Better-than-expected employment figures capped a strong week for US markets, which had continued to chart into historic high territories in anticipation of the data.
Figures released at the start of Friday were expected to show the US had added 720,000 jobs to its economy – which would represent the sixth consecutive month of growth. The actual growth exceeded this number, at 850,000.
The sector that saw the largest growth in headcount was, perhaps unsurprisingly, leisure and hospitality, which added 343,000 new jobs in the month, suggesting it’s bouncing back after a prolonged, COVID-19-induced period of difficulty.
“Overall, this report signals incremental progress in the pace of job growth, but there’s no sign yet of a shift back into the labour force. The missing millions are still missing, but it’s too soon to see any impact of the early ending to the $300 per week unemployment benefit uplift in a few states,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
He continued: “It’s reasonable to expect a modest shift back into the labour force in July and August as more states cut off the benefit, but when the federal money runs out on September 6, about 70% of unemployed people will still be receiving the uplift.”
US markets, which had been rising all week, generally ended the week on a high as a result of the news. It also encouraged a rise European stocks on the Friday; however this wasn’t enough to fully compensate slight falls seen over the rest of the week, and the FTSE 100 finished the week flat while the STOXX Europe 600 Index finished down slightly.
Part of the worry in Europe has been the spread of the Delta variant of COVID-19. The UK has seen a recent spike in COVID-19 numbers, just as the end of the restrictions (due 19 July) approaches. While these exchanges may have finished the week slightly down, the overall first half of the year has been positive on both sides of the Atlantic. Over the first six months of the year, the FTSE 100 rose 8.57%, while the STOXX Europe 600, S&P 500, Nasdaq and Dow Jones have all experienced double-digit growth since the start of the year.
Speaking about the market improvement in the first half of this year, Darren Johnson, Head of Engagement – Investment Consultancy at St. James’s Place, suggested that markets have responded to the underlying economic improvement that has become more likely since vaccine rollouts began at the end of last year.
“Markets are a leading indicator of where the economy is likely to go. And the economy is likely – we can debate it, but it’s likely – to improve from where it’s been. So, it shouldn’t be a surprise that markets have gone that way,” he said.
He added that many funds which struggled last year have done reasonably well this year. He said: “The funds that struggled last year are the ones that, ultimately, have done the best this year. And that brings us on to the benefits of diversification: it really does show you how quickly things can change without you noticing.”
Last week, it emerged that the level of Income Tax paid by the public each year has doubled in the past 20 years. According to data from HMRC, the figure in the 1999/2000 tax year was £93 billion, while in the 2018/19 tax year (the last one for which data is available) it was £187 billion1.
This increase is partly due to the fact that more people are paying tax: while 27 million people paid Income Tax at the start of the period, almost 32 million people paid at the end.
More precisely, it’s also due to the recent freezing of Income Tax thresholds. As wages go up, but the levels at which people pay tax remains the same, more people have ended up paying higher rates of tax. In this year’s Budget, Income Tax, Capital Gains Tax and Inheritance Tax thresholds were frozen until 2026, in order to help pay for the extra public expenditure brought about by COVID-19.
HMRC also estimates that in this tax year (2021/22), people paying the ‘additional rate’ of Income Tax will be the fastest-growing group. It projects that there will be 440,000 people in this group at the end of the year, representing a 10.3% increase over the 2018/19 tax year.1
These changes highlight the growing need for financial advice. By seeking expert guidance about the latest levels of taxation, and the steps that you can take to take advantage of the various tax reliefs that apply to your circumstances, you can be more confident about your financial wellbeing in the future.
Speak with your Partner to learn more about the various actions that can take you closer towards achieving your financial goals.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
1 Source: HMRC, Income Tax payers by type, 30 June 2021
The average person will work for 11 employers during their working life and a quarter of people will have 14 or more employers1. That’s one of the reasons why financial advice in later life is so important. There are many different ways to create your retirement income using the various different pension types, so speaking to an adviser can help to create a retirement plan that will use them in the most efficient way possible.
1 Source: Meeting future workplace pension challenges: improving transfers and dealing with small pension pots, Department for Work & Pensions, December 2011
“Hairdressing and personal grooming inflation was strong in particular, at an annual rate of 8%, and saw a 29-year high. Pent-up demand, essential need, or recreating the early 1990s David Beckham look, I leave that to others to judge. Further up the supply chain, food input prices were up, and producer input inflation was around a ten-year high. However, these price rises are certainly not universal, and for balance I should note that we also learned last week that Victoria Beckham is reducing the average selling price of her dresses by almost 40%.”
Andrew Bailey, Governor of the Bank of England, gives his take on inflation in a speech at Mansion House last week.