Economics & Growth | Equities | US
Charts of the Week: Hot US Labour Market, Peaking Oil Production, and a Wavering Private Market
- By Matthew Tibble
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- 6 min read
Summary
- With labour demand still growing faster than labour supply, the US labour market remains very tight.
- Oil rig counts implies US oil production has peaked for 2023.
- Equity selloffs have been surprisingly common in 2023.
- Private market activity has fallen in H1, with total vehicles closed down over 50%.
US Labour Market Remains Tighter Than Ever
With labour demand still growing faster than labour supply, the July data continued to indicate a very tight labour market. Unemployment at 3.5%, vs 3.6% expected and 3.6% in June, remained near its post-1970 lows (Chart 1). This is also true for U6, the broader unemployment measure that includes workers marginally attached to the workforce as well as part-time workers for economic reasons.
US Oil Production Has Peaked
Evidence suggests US crude production has peaked for 2023 at 12.7–12.8mn b/d over the last couple of months. For example, the oil rig count is a leading indicator (by 6-8 months) and is sitting around 529, down almost 100 since late last year (Chart 2). Declining production provides OPEC+ with more market power as the US has been the largest source of global supply growth this year.
Equity Selloffs: A Common Occurrence in 2023
Equity selloffs always spark worries about whether this is the start of something worse – but so far last week fits the pattern of other selloffs during the 2023 rally (Chart 3). We expect equities to plateau for now – in other words, no rising tide to lift all boats. Company outlooks are sufficiently mixed that it is difficult to sustain much upward momentum.
Private Market Deal-Making Has Slowed
Private markets are still recovering from the sharp drawdowns in public markets last year, driven by the rapid increase in interest rates. This has resulted in a sharp slowdown in deal-making. Private Equity International finds that fundraising dollars raised by private equity funds globally reached $315bn this year versus almost $400bn this time last year. Further, just 508 vehicles were closed during the first six months, 466 fewer than last year (Chart 4).
