REUTERS
"U.S. economy gaining steam as manufacturing forges ahead; shortages still a constraint"
By Lucia Mutikani
December 1, 2021
Summary
* Manufacturing activity picks up in November
* Signs supply constraints easing in a few industries
* Private payrolls increase 534,000
WASHINGTON, Dec 1 (Reuters) - U.S. manufacturing activity picked up in November amid strong demand for goods, keeping inflation high as factories continued to struggle with pandemic-related shortages of raw materials.
Signs that the economy was gathering momentum halfway through the fourth quarter were underscored by other data on Wednesday showing private employers maintained a strong pace of hiring last month.
But there are fears that the Omicron variant of COVID-19 could hurt demand for services as well as keep the unemployed at home, and hold back job growth and the economy.
"Manufacturing should continue to contribute positively to GDP growth over the next year as businesses replenish inventories and supply-chain issues improve," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
"There are risks, including the potential for businesses overbooking orders now and the Omicron variant magnifying price and supply chain issues."
The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 61.1 last month from 60.8 in October.
A reading above 50 indicates expansion in manufacturing, which accounts for 12% of the U.S. economy.
Economists polled by Reuters had forecast the index rising to 61.0.
"The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment, with some indications of slight labor and supplier delivery improvement," said Timothy Fiore, ISM chair of the manufacturing business survey committee.
Global economies' simultaneous recovery from the COVID-19 pandemic, fueled by trillions of dollars in relief money from governments, has strained supply chains, leaving factories waiting longer to receive raw materials.
The Federal Reserve's Beige Book on Wednesday described economic activity as growing at "a modest to moderate pace" during October and early November, but noted that "growth was constrained by supply chain disruptions and labor shortages."
All of the six largest manufacturing industries in the ISM survey, including computer and electronic products as well as transportation equipment, reported moderate to strong growth.
Makers of computer and electronic products said "international component shortages continue to cause delays in completing customer orders."
Transport equipment manufacturers reported "large volume drops due to chip shortage."
Furniture producers said "business is strong but meeting customer demand is difficult due to a shortage of raw materials and labor."
But there are some glimmers of hope.
Prices for steel plate and hot-rolled coil appear to be nearing a plateau, according to manufacturers of fabricated metal products.
Supply of plastic resins is improving, accounts from electrical equipment, appliances and components, as well as plastics and rubber products manufacturers suggested.
The ISM survey's measure of supplier deliveries slipped to 72.2 from 75.6 in October.
A reading above 50% indicates slower deliveries.
The long delivery times kept inflation at the factory gate bubbling.
The survey's measure of prices paid by manufacturers fell to a still-high 82.4 from 85.7 in October.
Factories are easily passing the increased production costs to consumers and there are no signs yet of resistance.
Fed Chair Jerome Powell told lawmakers on Tuesday that "the risk of higher inflation has increased," adding that the U.S. central bank should consider accelerating the pace of winding down its large-scale bond purchases at its next policy meeting in two weeks.
The Fed's preferred inflation measure surged by the most in nearly 31 years on an annual basis in October.
Stocks on Wall Street rebounded after Tuesday's sell-off.
The dollar was steady against a basket of currencies.
Prices for longer-dated U.S. Treasury prices rose.
STRONG ORDERS
The ISM survey's forward-looking new orders sub-index climbed to 61.5 last month from 59.8 in October.
Customer inventories remained depressed.
With demand robust, factories hired more workers.
A measure of manufacturing employment rose to a seven-month high.
Strengthening labor market conditions were reinforced by the ADP National employment report on Wednesday showing private payrolls increased by 534,000 jobs in November after rising 570,000 in October.
That was broadly in line with expectations.
This, combined with consumers' robust perceptions of the labor market last month suggest job growth accelerated further in November.
First-time applications for unemployment benefits declined between mid-October and mid-November.
But a shortage of workers caused by the pandemic is hindering faster job growth.
There were 10.4 million job openings at the end of September.
Workers have remained home even as companies have been boosting wages, school reopened for in-person learning and generous federal government-funded benefits ended.
"Overall, the risk remains that renewed health concerns will keep workers, especially those with caregiving responsibilities, from returning to the labor force, preventing a return to pre-pandemic strength," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
According to a Reuters survey of economists nonfarm payrolls probably increased by 550,000 jobs in November.
The economy created 531,000 jobs in October.
The Labor Department is scheduled to publish its closely watched employment report for November on Friday.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-p ... 021-12-01/
THE ECONOMY
Re: THE ECONOMY
REUTERS
"Fed's Daly says officials may need to start crafting plan for rate increase"
Reuters
December 2, 2021
Dec 2 (Reuters) - As Federal Reserve officials always need to be prepared for various economic scenarios and it might be time to start crafting a plan for raising interest rates to address above target inflation, San Francisco Fed President Mary Daly said on Thursday.
Fed officials might need to start dialing down some of the extra accommodation they're "giving to the economy and start crafting a plan to, at least, you know, think about raising the interest rate," Daly said during a virtual event organized by the Peterson Institute for International Economics.
Reporting by Jonnelle Marte
https://www.reuters.com/markets/us/feds ... 021-12-02/
"Fed's Daly says officials may need to start crafting plan for rate increase"
Reuters
December 2, 2021
Dec 2 (Reuters) - As Federal Reserve officials always need to be prepared for various economic scenarios and it might be time to start crafting a plan for raising interest rates to address above target inflation, San Francisco Fed President Mary Daly said on Thursday.
Fed officials might need to start dialing down some of the extra accommodation they're "giving to the economy and start crafting a plan to, at least, you know, think about raising the interest rate," Daly said during a virtual event organized by the Peterson Institute for International Economics.
Reporting by Jonnelle Marte
https://www.reuters.com/markets/us/feds ... 021-12-02/
Re: THE ECONOMY
REUTERS
"Unfazed by Omicron, Fed policymakers show greater consensus for faster taper"
By Ann Saphir and Lindsay Dunsmuir, Jonnelle Marte
December 2, 2021
Dec 2 (Reuters) - Federal Reserve policymakers on Thursday sounded sanguine about the economic impact of the latest COVID-19 variant, but flagged rising inflation in remarks that suggested growing consensus for an earlier end to bond buys and, perhaps, earlier interest rate hikes next year.
Atlanta Fed President Raphael Bostic told the Reuters Next conference on Thursday it would be appropriate to end the central bank's bond-buying program by the end of March to allow the Fed to raise rates to deal with inflation.
The Fed, which began tapering its bond-buying last month at a pace that would end the program by June, is set to consider compressing that timeline when policymakers meet on Dec. 14 and 15.
With robust growth, an improving job market and inflation more than twice the Fed's 2% target, "I think having this finished some time before the end of the first quarter would be in our interest," Bostic said.
And if inflation continues as high as 4% through next year, as some forecasters project, "there’s going to be a good case to be made that we should be pulling forward more interest rate increases and perhaps even do more than the one I’ve penciled in."
Only half of Fed policymakers in September thought the Fed should start raising rates next year, with the rest expecting the first rate hike in 2023.
Since then, several appear to have moved their rate hike expectations earlier.
After this week's hawkish Fed commentary, rate futures traders now see the first Fed rate hike in May.
Though the new Omicron variant's severity and transmissibility will determine how afraid people are, Bostic said each successive wave of COVID-19 has led to milder economic slowdowns.
If that holds, the economy will continue to grow through it, he said.
Bostic is hardly the Fed's lone hawkish voice.
Earlier this week, Fed Chair Jerome Powell said he wants a faster taper timeline on the table at this month's meeting.
Bostic said he doesn't see "tension" between the Fed's two goals of price stability and full employment at the moment.
Once the Fed does start raising rates, he said, it will likely do so at a "slow and steady" pace.
Though if inflation does not recede as expected over the next year or two, it may need to "take more strident steps" to rein it in, he said.
But other Fed policymakers appear increasingly worried they may need to put the brakes on growth before the labor market has fully healed and millions of unemployed Americans find jobs.
“If we didn't have higher inflation readings, you might let the economy go a little bit more to see if we can get through COVID and have those individuals come back,” said San Francisco Fed President Mary Daly, who as recently as last month was calling for "patience" in the face of high inflation.
“Right now, we're dealing with inflation that's above our target and inconsistent in its current readings with our longer run views on price stability,” Daly said during a virtual event held by the Peterson Institute for International Economics.
“We have to deal with that.”
Speaking alongside Daly at the Peterson event, Richmond Fed President Thomas Barkin said it is important for the Fed to keep long-run inflation expectations anchored.
"I do take seriously actual inflation and its impact, and that's why I'm supportive of normalizing policy as we're doing," he said.
HAWKISH STANCE
Fed Governor Randal Quarles, in his final public appearance before leaving his post this month, took an even more hawkish stance.
He said at an American Enterprise Institute event he believes "sustained higher demand" is stoking inflation and the Fed should "constrain that demand" to allow supply chains to catch up.
Given strength of economic data, "I certainly would be supportive of moving the end of the taper forward," he said.
If inflation is still over 4% by next spring, the Fed would have to consider rate hikes, he said.
The Omicron variant could prolong some of the supply chain challenges.
"On the supply side, it means the inflationary pressures will probably persist even longer," Kristin Forbes, an economics professor at MIT's Sloan School of Management, told the Reuters Next conference.
Reporting by Ann Saphir, Lindsay Dunsmuir and Dan Burns; Editing by Chizu Nomyama and Cynthia Osterman
https://www.reuters.com/business/financ ... 021-12-02/
"Unfazed by Omicron, Fed policymakers show greater consensus for faster taper"
By Ann Saphir and Lindsay Dunsmuir, Jonnelle Marte
December 2, 2021
Dec 2 (Reuters) - Federal Reserve policymakers on Thursday sounded sanguine about the economic impact of the latest COVID-19 variant, but flagged rising inflation in remarks that suggested growing consensus for an earlier end to bond buys and, perhaps, earlier interest rate hikes next year.
Atlanta Fed President Raphael Bostic told the Reuters Next conference on Thursday it would be appropriate to end the central bank's bond-buying program by the end of March to allow the Fed to raise rates to deal with inflation.
The Fed, which began tapering its bond-buying last month at a pace that would end the program by June, is set to consider compressing that timeline when policymakers meet on Dec. 14 and 15.
With robust growth, an improving job market and inflation more than twice the Fed's 2% target, "I think having this finished some time before the end of the first quarter would be in our interest," Bostic said.
And if inflation continues as high as 4% through next year, as some forecasters project, "there’s going to be a good case to be made that we should be pulling forward more interest rate increases and perhaps even do more than the one I’ve penciled in."
Only half of Fed policymakers in September thought the Fed should start raising rates next year, with the rest expecting the first rate hike in 2023.
Since then, several appear to have moved their rate hike expectations earlier.
After this week's hawkish Fed commentary, rate futures traders now see the first Fed rate hike in May.
Though the new Omicron variant's severity and transmissibility will determine how afraid people are, Bostic said each successive wave of COVID-19 has led to milder economic slowdowns.
If that holds, the economy will continue to grow through it, he said.
Bostic is hardly the Fed's lone hawkish voice.
Earlier this week, Fed Chair Jerome Powell said he wants a faster taper timeline on the table at this month's meeting.
Bostic said he doesn't see "tension" between the Fed's two goals of price stability and full employment at the moment.
Once the Fed does start raising rates, he said, it will likely do so at a "slow and steady" pace.
Though if inflation does not recede as expected over the next year or two, it may need to "take more strident steps" to rein it in, he said.
But other Fed policymakers appear increasingly worried they may need to put the brakes on growth before the labor market has fully healed and millions of unemployed Americans find jobs.
“If we didn't have higher inflation readings, you might let the economy go a little bit more to see if we can get through COVID and have those individuals come back,” said San Francisco Fed President Mary Daly, who as recently as last month was calling for "patience" in the face of high inflation.
“Right now, we're dealing with inflation that's above our target and inconsistent in its current readings with our longer run views on price stability,” Daly said during a virtual event held by the Peterson Institute for International Economics.
“We have to deal with that.”
Speaking alongside Daly at the Peterson event, Richmond Fed President Thomas Barkin said it is important for the Fed to keep long-run inflation expectations anchored.
"I do take seriously actual inflation and its impact, and that's why I'm supportive of normalizing policy as we're doing," he said.
HAWKISH STANCE
Fed Governor Randal Quarles, in his final public appearance before leaving his post this month, took an even more hawkish stance.
He said at an American Enterprise Institute event he believes "sustained higher demand" is stoking inflation and the Fed should "constrain that demand" to allow supply chains to catch up.
Given strength of economic data, "I certainly would be supportive of moving the end of the taper forward," he said.
If inflation is still over 4% by next spring, the Fed would have to consider rate hikes, he said.
The Omicron variant could prolong some of the supply chain challenges.
"On the supply side, it means the inflationary pressures will probably persist even longer," Kristin Forbes, an economics professor at MIT's Sloan School of Management, told the Reuters Next conference.
Reporting by Ann Saphir, Lindsay Dunsmuir and Dan Burns; Editing by Chizu Nomyama and Cynthia Osterman
https://www.reuters.com/business/financ ... 021-12-02/
Re: THE ECONOMY
REUTERS
"Labor market tightening; layoffs lowest in nearly 30 years"
By Lucia Mutikani
December 2, 2021
Summary
* Weekly jobless claims increase 28,000 to 222,000
* Continuing claims drop 107,000 to 1.956 million
* Layoffs plunge 34.8% to 14,875 in November
WASHINGTON, Dec 2 (Reuters) - The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to tightening labor market conditions, while layoffs tumbled to the lowest level in 28-1/2 years in November.
The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy's health, also showed jobless benefits rolls falling below 2 million for the first time since the COVID-19 pandemic started in the United States nearly two years ago.
The upbeat news on the labor market added to strong consumer spending and manufacturing data in suggesting that the economy was accelerating after hitting a speed bump in the third quarter.
The Omicron variant of the coronavirus, however, poses a risk to the brightening picture.
Federal Reserve Chair Jerome Powell in a nod to the strengthening economy told lawmakers this week that the U.S. central bank should consider accelerating the pace of winding down its bond purchases at its Dec. 14-15 policy meeting.
"Companies are not laying off workers like they did during the recession," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"Powell was right to hint the Fed might speed up the tapering process because a tight labor market means increasing wage demands will stoke the fires of inflation."
Initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 222,000 for the week ended Nov. 27.
Claims dropped to 194,000 in the prior week, which was the lowest number since 1969.
They tend to be volatile around this time of the year.
Economists polled by Reuters had forecast 240,000 applications for the latest week.
Claims have declined from a record high of 6.149 million in early April 2020.
Unadjusted claims fell 41,622 to 211,896 last week amid sharp declines in filings in California, Texas and Virginia, which offset notable rises in North Carolina and Wisconsin.
"Before seasonal adjustment, claims generally move higher in the colder months, but the related layoffs may not be occurring like normal this year because of the tight labor market," said Daniel Silver, an economist at JPMorgan in New York.
"This could continue to occur in the coming weeks."
Stocks on Wall Street were trading higher.
The dollar dipped against a basket of currencies.
U.S. Treasury prices fell.
EYES ON PAYROLLS
The claims data has no bearing on the department's closely watched employment report for November, scheduled to be published on Friday, as it falls outside the period during which the government surveyed businesses and households for the nonfarm payrolls count and the unemployment rate.
Claims declined between mid-October and mid-November.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 550,000 jobs last month after rising 531,000 in October.
The unemployment rate is forecast dipping to 4.5% from 4.6% in October.
Also arguing for continued improvement in the labor market, the ADP National Employment report on Wednesday showed private payrolls increased by 534,000 jobs last month.
A measure of manufacturing employment rose to a seven-month high, a survey from the Institute for Supply Management showed.
The Conference Board's labor market differential - derived from data on consumers' views on whether jobs are plentiful or hard to get - jumped to a record high in November.
The run of good news on the labor market continued, with another report on Thursday from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by U.S.-based employers dropped 34.8% in November to 14,875, the fewest since May 1993.
But worker shortages are hindering faster job growth.
The Fed's Beige Book on Wednesday described employment growth ranging from "modest to strong" across the U.S. central bank's districts during October and early November, with contacts noting "persistent difficulty in hiring and retaining employees."
There were 10.4 million job openings as of the end of September.
The workforce is down 3 million people from its pre-pandemic level, despite generous federal government-funded benefits expiring, schools reopening for in-person learning and companies raising wages.
Thursday's claims report showed the number of people receiving benefits after an initial week of aid plunged 107,000 to 1.956 million in the week ended Nov. 20.
The lowest level in the so-called continuing claims since mid-March 2020 likely reflected a combination of people exhausting their benefits as well as finding work.
A total 2.31 million people were receiving unemployment checks under all programs in mid-November.
Still, labor supply could remain tight.
A survey from the Chamber of Commerce on Thursday showed no urgency to return to work among many Americans who lost their jobs during the pandemic and remain unemployed.
"It is increasingly clear that the workforce challenges facing our country extend beyond those induced by the pandemic and we cannot simply assume that people will return to the workforce," said Chamber of Commerce President Suzanne Clark.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-w ... 021-12-02/
"Labor market tightening; layoffs lowest in nearly 30 years"
By Lucia Mutikani
December 2, 2021
Summary
* Weekly jobless claims increase 28,000 to 222,000
* Continuing claims drop 107,000 to 1.956 million
* Layoffs plunge 34.8% to 14,875 in November
WASHINGTON, Dec 2 (Reuters) - The number of Americans filing new claims for unemployment benefits increased less than expected last week, pointing to tightening labor market conditions, while layoffs tumbled to the lowest level in 28-1/2 years in November.
The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy's health, also showed jobless benefits rolls falling below 2 million for the first time since the COVID-19 pandemic started in the United States nearly two years ago.
The upbeat news on the labor market added to strong consumer spending and manufacturing data in suggesting that the economy was accelerating after hitting a speed bump in the third quarter.
The Omicron variant of the coronavirus, however, poses a risk to the brightening picture.
Federal Reserve Chair Jerome Powell in a nod to the strengthening economy told lawmakers this week that the U.S. central bank should consider accelerating the pace of winding down its bond purchases at its Dec. 14-15 policy meeting.
"Companies are not laying off workers like they did during the recession," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"Powell was right to hint the Fed might speed up the tapering process because a tight labor market means increasing wage demands will stoke the fires of inflation."
Initial claims for state unemployment benefits rose 28,000 to a seasonally adjusted 222,000 for the week ended Nov. 27.
Claims dropped to 194,000 in the prior week, which was the lowest number since 1969.
They tend to be volatile around this time of the year.
Economists polled by Reuters had forecast 240,000 applications for the latest week.
Claims have declined from a record high of 6.149 million in early April 2020.
Unadjusted claims fell 41,622 to 211,896 last week amid sharp declines in filings in California, Texas and Virginia, which offset notable rises in North Carolina and Wisconsin.
"Before seasonal adjustment, claims generally move higher in the colder months, but the related layoffs may not be occurring like normal this year because of the tight labor market," said Daniel Silver, an economist at JPMorgan in New York.
"This could continue to occur in the coming weeks."
Stocks on Wall Street were trading higher.
The dollar dipped against a basket of currencies.
U.S. Treasury prices fell.
EYES ON PAYROLLS
The claims data has no bearing on the department's closely watched employment report for November, scheduled to be published on Friday, as it falls outside the period during which the government surveyed businesses and households for the nonfarm payrolls count and the unemployment rate.
Claims declined between mid-October and mid-November.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 550,000 jobs last month after rising 531,000 in October.
The unemployment rate is forecast dipping to 4.5% from 4.6% in October.
Also arguing for continued improvement in the labor market, the ADP National Employment report on Wednesday showed private payrolls increased by 534,000 jobs last month.
A measure of manufacturing employment rose to a seven-month high, a survey from the Institute for Supply Management showed.
The Conference Board's labor market differential - derived from data on consumers' views on whether jobs are plentiful or hard to get - jumped to a record high in November.
The run of good news on the labor market continued, with another report on Thursday from global outplacement firm Challenger, Gray & Christmas showing job cuts announced by U.S.-based employers dropped 34.8% in November to 14,875, the fewest since May 1993.
But worker shortages are hindering faster job growth.
The Fed's Beige Book on Wednesday described employment growth ranging from "modest to strong" across the U.S. central bank's districts during October and early November, with contacts noting "persistent difficulty in hiring and retaining employees."
There were 10.4 million job openings as of the end of September.
The workforce is down 3 million people from its pre-pandemic level, despite generous federal government-funded benefits expiring, schools reopening for in-person learning and companies raising wages.
Thursday's claims report showed the number of people receiving benefits after an initial week of aid plunged 107,000 to 1.956 million in the week ended Nov. 20.
The lowest level in the so-called continuing claims since mid-March 2020 likely reflected a combination of people exhausting their benefits as well as finding work.
A total 2.31 million people were receiving unemployment checks under all programs in mid-November.
Still, labor supply could remain tight.
A survey from the Chamber of Commerce on Thursday showed no urgency to return to work among many Americans who lost their jobs during the pandemic and remain unemployed.
"It is increasingly clear that the workforce challenges facing our country extend beyond those induced by the pandemic and we cannot simply assume that people will return to the workforce," said Chamber of Commerce President Suzanne Clark.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-w ... 021-12-02/
Re: THE ECONOMY
CNBC
"Job growth disappoints in November, with a gain of just 210,000, despite high hopes"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED FRI, DEC 3 2021
KEY POINTS
* Nonfarm payrolls increased by 210,000 in November, following a gain of 546,000 the previous month.
* The number was well below Wall Street expectations of 573,000.
* Despite the big hiring miss, the unemployment rate fell to 4.2%, a 0.4% percentage point decline that came even with rising labor force participation.
* Professional and business services and transportation and warehousing led gains, while hiring in leisure and hospitality was sluggish and retail lost jobs despite the traditional holiday hiring season.
The U.S. economy created far fewer jobs than expected in November, in a sign that hiring started to slow even ahead of the new Covid threat, the Labor Department reported Friday.
Nonfarm payrolls increased by just 210,000 for the month, though the unemployment rate fell sharply to 4.2% from 4.6%, even though the labor force participation rate increased for the month to 61.8%, its highest level since March 2020.
The Dow Jones estimate was for 573,000 new jobs and a jobless level of 4.5% for an economy beset by a chronic labor shortage.
A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons dropped even more, tumbling to 7.8% from 8.3%.
The household survey painted a brighter picture, with an addition of 1.1 million jobs as the labor force increased by 594,000.
“This report is a tale of two surveys,” said Nick Bunker, economic research director at jobs placement site Indeed.
“The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work."
"The payroll survey shows a significant deceleration in job growth, particularly in COVID-affected sectors.”
“The underlying momentum of the labor market is still strong, but this month shows more uncertainty than expected,” he added.
Leisure and hospitality, which includes bars, restaurants, hotels and similar businesses, saw a gain of just 23,000 after being a leading job creator for much of the recovery.
Though the sector has regained nearly 7 million of the jobs lost at the depths of the pandemic, it remains about 1.3 million below its February 2020 level, with an unemployment rate stuck at 7.5%.
Following the disappointment, markets initially shrugged off the numbers, but then turned negative after the open.
Initial jobs tallies this year have seen substantial revisions, with months showing low counts initially often bumped higher.
The October and September estimates were moved up a combined 82,000 in the report released Friday.
Sectors showing the biggest gains in November included professional and business services (90,000), transportation and warehousing (50,000) and construction (31,000).
Even with the holiday shopping season approaching, retail saw a decline of 20,000.
Worker wages climbed for the month, rising 0.26% in November and 4.8% from a year ago.
Both numbers were slightly below estimates.
Fed ready to change policy
Policymakers have been watching the employment figures closely to gauge how close the economy is to a full recovery from the depths of the pandemic.
The U.S. suffered its shortest but steepest recession in the early days of the Covid-19 breakout and has been on a progressive but volatile path since.
Federal Reserve officials put a new wrinkle into the picture this week when they indicated that the measures they instituted to support growth could be coming to an end sooner than expected.
In congressional testimony earlier in the week, Fed Chairman Jerome Powell said he expects the central bank’s policy committee to discuss at its meeting this month stepping up the level at which it is tapering its monthly bond purchases.
Powell said he sees the unwinding to conclude “a few months” sooner than expected, a move that would open the possibility for interest rate hikes.
“The disappointing 210,000 gain in non-farm payrolls in November suggests the labor market recovery was faltering even before the potential impact of the new Omicron variant, possibly as a result of the rising infection rates in the Northeast and Midwest,” wrote Andrew Hunter, senior U.S. economist at Capital Economics.
“Nevertheless, the Fed will still push ahead with its plans to accelerate the pace of its QE taper at this month’s FOMC meeting.”
San Francisco Fed President Mary Daly backed up Powell’s comments in remarks Thursday, saying that inflation that is stronger and more durable than expected is creating the need to rethink policy.
She said the Fed should “at least, you know, think about raising the interest rate” and accelerating the taper pace.
Daly also hinted that the summary of economic projections to be released this month, in which officials show their expectations for the future, likely will point to interest rate hikes pulled forward into 2022.
Markets currently expect the Fed to enact at least two quarter-percentage point increases next year.
St. Louis Fed President James Bullard added to the chorus on Friday, saying the economy as measured by GDP has recovered fully and can operate with less policy stimulus, particularly considering the pace at which inflation is running.
“These considerations suggest, on balance, that the Federal Open Market Committee should remove monetary policy accommodation,” Bullard said.
https://www.cnbc.com/2021/12/03/jobs-re ... -2021.html
"Job growth disappoints in November, with a gain of just 210,000, despite high hopes"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED FRI, DEC 3 2021
KEY POINTS
* Nonfarm payrolls increased by 210,000 in November, following a gain of 546,000 the previous month.
* The number was well below Wall Street expectations of 573,000.
* Despite the big hiring miss, the unemployment rate fell to 4.2%, a 0.4% percentage point decline that came even with rising labor force participation.
* Professional and business services and transportation and warehousing led gains, while hiring in leisure and hospitality was sluggish and retail lost jobs despite the traditional holiday hiring season.
The U.S. economy created far fewer jobs than expected in November, in a sign that hiring started to slow even ahead of the new Covid threat, the Labor Department reported Friday.
Nonfarm payrolls increased by just 210,000 for the month, though the unemployment rate fell sharply to 4.2% from 4.6%, even though the labor force participation rate increased for the month to 61.8%, its highest level since March 2020.
The Dow Jones estimate was for 573,000 new jobs and a jobless level of 4.5% for an economy beset by a chronic labor shortage.
A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons dropped even more, tumbling to 7.8% from 8.3%.
The household survey painted a brighter picture, with an addition of 1.1 million jobs as the labor force increased by 594,000.
“This report is a tale of two surveys,” said Nick Bunker, economic research director at jobs placement site Indeed.
“The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work."
"The payroll survey shows a significant deceleration in job growth, particularly in COVID-affected sectors.”
“The underlying momentum of the labor market is still strong, but this month shows more uncertainty than expected,” he added.
Leisure and hospitality, which includes bars, restaurants, hotels and similar businesses, saw a gain of just 23,000 after being a leading job creator for much of the recovery.
Though the sector has regained nearly 7 million of the jobs lost at the depths of the pandemic, it remains about 1.3 million below its February 2020 level, with an unemployment rate stuck at 7.5%.
Following the disappointment, markets initially shrugged off the numbers, but then turned negative after the open.
Initial jobs tallies this year have seen substantial revisions, with months showing low counts initially often bumped higher.
The October and September estimates were moved up a combined 82,000 in the report released Friday.
Sectors showing the biggest gains in November included professional and business services (90,000), transportation and warehousing (50,000) and construction (31,000).
Even with the holiday shopping season approaching, retail saw a decline of 20,000.
Worker wages climbed for the month, rising 0.26% in November and 4.8% from a year ago.
Both numbers were slightly below estimates.
Fed ready to change policy
Policymakers have been watching the employment figures closely to gauge how close the economy is to a full recovery from the depths of the pandemic.
The U.S. suffered its shortest but steepest recession in the early days of the Covid-19 breakout and has been on a progressive but volatile path since.
Federal Reserve officials put a new wrinkle into the picture this week when they indicated that the measures they instituted to support growth could be coming to an end sooner than expected.
In congressional testimony earlier in the week, Fed Chairman Jerome Powell said he expects the central bank’s policy committee to discuss at its meeting this month stepping up the level at which it is tapering its monthly bond purchases.
Powell said he sees the unwinding to conclude “a few months” sooner than expected, a move that would open the possibility for interest rate hikes.
“The disappointing 210,000 gain in non-farm payrolls in November suggests the labor market recovery was faltering even before the potential impact of the new Omicron variant, possibly as a result of the rising infection rates in the Northeast and Midwest,” wrote Andrew Hunter, senior U.S. economist at Capital Economics.
“Nevertheless, the Fed will still push ahead with its plans to accelerate the pace of its QE taper at this month’s FOMC meeting.”
San Francisco Fed President Mary Daly backed up Powell’s comments in remarks Thursday, saying that inflation that is stronger and more durable than expected is creating the need to rethink policy.
She said the Fed should “at least, you know, think about raising the interest rate” and accelerating the taper pace.
Daly also hinted that the summary of economic projections to be released this month, in which officials show their expectations for the future, likely will point to interest rate hikes pulled forward into 2022.
Markets currently expect the Fed to enact at least two quarter-percentage point increases next year.
St. Louis Fed President James Bullard added to the chorus on Friday, saying the economy as measured by GDP has recovered fully and can operate with less policy stimulus, particularly considering the pace at which inflation is running.
“These considerations suggest, on balance, that the Federal Open Market Committee should remove monetary policy accommodation,” Bullard said.
https://www.cnbc.com/2021/12/03/jobs-re ... -2021.html
Re: THE ECONOMY
REUTERS
"U.S. labor market tightening; jobless rate flirts with pre-pandemic lows"
By Lucia Mutikani
December 3, 2021
Summary
* Nonfarm payrolls increase 210,000 in November
* Unemployment rate falls to 4.2% from 4.6%
* Average hourly earnings up 0.3%; workweek rises to 34.8
WASHINGTON, Dec 3 (Reuters) - U.S. employment growth slowed considerably in November amid job losses at retailers and in local government education, but the unemployment rate plunged to a 21-month low of 4.2%, suggesting the labor market was rapidly tightening.
The four-tenths-of-a-percentage-point drop in the jobless rate from October reported by the Labor Department in its closely watched employment report on Friday occurred even as 594,000 people entered the labor force, the most in 13 months.
Workers put in more hours, boosting aggregate wages, which should help to underpin consumer spending.
"Don't be fooled by the measly payroll jobs gain this month because the economy's engines are actually in overdrive as shown by the plunge in joblessness," said Christopher Rupkey, chief economist at FWDBONDS in New York.
The survey of businesses showed nonfarm payrolls increased by 210,000 jobs, the fewest since last December.
But the economy created 82,000 more jobs than initially reported in September and October, a sign of strength.
That left employment 3.9 million jobs below the peak in February 2020.
Despite November's slowdown in hiring, which also reflected a small gain in the leisure and hospitality industry, 6.1 million jobs have been added this year.
The unemployment rate has declined by a whopping 2.1 percentage points since January.
President Joe Biden, whose approval rating has fallen amid angst over high inflation, said the economy was stronger than it was before the COVID-19 pandemic and that the nation could "look forward to a brighter, happier new year ahead."
"But I also know that despite this progress, families are anxious about COVID."
"They're anxious about the cost of living, the economy more broadly," Biden said in a speech about the economy.
"I want you to know I hear you, it is not enough to know that we're making progress."
Economists say the economy is very close to maximum employment, making an early interest rate increase from the Federal Reserve possible.
Fed Chair Jerome Powell told lawmakers this week that the U.S. central bank should consider speeding up the winding down of its massive bond purchases at its Dec. 14-15 policy meeting.
"The Fed will see the report as more than adequate to stay on course to accelerate tapering of asset purchases at the December meeting, implying an end to purchases in March," said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
"Moreover, an unemployment rate that is poised to fall below 4.0% perhaps in the coming months keeps a first Fed rate hike in June or even earlier firmly on the table."
Economists polled by Reuters had forecast that payrolls would advance by 550,000 jobs.
Hiring continues to be hampered by worker shortages.
There were 10.4 million job openings at the end of September.
U.S. stocks were sharply lower.
The dollar was flat against a basket of currencies.
U.S. Treasury yields fell.
TIGHT LABOR SUPPLY
Employment growth was held back by a decline of 20,400 jobs in the retail sector.
State and local government education employment fell by 12,600 jobs.
That led to a drop of 25,000 in overall government jobs, the fourth straight monthly decrease.
Pandemic-related staffing fluctuations have distorted normal seasonal patterns in state and local government education.
The leisure and hospitality sector added only 23,000 jobs compared to 170,000 in the previous month.
Professional and business services payrolls increased by 90,000 jobs.
There were also solid gains in transportation and warehousing as well as in construction.
Manufacturing employment increased by 31,000 jobs.
November's modest job growth did little to temper expectations that the economy was poised for stronger growth this quarter after hitting a speed bump in the third quarter.
A measure of services sector activity scaled a fresh record high in November.
U.S. consumer spending and manufacturing activity have been strong.
Spending should remain supported by rising wages as companies scramble for scarce workers.
Average hourly earnings increased 0.3% in November, keeping the annual increase in wages at 4.8%.
The average workweek climbed to 34.8 hours from 34.7.
As a result of the longer workweek, aggregate wages rose 0.7%.
But the spread of the new, highly contagious Omicron variant of COVID-19 poses a risk to the brightening picture.
While little is known about the impact of Omicron, some slowdown in hiring and demand for services is likely, based on the experience with the Delta variant, which was responsible for the slowest economic growth pace in more than a year last quarter.
While labor supply remains tight, there are signs that some of the millions of Americans who lost their jobs during the pandemic-induced recession are wading back into the labor force.
The smaller survey of households, from which the unemployment rate is derived, showed the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was 61.8%.
That was the highest level since March 2020 and was up from 61.6% in October.
The increase was concentrated in the 20-54 age group.
About 274,000 women aged 20 and older joined the labor force.
The workforce remains 2.4 million below its pre-pandemic level.
"If more people are starting to look for work again, this would allow for stronger near-term hiring," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
The household survey also showed a rise of 1.14 million in the number of people employed.
The employment-to-population ratio, viewed as a measure of an economy's ability to create jobs, jumped to 59.2%, also the highest since March 2020, from 58.8% in October.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-j ... 021-12-03/
"U.S. labor market tightening; jobless rate flirts with pre-pandemic lows"
By Lucia Mutikani
December 3, 2021
Summary
* Nonfarm payrolls increase 210,000 in November
* Unemployment rate falls to 4.2% from 4.6%
* Average hourly earnings up 0.3%; workweek rises to 34.8
WASHINGTON, Dec 3 (Reuters) - U.S. employment growth slowed considerably in November amid job losses at retailers and in local government education, but the unemployment rate plunged to a 21-month low of 4.2%, suggesting the labor market was rapidly tightening.
The four-tenths-of-a-percentage-point drop in the jobless rate from October reported by the Labor Department in its closely watched employment report on Friday occurred even as 594,000 people entered the labor force, the most in 13 months.
Workers put in more hours, boosting aggregate wages, which should help to underpin consumer spending.
"Don't be fooled by the measly payroll jobs gain this month because the economy's engines are actually in overdrive as shown by the plunge in joblessness," said Christopher Rupkey, chief economist at FWDBONDS in New York.
The survey of businesses showed nonfarm payrolls increased by 210,000 jobs, the fewest since last December.
But the economy created 82,000 more jobs than initially reported in September and October, a sign of strength.
That left employment 3.9 million jobs below the peak in February 2020.
Despite November's slowdown in hiring, which also reflected a small gain in the leisure and hospitality industry, 6.1 million jobs have been added this year.
The unemployment rate has declined by a whopping 2.1 percentage points since January.
President Joe Biden, whose approval rating has fallen amid angst over high inflation, said the economy was stronger than it was before the COVID-19 pandemic and that the nation could "look forward to a brighter, happier new year ahead."
"But I also know that despite this progress, families are anxious about COVID."
"They're anxious about the cost of living, the economy more broadly," Biden said in a speech about the economy.
"I want you to know I hear you, it is not enough to know that we're making progress."
Economists say the economy is very close to maximum employment, making an early interest rate increase from the Federal Reserve possible.
Fed Chair Jerome Powell told lawmakers this week that the U.S. central bank should consider speeding up the winding down of its massive bond purchases at its Dec. 14-15 policy meeting.
"The Fed will see the report as more than adequate to stay on course to accelerate tapering of asset purchases at the December meeting, implying an end to purchases in March," said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
"Moreover, an unemployment rate that is poised to fall below 4.0% perhaps in the coming months keeps a first Fed rate hike in June or even earlier firmly on the table."
Economists polled by Reuters had forecast that payrolls would advance by 550,000 jobs.
Hiring continues to be hampered by worker shortages.
There were 10.4 million job openings at the end of September.
U.S. stocks were sharply lower.
The dollar was flat against a basket of currencies.
U.S. Treasury yields fell.
TIGHT LABOR SUPPLY
Employment growth was held back by a decline of 20,400 jobs in the retail sector.
State and local government education employment fell by 12,600 jobs.
That led to a drop of 25,000 in overall government jobs, the fourth straight monthly decrease.
Pandemic-related staffing fluctuations have distorted normal seasonal patterns in state and local government education.
The leisure and hospitality sector added only 23,000 jobs compared to 170,000 in the previous month.
Professional and business services payrolls increased by 90,000 jobs.
There were also solid gains in transportation and warehousing as well as in construction.
Manufacturing employment increased by 31,000 jobs.
November's modest job growth did little to temper expectations that the economy was poised for stronger growth this quarter after hitting a speed bump in the third quarter.
A measure of services sector activity scaled a fresh record high in November.
U.S. consumer spending and manufacturing activity have been strong.
Spending should remain supported by rising wages as companies scramble for scarce workers.
Average hourly earnings increased 0.3% in November, keeping the annual increase in wages at 4.8%.
The average workweek climbed to 34.8 hours from 34.7.
As a result of the longer workweek, aggregate wages rose 0.7%.
But the spread of the new, highly contagious Omicron variant of COVID-19 poses a risk to the brightening picture.
While little is known about the impact of Omicron, some slowdown in hiring and demand for services is likely, based on the experience with the Delta variant, which was responsible for the slowest economic growth pace in more than a year last quarter.
While labor supply remains tight, there are signs that some of the millions of Americans who lost their jobs during the pandemic-induced recession are wading back into the labor force.
The smaller survey of households, from which the unemployment rate is derived, showed the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was 61.8%.
That was the highest level since March 2020 and was up from 61.6% in October.
The increase was concentrated in the 20-54 age group.
About 274,000 women aged 20 and older joined the labor force.
The workforce remains 2.4 million below its pre-pandemic level.
"If more people are starting to look for work again, this would allow for stronger near-term hiring," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
The household survey also showed a rise of 1.14 million in the number of people employed.
The employment-to-population ratio, viewed as a measure of an economy's ability to create jobs, jumped to 59.2%, also the highest since March 2020, from 58.8% in October.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-j ... 021-12-03/
Re: THE ECONOMY
CNBC
"Labor productivity rate falls at the fastest pace since 1960"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, DEC 7 2021
KEY POINTS
* Labor productivity declined 5.2% from the previous three-month period, worse than the Dow Jones estimate for a drop of 5%.
* That was the biggest quarterly decline since the second quarter of 1960.
Labor productivity fell at the fastest rate in more than 60 years in the third quarter, according to a Labor Department report Tuesday.
A measure of output versus energy, nonfarm business sector productivity declined 5.2% from the previous three-month period, worse than the Dow Jones estimate for a drop of 5%, and the worst since the second quarter of 1960.
The slide happened as output increased 1.8% while hours worked rose 7.4%.
On a year-over-year basis, productivity fell 0.6%, which itself was the biggest decline since the second quarter of 1993.
Inflation also was evident in the report.
Unit labor costs, or the measure of how much businesses pay their per unit of input, rose 9.6% from the second quarter, which reflected a 3.9% increase in compensation combined with the decline in productivity.
That was well above the 8.4% Dow Jones estimate.
Higher levels of productivity can offset wage increases when determining unit labor costs, but lower levels raise the number.
Federal Reserve officials watch the productivity data closely for its impact on inflation.
Low productivity levels tend to boost inflation as companies are forced to raise prices as unit labor costs increase and profit margins come under pressure.
The economy currently is in the midst of its fastest inflation spurt in more than 30 years, and Fed officials are expected to begin tightening monetary policy to combat rising prices.
https://www.cnbc.com/2021/12/07/labor-p ... -1960.html
"Labor productivity rate falls at the fastest pace since 1960"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, DEC 7 2021
KEY POINTS
* Labor productivity declined 5.2% from the previous three-month period, worse than the Dow Jones estimate for a drop of 5%.
* That was the biggest quarterly decline since the second quarter of 1960.
Labor productivity fell at the fastest rate in more than 60 years in the third quarter, according to a Labor Department report Tuesday.
A measure of output versus energy, nonfarm business sector productivity declined 5.2% from the previous three-month period, worse than the Dow Jones estimate for a drop of 5%, and the worst since the second quarter of 1960.
The slide happened as output increased 1.8% while hours worked rose 7.4%.
On a year-over-year basis, productivity fell 0.6%, which itself was the biggest decline since the second quarter of 1993.
Inflation also was evident in the report.
Unit labor costs, or the measure of how much businesses pay their per unit of input, rose 9.6% from the second quarter, which reflected a 3.9% increase in compensation combined with the decline in productivity.
That was well above the 8.4% Dow Jones estimate.
Higher levels of productivity can offset wage increases when determining unit labor costs, but lower levels raise the number.
Federal Reserve officials watch the productivity data closely for its impact on inflation.
Low productivity levels tend to boost inflation as companies are forced to raise prices as unit labor costs increase and profit margins come under pressure.
The economy currently is in the midst of its fastest inflation spurt in more than 30 years, and Fed officials are expected to begin tightening monetary policy to combat rising prices.
https://www.cnbc.com/2021/12/07/labor-p ... -1960.html
Re: THE ECONOMY
REUTERS
"U.S. bank executives raise concerns over inflation"
By Matt Scuffham
December 7, 2021
NEW YORK, Dec 7 (Reuters) - U.S. bank executives on Tuesday raised concerns about the impact of a sustained period of higher inflation, adding to pressure on the Federal Reserve to accelerate plans to slow down the pace of its asset purchases.
Wells Fargo Chief Executive Charlie Scharf said at a conference that the Fed may need to move more quickly to address inflation concerns.
Goldman Sachs Chief Executive David Solomon said he anticipated a period of higher inflation.
The International Monetary Fund last week warned of intensifying inflationary pressures, especially in the United States, and said U.S. central bankers should focus more on inflation risks.
"There's a case to be made that they (the Federal Reserve) should be moving faster than they've been moving," said Scharf, speaking at the Goldman Sachs Financial Services Conference.
"Inflation is very, very real," he said.
"Prices are significantly higher for inputs across most industries."
"Labor shortage and wage increases are extremely real."
"Whether that continues for several years is not all that relevant but it certainly will have an impact over the next year or so."
The Fed needs to be ready to respond to the possibility that inflation may not recede in the second half of next year as most forecasters currently expect, Federal Reserve Chair Jerome Powell said last week.
"My guess is now that there will be a quicker path to appropriate actions," said Scharf.
Goldman Sachs' Solomon anticipates inflation will be higher for a period but doesn't expect a repeat of the cost rises seen in the 1970s, he said in an interview with CNBC.
"There's a reasonable chance that we're going to have inflation above trend for a period of time but that doesn't mean it has to be like the 1970s," he said.
"You've got to be cautious and manage your risk appropriately."
Solomon acknowledged "uncertainty" in global financial markets due to factors including the Omicron COVID-19 variant and question marks over the pace at which the Fed and other central banks will reduce asset purchases.
"We're still not completely out of the pandemic."
"There's uncertainty that comes from that and that uncertainty is going to affect economic activity," he said.
"On top of that, we have shifts going on in fiscal and monetary policy to try to balance that."
"There's no question that this has been an unprecedented period so it's very hard to predict how we're going to come out of this."
Reporting by Matt Scuffham; Editing by Louise Heavens and Emelia Sithole-Matarise
https://www.reuters.com/business/goldma ... 021-12-07/
"U.S. bank executives raise concerns over inflation"
By Matt Scuffham
December 7, 2021
NEW YORK, Dec 7 (Reuters) - U.S. bank executives on Tuesday raised concerns about the impact of a sustained period of higher inflation, adding to pressure on the Federal Reserve to accelerate plans to slow down the pace of its asset purchases.
Wells Fargo Chief Executive Charlie Scharf said at a conference that the Fed may need to move more quickly to address inflation concerns.
Goldman Sachs Chief Executive David Solomon said he anticipated a period of higher inflation.
The International Monetary Fund last week warned of intensifying inflationary pressures, especially in the United States, and said U.S. central bankers should focus more on inflation risks.
"There's a case to be made that they (the Federal Reserve) should be moving faster than they've been moving," said Scharf, speaking at the Goldman Sachs Financial Services Conference.
"Inflation is very, very real," he said.
"Prices are significantly higher for inputs across most industries."
"Labor shortage and wage increases are extremely real."
"Whether that continues for several years is not all that relevant but it certainly will have an impact over the next year or so."
The Fed needs to be ready to respond to the possibility that inflation may not recede in the second half of next year as most forecasters currently expect, Federal Reserve Chair Jerome Powell said last week.
"My guess is now that there will be a quicker path to appropriate actions," said Scharf.
Goldman Sachs' Solomon anticipates inflation will be higher for a period but doesn't expect a repeat of the cost rises seen in the 1970s, he said in an interview with CNBC.
"There's a reasonable chance that we're going to have inflation above trend for a period of time but that doesn't mean it has to be like the 1970s," he said.
"You've got to be cautious and manage your risk appropriately."
Solomon acknowledged "uncertainty" in global financial markets due to factors including the Omicron COVID-19 variant and question marks over the pace at which the Fed and other central banks will reduce asset purchases.
"We're still not completely out of the pandemic."
"There's uncertainty that comes from that and that uncertainty is going to affect economic activity," he said.
"On top of that, we have shifts going on in fiscal and monetary policy to try to balance that."
"There's no question that this has been an unprecedented period so it's very hard to predict how we're going to come out of this."
Reporting by Matt Scuffham; Editing by Louise Heavens and Emelia Sithole-Matarise
https://www.reuters.com/business/goldma ... 021-12-07/
Re: THE ECONOMY
REUTERS
"U.S. third-quarter labor costs revised sharply higher"
Reuters
December 7, 2021
WASHINGTON, Dec 7 (Reuters) - U.S. unit labor costs surged more than initially thought in the third quarter, suggesting inflation could remain high for a while.
The Labor Department said on Tuesday that unit labor costs, the price of labor per single unit of output, accelerated at a 9.6% annualized rate last quarter.
That was revised up from the 8.3% pace reported in November.
Labor costs rose at a 5.9% pace in the April-June quarter.
They increased at a 6.3% rate compared to a year ago, instead of the previously reported 4.8% rate.
Economists polled by Reuters had forecast unit labor costs would rise at an unrevised 8.3% pace.
Pandemic-related shortages amid snarled supply chains have boosted inflation well above the Federal Reserve's 2% target.
Wages are also rising as companies scramble for workers.
Hourly compensation increased at a 3.9% rate in the third quarter, rather than at a 2.9% rate as previously reported.
The surge in labor costs came at the expense of worker productivity, which fell at a downwardly revised 5.2% rate last quarter.
Productivity was previously reported to have tumbled at a 5.0% pace.
It grew at a 2.4% pace in the April-June quarter.
Compared to the third quarter of 2020, productivity fell at a 0.6% rate.
It was previously reported to have declined at a 0.5% rate.
Hours worked increased at a 7.4% rate last quarter, revised up from the previously estimated 7.0 pace.
Reporting by Lucia Mutikani; Editing by Paul Simao
https://www.reuters.com/markets/us/us-t ... 021-12-07/
"U.S. third-quarter labor costs revised sharply higher"
Reuters
December 7, 2021
WASHINGTON, Dec 7 (Reuters) - U.S. unit labor costs surged more than initially thought in the third quarter, suggesting inflation could remain high for a while.
The Labor Department said on Tuesday that unit labor costs, the price of labor per single unit of output, accelerated at a 9.6% annualized rate last quarter.
That was revised up from the 8.3% pace reported in November.
Labor costs rose at a 5.9% pace in the April-June quarter.
They increased at a 6.3% rate compared to a year ago, instead of the previously reported 4.8% rate.
Economists polled by Reuters had forecast unit labor costs would rise at an unrevised 8.3% pace.
Pandemic-related shortages amid snarled supply chains have boosted inflation well above the Federal Reserve's 2% target.
Wages are also rising as companies scramble for workers.
Hourly compensation increased at a 3.9% rate in the third quarter, rather than at a 2.9% rate as previously reported.
The surge in labor costs came at the expense of worker productivity, which fell at a downwardly revised 5.2% rate last quarter.
Productivity was previously reported to have tumbled at a 5.0% pace.
It grew at a 2.4% pace in the April-June quarter.
Compared to the third quarter of 2020, productivity fell at a 0.6% rate.
It was previously reported to have declined at a 0.5% rate.
Hours worked increased at a 7.4% rate last quarter, revised up from the previously estimated 7.0 pace.
Reporting by Lucia Mutikani; Editing by Paul Simao
https://www.reuters.com/markets/us/us-t ... 021-12-07/
Re: THE ECONOMY
REUTERS
"Record exports sharply narrow U.S. trade deficit"
By Lucia Mutikani
December 7, 2021
Summary
* Trade deficit falls 17.6% to $67.1 billion in October
* Exports increase 8.1%; imports rise 0.9%
* Third-quarter unit labor cost rise revised up to 9.6%
WASHINGTON, Dec 7 (Reuters) - The U.S. trade deficit narrowed sharply in October as exports soared to a record high, potentially setting up trade to contribute to economic growth this quarter for the first time in more than a year.
The report from the Commerce Department on Tuesday, which also showed imports rising to an all-time high, added to a tightening labor market, strong consumer spending as well as services and manufacturing activity that have suggested an acceleration in growth was underway as the year winds down.
"The trade deficit is narrowing big time and pouring even more fuel into the economy's tank which guarantees stronger growth as 2021 comes to an end," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"The brightening trade picture is additional evidence that the economy is very strong."
The trade gap plunged 17.6% to a six-month low of $67.1 billion.
That was the biggest percentage drop since April 2015, reflecting an increase in the flow of goods and services following disruptions caused by the COVID-19 pandemic.
Economists polled by Reuters had forecast a $66.8 billion deficit.
Exports accelerated 8.1% to an all-time high of $223.6 billion.
The surge was led by goods exports, which soared 11.1% to $158.7 billion, also a record high.
Exports of industrial supplies and materials increased $6.4 billion, with shipments of crude oil advancing $1.2 billion.
Petroleum exports were the highest on record.
Capital goods exports increased $3.1 billion, boosted by other industrial machines as well as civilian aircraft.
Food exports rose by $2.1 billion, with soybeans increasing $1.8 billion.
Exports of consumer goods jumped $1.6 billion, lifted by increases in shipments of gem diamonds as well as motor vehicles, parts and engines.
The nation exported more services, which rose $1.0 billion to $64.9 billion.
That reflected a rise in overseas travel, other business services and charges for the use of intellectual property.
Further gains are likely after the United States reopened its borders to international travelers in early November after a 20-month ban.
The Omicron variant of the coronavirus could, however, temporarily slow international travel following recent restrictions on travelers from southern African countries.
"While international travel activity could be dampened again later in the month with the emergence of the Omicron variant, we expect a continued normalization of travel through 2022," said Veronica Clark, an economist at Citigroup in New York.
U.S. financial markets were unmoved by the data.
STRONG IMPORT
The surge in exports eclipsed a 0.9% increase in imports to $290.7 billion, also a record high.
Goods imports climbed 0.7% to an all-time high of $242.7 billion.
The rise was led by motor vehicles, parts and engines, which increased $1.5 billion.
There were also gains in imports of consumer goods, including cell phones and other household goods.
Imports of industrial supplies and materials fell as did imports of capital goods, pulled down by declines in semiconductors and civilian aircraft.
There is a global chip shortage.
Adjusted for inflation, the goods deficit decreased $13.5 billion to $97.6 billion in October.
That was the smallest so-called real goods deficit since last December.
If the real goods trade deficit continues to shrink, trade could contribute to gross domestic product this quarter.
The trade gap has been a drag on GDP growth for five straight quarters.
"Early in the fourth quarter it looks like net exports are on track to add to GDP growth although the recent volatility in the monthly figures makes it hard to detect any underlying trend," said Daniel Silver, an economist at JPMorgan in New York.
"We continue to see upside risk to our 7.0% real GDP growth forecast for the fourth quarter."
Fourth-quarter GDP growth estimates are as high as an 8.6% annualized rate.
The economy grew at a 2.1% pace in the third quarter.
It is regaining speed after being restrained by shortages and a flare-up of COVID-19 infections, driven by the Delta variant.
Shortages because of snarled supply chains caused by the coronavirus are fanning price pressures.
There are signs inflation could remain well above the Federal Reserve's 2% target for a while, also as companies competing for workers raise wages.
A separate report from the Labor Department on Tuesday showed unit labor costs, the price of labor per single unit of output, surged more than initially thought in the third quarter.
Labor costs accelerated at a 9.6% annualized rate last quarter, revised up from the 8.3% pace reported in November.
Unit labor costs increased at a 6.3% rate compared to a year ago, the largest gain since 1982.
"Unit wage cost pressures are strong in the face of a tight labor market," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
The unemployment rate is at a 21-month low of 4.2%.
Reporting By Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-t ... 021-12-07/
"Record exports sharply narrow U.S. trade deficit"
By Lucia Mutikani
December 7, 2021
Summary
* Trade deficit falls 17.6% to $67.1 billion in October
* Exports increase 8.1%; imports rise 0.9%
* Third-quarter unit labor cost rise revised up to 9.6%
WASHINGTON, Dec 7 (Reuters) - The U.S. trade deficit narrowed sharply in October as exports soared to a record high, potentially setting up trade to contribute to economic growth this quarter for the first time in more than a year.
The report from the Commerce Department on Tuesday, which also showed imports rising to an all-time high, added to a tightening labor market, strong consumer spending as well as services and manufacturing activity that have suggested an acceleration in growth was underway as the year winds down.
"The trade deficit is narrowing big time and pouring even more fuel into the economy's tank which guarantees stronger growth as 2021 comes to an end," said Christopher Rupkey, chief economist at FWDBONDS in New York.
"The brightening trade picture is additional evidence that the economy is very strong."
The trade gap plunged 17.6% to a six-month low of $67.1 billion.
That was the biggest percentage drop since April 2015, reflecting an increase in the flow of goods and services following disruptions caused by the COVID-19 pandemic.
Economists polled by Reuters had forecast a $66.8 billion deficit.
Exports accelerated 8.1% to an all-time high of $223.6 billion.
The surge was led by goods exports, which soared 11.1% to $158.7 billion, also a record high.
Exports of industrial supplies and materials increased $6.4 billion, with shipments of crude oil advancing $1.2 billion.
Petroleum exports were the highest on record.
Capital goods exports increased $3.1 billion, boosted by other industrial machines as well as civilian aircraft.
Food exports rose by $2.1 billion, with soybeans increasing $1.8 billion.
Exports of consumer goods jumped $1.6 billion, lifted by increases in shipments of gem diamonds as well as motor vehicles, parts and engines.
The nation exported more services, which rose $1.0 billion to $64.9 billion.
That reflected a rise in overseas travel, other business services and charges for the use of intellectual property.
Further gains are likely after the United States reopened its borders to international travelers in early November after a 20-month ban.
The Omicron variant of the coronavirus could, however, temporarily slow international travel following recent restrictions on travelers from southern African countries.
"While international travel activity could be dampened again later in the month with the emergence of the Omicron variant, we expect a continued normalization of travel through 2022," said Veronica Clark, an economist at Citigroup in New York.
U.S. financial markets were unmoved by the data.
STRONG IMPORT
The surge in exports eclipsed a 0.9% increase in imports to $290.7 billion, also a record high.
Goods imports climbed 0.7% to an all-time high of $242.7 billion.
The rise was led by motor vehicles, parts and engines, which increased $1.5 billion.
There were also gains in imports of consumer goods, including cell phones and other household goods.
Imports of industrial supplies and materials fell as did imports of capital goods, pulled down by declines in semiconductors and civilian aircraft.
There is a global chip shortage.
Adjusted for inflation, the goods deficit decreased $13.5 billion to $97.6 billion in October.
That was the smallest so-called real goods deficit since last December.
If the real goods trade deficit continues to shrink, trade could contribute to gross domestic product this quarter.
The trade gap has been a drag on GDP growth for five straight quarters.
"Early in the fourth quarter it looks like net exports are on track to add to GDP growth although the recent volatility in the monthly figures makes it hard to detect any underlying trend," said Daniel Silver, an economist at JPMorgan in New York.
"We continue to see upside risk to our 7.0% real GDP growth forecast for the fourth quarter."
Fourth-quarter GDP growth estimates are as high as an 8.6% annualized rate.
The economy grew at a 2.1% pace in the third quarter.
It is regaining speed after being restrained by shortages and a flare-up of COVID-19 infections, driven by the Delta variant.
Shortages because of snarled supply chains caused by the coronavirus are fanning price pressures.
There are signs inflation could remain well above the Federal Reserve's 2% target for a while, also as companies competing for workers raise wages.
A separate report from the Labor Department on Tuesday showed unit labor costs, the price of labor per single unit of output, surged more than initially thought in the third quarter.
Labor costs accelerated at a 9.6% annualized rate last quarter, revised up from the 8.3% pace reported in November.
Unit labor costs increased at a 6.3% rate compared to a year ago, the largest gain since 1982.
"Unit wage cost pressures are strong in the face of a tight labor market," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
The unemployment rate is at a 21-month low of 4.2%.
Reporting By Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-t ... 021-12-07/