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Reopening U.S. economy fuels inflation, labor market recovery
  + stars: | 2021-06-10 | by ( Lucia Mutikani | ) www.reuters.com + 0.00   time to read: +6 min
May's inflation drivers appear to be temporary, fitting in with Federal Reserve Chair Jerome Powell's repeated assertion that higher inflation will be transitory. "Areas not impacted by the pandemic are moderating the CPI rise. In another report on Thursday, the Labor Department said initial claims for state unemployment benefits fell 9,000 a seasonally adjusted 376,000 for the week ended June 5. Though layoffs are subsiding, claims remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market. At least 15.3 million people were on unemployment benefits under all programs during the week ended May 22.
Persons: Jerome Powell's, Chris Low, Britni Mann, Chris Aluka Berry Read, Charlie Ripley Organizations: COVID, Federal, FHN, Reuters, CPI, REUTERS, Fed, Allianz Investment Management, Treasury, Employers, Labor Department, Thomson Locations: New York, Roswell , Georgia, U.S, California, Pennsylvania, Florida, Texas
May's inflation drivers appear to be temporary, fitting in with Federal Reserve Chair Jerome Powell's repeated assertion that higher inflation will be transitory. Food prices rose 0.4%, but gasoline declined for a second straight month. In another report on Thursday, the Labor Department said initial claims for state unemployment benefits fell 9,000 to a seasonally adjusted 376,000 for the week ended June 5. Though layoffs are subsiding, claims remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market. At least 15.3 million people were on unemployment benefits under all programs during the week ended May 22.
Persons: Jerome Powell's, Chris Low, Britni Mann, Chris Aluka Berry Read, , Charlie Ripley, Isfar Munir Organizations: Labor Department, COVID, Federal, FHN, Reuters, CPI, REUTERS, Fed, Allianz Investment Management, Treasury, Employers, Citigroup, Thomson Locations: New York, Roswell , Georgia, U.S, California, Pennsylvania, Florida, Texas, rehiring
U.S. job growth picks up; wages increase solidly
  + stars: | 2021-06-04 | by ( Lucia Mutikani | ) www.reuters.com + 0.00   time to read: +4 min
There has been handwringing among some economists and investors that growth was stagnating at a time when inflation was rising. “There would have been many more hires if employers could find more people.”Nonfarm payrolls increased by 559,000 jobs last month. UNEMPLOYMENT RATE FALLSWith a record 8.1 million jobs to fill, employers are raising wages. The unemployment rate fell to 5.8% from 6.1% in April. The jobless rate has been understated by people misclassifying themselves as being “employed but absent from work.” Without this problem, the unemployment rate would have been 6.1%.
Persons: Amira Karaoud, , Chris Low, Jerome Powell Organizations: WASHINGTON, REUTERS, Labor, FHN, Reuters, COVID, U.S . Centers for Disease Control, Government, Treasury, Fed Locations: Louisville, U.S, COVID, New York
Growth is being supported by vaccinations against COVID-19, massive fiscal stimulus and the Federal Reserve’s ultra-easy monetary policy stance. “There would have been many more hires if employers could find more people.”Nonfarm payrolls increased by 559,000 jobs last month. Data for April was revised higher to show payrolls rising by 278,000 jobs instead of 266,000 as previously reported. The unemployment rate fell to 5.8% from 6.1% in April. The jobless rate has been understated by people misclassifying themselves as being “employed but absent from work.” Without this problem, the unemployment rate would have been 6.1%.
Persons: April’s nonfarm, , Chris Low, Marty Walsh, jobseeking, Walsh, Amira Karaoud Stocks, Jerome Powell, Jim O’Sullivan, Charlie Ripley Organizations: WASHINGTON, Labor, COVID, Federal, FHN, Reuters, U.S . Centers for Disease Control, Government, REUTERS, Treasury, Fed, Securities, Manufacturing, Allianz Investment Management Locations: COVID, New York, America, Louisville, U.S
April’s nonfarm payrolls count, which delivered about a quarter of the new jobs economists had forecast, caused handwringing among some analysts and investors that growth was stagnating at a time when inflation was rising. “There would have been many more hires if employers could find more people.”Nonfarm payrolls increased by 559,000 jobs last month after rising 278,000 in April. That left employment about 7.6 million jobs below its peak in February 2020. Graphic: Net change in jobs since Feb. 2020 -WILLING WORKERS SCARCEBut labor shortages could remain a fixture. Graphic: Jobs by industry -The unemployment rate fell to 5.8% from 6.1% in April.
Persons: April’s nonfarm, , Chris Low, Marty Walsh, Walsh, ” Stocks, Amira Karaoud, Jerome Powell, Powell, Kevin Cummins Organizations: WASHINGTON, Labor, Federal, FHN, Reuters, Government, Treasury, Chamber of Commerce, REUTERS, Fed, NatWest Markets, Manufacturing Locations: COVID, New York, America, U.S, Louisville, Stamford , Connecticut
There is, however, no consensus that the generous unemployment benefits are keeping people home. These so-called core capital goods orders increased 1.6% in March. Shipments of core capital goods gained 0.9% after rising 1.5% in March. Core capital goods shipments are used to calculate equipment spending in the GDP measurement. (Graphic: Core capital goods, )With households sitting on at least $2.3 trillion in excess savings, demand booming, inventories low and profits rebounding, businesses are likely to continue investing in equipment to boost production, supporting manufacturing.
Persons: Bryan Woolston, , Scott Hoyt, , Daniel Silver, Jay Bryson, Chris Low Organizations: WASHINGTON, Kentucky, Center, REUTERS, Labor Department, Reuters, COVID, Treasury, Commerce Department, Commerce, FHN Locations: Frankfort , Kentucky, U.S, West Chester , Pennsylvania, Washington, Florida, New Jersey, United States, Texas, Wells, Charlotte , North Carolina, New York
The breakeven rate on 10-year Treasury inflation-protected securities, or TIPS, fell to a session low of 2.44% after the auction of $13 billion in 10-year TIPS securities. The yield on benchmark 10-year Treasury notes fell 5.1 basis points to 1.632%. The yield on the 30-year Treasury bond was down 4.7 basis points to 2.340%. The 10-year TIPS breakeven rate was last at 2.457%, indicating the market sees inflation averaging just under 2.5% a year for the next decade. 2-year dollar swap 9.75 -0.25 spread U.S. 3-year dollar swap 11.75 0.50 spread U.S. 5-year dollar swap 8.75 1.25 spread U.S. 10-year dollar swap -3.00 1.00 spread U.S. 30-year dollar swap -30.00 1.75 spread (Reporting by Herbert Lash; editing by Barbara Lewis, Kirsten Donovan and Jonathan Oatis)
Persons: Herbert Lash NEW, Jim Vogel, Vogel, Steven Ricchiuto, Bond, Herbert Lash, Barbara Lewis, Kirsten Donovan, Jonathan Oatis Organizations: FHN, Herbert Lash NEW YORK, Treasury, Philadelphia Federal Reserve Bank, Mizuho Securities USA, Labor Department Locations: U.S, New York
Bottlenecks in the supply chain, which led to a record jump in prices of used cars and trucks last month, were expected to ease. “We have the capacity to produce this stuff, we simply need time to get things back on line.”The consumer price index jumped 0.8% last month, the largest gain since June 2009. It has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average. Excluding the volatile food and energy components, the CPI soared 0.9% last month, the largest gain since April 1982. “Put together with potentially higher wage inflation, higher inflation may be stickier than the Fed expects,” said David Kelly, chief global strategist at JPMorgan Asset Management in New York.
Persons: Paula Jarvis, Lucy Nicholson, Jerome Powell, , Robert Barbera, Johns, Chris Low, Richard Clarida, , David Kelly Organizations: WASHINGTON, REUTERS, Labor Department, Johns Hopkins University’s Center, Financial Economics, Colonial Pipeline, Reuters, Treasury, FHN, U.S, Consumers, Fed, Asset Management Locations: Los, Santa Monica , California, U.S, Florida, Virginia, New York, United States
“Manufacturing is struggling to keep up with roaring demand,” said Will Compernolle, a senior economist at FHN Financial in New York. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Manufacturers also complained about steel prices, which makers of fabricated metal products described as “crazy high.” Imported steel prices have been boosted by tariffs imposed by former President Donald Trump to protect domestic industries from what he said was unfair competition. “Yet unlike in 2008, demand is far from wavering,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. The survey’s manufacturing employment gauge fell to 55.1 after shooting up to 59.6 in March, which was the highest reading since February 2018.
Persons: Timothy Aeppel, , Will Compernolle, Jerome Powell, Joel Naroff, Donald Trump, “ it’s, Tim Quinlan, nonfarm payrolls Organizations: WASHINGTON, COVID, REUTERS, Institute for Supply Management, FHN, Reuters, Naroff, Treasury, PMI, Manufacturers, Ford Motor, Technology, Apple, Companies, Commerce Department Locations: Beaver Dam , Wisconsin, U.S, New York, Holland , Pennsylvania, Wells, Charlotte , North Carolina
"There is little relationship between the effective corporate tax rate and changes in real business equipment spending. These so-called core capital goods orders fell 0.8% in February after bitterly cold temperatures gripped large parts of the country. STRONG GROWTHIn March, core capital goods orders were boosted by machinery, primary and fabricated metal products, as well as computers and electronic products. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. Based on the latest data, economists are forecasting strong business spending on equipment in the first quarter.
Persons: Lucy Nicholson, Joe Biden's, Economists, Donald Trump's, Ryan Sweet, Biden, Conrad DeQuadros, Will Compernolle Organizations: REUTERS, Commerce Department, Monday, U.S, Congress, Wednesday, Trump, Biden, Treasury, Brean, FHN, Boeing, Thomson Locations: Port of Los Angeles , California, U.S, West Chester , Pennsylvania, New York, Indonesia, Ethiopia
Economists polled by Reuters had forecast starts would rise to a rate of 1.613 million units in March. Housing supply has been insufficient, with the inventory of previously-owned homes at record lows. Housing completions accelerated 16.6% to a rate of 1.580 million units last month, the highest since March 2007. Realtors estimate that single-family housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to close the inventory gap. The stock of housing under construction rose 0.8% to a rate of 1.306 million units, the highest since September 2006.
Persons: homebuilding, Mike Blake, , , Robert Frick, Homebuilding, Doug Duncan, Fannie, “ Homebuilders, Jerome Powell, Chris Low Organizations: WASHINGTON, REUTERS, Commerce Department, Navy Federal Credit Union, Housing, Reuters, Dow Jones, Treasury, National Association of Home Builders, Builders, University of Michigan, Economists, Institute for Supply Management, FHN, Realtors Locations: Carlsbad , California, Vienna , Virginia, Texas, Northeast, Midwest, Fannie Mae, Washington, West Coast, Canada, New York
Federal Reserve Chair Jerome Powell and many economists view higher inflation as transitory, with supply chains expected to adapt and become more efficient. A 9.1% surge in gasoline prices accounted for nearly half of the increase in the CPI. UNDERLYING INFLATION FIRMINGExcluding the volatile food and energy components, the CPI increased 0.3% after nudging up 0.1% in February. Used cars and trucks prices increased a solid 0.5%, but the cost new cars was unchanged for a second straight month. The core CPI increased 1.6% on a year-on-year basis after rising 1.3% in February.
Persons: Jerome Powell, , Chris Low, subsiding, James Knightley, David Berson Organizations: WASHINGTON, REUTERS, Labor Department, FHN, CPI, Reuters, Treasury, Consumers, Fed, PPI, JPMorgan, ING, Nationwide Locations: Manhattan, New York City , New York, U.S, New York, United States, Columbus , Ohio
The best first two months of employment growth of any administration in history suggested the labor market has finally turned the corner. President Joe Biden welcomed the job growth spurt. Still, employment remains 8.4 million jobs below its peak in February 2020. At the current pace, many believe the more than 22 million jobs lost during the pandemic could be recouped by the end of next year. The economy added 1.6 million jobs in the first quarter.
Persons: Joe Biden, ” Biden, , Nonfarm payrolls, , Chris Low, payrolls, Carlo Allegri, Michael Feroli, Sarah House Organizations: WASHINGTON, Labor, Reuters, Federal, FHN, Manufacturers, Public, U.S . Centers for Disease Control, CDC, Biden, Treasury, REUTERS, JPMorgan, Wells, Wells Fargo Securities Locations: U.S, New York, United States, Manhattan, New York City , New York, Wells Fargo, Charlotte , North Carolina
The labor market and economy are also being supported by the White House’s massive $1.9 trillion pandemic relief package. It has a very poor track record of predicting the private payrolls count in the government’s more comprehensive, and closely watched employment report because of methodology differences. Recent reports have pointed to rapidly improving labor market conditions. Economists are hopeful that the labor market has turned the corner after shedding 306,000 jobs in December. While the labor market is regaining its footing, the housing market appears to be stumbling as surging prices amid tight supply and rising mortgage rates reduce affordability.
Persons: Jessica Rinaldi, , Chris Low, payrolls, nonfarm payrolls, , Michael Pearce, Raphael Bostic, Freddie Mac, Nancy Vanden Houten Organizations: WASHINGTON, COVID, REUTERS, UNITED, ADP, , FHN, Reuters, Moody’s, Treasury, Capital Economics, Atlanta Federal Reserve, National Association of Realtors, Mortgage, Association, Oxford Economics Locations: Flushing , New York, New York, U.S
The plunge in nonfarm payrolls reported by the Labor Department on Friday was concentrated in the coronavirus-sensitive leisure and hospitality sector, which lost nearly half a million jobs. But with other industries including retail, manufacturing and construction performing better, the economy is unlikely to tip back into recession. The economy has recovered 12.4 million of the 22.2 million jobs lost during the pandemic. The leisure and hospitality sector lost 498,000 jobs last month, with employment at bars and restaurants tumbling 372,000, accounting for three quarters of the drop. Restaurants and bars in many states, including New York and California, were shut during the holidays to slow the spread of the virus.
Persons: nonfarm payrolls, Joe, Biden, Donald Trump’s, , Chris Low, Carlo Allegri, Stocks, Lydia Boussour, Sarah House Organizations: WASHINGTON, Labor Department, U.S . Senate, U.S . Capitol, Trump, FHN, Reuters, REUTERS, Factories, Treasury, Oxford Economics, , Wells, Wells Fargo Securities, U.S . House Locations: U.S, nonfarm, New York, COVID, United States, California, Manhattan, New York City , New York, Wells Fargo, Charlotte , North Carolina, Georgia
U.S. economy losing speed as year winds down
  + stars: | 2020-12-23 | by ( Lucia Mutikani | ) www.reuters.com + 0.00   time to read: +6 min
Other data on Wednesday showed consumer spending dropping in November for the first time since the recovery from the coronavirus recession started in May. Initial claims for state unemployment benefits fell 89,000 to a seasonally adjusted 803,000 for the week ended Dec. 19, the Labor Department said. State and local governments have re-imposed restrictions on businesses, undercutting consumer spending and unleashing a fresh round of layoffs. With consumer spending weak, inflation remained muted. Still, business investment could blunt some of the impact of slowing consumer spending and keep the economy on a moderate growth path this quarter.
Persons: Rose Carter, Bryan Woolston, , Chris Low, Donald Trump, Gus Faucher, Rubeela Farooqi Organizations: WASHINGTON, Kentucky Labor, REUTERS, FHN, Labor Department, Reuters, PNC Financial, Treasury, Commerce Department, Consumers, Federal Locations: Lexington, Frankfort , Kentucky, U.S, New York, United States, Pittsburgh , Pennsylvania, coronavirus, White Plains , New York
WASHINGTON (Reuters) - U.S. consumer spending rose more than expected in September, but decreasing benefits for millions of unemployed Americans, cooling temperatures and a resurgence in COVID-19 cases across the nation could crimp spending in the fourth quarter. Economists polled by Reuters had forecast consumer spending rising 1% in September. Still, consumer spending remains below its level at the start of the year, held back by outlays on services like air travel and hotel accommodation. A jaw-dropping 40.7% pace of growth in consumer spending accounted for 76.3% to the bounce back in GDP. Despite the stronger-than-expected jump in consumer spending last month, inflation remained benign.
Persons: Taylor, Brian Snyder, , Gus Faucher, Chris Low, Sarah House Organizations: WASHINGTON, REUTERS, Commerce Department, Federal Reserve, PNC Financial, Reuters, Consumers, Treasury, FHN, Labor Department, Wells, Wells Fargo Securities, WASHINGTON (Reuters), Massachusetts, REUTERS/Brian Snyder, PNC Financial in Pittsburgh, Pennsylvania, FHN Financial in New York, Wells Fargo Securities in Charlotte, North Carolina Locations: Boston , Massachusetts, U.S, Pittsburgh , Pennsylvania, New York, Wells Fargo, Charlotte , North Carolina, Boston
Total: 17