The content of the report of the United States Department of Labor was somewhat mixed, and did not coincide with the forecasts in many ways. In particular, there are not 158 thousand new jobs were created outside agriculture but only 130 thousand. At the same time, the previous result was revised from 164 thousand to 159 thousand. So, the slowdown in the rate of creating new jobs is obvious, which was supposed to provoke a new wave of panic regarding the state of the American economy accompanied by regular calls for an immediate reduction in the refinancing rate. However, pretty quickly everyone remembered the words of Jerome Powell regarding the state of the labor market. In particular, the pace of creating new jobs has long exceeded the growth rate of the workforce. In other words, more jobs are created than necessary. Consequently, a certain slowdown in the pace of the creation of these newest jobs is quite normal and there is no need to worry about this. At least the Federal Reserve is clearly not going to make hasty decisions. Also, the dollar turned out to be somewhat oversold amid the battles in the UK between Boris Johnson and the House of Commons, which significantly reduces the risk of unregulated Brexit. So the dollar simply had nowhere to decline.
Moreover, the slowdown in the creation of new jobs outside agriculture is probably the only negative point in the contents of the report of the United States Department of Labor. In particular, the average working week increased from 34.3 hours to 34.4 hours. The growth rate of average hourly wages slowed down not to 3.1% but to 3.2% as expected. And that is only due to the fact that the previous result was revised from 3.2% to 3.3%. Moreover, the average hourly wage increased by 0.4% in monthly terms, while they forecast growth by 0.3%. In other words, there is no particular reason for panic.
The number of new jobs created outside agriculture (USA):
In addition, the final data on European GDP for the second quarter nevertheless confirmed the fact of a slowdown in economic growth from 1.3% to 1.2% instead of 1.2% to 1.1%. The wonders of revising statistics but nothing has changed in general. The European economy is clearly slowing, and its growth rate is significantly lower than that of the United States.
GDP growth rate (Europe):
If on Friday we were given at least a little break from Brexit and switched our attention to macroeconomic statistics, today the Foggy Albion is in the spotlight. Firstly, Her Majesty must sign a bill banning Brexit without a divorce deal with the European Union. In addition to it, there is also an obligation for the government to receive a new reprieve, this time until January 31. There is virtually no doubt that Elizabeth II will sign the bill passed by parliament. However, the intrigue does not lie in this but in the voting scheduled for today in the House of Commons for early parliamentary elections. In principle, both Boris Johnson and his opponents in parliament are not against holding early elections. Only now the prime minister wants to set the elections for October 15, and Jeffrey Sanders for October 30. Labor's idea is so that the government has time to get a deferral of Brexit. So the battle will be serious. Although politicians usually have a negative impact on financial markets, the recent actions of the House of Commons have had a beneficial effect on the pound. According to investors, what they do reduces the risk of an unregulated Brexit with all its unpredictably terrible consequences for the British economy. Also, if you take into account that at least during the past week the Labor Party clearly outplayed Johnson, then you should count on the further growth of the pound. And the reference point is 1.2400.
The single European currency will follow the pound as the reduction in the risk of an unregulated Brexit and oddly enough, reduces the risks of uncertainty for Europe. So we can expect growth to 1.1075.
