Economic and jobs news thread

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On Friday, August 20, 2022, the market dropped: https://www.morganstanley.com/content/m ... e-20220819

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Durable goods orders unexpectedly stall in July, core figure up more than expected

Aug. 24, 2022 8:31 AM ET By: Liz Kiesche, SA News Editor

-- July Durable Goods Orders: 0.0% to $273.5B vs. +0.6% expected and +2.2% prior (revised from +1.9%).

-- Durable goods orders in July fell less than $0.1B, or were virtually unchanged, from the prior month. That follows four straight months of increases.

-- Core durable goods: +0.3% vs. +0.2% expected and +0.3% prior (unchanged).

-- Durable goods, excluding defense: +1.2% vs. +0.7% in June (revised from +0.4%).

-- Non-defense orders, excluding aircraft: +0.4% vs. +0.3% expected and +0.9% prior (revised from +0.5%).

-- Shipments of manufactured durable goods, up 14 of the last 15 months, rose 0.4% to $270.5B. That's after a 0.3% increase in June. -- Transportation equipment, up nine of the last 10 months, drove the increase, rising 1.1% to $86.3B.

-- Last week (Aug. 16), Industrial production rose more than expected in July

Read more: https://seekingalpha.com/news/3876162-d ... ll-in-july

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'All of Us Are Paying the Price' as Corporate Profits Surge to Record-High $2 Trillion
by Jake Johnson
August 26, 2022

Introduction:

(Common Dreams) Federal data published Thursday shows that nonfinancial corporate profits in the U.S. surged to an all-time record of $2 trillion in the second quarter of 2022 as companies continued jacking up prices, pushing inflation to a 40-year high to the detriment of workers and consumers.

According to figures released by the Commerce Department's Bureau of Economic Analysis (BEA), corporate profit margins over the past three months were the widest they've been since the 1950s as ongoing price hikes pad the bottom lines of large businesses—and eat into the paychecks of employees.
"We can argue until the cows come home about the cause of inflation," Chris Becker, senior economist at the Groundwork Collaborative, wrote in response to the new data. "But we can't lose sight of the basic moral point that it is outrageous that corporations are seeing skyrocketing profits while purchasing power for so many American households is declining."

Bloomberg noted Thursday that "with household budgets squeezed by the rising cost of living, some firms have been able to offset any slip in demand by charging more to the customers they've retained."

"Across the economy, adjusted pretax corporate profits increased 6.1% in the April-to-June period from the prior quarter—the fastest pace in a year—after falling 2.2% in the first three months of the year," the outlet continued. "Profits are up 8.1% from a year earlier."

Read more here: https://www.commondreams.org/news/2022 ... -trillion

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Fed Chief Powell: Bringing Down Inflation Will Require Economic Pain
by Neil Irwin and Courtenay Brown
August 26, 2022

Introduction:

(Axios) Bringing down inflation will require some economic pain, Federal Reserve chair Jerome Powell said on Friday in a tough-talking speech that signals the Fed is nowhere near relenting on interest rate increases.

Why it matters: In a much-awaited address, Powell was blunt about the likelihood that bringing down inflation will come at the expense of the solid labor market that's been beneficial to workers and softer business conditions. But he indicated the Fed does not intend to reverse course and cut rates just because of such softening.

Driving the news: In a much-awaited speech before leading economists gathered in Jackson Hole, Wyoming, on Friday, Powell was uncommonly succinct and direct, aiming to convey nothing but resolve in the central bank's efforts to bring down inflation.

What they're saying: "Reducing inflation is likely to require a sustained period of below-trend growth," Powell said, according to a prepared text. "Moreover, there will very likely be some softening of labor market conditions."

• "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

Read more here: https://www.axios.com/2022/08/26/fed-p ... inflation

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Inflation eased to 6.3 percent

https://www.yahoo.com/news/inflation-ea ... 14949.html

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Inflation falls for first time in more than two years, key U.S. gauge shows, due to sinking gas pric
Source: Market Watch

prices

The numbers: A key gauge of U.S. inflation fell 0.1% in July thanks to tumbling gasoline prices, marking the first decline in more than two years and giving Americans some relief from a rapidly rising cost of living.

The drop in the so-called personal-consumption price index was the first since April 2020, when the U.S. economy was locked down after the initial outbreak of the coronavirus.

Economists polled by The Wall Street Journal had predicted no change in July.

A narrower measure of inflation that omits volatile food and energy costs, known as the core PCE, edged up 0.1% . That was below Wall Street’s 0.2% forecast.

Read more: https://www.marketwatch.com/story/infla ... 1661517617

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Asian Shares Slide on Wall Street Drop that Ended Last Week
August 29, 2022

Introduction:

(AP via the Asahi Shimbun) Asian shares declined Monday after the head of the U.S. Federal Reserve indicated high interest rates will continue for some time to curb inflation.

The plunge in early trading in Asia paralleled the drop on Wall Street, where the Dow Jones Industrial Average ended the week sinking more than 1,000 points. A slowdown in the U.S. is damaging to Asia’s export-reliant economies.

The message from Federal Reserve Chair Jerome Powell in a speech Friday had been expected, though some had wished for words that weren't quite so clear.

“The market apparently was looking for something a little more neutral. After all the talk of a ‘pause’ and ‘pivot’, none of which ever made any sense with a Fed that has said several times it will keep hiking rates even if it means some economic pain, we are back to square one with a Fed outlook to keep tightening,” said Clifford Bennett, chief economist at ACY Securities.

“The Fed was always going to keep raising rates aggressively, but the market decided to price in a slowing in hikes, and even a reversal.”

The article goes on to give further detail in the drop in both Asian and U.S. markets. It also briefly reports on a drop in Chinese industrial profits.

Read more here: https://www.asahi.com/ajw/articles/14705748

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Job vacancies rose in July, dashing Fed hopes for cooling
Source: AP by way of MSN

The number of open jobs in the United States rose in July after three months of declines, a sign that employers are still urgently seeking workers despite a weakening economy and high inflation.

The increase that the government reported Tuesday will be a disappointment for Federal Reserve officials, who are seeking to cool hiring and the economy by raising short-term interest rates to try to slow borrowing and spending, which tend to fuel inflation. Fed officials hope that their policies will serve primarily to reduce job openings and spare workers the pain of widespread layoffs and higher unemployment.

There were 11.2 million open jobs available on the last day of July — nearly two jobs, on average, for every unemployed person — up from 11 million in June. June's figure was also revised sharply higher.

"The Fed has made very little progress in terms of narrowing the gap between labor supply and demand," Aneta Markowska, chief economist at investment bank Jefferies, wrote in a research note.

Read more: https://www.msn.com/en-us/money/markets ... r-AA11hlFN

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Revisions confirm steep decline in U.S. productivity in second quarter
Reuters

WASHINGTON, Sept 1 (Reuters) - U.S. worker productivity plunged in the second quarter, leading to the largest year-on-year decline on record, the government confirmed on Thursday, keeping upward pressure on labor costs.

Nonfarm productivity, which measures hourly output per worker, contracted at a 4.1% annualized rate last quarter, the Labor Department said. That was revised up from the previously reported 4.6% pace of contraction reported last month. Productivity tumbled at a 7.4% rate in the first quarter. ... Economists polled by Reuters had expected that pace of decline in productivity would be revised to 4.5%.

Productivity fell at 2.4% rate from a year ago, instead of the 2.5% pace estimated last month. It was still the biggest year-on-year decline since the government started tracking the series in the first quarter of 1948.

The decline in productivity, against the backdrop of fairly strong job growth, is likely unsustainable. That has made economists expect that hiring will slow down in the coming months. Job growth averaged about 461,300 per month in the first half of the year and has outperformed the overall economy.

{snip}

Read more: https://www.reuters.com/markets/us/revi ... 022-09-01/

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Private payrolls grew by just 132,000 in August, ADP says in reworked jobs report

PUBLISHED WED, AUG 31 2022 * 8:16 AM EDT * UPDATED 37 MIN AGO


KEY POINTS

-- Private payrolls grew by just 132,000 for the month, a deceleration from the 268,000 gain in July, ADP said in its monthly payroll report.
-- August's numbers add to the inflation worries, as the firm reported annual pay up 7.6% for the month.

Companies sharply slowed the pace of hiring in August amid growing fears of an economic slowdown, according to payroll processing company ADP. ... Private payrolls grew by just 132,000 for the month, a deceleration from the 268,000 gain in July, the firm said in its monthly payroll report. ... The Dow Jones estimate for the ADP count was 300,000.

"Our data suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy's conflicting signals," said ADP's chief economist, Nela Richardson. "We could be at an inflection point, from super-charged job gains to something more normal."

August payroll numbers are notoriously volatile. ADP's release also comes at an uncertain time for a U.S. economy which saw negative growth for the first half of 2022 amid the highest inflation the nation has seen since the early 1980s. The more closely watched nonfarm payrolls report from the Bureau of Labor Statistics comes out Friday and is expected to show an increase of 318,000.

The ADP report had been on public hiatus through the latter part of the summer as the firm adjusted methodology and entered into a partnership with the Stanford Digital Economy Lab. (1) ... While much of the changes are technical in nature, ADP’s count differs in how it accounts for issues such as weather and natural disasters. The company also differs from the BLS in that ADP’s count includes any employees active in the company, while the BLS measures only those who have been paid that month.

{snip}

(1) https://adpemploymentreport.com/common/ ... Detail.pdf

Read more: https://www.cnbc.com/2022/08/31/adp-job ... ugust.html

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August jobs report: U.S. payrolls grew by 315,000 last month
Source: Yahoo! Finance

The U.S. labor market grew as expected in August as more people entering the workforce pushed the unemployment rate higher last month. Here are the highlights from the Labor Department's monthly jobs report released Friday, compared to consensus estimates from Bloomberg.

Non-farm payrolls: 315,000 vs. +298,000 expected

Unemployment rate: 3.7% vs. 3.5% expected

Average hourly earnings, month-over-month: +0.3% vs. +0.4% expected

Average hourly earnings, year-over-year: +5.2% vs. +5.3% expected



The labor force participation rate in August also registered a notable uptick, to 62.4% from 62.1% the prior month, matching the highest level since March 2020.

Friday's report showed a modest revision to July's payroll growth, with the BLS now estimating 526,000 jobs were created last month, down from the 528,000 previously reported. Between revisions to June and July's figures, there were 107,000 fewer jobs created over those months than initially estimated. Still, job gains over the last three months have averaged 378,000. In 2019, average monthly job gains stood at 164,000.

Read more: https://finance.yahoo.com/news/august-j ... 21393.html

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Eurozone Jobless Rate Continues to Fall
by Gabriel Tynes
September 1, 2022

Introduction:

(Courthouse News) — Unemployment in the 19-nation eurozone still exceeds that of the larger European Union, but the rate fell slightly in July to 6.6%, according to data released Thursday by the EU's statistics agency.

Notably, it’s a reduction of a whole percentage point from the same time in 2021 and represents some 1.5 million employees that have returned to the workforce in the past year.

The unemployment rate in the 27-nation EU has similarly decreased, from 6.9% in July 2021 to 6% one year later, according to the Eurostat report. Meanwhile, long-term data indicates both the EU and the eurozone, also known as the euro area, have some of the strongest employment numbers in nearly 15 years. Unemployment peaked above 11.5% in 2013, but steadily declined each year thereafter until a spike during the beginning of the Covid-19 pandemic.

Further extract:

Geographically, Spain is experiencing the highest unemployment rate in the eurozone at 12.6% in July 2022. At 11.4%, Greece is the only other country with a double-digit rate. The next highest rate is in Cyprus, with a flat 8%.

On the other hand, the Czech Republic is enjoying the lowest unemployment rate in the eurozone with 2.3%. Within a single percentage point behind are Poland (2.6%) Germany and Malta (2.9%), and Norway (3.1%).

Read more here: https://www.courthousenews.com/eurozon ... -to-fall/

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Women Workers Hit Post-COVID Jobs Milestone
by Courtenay Brown
September 2, 2022

Introduction:

(Axios) Women workers hit a milestone last month: The proportion of employed prime-aged women (that is, between the ages of 25-54) is finally above the level seen before the pandemic.

By the numbers: Labor force participation rate in this cohort ticked up last month by a whopping 0.8 percentage points.

• Julia Coronado, founder of MacroPolicy Perspectives, suspects it could be tied to schools back-in-session, per a tweet.

What to watch: Men haven't notched the same feat. The employment-population ratio for prime-aged men is roughly 0.7 percentage points below the February 2020 level.

See graph here: https://www.axios.com/2022/09/02/women ... milestone

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I have to admit that prior to today I was not familiar with the ISM manufacturing index, also known as the purchasing managers' index (PMI).

(It) is a monthly indicator of U.S. economic activity based on a survey of purchasing managers at more than 300 manufacturing firms. It is considered to be a key indicator of the state of the U.S. economy.

Formally called the Manufacturing ISM Report on Business, the survey is conducted by the Institute for Supply Management (ISM)...
...
The ISM manufacturing index is a composite index that gives equal weighting to new orders, production, employment, supplier deliveries, and inventories. Each factor is seasonally adjusted.

An index of more than 50 indicates an expansion in the manufacturing segment of the economy in comparison with the previous month while a reading of 50 indicates no change and a reading below 50 suggests a contraction of the manufacturing sector.

Source: https://www.investopedia.com/terms/i/ism-mfg.asp

The ISM Manufacturing PMI was steady at 52.8 in August of 2022, the same as in July, and close to 53 in June. Figures beat market forecasts of 52, but still pointed to low levels of factory growth not seen since June 2020. New orders returned to expansion (51.3 vs 48), supplier deliveries remain at appropriate tension levels (55.1 vs 55.2) and prices softened again (52.5 vs 60), reflecting movement toward supply/demand balance. Meanwhile, employment rebounded (54.2 vs 49.9), with few indications of layoffs, hiring freezes or head-count reductions through attrition. On the other hand, production slowed (50.4 vs 53.5). "Sentiment remained optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to express unease about a softening economy, with 18 percent of comments noting concern about order book contraction. Twelve percent reflect growing worries about total supply chain inventory", Timothy Fiore, Chair of the ISM said.

Source: https://tradingeconomics.com/united-st ... onfidence

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Yen Plummets to 24-year Low of 140 Against the U.S. Dollar
by Yuki Kubota and Kyosuke Yamamoto
September 2, 2022

Introduction:

(The Asahi ShimbunThe Japanese yen plunged to its lowest level in 24 years in New York on Sept. 1, trading at 140 against the U.S. dollar amid speculation of another interest rate hike by the U.S. Federal Reserve Board.

The value of the Japanese currency has fallen by 25 yen against the greenback over the past six months as the Bank of Japan maintains its monetary easing policy to shore up the economy, while the Fed has been raising interest rates since March to curb record high levels of inflation.

Many market players initially expected the Fed would ease up on interest rate hikes due to fears of an economic downturn.

But senior Fed officials have indicated since the end of last week that they would prioritize raising interest rates to counter inflation. Multiple statistics released Sept. 1 showed the U.S. economy remains robust, fueling speculation the Fed would opt for another interest rate hike.

These factors prompted traders to sell yen and buy U.S. dollars, pushing the value of the Japanese currency to its lowest level since 1998, when Japan was hit by a financial crisis following the collapse some years earlier of the asset-inflated bubble economy.

Source: https://www.asahi.com/ajw/articles/14709330

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Inflation Showed Signs of Easing in Several Industries in August
Source: Wall Street Journal

U.S. consumer-price inflation showed signs of moderating in August for the second straight month, though the decrease was uneven across sectors and it remains unclear whether the slowdown will continue.

Gasoline prices fell sharply in August, airfares dropped and used cars and hotels ebbed, while rent increases also gave hints of slowing, according to private firms that track such data.

Still, food prices continued to soar this past month and prices for a range of goods and services remained much higher than a year earlier, the figures show.

The path of inflation could influence looming decisions by the Federal Reserve about how high to lift interest rates. Inflation could also shape midterm elections as voters assess their pocketbooks.

Read more: https://www.wsj.com/amp/articles/inflat ... 1662888602

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What If We’re Fighting Inflation All Wrong?
by Emily Stewart
September , 2022

Introduction:

(Vox) Inflation is, like, the thing going on in the economy right now. Even for non-economy watchers — which, let’s be honest here, is most people — every time you walk into the gas station or grocery store lately, there really is a sense of, “What in the world is going on?” Since you’re probably paying attention to inflation, that might mean you’re also keeping a bit more of an eye on the Federal Reserve — the government body charged with keeping the economy in check.

The Fed has a dual mandate on the economy (stick with me here), which is maximum employment and price stability. To put it plainly, that means to keep unemployment low while at the same time making sure inflation doesn’t rise too much. And when inflation does go up too much, one of its main policy tools to slow things down is to raise interest rates to make borrowing more expensive to cool off demand, which in turn can increase unemployment. That’s what the Fed did to end runaway inflation in the late 1970s, and while it was successful, it also sucked. The Fed pushed the economy into a recession and pushed unemployment above 10 percent to achieve its goals.

Conclusion:

…my colleagues and I think a legally enforceable right to a job is important, meaning a federal jobs guarantee. Because if some agency — whether it’s a fiscal agency or monetary policy or Congress — thinks we need to reduce inflation by reducing demand, we need some kind of automatic stabilizer [policies that kick in automatically as economic decisions change to stabilize the economy] there to make sure that, at the very least, someone will have some basic job with basic paying benefits at the end of that process. They can’t just unemploy, cause destitution, among people. That legal right to a job is a critical function that should happen.

These problems seem new in this moment, but they are a lot of the same issues that were happening 50 years ago. The interest rate-mongers won that battle then, but they don’t have to win again now.

Read more here: https://www.vox.com/the-goods/23339531 ... est-rates

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Consumer Price Index Summary
September 13, 2022

Introduction:

(U.S. Bureau of Labor Statistics) CONSUMER PRICE INDEX - AUGUST 2022

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in August on a
seasonally adjusted basis after being unchanged in July, the U.S. Bureau of Labor
Statistics reported today. Over the last 12 months, the all items index increased 8.3
percent before seasonal adjustment.

Increases in the shelter, food, and medical care indexes were the largest of many
contributors to the broad-based monthly all items increase. These increases were mostly
offset by a 10.6-percent decline in the gasoline index. The food index continued to rise,
increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The
energy index fell 5.0 percent over the month as the gasoline index declined, but the
electricity and natural gas indexes increased.

The index for all items less food and energy rose 0.6 percent in August, a larger
increase than in July. The indexes for shelter, medical care, household furnishings and
operations, new vehicles, motor vehicle insurance, and education were among those that
increased over the month. There were some indexes that declined in August, including those
for airline fares, communication, and used cars and trucks.

The all items index increased 8.3 percent for the 12 months ending August, a smaller
figure than the 8.5-percent increase for the period ending July. The all items less food
and energy index rose 6.3 percent over the last 12 months. The energy index increased 23.8
percent for the 12 months ending August, a smaller increase than the 32.9-percent increase
for the period ending July. The food index increased 11.4 percent over the last year, the
largest 12-month increase since the period ending May 1979.

Read more here: https://www.bls.gov/news.release/cpi.nr0.htm

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Inflation rose 0.1% in August even with sharp drop in gas prices

PUBLISHED TUE, SEP 13 2022 * 8:31 AM EDT * UPDATED 7 MIN AGO
Jeff Cox

Inflation rose more than expected in August even as gas prices helped give consumers a little bit of a break, the Bureau of Labor Statistics reported Tuesday.

The consumer price index, which tracks a broad swath of goods and services, increased 0.1% for the month and 8.3% over the past year. Excluding volatile food and energy costs, CPI rose 0.6% from July and 6.3% from the same month in 2021.

Economists had been expecting headline inflation to fall 0.1% and core to increase 0.3%, according to Dow Jones estimates. The respective year-over-year estimates were 8% and 6%.

This is breaking news. Please check back here for updates.

Read more: https://www.cnbc.com/2022/09/13/inflati ... rices.html

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Markets were down September 13, 2022: https://image.msmail.morganstanley.com/ ... 219530.pdf

(Morgan Stanley)
What Happened in the Markets?

Following the US CPI report Tuesday morning, US equities deteriorated and rates moved higher across the curve.
By 4pm, the S&P 500 Index closed at 3,933, a 4.3% decline from Monday and the Nasdaq 100 ended the day 5.5% lower.
This was the largest one-day dip since June 11 2020 for the S&P 500, and since March 16 2020 for the Nasdaq 100.
Markets responded negatively following this morning's US Headline CPI report which showed inflation rose 8.3% YoY, above
expectations for 8.0% YoY. Even though the report came in below the 8.5% YoY reading last month, much of the decline
was driven by lower gas prices, with most other major categories ticking up in August vs July.

Following this report, fixed income markets (according to Bloomberg) are pricing in a 100% chance of a 75 basis point hike
and a 35% chance of a 100 basis-point hike at next week's Fed meeting.

For the S&P 500 Index, the pressure was broad-based as all but five of the index's constituents declined on the day and
each of the 11 S&P 500 sectors ended the day lower. Communication Services (-5.6%) and IT (-5.4%) underperformed the
most, while Energy (-2.5%) and Utilities (-2.7%) outperformed but still declined since the close of trading Monday. Year to
date, the S&P 500 Index is down 17.1% while the Nasdaq 100 has fallen 26.3%.

As of the 4pm equity market close, pressure was seen across all asset classes. The 10-year Treasury yield was higher at
3.42% and the 2-year yield rose to 3.75%. WTI oil remained near $87.5 per barrel while gold was lower at $1,703 per ounce.
The US dollar gained 1.4% to 109.9.