Finimize - 🛠 Jobs jumped

What’s going on here?

Data out on Friday showed that the US added more jobs than expected again last month.

What does this mean?

The US economy’s grappling with regional bank woes and a good old-fashioned slump right now – but the jobs market appears to have missed the memo. A whole 253,000 jobs were added last month, leaving the modest prediction of 180,000 in the dust. And sure, some businesses hit the brakes on hiring or showed workers the door, but others were still trying to fill empty office chairs with sweet, sky-high salaries. That’s probably why average hourly wages outpaced April’s expectations – clocking in at 0.5% monthly and 4.4% annually.

Why should I care?

The bigger picture: Chin up.

This may not be the news the Federal Reserve (the Fed) hoped for, especially days after hinting at a pause in interest rate hikes. But let’s look at the bigger picture: data suggests that estimates for previous months were somewhat overblown, meaning the Fed’s efforts might just be cooling the red-hot market slowly but surely. Plus, tighter lending conditions will take time to make themselves felt – and the central bank holding rates at their highest since 2007 is almost destined to leave its mark too. So, while some say the Fed might have to step in again, there’s still a solid chance it can just stay the course.

Zooming out: Matter of life and debt.

The US has a short-term issue on its mind too. See, the nation routinely spends beyond its means, and it issues bonds to make up some of that shortfall. But the spendthrift government’s already hit its borrowing limit – and that’s got it scrambling to raise the so-called “debt ceiling”. If politicians can’t pull that off, Uncle Sam could wind up cash-strapped, jeopardizing millions of jobs and grinding welfare payments and infrastructure projects to a halt, and putting a dent in financial markets too.

What’s going on here?

Airline group IAG upped its profit outlook for the year on Friday, after a high-flying first quarter.

What does this mean?

The first quarter is usually a bumpy ride for IAG and its ilk, who count on lively, jet-setting Easter and summer seasons to balance out the lull in quieter months. But this time IAG bucked that trend, thanks to cheaper fuel and hot demand, helping ticket prices outpace inflation. The outcome: a surprise profit for the owner of British Airways, Iberia, and Vueling – the first time it’s wrapped the first quarter in the black since 2019. And with the quiet season in the rearview, IAG sees a booming period ahead: after all, a staggering 80% of this quarter's projected sales are already booked – and while mojito-sipping tourists will be filling most of those seats, the suited-and-booted crowd’s slowly making a comeback. That had IAG feeling pretty chipper, upping its profit forecast for the whole year.

Why should I care?

Zooming in: Summertime gladness.

IAG's optimism isn’t unique, with fellow European heavyweights Air France-KLM and Lufthansa also celebrating robust results and promising summer forecasts. And tourists need somewhere to snooze and to salve their sunburn, so hotels are winning too: IHG – the owner of Holiday Inn – is a case in point, posting some impressive first-quarter results last week. Just how much the “White Lotus effect” has helped is anyone’s guess, but one thing is clear: inflation can sear and economies might bow, but folks will fly come rain or shine.

The bigger picture: Goodbye, weekend breaks.

The near future’s looking bright, but airlines are confronting a daunting long-term challenge: decarbonization. See, aviation creates 2.5% of global CO2 emissions, and airlines are under pressure to hit net-zero targets by 2050 – which could cost almost $1 trillion. Someone’s going to have to foot that bill, and that might bring the era of low-cost airfares to a close…