the survey's median forecasts for GDP growth in 2024 declined, with analysts polled lowering growth estimates to 1.8pc for 2024 from 2pc in last month's survey. The 2025 growth forecast slipped to 1.61pc from 1.78pc. The shift in forecasts arrives on the heels of preliminary second quarter GDP data, posted by statistics agency Inegi 30 July, showing the economy grew by an annual 2.2pc in the second quarter, up from 1.6pc in the first quarter but slowing from 3.5pc in the second quarter 2023. The central bank's 2024 GDP estimate was lower than a 2.4pc estimate from Mexican bank Banorte. Median projections for end-2024 inflation in the central bank's private-sector survey for July moved to 4.58pc from 4.23pc, with end-2025 projections rising to 3.83pc from 3.76pc in the June survey. The central bank cited higher risks to inflation from a weakening peso and a potentially severe hurricane season in its latest monetary policy decision on 27 June when it held its target interest rate at 11pc. The peso weakened above 19 pesos to the US dollar Friday for the first time since January 2023, extending the losses triggered after 2 June elections that effectively erased congressional opposition to the progressive Morena party. It has weakened from 16.3 pesos to the dollar early April, its strongest level in more than eight years. Growth in the industrial sector grew by an annual 1.9pc in the second quarter from 0.9pc in the first quarter, while services grew by 2.7pc in the second quarter from 2.1pc in the prior quarter, according to the latest GDP report. Agriculture contracted by 2.7pc in the second quarter from 0.6pc growth in the first quarter. "The economy's exceptional momentum in previous years may be running out of steam," said Mexican bank Banorte in a note on the GDP report. Banorte noted uncertainty in manufacturing, "although some of the early nearshoring-related investments could begin to result into more production. In addition, the auto sector remains strong, key to driving the category forward." The downtrend is supported by comments from ratings agency Moody's out this week, predicting a "substantial slowdown" in the second half of 2024. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Vz unrest no threat to Trinidad gas projects: Minister
Vz unrest no threat to Trinidad gas projects: Minister
Kingston, 2 August (Argus) — Increasing political instability in neighbouring Venezuela will not affect major offshore natural gas projects in Trinidad and Tobago, energy minister Stuart Young said. The three gas projects being developed under agreements with Shell and BP "will be seen to their fruition," Young said. Protests have erupted in Venezuela after electoral authorities named president Nicolas Maduro the winner of the 28 July election. But several countries — including the US — declared the opposition's Edmundo Gonzalez as the winner . Trinidad and Tobago will continue to develop the cross-border gas projects "as our economy is based on oil and gas, and we are committed to developing them and to earning the revenue streams from these projects," Young said. But the projects "are inevitably being clouded by domestic developments in Venezuela," a Caribbean diplomat in the capital Port of Spain told Argus . "It is possible Washington will stiffen some sanctions it had moderated months ago to allow some of the gas projects to proceed." Trinidad and Tobago and Venezuela last month signed a 20-year exploration and production agreement for the Cocuina gas field that is part of a field that straddles the countries' borders. BP and Trinidad's state gas company NGC will develop the field. Shell made a final investment decision on the shallow-water 2.7Tcf Manatee cross-border field, the company said last month. Shell and NGC are developing the Dragon field that sits on the border with Venezuela and which the companies say contains an estimated 4.3Tcf of gas. Trinidad needs gas to reverse a drop in production that has depressed LNG, petrochemical and fertilizer production. The country's 2023 natural gas production of 2.6 Bcf/d was 3.7pc less than in 2022, according to energy ministry data. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU dumping case could impact over 50pc of HRC imports
EU dumping case could impact over 50pc of HRC imports
London, 2 August (Argus) — The EU's impending anti-dumping investigation into four steel exporters could affect more than half of the bloc's hot-rolled coil (HRC) imports. Next week the commission is expected to officially initiate an investigation into HRC imports from Egypt, Japan, India and Vietnam, in response to a petition from European producers' association Eurofer. In January-May this year, these four sellers accounted for about 51pc of the EU's nearly 4.3mn t of HRC imports; in both April and January of this year, when quarterly quotas reset, they accounted for more than 58pc. This suggests that nearly 2.2mn t of this year's HRC imports could be affected by the investigation, which would create a much more captive market for domestic steelmakers. It is not clear whether dumping will be proven, and market sources suggest this will be difficult in some cases, particularly for Vietnam and Egypt, as domestic prices in Vietnam are regularly below its export deals, they said. But even fairly small duties can affect trade flow, as evidenced by Turkey's reduced competitiveness in the EU in recent years, although aggressive Chinese prices have also had a major impact on this volume of late. "Importing coil is becoming impossible," a service centre source said, suggesting end-manufacturers would buy finished parts from these countries instead of steel, undermining the steelmakers that the investigation is meant to protect. "By standing on the necks of European manufacturers like this, the commission is going to kill consumption in Europe," a trading firm posted on social media. An executive with one trading firm said the commission should exempt low emission steel "if they really care about CBAM [the carbon border adjustment mechanism]". Despite the potential outsize effect of the investigation, physical prices have not moved, given the current market malaise and the typical duration of EU investigations. Since Argus broke the news of the investigation on 25 July, the benchmark northwest EU HRC index fell by €14.75/t to €605/t on Thursday. The typical timeline for EU anti-dumping cases now is for provisional duties at eight months and definitive measures after 14 months, assuming dumping is proven. A steelmaking executive said the dumping case "should support" prices headed into the fourth quarter of this year and the first of next year, by which time service centres' will have destocked and have to return to market. So far, Japan, Vietnam and India have been informed of the case, according to market participants and diplomatic notes seen by Argus . By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Vitol expands coal trading in Noble Resources purchase
Vitol expands coal trading in Noble Resources purchase
Singapore, 2 August (Argus) — Vitol has agreed to buy fellow commodity trading firm Noble Resources for $208.9mn, a deal that will expand its coal trading business. Vitol will pay the equivalent of $0.63 per share on a cash free and debt free basis for the Singapore-based firm and expects to close the deal before the end of 2024, it said on 2 August. The reconstituted Noble Resources trades and manage more than 35mn t/yr of thermal coal, sourced from Indonesia and Australia and marketed to key markets across Asia-Pacific. Its predecessor company Noble Group was forced to sell many of its assets because of a debt crisis after accusations of accounting fraud. The company completed a $3.45bn debt restructuring in December 2018 . Major divestments included selling its North American oil liquids business to Vitol in 2017 and its North American power and gas unit to trading firm Mercuria. The acquisition of Noble Resources is the latest in a series of strategic moves by Vitol to expand its global operations. Vitol in June this year completed a deal to buy a controlling stake in Italian refiner Saras . The deal will lift Vitol's investments in refining capacity to over 800,000 b/d and grow its footprint in the Mediterranean. Vitol in April acquired US-based renewable energy company BioMethane Partners to form Vitol BioMethane (VBM). The combined capacity at VBM is estimated to generate an equivalent 22mn cellulosic biofuel D3 renewable identification number credits. By Janet Ong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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