US economy added a disappointing 73 000 in July, unemployment rate up to 4.2% and massive downward revisions to prior two months data. US manufacturing lost 11 000 jobs in July after losing 15 000 jobs in June. Significant increased chance of a rate cut in September.

The White House announced a 10% global minimum tariff, with rates of 15% and higher for countries with significant trade surpluses with the US. South Africa with a tariff of 30% is one of the hardest hit, but not the only country with high tariffs, including Canada at 35%.

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US GDP grew by 3.0% q/q in Q2 2025, better than the expected increase of 2.6%. Growth boosted by a massive 30.3% drop in imports. Net exports contributed a substantial 5.0 percentage points to the quarterly growth rate. Consumer spending still positive but a little underwhelming.

SA inflation up at 3.0% in May driven mostly by food and housing. Market expected 3.1%. SA inflation is expected to continue to drift higher in second half of the year, but there is still scope for the Reserve Bank to cut a further 25bps.

US inflation a mixed outcome in June with headline inflation up at 2.7% and core inflation at 2.9%. There is some evidence of tariffs pushing some prices higher, but a lower monthly increase in shelter helped to soften the headline impact.

There are currently 7 568 bills and resolution before the US Congress, but only about 7% will become law. The vast majority of bills that are introduced to the US Congress don’t make it past the Committee stage and are usually introduced to appease a particular constituency.

Interestingly just before the US labour market report was released at 14h30 the market was pricing a 25% chance of the Federal Reserve cutting interest rates by 25bps at the next FOMC meeting on 30 July. This has now fallen to 6.7%.

US employment report better than expected in June with economy adding 147 000 jobs while the unemployment rate strengthened to 4.1% helped by a reduction in the size of the labour force. No cut in US interest rate at the end of July.

Over past 2 months the US ADP report shows a loss of 2000 jobs. The last time ADP indicated job losses over 2 months was during COVID. Increased nervousness about today’s official employment report. ADP suggests companies have become reluctant to add jobs given policy uncertainty.

Fed chair Jerome Powell made it clear at the ECB forum in Portugal today that the Fed would have cut interest rates further if President Trump had not introduced the high import tariffs, which led to concerns about a substantial increase in US inflation.

The US Tax Bill (which has $4.5 trillion in tax cuts and $1.2 trillion in spending cuts) has passed in the senate with a vote of 51 to 50 with vice president Vance casting the deciding vote. Now it goes back to the House of Representative for their second approval.

US Federal Reserve kept interest rates unchanged as expected. But the focus is on the updated dot plot. The Fed appears to have become a little more concerned about weakening growth rather than higher inflation. Fed is expecting to cut rates twice during the remainder of the year.

SA consumer in line with expectations in May at 2.8%, with core inflation unchanged at 3.0%. Only concern is a further large increase in food prices, but overall SA inflation remains well under control.

China has announced that all African countries will be able to export to China duty free across all categories of goods. Smart move!.

SA GDP grew 0.1%q/q in Q1 2025 vs expectations for a decline -0.1%. Not good at all, but better than a negative number. Declining sectors include mining, manufacturing and construction. Positives were trade, finance. Over past year GDP grew by 0.8% vs population growth of 1.4%.

It will interesting to see if the US tariffs are allowed to remain in place while the appeal is underway. If not the government will probably have to start to refund importers. Trump has other ways to increase tariffs, but not as effective.

SA headline inflation slightly higher than expected at 2.8% due to sharp increase in food prices. This is despite a decrease in the fuel price. In contrast core inflation slightly lower than expected at 3.0%. Overall SA inflation remains well under control. Rate cut possible.

Moody’s downgraded the US credit rating from Aaa to Aa1 due to its high level of government debt and rising interest cost. Fitch and S&P have already downgraded the US to below the AAA credit rating.

Changes to US/China import tariff from 145% to 30% reduces the negative economic impact of all US tariffs by 40%, which is substantial. In contrast the US-UK trade deal has only a minor impact. Overall the current level of US tariffs is expected to push US inflation up by 1.5%.

No change in US interest rates, which remains in a range of 4.25% to 4.50%. Fed highlighted increased economic uncertainty, both in terms of inflation as well as growth. US interest rates on hold for a while longer, but the Fed will cut if the economy weakness meaningfully.