Weekly Briefing - A vital shipping lane stays shut, but hiring holds up

Here is the week in economics, explained without the jargon.

A key shipping route stayed nearly shut

Nearly three months after the conflict began, shipping traffic through the Strait of Hormuz remained at roughly 15% of its normal level. This single waterway normally carries around a fifth of the world’s oil, along with significant volumes of natural gas and fertilizer - so a closure this prolonged has effects that reach well beyond energy prices. Shipping industry leaders gathering for their annual conference this week said most companies were still unwilling to route cargo through the strait without a firmer peace deal in place.

Hiring stayed resilient

Despite months of economic uncertainty, May’s jobs report - released just after this week began - showed a solid gain of 172,000 jobs, well above expectations, with unemployment holding steady and wages up a healthy amount over the past year. A report this strong reduces the near-term likelihood of an interest rate cut, since the Fed generally cuts rates to support a weakening job market, not a strong one.

Two different stories at once

This week captured a genuine split in the economy: a major global supply chain disruption dragging on for months, alongside a domestic labor market that, so far, has kept adding jobs at a healthy pace.

What it means for you

A strong jobs report is good news if you are looking for work, but it also means borrowing costs are less likely to fall soon. The shipping story is the one to watch for any early signs of it affecting prices on store shelves.