US Business Newsletter July 01 - July 31, 2022

Greetings from Consulate General of India,

New York!

Welcome to the July 2022 edition of our newsletter, bringing you important policy and high-impact news.

We hope you find it useful.

US Economy Added 372,000 Jobs in June Amid Red-Hot Labour Demand

Red-hot labour demand stoked another strong month of US jobs gains, defying expectations for a sharper slowdown and giving the Federal Reserve greater leeway to continue raising interest rates to stamp out soaring inflation. With these gains, the unemployment rate stabilised at its historically low level of 3.6 per cent, just above its pre-pandemic threshold. Professional and business services jobs jumped by the most for the month, with 74,000 positions added. Employment in the leisure and hospitality sector rose by 67,000, helping to close a still 1.3mn gap for the sector compared to pre-pandemic levels. Nearly 40,000 jobs were added to the transportation and warehousing sector with another roughly 30,000 positions created in the manufacturing space.

Shrinking flows of Russian natural gas to Europe have triggered a global race among U.S. allies to secure American gas exports, testing the country’s ability to meet fast-growing demand. Europe’s liquefied natural gas, or LNG, imports from the U.S. more than doubled between March and June from the year prior, according to consulting form Rystad Energy. What is more, increased European demand for U.S. gas is reshaping global LNG market, as cargoes headed to Asia and other regions are redirected to Europe where they can fetch a higher price. Meanwhile, some developing nations that planned to shift from coal and oil to natural gas are finding themselves priced out of the LNG market.

Strong U.S. Dollar Sends Ripples Around the World

The U.S. dollar is stronger than it has been in decades and the effects of its rapid rise are reverberating across the globe. The Wall Street Journal Dollar Index, which measures the greenback against a basket of 16 currencies, rose 8.7% through June to notch its best first half since 2010. The dollar’s run has been driven largely by rising U.S. interest rates. The Federal Reserve approved a 0.75-percentage-point rate increase in June, the largest since 1994, and officials have signalled they are likely to raise rates by the same amount later in July. Investors are also drawn to the U.S. as a source of relative stability amid weak overseas economic conditions. When putting money into American stocks and bonds, foreign investors typically use dollars, which boosts the U.S. currency.

U.S. Trade Gap Narrowed in May as Imports of Goods Slowed

The U.S. trade deficit narrowed for the second consecutive month in May as imports were held down by lower goods spending by American households and exports jumped on energy shipments. The trade gap in goods and services shrank 1.3% in May from the previous month to $85.5 billion, the Commerce Department said Thursday, down from April’s revised $86.7 billion. Imports rose 0.6% to $341.4 billion, largely due to higher costs for imports of crude oil and services. Exports were up 1.2% to $255.9 billion on higher crude-oil and natural-gas exports. Imports of consumer goods fell $1.5 billion as a result of Americans’ cooling appetite for goods purchases. Higher consumer prices are also making goods less attractive to consumers. At the same time, supply-chain disruptions caused businesses to stockpile orders, which has left them with full inventories and no room to store new products, reducing the demand for new imports.

Mortgage Rates Fall to 5.30%, Reflecting Recession Fears

Mortgage rates recorded their largest decline since 2008 as investors raise their bets that the economy is headed for a downturn. The average rate on a 30-year fixed-rate mortgage fell to 5.30%, mortgage-finance giant Freddie Mac said on the 7^th of July. That is down from 5.70% last week. Mortgage rates haven’t recorded such a big weekly decline since December 2008, when the rate fell from 5.97% to 5.53%. Growing fears of a recession in the U.S. stand to further push down mortgage rates as investors pile into U.S. Treasurys, widely seen as safe investments during times of economic uncertainty.

U.S. Electric Car Sales Climb Sharply Despite Shortages

Americans are buying electric vehicles at a record pace, undeterred by rising prices and long waits for delivery, a further indication that the twilight of the internal combustion engine is on the horizon. Vehicles that run on batteries accounted for 5.6 percent of new-car sales from April through June, still a small slice of the market but twice the share a year ago, according to Cox Automotive, an industry consulting firm.