Skip navigation Scroll to top
Scroll to top

LGT Navigator: How solid is the US labor market?

August 5, 2022

The monthly employment report from Washington is the focus of attention on financial markets today. On the one hand, it will show whether the recent economic slowdown, or de facto a recession, and the slump in consumer sentiment already had an impact on employment trends and, on the other hand, whether this will have an impact on the monetary policy stance of the Federal Reserve.

How solid is the US labor market?

After 372'000 new jobs were created in the United States in June and the unemployment rate remained at 3.6%, its lowest level in 52 years, analysts on average expect a slowdown in employment momentum in July, or 250'000 non-farm payrolls. According to the Federal Reserve's assessment, the US labor market has remained robust so far, thus supporting the orientation towards a more restrictive monetary policy, respectively rising interest rates. Today's statistics will provide information in this regard and thus also directly influence the interest rate landscape.

On the New York Stock Exchange, the stock indices consolidated after the mid-week recovery rally. The Dow Jones Industrial rose moderately by +0.26% to 32'726.82 points and the S&P 500 closed almost unchanged from the previous day at 4'151.94 points (-0.08%). On the Nasdaq, the indices gained almost half a percent, defending their strong gains of the previous day.

In Asia, the stock indices tend to close the week mostly in positive territory. In Tokyo, the Nikkei 225 recorded a daily gain of +0.80%, while in Hong Kong and Shanghai, the Hang Seng and the Composite index rose by around +0.1% and +0.3%, respectively. The stock market in Taiwan rose more than two percent on Friday despite increased geopolitical tensions following the visit of the Speaker of the US House of Representatives Nancy Pelosi. Meanwhile, in India, the central bank announced a 50-basis point rate hike to 5.4%.

Bank of England raises key interest rate by 50 basis points

Britain's central bank is sending out a clear signal in the fight against inflation with its biggest key interest rate hike since 1995. After the increase of half a percent, the key interest rate now stands at 1.75% – the highest level since the end of 2008. The financial markets had expected the new rate hike to be of this magnitude. There was one dissenting vote within the nine-member monetary policy committee. Since the end of last year, the British central bank has now raised the key interest rate six times. In the UK, the annual inflation rate recently climbed to 9.4% – the highest level in 40 years – and economists believe that inflation could reach levels around 15% by early 2023. In the latest forecast, Governor Andrew Bailey and his team expect inflation to fall back to 2% in two years as the expected economic slump slows demand. The economic outlook is fraught with “extremely large uncertainties” and next steps will be determined depending on how events unfold, the Bank of England stressed.

US trade deficit shrinks

The foreign trade deficit of the United States shrank again in June. The shortfall between exports and imports narrowed to USD 79.6 billion from USD 84.9 billion in the previous month. The third consecutive decline brought the trade deficit to its lowest level since the beginning of the year. Americans exported +1.7% more in the month under review than in the previous month, while imports fell by -0.3%.


Economic Indicators August 5

MEZ Country Indicator Last period
08:00 GE Industrial Production (June, m/m) +0.2%
08:45 FR Industrial Production (June, m/m) +0.0%
10:00 IT Industrial Production (June, m/m) -1.1%
14:30 US Unemployment Rate (July) 3.6%
14:30 US Non-Farm Payrolls (July) +372,000
14:30 US Average Hourly Earnings (July, y/y) +5.1%


Earnings Calender August 5

Country Company Period
GE Allianz Q2
GE Deutsche Post Q2
UK London Stock Exchange Q2


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.


Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail:
Source: LGT Bank (Switzerland) Ltd.


Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).