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Insight Weekly: Job growth faces hurdles; shale firms sit on cash pile; Africa's lithium future


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Insight Weekly: Job growth faces hurdles; shale firms sit on cash pile; Africa's lithium future

Today is Tuesday, September 13, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.

In this edition, we examine the state of the U.S. labor market. The unemployment rate rose to 3.7% in August from 3.5% in July as more people entered the workforce and job growth moderated. Most economists agree that the unemployment rate will rise by the end of 2022 as the Federal Reserve raises interest rates to tame soaring inflation. S&P Global's IHS Markit expects labor demand to weaken in the coming quarters as companies adjust their workforces in response to sluggish output growth. On the supply side, Market Intelligence forecasts a further decline in the labor force participation rate due to changing demographics after a short-term recovery.

High oil and natural gas prices have increased the cash flows of most U.S. shale producers, leaving many of these companies with hefty amounts of cash and with choices to make. The increase in cash balances could drive M&A activity, with analysts pointing to several recent deals in which drillers bought adjacent operators in the Permian Basin and the Haynesville and Marcellus shales.

Globally significant discoveries tantalizingly close to production highlight sub-Saharan Africa's potential to be a major lithium production hub. Zimbabwe, the Democratic Republic of Congo, Ghana, Namibia and Mali have a combined 4.38 million tonnes in lithium resources, ahead of critical minerals aspirants Canada and Germany, according to U.S. Geological Survey data. However, experts warn of vast infrastructure and sovereign risk challenges for projects and investments in the region.

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IHS Markit is now part of S&P Global.
Written and compiled by Louis Bacani

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