US Jobs Growth Relieves Pressure on Federal Reserve as Global Economy Faces Mixed Signals

Fresh evidence of strong hiring in the United States has eased the immediate pressure on the Federal Reserve to cut interest rates, even as other parts of the world economy show growing signs of strain. The new jobs data, released in June, revealed that American employers added more positions than economists expected. The unemployment rate dipped to 4.1%, suggesting that companies remain hesitant to lay off workers despite slower momentum in private-sector hiring.

While public education jobs saw a notable increase, private payroll growth weakened to its lowest level since October, driven mainly by healthcare hiring. This mixed picture means the Federal Reserve is likely to keep rates steady at least until the fall, waiting for clearer signals about the economy’s direction.

Outside the United States, economic trends varied widely. In Asia, manufacturing activity continued to slow. Purchasing managers indexes in Taiwan, Indonesia, and Vietnam remained stuck in contraction territory, reflecting falling new orders and factory output as trade tensions with the United States weigh on demand. At the same time, Japan’s annual wage negotiations concluded with the biggest pay raises in 34 years, with workers securing an average increase of 5.25%. This supports the Bank of Japan’s belief that higher wages and prices are starting to take hold.

Europe also sent mixed messages. In the euro area, inflation settled at the European Central Bank’s target, strengthening the case to pause a year-long effort to reduce borrowing costs. However, Sweden posted the steepest drop in retail sales in over three decades. Coupled with rising unemployment and a surprise contraction in the country’s economic output, the decline is putting fresh pressure on Sweden’s central bank to consider another rate cut.

Meanwhile, the United Kingdom’s economy grew in early 2024 as households spent more and saved less ahead of new tax increases. But since April, the outlook has worsened with falling employment, weaker retail sales, and declining exports to the United States.

In emerging markets, Mexico saw a sharp rise in cargo thefts, which climbed to over 24,000 incidents in 2024. Although the number is lower in absolute terms than in the United States and Europe, Mexico ranks worst globally when theft is measured relative to the size of its economy.

Poland added a surprise twist by cutting interest rates after just a one-month pause, even as officials insisted this move was not the start of a longer easing cycle. Tanzania also lowered borrowing costs, while Ethiopia and the Bank of Central African States kept theirs unchanged.

Altogether, the latest figures show an uneven global recovery marked by strong hiring in the United States, persistent weakness in Asia’s factories, and uncertainty in Europe. Central banks worldwide now face a delicate balancing act as they weigh the need to support growth against the risks of reigniting inflation.