Another Healthy U.S. Jobs Report Seen; Fed's Barkin Says Rate Hikes Should Be Starting to Bite Now

Another Healthy U.S. Jobs Report Seen; Fed's Barkin Says Rate Hikes Should Be Starting to Bite Now By James Christie

Good day. Today's jobs report is expected to show solid employment growth and low joblessness in July, suggesting the labor market remained strong despite the Federal Reserve's efforts to slow the economy to reduce inflation. Beside the payroll figures, Fed officials will be watching wages. Employers spent 4.5% more on pay and benefits in the April-to-June period from a year earlier, slowing from a 4.8% increase the prior quarter. Even with the slowdown, wage gains are exceeding their prepandemic pace and a rate that could deliver low, stable inflation, economists say. On Thursday, Richmond Fed President Tom Barkin said the effects of rate increases should be starting to show about now-though freely-spending consumers seem to be muffling the impact. He pointed to big business for the "Barbie" movie, Taylor Swift's sold-out concert tour, as well as economic dislocations from the pandemic as factors that have helped stave off recession.

Now on to today's news and analysis.

Top News Hiring Has Stayed Strong. Here's Where to Look for Signs of Cooling.

Economists surveyed by The Wall Street Journal estimate that employers added 200,000 jobs and that the unemployment rate remained at 3.6% in July-essentially unchanged readings from June. Still, that payroll gain, adjusted for seasonality, would represent cooler growth than earlier in the pandemic recovery.

Forecasters estimate wage gains eased very slightly in July. Other recent data showed employer spending on pay and benefits rose more slowly in the second quarter than last year. The Fed is closely watching wage growth as a sign of inflationary pressures, especially among services providers.

Economic Slowing Is in the Cards, Fed's Tom Barkin Says

The impact of Federal Reserve interest-rate hikes that began early last year "should start to really hit around now," the president of the Richmond Fed said, adding that those who keep predicting a recession will eventually be right.

U.S. Economy Weather and Wall Street Conspire to Push Up Gas Prices

Wholesale gasoline costs have jumped more than 13% since July 3, hovering near nine-month highs and promising a more expensive end to road-trip season, while wholesale diesel, has risen by 26%.

U.S. Steelmakers Are Still Expanding as Demand Slows

American steelmakers are investing in new plants, anticipating a big payoff from the steel needed for federal infrastructure projects , increased car production and new electric-battery facilities.

Key Developments Around the World Inflation Is Cooling. Food Inflation Could Get Worse.

A combination of disrupted exports, unusually hot weather and Russia's continuing pounding of Ukraine, one of the world's largest grain producers, is likely to add fresh momentum to the main source of global inflation .

In Saudi Arabia's Ukraine Peace Talks, How to Measure Success?

Senior officials from up to 30 countries will meet in Saudi Arabia this weekend to talk about peace in Ukraine, a potentially important process Ukraine and its Western backers hope can help frame future peace talks to Kyiv's advantage.

Ukrainian Naval Drones Attack Russian Black Sea Port India Restricts Laptop Imports to Boost Local Manufacturing

India is making it harder to import laptops, tablets and other consumer-electronics devices in a move intended to boost local manufacturing and address some security concerns, government and industry officials said.

Niger Coup Leaders End Military Cooperation With France

Coup leaders in Niger said they would end military cooperation with their country's former colonial power France, as the clock ticked down to a Sunday deadline set by other West African states for the ousted president to be reinstated.

Financial Regulation Roundup Billion-Dollar Hedge Fund Club Is About to Get Bigger

For startup hedge funds, bigger is increasingly better, as some firms aim for 10-figure launches , including what could be the biggest fund launch this year, Freestone Grove Partners, started by ex-Citadel and BlackRock executives.

Coinbase Posts Sixth Consecutive Quarterly Loss

Digital asset prices are up, but Coinbase Global continues to face its own crypto winter , reporting a sixth consecutive quarter of losses as regulatory risks and lower trading volumes continue to weigh on the company.

Tech Entrepreneur Admits to Being Hacker in $4.5 Billion Bitcoin Heist

Ilya Lichtenstein admitted to the hack at a hearing in federal court in Washington, D.C., saying that in 2016 he broke into crypto exchange Bitfinex's network and stole bitcoin that is now worth billions of dollars.

Congress Ended a Tax Break. How That May Help Higher Earners

Many retirement savers are furious about a law set to take effect in January. The provision denies a key tax deduction to workers aged 50 and older who had $145,000 or more in wages the prior year. But some may come out ahead .

Forward Guidance Friday (all times ET)

8:30 a.m.: Canada labor survey for July; U.S. employment report for July

Monday

8:30 a.m.: Fed's Bowman and Atlanta Fed's Bostic speak at Atlanta Fed's Fed Listens

10 a.m.: The Conference Board Employment Trends Index for July

12 p.m.: Virtual Q&A with Bank of England's Pill on cost of living and economic conditions

Commentary The Economy's Odometer Is Broken

If what is going on with productivity is uncertain, the right pace of growth for the economy is uncertain, too, so the Fed can't be too sure of informative measures such as GDP for its decision-making , Justin Lahart writes.

Executive Insights

Each week, we will share selections from WSJ Pro that provide insight and analysis we hope are useful to you. The stories are unlocked for The Wall Street Journal's subscribers.

Uncertainty can be both good and bad when it comes to the sale of private-market assets. Secondary dealmaking has been hampered so far this year. But the outlook is rosier for the rest of 2023 [https://urldefense.com/v3/__https://privateequity.wsj.net/?selDate=20230723__;!!F0Stn7g!Fjw7eDx2oyStiO4Xm1BxZOMwnskuXNpFiWOSEmF_DrHrE9tcF0HPZn7J9lr0agLzj7lCXu6MjeTxc2bw-AvOPrlidQGtff8sEYsKEeEl$ ]. When deal activity picks up, the laws of supply and demand stand to favor secondary buyers.

Listen to Fahim Siddiqui, the chief information officer of Home Depot, on the home-improvement retailer's plans to use generative AI and its app to attract DIY and professional customers.

Listen Now [https://urldefense.com/v3/__https://open.spotify.com/episode/3ChuljmXB5PzF1vuY3bNzW__;!!F0Stn7g!Fjw7eDx2oyStiO4Xm1BxZOMwnskuXNpFiWOSEmF_DrHrE9tcF0HPZn7J9lr0agLzj7lCXu6MjeTxc2bw-AvOPrlidQGtff8sEVs4U6G0$ ] Basis Points U.S. mortgage rates have inched up closer to 7% , reaching the highest level since mid-July. The average rate on the standard 30-year fixed mortgage climbed to 6.90%, according to a survey of lenders released Thursday by mortgage-finance giant Freddie Mac. Rates were around 5% a year ago. U.S. services activity increased in July for the seventh straight month, as the Institute for Supply Management's services-activity index came in at 52.7, slowing from 53.9 in June. Readings over 50 mark expansion in the sector, which has grown every month since the start of the year, and almost every month for the last three years. Economists polled by The Wall Street Journal expected a 53.3 reading. (Dow Jones Newswires) Initial claims for unemployment benefits in the U.S., a proxy for layoffs, rose to a seasonally adjusted 227,000 in the week ended July 29, the Labor Department said. Claims filings averaged about 220,000 in 2019 when the labor market also was solid. The four-week moving average of weekly claims, which smooths for volatility in the weekly figures, declined to 228,250. (DJN) The People's Bank of China will need to flexibly use monetary policy tools including reserve-requirement-ratio cuts, open market operations and medium-term lending facilities to ensure ample liquidity in the country's banking system, a senior central bank official said Friday. The Reserve Bank of Australia remains confident that it will tame inflation over the coming years, bringing it back within the desired 2% to 3% target band by the end of 2025. The RBA's latest set of forecasts predict that the annual rate of inflation will be running at 2.75% by the end of 2025, with consumer price pressures expected to cool rapidly through 2024, and end that year at 3.25%. Feedback Loop

This newsletter is compiled by James Christie in San Francisco and Perry Cleveland-Peck in Barcelona.

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08-04-23 0719ET