Interest rate rises help slow US jobs growth

Today’s top stories

• Eurozone consumer price inflation fell more than expected to 9.2 per cent in December from 10.1 per cent the previous month. Core inflation, however, which excludes volatile energy, food and fuel prices, rose unexpectedly to 5.2 per cent. Here’s our explainer on why the inflation drop is unlikely to halt rate rises.

• UK ministers announced new anti-strike legislation that would enforce minimum service levels across eight sectors, including the NHS — already stretched by a “twindemic” of Covid and flu cases — in response to a wave of industrial action. Prime minister Rishi Sunak has invited union leaders to talks on Monday.

• Taiwan is seeking investors to help set up its own satellite communications provider, inspired by the use of Elon Musk’s Starlink in the war in Ukraine. The move is part of efforts by Taipei to strengthen itself against a potential assault from China.

For up-to-the-minute news updates, visit our live blog

Good evening.

The growth in US jobs has slowed further as interest rate rises take their effect on the world’s largest economy but is unlikely to deflect the Federal Reserve from its programme of interest rate rises.

Some 223,000 positions were added in December, more than expected but down from November’s 256,000 and far below last February’s peak of 714,000. The unemployment rate also fell more than expected to 3.5 per cent.

Fed policymakers have acknowledged that curbing inflation will require job losses and in turn a higher unemployment rate, which economists predict could eventually top 5.5 per cent as the economy tips into recession.

A number of US companies have announced lay-offs in recent weeks. Amazon yesterday became the latest tech company to rein in costs, announcing plans to cut 18,000 jobs, hitting the company’s Stores unit — which includes its core ecommerce business — and its human resources division. Software group Salesforce said on Wednesday it was culling 10 per cent of its staff.

Separate survey data today showed US services contracting for the first time since May 2020.

Hourly earnings in December nudged up 0.3 per cent but this was less than expected and slower than last month.

In minutes from its last policy meeting published on Wednesday, the Fed said it wanted “more evidence” that inflation was easing before it reconsidered its policy tightening, which has seen rates rise from near zero to just below 4.5 per cent.

Gita Gopinath, second-in-command at the IMF, this week urged the Fed to “stay the course” in its fight against inflation, emphasising concerns about the tightness of the labour market. Separate data on jobless claims yesterday showed new applications still at historically low levels.

Investors gave a broad welcome to the news that jobs and wage growth were slowing, sending US stocks up higher in morning trading in New York.

Need to know: UK and Europe economy

UK companies are cutting investment as interest rates rise, according to a Bank of England survey.

British taxpayers face losses from almost £1bn in potential fraud and error in grants to help companies cope during the pandemic.

Energy suppliers and campaigners in the UK called for a “social tariff” to help people cope with soaring bills as analysts cautioned that wholesale gas prices might not return to “normality” before 2030. The head of Italy’s ENI, one of Europe’s biggest oil and gas companies, called for closer collaboration between Europe and Africa as the EU seeks to replace Russian imports.

German industrial orders fell more than expected in November.

Spain is enjoying a surge in tax revenues after previously underground business activity was forced out of the shadows by the pandemic.

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Need to know: Global economy

China and Hong Kong confirmed plans to reopen their shared border on Sunday after coronavirus restrictions are lifted, albeit with daily limits on crossings. The easing coincides with Beijing dropping entry restrictions for overseas travellers, including scrapping PCR tests on arrival.

Global regulators are set to step up scrutiny of “non-bank financial institutions” such as hedge funds, clearing houses and pension assets after a series of crises.

From peak dollar to not-so-big Tech and the return of political orthodoxy, contributing editor Ruchir Sharma offers his investors’ guide to 2023 in the FT Weekend Essay.

And lest you despair too much of the bleak warnings that are the stock in trade of Disrupted Times, economics editor Chris Giles has some good news: prospects for 2023 are better than you think.

Need to know: business

Shell will pay tax in the UK for the first time in five years thanks to $2.4bn in windfall levies from the EU and UK. In recent years the oil and gas giant has received tax refunds on investments in the North Sea and decommissioning activities, which have been higher than any tax owed.

Tech investors remain cautious about China’s pledge to support its biggest tech companies after bruising regulatory clampdowns.

Profits at Samsung, the world’s biggest memory chipmaker, fell 69 per cent in the fourth quarter as demand slumped in tandem with the slowing global economy.

Some mixed news on prospects for air travel. Europe’s air traffic manager warned of “major” disruption this year as skies become more congested, partly because of the war in Ukraine. Ryanair revised up its earnings forecasts after a bumper festive period, sending its shares up 10 per cent, but Southwest Airlines in the US said an operational meltdown in December would cost it up to $825mn.

UK retailers Next and B&M reported strong December sales, overcoming fears that hard-pressed Britons might shop less this Christmas. Both companies uprated their forecasts. Over in the US, however, home goods chain Bed Bath & Beyond could become one of the country’s largest retail bankruptcies since the start of the pandemic.

Chinese electric-vehicle makers are concerned at the end of government subsidies and semiconductor shortages, even after enjoying a bumper 2022. BYD, the country’s largest electric-car maker, unveiled luxury models to take on western rivals Mercedes and BMW. Tesla meanwhile has cut prices of its electric cars in the country.

Science round up

The surge in coronavirus infections in China has raised concerns that a dangerous new strain could emerge. Read our new Covid-19 variants explainer. Science commentator Anjana Ahuja says 2023 could be Covid’s least predictable year yet.

The UK is set to embark on a series of research projects that will cement its place as a world leader in genomics. They include the world’s largest genetic medicine initiative and a project to read all 3bn letters of a newborn baby’s DNA to detect childhood diseases.

Could this and other projects help realise the UK’s dream of becoming a science superpower or will it remain a low-cost ‘technology sweetie shop’ for the world? Our Big Read examines the substance behind the rhetoric.

Chinese researchers say they have found a way to break online encryption using quantum computers. If correct, it would mean that governments could crack other governments’ secrets. “If it’s true — a big if — it would be a secret like out of the movies, and one of the biggest things ever in computer science,” said one expert.

And finally, here’s a short video unveiling the FT’s Tech Champions of 2022: the companies chosen by our judges to be the best users of technology to meet today’s business challenges.

Some good news

Here’s the latest example of those UK ambitions: ministers have signed a deal with BioNTech for cutting-edge cancer trials involving 10,000 participants. The German Covid-19 vaccine pioneer has been conducting tests of its personalised cancer vaccines since 2012, and now needs to expand their scale to get a product ready for approval by 2030.

Something for the weekend

The FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not have a go with today’s cryptic crossword?

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