SA Economy Under Pressure? U.S. Job Data & Trump Tariffs Impact
Colaboradores
The latest U.S. jobs data offers a mixed bag of signals for the global economy, including South Africa. While May's figures suggest some stability, economists warn that President Trump's tariff policies are beginning to exert a significant strain, potentially impacting international trade and investment flows.
Job Market Stability: A Fleeting Respite?
Forecasts indicated around 120,000 new payrolls added in the U.S. last month. While figures above 100,000 are generally considered healthy, they still represent the lowest monthly job creation since February and fall short of the recent 12-month average of 150,000. This suggests a possible slowdown in economic momentum.
Warning Signs Emerge
Even with potentially positive job numbers, other indicators paint a less optimistic picture. ADP's private payroll data revealed the weakest monthly job total since March 2023. While ADP data doesn't always perfectly mirror official Bureau of Labor Statistics figures, the downward trend is evident, with fewer jobs added in five of the last seven months.
Furthermore, the Institute for Supply Management reported an unexpected contraction in activity at U.S. service firms last month – the first in almost a year – accompanied by a deceleration in hiring. Weekly jobless claims have also surpassed expectations, reaching their highest level since October, while continuing unemployment claims remain elevated, suggesting increased difficulty for job seekers.
The Tariff Effect: A Growing Concern
Economists are increasingly concerned about the impact of Trump's tariffs. Mark Zandi, chief economist at Moody's Analytics, believes that the damage from the trade war is yet to fully manifest. He anticipates upcoming inflation readings to reflect price increases resulting from Trump's import taxes. A Federal Reserve survey has already indicated widespread expectations among companies for rising costs and prices due to higher tariffs. This has potential ripple effects on global markets, including South Africa's trade relations and investment landscape.
- Tariffs are expected to drive up prices.
- Businesses anticipate increased costs.
- Job growth may be slowing down.
Ultimately, the global impact of these economic shifts is uncertain, but South African businesses and policymakers should remain vigilant and adapt to evolving international conditions.