REUTERS
"U.N. agency warns of recession linked to 'imprudent' monetary policy"
By Emma Farge
October 3, 2022
GENEVA, Oct 3 (Reuters) - A United Nations agency warned on Monday of the risk of a monetary policy-induced global recession that would have especially serious consequences for developing countries and called for a new strategy.
"Excessive monetary tightening could usher in a period of stagnation and economic instability" for some countries, the United Nations Conference on Trade and Development (UNCTAD) said in a statement released alongside its annual report.
"Any belief that they (central banks) will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, an imprudent gamble," it said.
The report said that higher interest rates, including hikes by the U.S. Federal Reserve, would have a more severe impact on emerging economies, which already have high levels of private and public debt.
The report, entitled "Development prospects in a fractured world", also warned of a potential debt crisis in the developing world.
"The current course of action is hurting vulnerable people everywhere, especially in developing countries."
"We must change course," UNCTAD Secretary-General Rebeca Grynspan told a press conference in Geneva.
Asked about solutions, she suggested there were other ways to bring inflation down, mentioning windfall taxes on corporations, better regulations to control commodity speculation and efforts to resolve supply-side bottlenecks.
"If you want to use only one instrument to bring inflation down...the only possibility is to bring the world to a slowdown that will end up in a recession," she said.
Overall, UNCTAD revised down its 2022 global growth projection to 2.5% from the earlier 2.6% estimated in its March assessment.
It expects growth of 2.2% in 2023.
The International Monetary Fund also warned last month that some countries may slip into recession next year and revised its growth forecast downwards.
Reporting by Emma Farge; Editing by Bernadette Baum and Aurora Ellis
https://www.reuters.com/markets/rates-b ... 022-10-03/
THE ECONOMY
Re: THE ECONOMY
REUTERS
"Fed's Williams says central bank has more work to do to cool inflation"
By Michael S. Derby
October 3, 2022
NEW YORK, Oct 3 (Reuters) - Federal Reserve Bank of New York President John Williams said on Monday that while there have been nascent signs of cooling inflation, underlying price pressures remain too high, which means the U.S. central bank must press forward to get inflation under control.
"Clearly, inflation is far too high, and persistently high inflation undermines the ability of our economy to perform at its full potential," Williams said in the text of a speech to be delivered before an audience in Phoenix.
"Tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done."
Williams, who also serves as vice chairman of the Fed's interest rate-setting Federal Open Market Committee, did not offer a view about what's next for monetary policy.
But he said the Fed will continue to press forward with actions aimed at cooling demand, in a bid to help lower inflation back to the Fed’s 2% target.
Inflation was at 6.2% in August compared with the same month a year ago.
Williams said lower economic growth and higher unemployment are very likely to be side effects of the Fed’s inflation-fighting mission.
Economic activity will likely be close to flat this year, with only modest growth next year, and the unemployment rate, now at 3.7%, will likely rise to 4.5% by the close of 2023, he said.
The Fed has raised its overnight target rate range aggressively this year, rising from near zero levels in March to the current range of between 3% and 3.25%.
Officials have penciled in more rate rises over the course of this year and into next year, which could lift the funds rate to around 4.6% by next year, based on forecasts released by the Fed at its policy meeting last month.
There's an active debate over the size of the rate rise at the Fed's next gathering, with many speculating the Fed will again hike by 0.75 percentage point.
Many market participants are questioning the need for rate rises, however, out of fears Fed action will break something in financial markets and send the economy into recession.
Others reckon the economy has already seen the worst of the inflation surge and that price pressures are set to ebb of their own accord.
In his remarks, Williams acknowledged that some inflation categories, like commodity prices, are already cooling off.
But that’s not enough, he said.
Goods demand remains very high and labor market and services demand is outstripping available supply.
"This is resulting in broad-based inflation, which will take longer to bring down," he said.
Williams said inflation could ease to 3% next year.
"I see inflation moving close to our 2% goal in the next few years," he said, adding that the Fed will do what it takes to lower inflation.
"To help rein in demand to levels consistent with supply — and therefore bring inflation down — monetary policy needs to do its job," Williams said.
"The FOMC is taking strong actions toward that end."
Reporting by Michael S. Derby; Editing by Leslie Adler
https://www.reuters.com/markets/us/feds ... 022-10-03/
"Fed's Williams says central bank has more work to do to cool inflation"
By Michael S. Derby
October 3, 2022
NEW YORK, Oct 3 (Reuters) - Federal Reserve Bank of New York President John Williams said on Monday that while there have been nascent signs of cooling inflation, underlying price pressures remain too high, which means the U.S. central bank must press forward to get inflation under control.
"Clearly, inflation is far too high, and persistently high inflation undermines the ability of our economy to perform at its full potential," Williams said in the text of a speech to be delivered before an audience in Phoenix.
"Tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done."
Williams, who also serves as vice chairman of the Fed's interest rate-setting Federal Open Market Committee, did not offer a view about what's next for monetary policy.
But he said the Fed will continue to press forward with actions aimed at cooling demand, in a bid to help lower inflation back to the Fed’s 2% target.
Inflation was at 6.2% in August compared with the same month a year ago.
Williams said lower economic growth and higher unemployment are very likely to be side effects of the Fed’s inflation-fighting mission.
Economic activity will likely be close to flat this year, with only modest growth next year, and the unemployment rate, now at 3.7%, will likely rise to 4.5% by the close of 2023, he said.
The Fed has raised its overnight target rate range aggressively this year, rising from near zero levels in March to the current range of between 3% and 3.25%.
Officials have penciled in more rate rises over the course of this year and into next year, which could lift the funds rate to around 4.6% by next year, based on forecasts released by the Fed at its policy meeting last month.
There's an active debate over the size of the rate rise at the Fed's next gathering, with many speculating the Fed will again hike by 0.75 percentage point.
Many market participants are questioning the need for rate rises, however, out of fears Fed action will break something in financial markets and send the economy into recession.
Others reckon the economy has already seen the worst of the inflation surge and that price pressures are set to ebb of their own accord.
In his remarks, Williams acknowledged that some inflation categories, like commodity prices, are already cooling off.
But that’s not enough, he said.
Goods demand remains very high and labor market and services demand is outstripping available supply.
"This is resulting in broad-based inflation, which will take longer to bring down," he said.
Williams said inflation could ease to 3% next year.
"I see inflation moving close to our 2% goal in the next few years," he said, adding that the Fed will do what it takes to lower inflation.
"To help rein in demand to levels consistent with supply — and therefore bring inflation down — monetary policy needs to do its job," Williams said.
"The FOMC is taking strong actions toward that end."
Reporting by Michael S. Derby; Editing by Leslie Adler
https://www.reuters.com/markets/us/feds ... 022-10-03/
Re: THE ECONOMY
CNBC
"Job openings plunged by more than 1.1 million in August"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, OCT 4 2022
KEY POINTS
* Job openings in August totaled 10.05 million, a 10% drop from the 11.17 million reported in July and more than a million less than expected.
* The Job Openings and Labor Turnover numbers are watched closely by the Federal Reserve, which is trying to reverse runaway inflation that has been pushed by the tight labor market.
The number of job openings plunged by more than a million in August, providing a potential early sign that the massive U.S. labor gap is beginning to close.
Available positions totaled 10.05 million for the month, a 10% drop from the 11.17 million reported in July, according to a Bureau of Labor Statistics release Tuesday.
That was also well below the 11.1 million FactSet estimate and was the biggest one-month decline since April 2020 in the early days of the Covid pandemic.
The number of hires rose slightly, while total separations jumped by 182,000.
Quits, or those who left their jobs voluntarily, rose by 100,000 for the month to 4.16 million.
The Job Openings and Labor Turnover numbers are watched closely by the Federal Reserve, which is trying to reverse runaway inflation through a series of five interest rate increases this year that thus far have totaled 3 percentage points.
One primary area of interest for the central bank has been the ultra-tight labor market, which had been showing about two job openings for every available worker.
That ratio contracted to 1.67 to 1 in August.
The job market has been a primary driver of inflation, as the outsized demand for the scarce labor pool has helped drive up wages sharply.
Average hourly earnings rose 5.2% over the 12-month period through August.
But adjusted for inflation, real earnings actually declined 2.8%.
“Job openings took a major dive in August, falling by more than about 1 million, but they still total more than 10 million."
"That and other data point to a jobs market that’s still challenging for employers,” said Robert Frick, corporate economist at Navy Federal Credit Union.
“But judging by the drop in openings and the high number of Americans who entered the labor force in August, almost 900,000, the worst of the tight labor market is over.”
Health care and social assistance saw the biggest drop in vacancies, falling by 236,000.
The “other services” category saw a decline of 183,000, while retail was down 143,000.
Aligning labor supply with demand has been a big goal for the Fed, which uses rate increases to slow the flow of money through the economy.
The labor market has shown little reaction to the moves, with weekly jobless claims recently hitting a five-month low and the unemployment rate at 3.7%.
August did see a sharp bump in the labor force, which increased by 786,000, pushing up the participation rate by 0.3 percentage point to 62.4%, tied for highest of the year.
The rate remains one full percentage point below where it was in February 2020, just prior to the pandemic.
Markets still expect the Fed to push forward with a fourth consecutive 0.75 percentage point interest rate hike at its next meeting.
Tuesday’s release comes ahead of Friday’s nonfarm payrolls report for September, which is expected to show a gain of 275,000, according to Dow Jones.
https://www.cnbc.com/2022/10/04/jolts-august-2022.html
"Job openings plunged by more than 1.1 million in August"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED TUE, OCT 4 2022
KEY POINTS
* Job openings in August totaled 10.05 million, a 10% drop from the 11.17 million reported in July and more than a million less than expected.
* The Job Openings and Labor Turnover numbers are watched closely by the Federal Reserve, which is trying to reverse runaway inflation that has been pushed by the tight labor market.
The number of job openings plunged by more than a million in August, providing a potential early sign that the massive U.S. labor gap is beginning to close.
Available positions totaled 10.05 million for the month, a 10% drop from the 11.17 million reported in July, according to a Bureau of Labor Statistics release Tuesday.
That was also well below the 11.1 million FactSet estimate and was the biggest one-month decline since April 2020 in the early days of the Covid pandemic.
The number of hires rose slightly, while total separations jumped by 182,000.
Quits, or those who left their jobs voluntarily, rose by 100,000 for the month to 4.16 million.
The Job Openings and Labor Turnover numbers are watched closely by the Federal Reserve, which is trying to reverse runaway inflation through a series of five interest rate increases this year that thus far have totaled 3 percentage points.
One primary area of interest for the central bank has been the ultra-tight labor market, which had been showing about two job openings for every available worker.
That ratio contracted to 1.67 to 1 in August.
The job market has been a primary driver of inflation, as the outsized demand for the scarce labor pool has helped drive up wages sharply.
Average hourly earnings rose 5.2% over the 12-month period through August.
But adjusted for inflation, real earnings actually declined 2.8%.
“Job openings took a major dive in August, falling by more than about 1 million, but they still total more than 10 million."
"That and other data point to a jobs market that’s still challenging for employers,” said Robert Frick, corporate economist at Navy Federal Credit Union.
“But judging by the drop in openings and the high number of Americans who entered the labor force in August, almost 900,000, the worst of the tight labor market is over.”
Health care and social assistance saw the biggest drop in vacancies, falling by 236,000.
The “other services” category saw a decline of 183,000, while retail was down 143,000.
Aligning labor supply with demand has been a big goal for the Fed, which uses rate increases to slow the flow of money through the economy.
The labor market has shown little reaction to the moves, with weekly jobless claims recently hitting a five-month low and the unemployment rate at 3.7%.
August did see a sharp bump in the labor force, which increased by 786,000, pushing up the participation rate by 0.3 percentage point to 62.4%, tied for highest of the year.
The rate remains one full percentage point below where it was in February 2020, just prior to the pandemic.
Markets still expect the Fed to push forward with a fourth consecutive 0.75 percentage point interest rate hike at its next meeting.
Tuesday’s release comes ahead of Friday’s nonfarm payrolls report for September, which is expected to show a gain of 275,000, according to Dow Jones.
https://www.cnbc.com/2022/10/04/jolts-august-2022.html
Re: THE ECONOMY
REUTERS
"Fed knows how to fight inflation, will seek to do so 'gently' -Daly"
By Ann Saphir and Michael S. Derby
October 4, 2022
Oct 4 (Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Tuesday said the U.S. central bank has the tools and the knowledge to bring down high inflation, and will use them, even as it tries to find the "gentlest" way to do so.
There is "a lot" of room for the Fed to use higher interest rates to reduce demand and ease price pressures, Daly said at a Council on Foreign Relations event in New York City, noting that about half of what is causing current high inflation is a product of excess demand.
"If we do our jobs well, and we communicate to the public why we are doing what we are doing, and why the interest rate path we are taking is necessary to get inflation down, and that price stability for us is extremely important, as is doing it as gently as possible so that the economy can be in a balanced state as easily as possible - whatever that looks like, we are going to take the easiest path we can find," Daly said.
Surveys show Americans do not expect inflation to remain high over the long term, she said, and those anchored inflation expectations are evidence that Americans already do trust the central bank.
"I think the trust goes up as inflation goes down."
The Fed has raised U.S. interest rates faster this year than it has in decades to fight inflation that's also running more than three times the Fed's 2% target.
The steep rise in the Fed's policy rate - at 3.00-3.25% and expected to reach 4.6% next year - has contributed to global market gyrations and declines in most currencies against the dollar, in many countries adding to pressure on those central banks to raise their own borrowing costs.
Daly said the Fed pays attention to the effect of dollar appreciation and rising U.S. interest rates on global growth because slowing growth abroad can feed back into the domestic economy.
"If Europe goes into recession, that's a headwind; if China falters, that's a headwind on our growth, and we have to take that into account so that we don't end up overtightening policy," she said.
Likewise the Fed must factor in that other central banks are also raising their own interest rates to bring down inflation in their own countries, which tightens global financial conditions.
Still, she said, the Fed's mandate is to achieve U.S. price stability and full employment, and that's what the Fed is focused on.
Despite recent volatility in markets over the last several weeks, she said, "we still have a healthy, stable financial system."
Reporting by Ann Saphir and Michael S. Derby; Editing by Andrea Ricci
https://www.reuters.com/world/us/fed-ha ... 022-10-04/
"Fed knows how to fight inflation, will seek to do so 'gently' -Daly"
By Ann Saphir and Michael S. Derby
October 4, 2022
Oct 4 (Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Tuesday said the U.S. central bank has the tools and the knowledge to bring down high inflation, and will use them, even as it tries to find the "gentlest" way to do so.
There is "a lot" of room for the Fed to use higher interest rates to reduce demand and ease price pressures, Daly said at a Council on Foreign Relations event in New York City, noting that about half of what is causing current high inflation is a product of excess demand.
"If we do our jobs well, and we communicate to the public why we are doing what we are doing, and why the interest rate path we are taking is necessary to get inflation down, and that price stability for us is extremely important, as is doing it as gently as possible so that the economy can be in a balanced state as easily as possible - whatever that looks like, we are going to take the easiest path we can find," Daly said.
Surveys show Americans do not expect inflation to remain high over the long term, she said, and those anchored inflation expectations are evidence that Americans already do trust the central bank.
"I think the trust goes up as inflation goes down."
The Fed has raised U.S. interest rates faster this year than it has in decades to fight inflation that's also running more than three times the Fed's 2% target.
The steep rise in the Fed's policy rate - at 3.00-3.25% and expected to reach 4.6% next year - has contributed to global market gyrations and declines in most currencies against the dollar, in many countries adding to pressure on those central banks to raise their own borrowing costs.
Daly said the Fed pays attention to the effect of dollar appreciation and rising U.S. interest rates on global growth because slowing growth abroad can feed back into the domestic economy.
"If Europe goes into recession, that's a headwind; if China falters, that's a headwind on our growth, and we have to take that into account so that we don't end up overtightening policy," she said.
Likewise the Fed must factor in that other central banks are also raising their own interest rates to bring down inflation in their own countries, which tightens global financial conditions.
Still, she said, the Fed's mandate is to achieve U.S. price stability and full employment, and that's what the Fed is focused on.
Despite recent volatility in markets over the last several weeks, she said, "we still have a healthy, stable financial system."
Reporting by Ann Saphir and Michael S. Derby; Editing by Andrea Ricci
https://www.reuters.com/world/us/fed-ha ... 022-10-04/
Re: THE ECONOMY
REUTERS
"U.S. job openings drop sharply, labor market starting to loosen"
By Lucia Mutikani
October 4, 2022
Summary
* Job openings fall 1.1 million to 10.053 mln in August
* Healthcare, retail trade lead decline in vacancies
* Quits, layoffs, hiring increase moderately
WASHINGTON, Oct 4 (Reuters) - U.S. job openings fell by the most in nearly 2-1/2 years in August, suggesting that the labor market was starting to cool as the economy grapples with higher interest rates aimed at dampening demand and taming inflation.
Despite the fifth month of decreases in job openings this year reported by the Labor Department in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday, vacancies remained above 10 million for the 14th straight month.
While there were 1.7 job openings for every unemployed person in August, down from two in July, this closely watched measure of supply-demand balance in the labor market remained above its historical average.
Layoffs also stayed low, signs of a still-tight labor market, which likely keep the Federal Reserve on its aggressive monetary policy tightening path.
"Even as higher interest rates and inflation, and weaker business and consumer confidence are beginning to tamp down labor market activity, the labor market still remains healthy," said Sophia Koropeckyj, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
"We expect that the Fed is not yet ready to pause."
Job openings dropped 1.1 million to 10.1 million on the last day of August, the lowest level since mid-2021.
August's decline was the largest since April 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.
Economists polled by Reuters had forecast 10.775 million vacancies.
The broad decrease in job openings was led by healthcare and social assistance, with a decline of 236,000.
There were 183,000 fewer job openings in other services, while vacancies decreased by 143,000 in the retail trade industry.
Fewer job openings were also reported in the financial activities, professional as well as leisure an hospitality industries.
Vacancies in the healthcare and leisure industries declined even though employment in the two sectors remains below its pre-pandemic levels, leading some economists to speculate that other factors besides higher borrowing costs were behind the cool off in demand for workers.
"The drop in openings could reflect healthcare providers becoming more accustomed to operating under labor shortages and forgoing hiring," said Veronica Clark, an economist at Citigroup in New York.
All four regions saw decreases, with a big decline in the Midwest.
The job openings rate fell to 6.2% from 6.8% in July.
Hiring increased moderately, keeping the hiring rate at 4.1%.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
WORKERS STILL QUITTING
The Fed is trying to cool demand for labor and the overall economy to bring inflation down to its 2% target.
The U.S. central bank has since March hiked its policy rate from near zero to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
The drop in job openings was accompanied by an increase in the unemployment rate to 3.7% from 3.5% in July.
The jobs-workers gap fell to 2.5% of the labor force, or 4.0 million workers, from 3.4% in July, which could slow wage inflation.
It has decreased from 3.6% of the labor force in March.
"The Fed will welcome this apparent decline in excess demand for labor in the hope that it eases wage pressures," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
"However, the ratio of job openings to unemployment in August was at about the same level as seen in the fourth quarter of 2021, which at that time was a record high."
The number of people voluntarily quitting their jobs climbed to 4.2 million from 4.1 million in July.
Resignations increased in the accommodation and food services industry, where 119,000 more people quit, but decreased by 94,000 in the professional and business services sector.
The quits rate, viewed by policymakers and economists as a measure of job market confidence, was unchanged at 2.8%.
Layoffs rose to 1.5 million from 1.4 million in July.
There were increases in retail trade, accommodation and food services as well as professional services.
Layoffs, however, fell in the construction industry.
There were fewer layoffs in the Northeast and Midwest.
But the South reported an increase, while the West saw a jump, likely reflecting job cuts in the technology sector.
The layoffs rate rose to 1.0% from 0.9% in the prior month.
"The heat of the labor market is slowly coming down to a slow boil as demand for hiring new workers fades," said Nick Bunker, head of economic research at Indeed Hiring Lab.
"This is still very much a job seekers' labor market, just one with fewer advantages for workers than a few months ago."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-j ... 022-10-04/
"U.S. job openings drop sharply, labor market starting to loosen"
By Lucia Mutikani
October 4, 2022
Summary
* Job openings fall 1.1 million to 10.053 mln in August
* Healthcare, retail trade lead decline in vacancies
* Quits, layoffs, hiring increase moderately
WASHINGTON, Oct 4 (Reuters) - U.S. job openings fell by the most in nearly 2-1/2 years in August, suggesting that the labor market was starting to cool as the economy grapples with higher interest rates aimed at dampening demand and taming inflation.
Despite the fifth month of decreases in job openings this year reported by the Labor Department in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday, vacancies remained above 10 million for the 14th straight month.
While there were 1.7 job openings for every unemployed person in August, down from two in July, this closely watched measure of supply-demand balance in the labor market remained above its historical average.
Layoffs also stayed low, signs of a still-tight labor market, which likely keep the Federal Reserve on its aggressive monetary policy tightening path.
"Even as higher interest rates and inflation, and weaker business and consumer confidence are beginning to tamp down labor market activity, the labor market still remains healthy," said Sophia Koropeckyj, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
"We expect that the Fed is not yet ready to pause."
Job openings dropped 1.1 million to 10.1 million on the last day of August, the lowest level since mid-2021.
August's decline was the largest since April 2020, when the economy was reeling from the first wave of the COVID-19 pandemic.
Economists polled by Reuters had forecast 10.775 million vacancies.
The broad decrease in job openings was led by healthcare and social assistance, with a decline of 236,000.
There were 183,000 fewer job openings in other services, while vacancies decreased by 143,000 in the retail trade industry.
Fewer job openings were also reported in the financial activities, professional as well as leisure an hospitality industries.
Vacancies in the healthcare and leisure industries declined even though employment in the two sectors remains below its pre-pandemic levels, leading some economists to speculate that other factors besides higher borrowing costs were behind the cool off in demand for workers.
"The drop in openings could reflect healthcare providers becoming more accustomed to operating under labor shortages and forgoing hiring," said Veronica Clark, an economist at Citigroup in New York.
All four regions saw decreases, with a big decline in the Midwest.
The job openings rate fell to 6.2% from 6.8% in July.
Hiring increased moderately, keeping the hiring rate at 4.1%.
Stocks on Wall Street were trading higher.
The dollar fell against a basket of currencies.
U.S. Treasury prices rose.
WORKERS STILL QUITTING
The Fed is trying to cool demand for labor and the overall economy to bring inflation down to its 2% target.
The U.S. central bank has since March hiked its policy rate from near zero to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
The drop in job openings was accompanied by an increase in the unemployment rate to 3.7% from 3.5% in July.
The jobs-workers gap fell to 2.5% of the labor force, or 4.0 million workers, from 3.4% in July, which could slow wage inflation.
It has decreased from 3.6% of the labor force in March.
"The Fed will welcome this apparent decline in excess demand for labor in the hope that it eases wage pressures," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
"However, the ratio of job openings to unemployment in August was at about the same level as seen in the fourth quarter of 2021, which at that time was a record high."
The number of people voluntarily quitting their jobs climbed to 4.2 million from 4.1 million in July.
Resignations increased in the accommodation and food services industry, where 119,000 more people quit, but decreased by 94,000 in the professional and business services sector.
The quits rate, viewed by policymakers and economists as a measure of job market confidence, was unchanged at 2.8%.
Layoffs rose to 1.5 million from 1.4 million in July.
There were increases in retail trade, accommodation and food services as well as professional services.
Layoffs, however, fell in the construction industry.
There were fewer layoffs in the Northeast and Midwest.
But the South reported an increase, while the West saw a jump, likely reflecting job cuts in the technology sector.
The layoffs rate rose to 1.0% from 0.9% in the prior month.
"The heat of the labor market is slowly coming down to a slow boil as demand for hiring new workers fades," said Nick Bunker, head of economic research at Indeed Hiring Lab.
"This is still very much a job seekers' labor market, just one with fewer advantages for workers than a few months ago."
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
https://www.reuters.com/markets/us/us-j ... 022-10-04/
Re: THE ECONOMY
REUTERS
"Exclusive: White House rules out ban on natural gas exports this winter"
By Jarrett Renshaw and Trevor Hunnicutt
October 4, 2022
WASHINGTON, Oct 4 (Reuters) - The White House has ruled out any ban or curbs on natural-gas exports this winter, in a bid to help alleviate energy shortages in Europe, according to two people directly involved in the discussions.
In March, U.S. President Joe Biden committed to deliver 15 billion cubic metres (bcm) more of liquefied natural gas (LNG) to Europe following Russia's invasion of Ukraine and has already surpassed that goal.
Further White House analysis has only cemented support for ongoing exports, the sources said, although rising energy costs and a colder-than-expected winter could test Biden's commitment.
A ban has not been seriously considered, said a U.S. official.
Biden and his aides are bracing for the prospect that inflation-fatigued Americans will pay high home-heating bills this winter.
Inventories of natural gas, the nation's primary heating fuel, are at historically low levels after U.S. companies exported record amounts to Europe in recent months to counter a cut in supplies and higher prices for European power plants.
White House officials, stung by spikes in inflation to four-decade highs above 8%, explored the market impact of limiting energy exports to ease consumer prices and lift domestic inventories, the sources said.
But that analysis only cemented a consensus that such a move would be too extreme and fracture key relationships with allies in Europe.
The issue has taken on new significance in recent weeks as the White House has threatened petroleum refiners they could stop them from exporting fuels like gasoline and diesel unless domestic inventories rise.
"President Biden made a commitment in March and we have been moving out on it."
"We surpassed the LNG export goal President Biden set," said a senior administration official, who pointed to 30 bcm in U.S. LNG exports to EU since early March, double the same period last year.
"And because of the steps we and our partners have been taking, gas storage in Europe is at a significantly higher level than last year."
"More work remains," the official said.
U.S. HEATING COSTS TO RISE
The average cost of U.S. home heating is expected to rise 17.2% from last winter to $1,202, putting millions of low-income families at risk of falling behind on their energy bills, according to a recent report by the National Energy Assistance Directors' Association (NEAD).
The price of natural gas, which heats about 50% of U.S. households, is expected to increase about 34% compared with last year, and up 66% from the winter of 2020-2021, the report said.
Some power companies who rely on natural gas in the U.S. northeast are warning consumers that electricity bills could soar by 60% this winter.
However, ruling out a natural gas export ban still makes sense, economists say, given the EU's increasing reliance on U.S. exports.
"(U.S.) natural gas prices would plummet, but if I were the EU, I would almost consider (a ban) an act of war."
"It would really stoke anti-American attitudes and make European countries question the strength of their relationship with the U.S.," said Ed Hirs, an energy economist at the University of Houston.
The U.S. banned crude oil exports for four decades in the name of consumer protection until President Barack Obama and Congress lifted the restriction in 2015.
Biden has sought to leverage the country's vast supply of natural gas to forge stronger ties with European allies in the wake of Russia's invasion of Ukraine and the subsequent upheaval in global energy markets.
Biden and European Commission President Ursula von der Leyen announced a plan to form a task force to cut Europe's reliance on Russian fossil fuels.
Russia, the world's second-biggest gas producer, has provided about a third of Europe's gas in recent years, but a major pipeline that runs from Russia to Germany was badly damaged in what European and U.S. officials have described as sabotage.
This summer, the EU urged member states to cut gas usage by 15% until March as an emergency step.
During the first nine months of 2022, roughly 60%, or 6.3 billion cubic feet per day (bcfd), of U.S. LNG exports went to Europe, as shippers diverted cargoes from Asia to fetch higher prices.
Last year, just 29%, or about 2.8 bcfd, of U.S. LNG exports went to Europe.
Gas stockpiles in northwest Europe - Belgium, France, Germany and the Netherlands - are currently about 6% above their five-year (2017-2021) average for this time of year, according to Refinitiv.
Storage is around 91% of capacity.
U.S. INVENTORIES LOW, PRICES RISING
That is much healthier than U.S. gas inventories, which are still about 9% below their five-year norm, despite record production due to export demand.
If the U.S. fall and winter are colder than expected, low inventories will drive up prices and could reignite calls from U.S. lawmakers, including influential Senator Elizabeth Warren, to curtail natural gas exports.
U.S. natural gas prices are far lower than global prices because the United States is the world's top producer.
The United States will produce a record 97.1 billion cubic feet per day (bcfd) of natural gas and export a record 11.0 bcfd of gas as LNG in 2022.
Still, natural gas heating bills will average $952 this winter, up from an average of $564 from 2012 to 2021, according to NEAD.
"Americans for years enjoyed low price natural gas," said Mark Wolfe, head of NEAD.
"I am afraid that era is now over."
Reporting by Jarrett Renshaw and Trevor Hunnicutt; additional reporting by Scott DiSavino in New York; editing by Heather Timmons, David Gregorio and Richard Pullin
https://www.reuters.com/business/energy ... 022-10-04/
"Exclusive: White House rules out ban on natural gas exports this winter"
By Jarrett Renshaw and Trevor Hunnicutt
October 4, 2022
WASHINGTON, Oct 4 (Reuters) - The White House has ruled out any ban or curbs on natural-gas exports this winter, in a bid to help alleviate energy shortages in Europe, according to two people directly involved in the discussions.
In March, U.S. President Joe Biden committed to deliver 15 billion cubic metres (bcm) more of liquefied natural gas (LNG) to Europe following Russia's invasion of Ukraine and has already surpassed that goal.
Further White House analysis has only cemented support for ongoing exports, the sources said, although rising energy costs and a colder-than-expected winter could test Biden's commitment.
A ban has not been seriously considered, said a U.S. official.
Biden and his aides are bracing for the prospect that inflation-fatigued Americans will pay high home-heating bills this winter.
Inventories of natural gas, the nation's primary heating fuel, are at historically low levels after U.S. companies exported record amounts to Europe in recent months to counter a cut in supplies and higher prices for European power plants.
White House officials, stung by spikes in inflation to four-decade highs above 8%, explored the market impact of limiting energy exports to ease consumer prices and lift domestic inventories, the sources said.
But that analysis only cemented a consensus that such a move would be too extreme and fracture key relationships with allies in Europe.
The issue has taken on new significance in recent weeks as the White House has threatened petroleum refiners they could stop them from exporting fuels like gasoline and diesel unless domestic inventories rise.
"President Biden made a commitment in March and we have been moving out on it."
"We surpassed the LNG export goal President Biden set," said a senior administration official, who pointed to 30 bcm in U.S. LNG exports to EU since early March, double the same period last year.
"And because of the steps we and our partners have been taking, gas storage in Europe is at a significantly higher level than last year."
"More work remains," the official said.
U.S. HEATING COSTS TO RISE
The average cost of U.S. home heating is expected to rise 17.2% from last winter to $1,202, putting millions of low-income families at risk of falling behind on their energy bills, according to a recent report by the National Energy Assistance Directors' Association (NEAD).
The price of natural gas, which heats about 50% of U.S. households, is expected to increase about 34% compared with last year, and up 66% from the winter of 2020-2021, the report said.
Some power companies who rely on natural gas in the U.S. northeast are warning consumers that electricity bills could soar by 60% this winter.
However, ruling out a natural gas export ban still makes sense, economists say, given the EU's increasing reliance on U.S. exports.
"(U.S.) natural gas prices would plummet, but if I were the EU, I would almost consider (a ban) an act of war."
"It would really stoke anti-American attitudes and make European countries question the strength of their relationship with the U.S.," said Ed Hirs, an energy economist at the University of Houston.
The U.S. banned crude oil exports for four decades in the name of consumer protection until President Barack Obama and Congress lifted the restriction in 2015.
Biden has sought to leverage the country's vast supply of natural gas to forge stronger ties with European allies in the wake of Russia's invasion of Ukraine and the subsequent upheaval in global energy markets.
Biden and European Commission President Ursula von der Leyen announced a plan to form a task force to cut Europe's reliance on Russian fossil fuels.
Russia, the world's second-biggest gas producer, has provided about a third of Europe's gas in recent years, but a major pipeline that runs from Russia to Germany was badly damaged in what European and U.S. officials have described as sabotage.
This summer, the EU urged member states to cut gas usage by 15% until March as an emergency step.
During the first nine months of 2022, roughly 60%, or 6.3 billion cubic feet per day (bcfd), of U.S. LNG exports went to Europe, as shippers diverted cargoes from Asia to fetch higher prices.
Last year, just 29%, or about 2.8 bcfd, of U.S. LNG exports went to Europe.
Gas stockpiles in northwest Europe - Belgium, France, Germany and the Netherlands - are currently about 6% above their five-year (2017-2021) average for this time of year, according to Refinitiv.
Storage is around 91% of capacity.
U.S. INVENTORIES LOW, PRICES RISING
That is much healthier than U.S. gas inventories, which are still about 9% below their five-year norm, despite record production due to export demand.
If the U.S. fall and winter are colder than expected, low inventories will drive up prices and could reignite calls from U.S. lawmakers, including influential Senator Elizabeth Warren, to curtail natural gas exports.
U.S. natural gas prices are far lower than global prices because the United States is the world's top producer.
The United States will produce a record 97.1 billion cubic feet per day (bcfd) of natural gas and export a record 11.0 bcfd of gas as LNG in 2022.
Still, natural gas heating bills will average $952 this winter, up from an average of $564 from 2012 to 2021, according to NEAD.
"Americans for years enjoyed low price natural gas," said Mark Wolfe, head of NEAD.
"I am afraid that era is now over."
Reporting by Jarrett Renshaw and Trevor Hunnicutt; additional reporting by Scott DiSavino in New York; editing by Heather Timmons, David Gregorio and Richard Pullin
https://www.reuters.com/business/energy ... 022-10-04/
Re: THE ECONOMY
FOX NEWS
"New York Times report warns of rising debt, says it is a 'political problem' for Biden"
Joe Silverstein
4 OCTOBER 2022
The New York Times published an article Tuesday warning that the rising national debt, which just surpassed a historic $31 trillion, poses "a political problem" for President Biden and an economic problem for the United States as a whole.
The article, titled "U.S. National Debt Tops $31 Trillion for First Time", briefly was featured as the New York Times' front page story and was written by economic policy reporter Alan Rappeport and White House correspondent Jim Tankersley.
In the piece, Rappeport and Tankersley warned that rising interest rates will make it more expensive for the federal government to borrow money, a departure from the comparatively cheap money it has been able to obtain in recent years due to low interest rates and inflation.
"America’s gross national debt exceeded $31 trillion for the first time on Tuesday, a grim financial milestone that arrived just as the nation’s long-term fiscal picture has darkened amid rising interest rates," The Times reported.
"The breach of the threshold, which was revealed in a Treasury Department report, comes at an inopportune moment, as historically low interest rates are being replaced with higher borrowing costs as the Federal Reserve tries to combat rapid inflation," the article continued.
Last month, the Federal Reserve raised interest points by 75 basis points, and it is expected to do so again twice more this year.
Higher interest rates make borrowing more expensive, including for the government, which sells various debt products to the public to finance its expenditures.
"Higher rates could add an additional $1 trillion to what the federal government spends on interest payments this decade, according to Peterson Foundation estimates," the reporters wrote, noting "its borrowing costs rise and fall along with interest rates."
They pointed to a report by the Congressional Budget Office published earlier this year which warned that mounting debt can cause investors to lose confidence in the U.S. government's ability to pay back what it owes: "Those worries, the budget office said, could cause ‘interest rates to increase abruptly and inflation to spiral upward.’"
As for the political implications of the rising debt, The Times reporters wrote, "The $31 trillion threshold also poses a political problem for President Biden, who has pledged to put the United States on a more sustainable fiscal path and reduce federal budget deficits by $1 trillion over a decade."
They noted The Committee for a Responsible Federal Budget estimates Biden's spending has added $5 trillion to the deficit.
"That projection includes Mr. Biden’s signature $1.9 trillion economic stimulus bill, a variety of new congressionally approved spending initiatives and a student-loan debt forgiveness plan that is expected to cost taxpayers nearly $400 billion over 30 years," The Times reported.
Inflation has been stubbornly persistent, with the most recent consumer price index data revealing the inflation rate to stand at 8.3%.
Federal Reserve Chairman Jerome Powell has signaled that the central bank will continue to raise rates in order to combat inflation.
https://www.msn.com/en-us/money/markets ... 75c01e95f8
"New York Times report warns of rising debt, says it is a 'political problem' for Biden"
Joe Silverstein
4 OCTOBER 2022
The New York Times published an article Tuesday warning that the rising national debt, which just surpassed a historic $31 trillion, poses "a political problem" for President Biden and an economic problem for the United States as a whole.
The article, titled "U.S. National Debt Tops $31 Trillion for First Time", briefly was featured as the New York Times' front page story and was written by economic policy reporter Alan Rappeport and White House correspondent Jim Tankersley.
In the piece, Rappeport and Tankersley warned that rising interest rates will make it more expensive for the federal government to borrow money, a departure from the comparatively cheap money it has been able to obtain in recent years due to low interest rates and inflation.
"America’s gross national debt exceeded $31 trillion for the first time on Tuesday, a grim financial milestone that arrived just as the nation’s long-term fiscal picture has darkened amid rising interest rates," The Times reported.
"The breach of the threshold, which was revealed in a Treasury Department report, comes at an inopportune moment, as historically low interest rates are being replaced with higher borrowing costs as the Federal Reserve tries to combat rapid inflation," the article continued.
Last month, the Federal Reserve raised interest points by 75 basis points, and it is expected to do so again twice more this year.
Higher interest rates make borrowing more expensive, including for the government, which sells various debt products to the public to finance its expenditures.
"Higher rates could add an additional $1 trillion to what the federal government spends on interest payments this decade, according to Peterson Foundation estimates," the reporters wrote, noting "its borrowing costs rise and fall along with interest rates."
They pointed to a report by the Congressional Budget Office published earlier this year which warned that mounting debt can cause investors to lose confidence in the U.S. government's ability to pay back what it owes: "Those worries, the budget office said, could cause ‘interest rates to increase abruptly and inflation to spiral upward.’"
As for the political implications of the rising debt, The Times reporters wrote, "The $31 trillion threshold also poses a political problem for President Biden, who has pledged to put the United States on a more sustainable fiscal path and reduce federal budget deficits by $1 trillion over a decade."
They noted The Committee for a Responsible Federal Budget estimates Biden's spending has added $5 trillion to the deficit.
"That projection includes Mr. Biden’s signature $1.9 trillion economic stimulus bill, a variety of new congressionally approved spending initiatives and a student-loan debt forgiveness plan that is expected to cost taxpayers nearly $400 billion over 30 years," The Times reported.
Inflation has been stubbornly persistent, with the most recent consumer price index data revealing the inflation rate to stand at 8.3%.
Federal Reserve Chairman Jerome Powell has signaled that the central bank will continue to raise rates in order to combat inflation.
https://www.msn.com/en-us/money/markets ... 75c01e95f8
Re: THE ECONOMY
REUTERS
"Fed's Daly: inflation 'problematic,' interest rates to rise"
By Reuters Staff
OCTOBER 5, 2022
(Reuters) - San Francisco Federal Reserve President Mary Daly on Wednesday underscored the U.S. central bank’s commitment to curbing inflation with more interest rate hikes, even as she said the Fed will not simply barrel ahead if the economy starts to crack.
“We definitely don’t raise rates until something breaks; we actually are forward-looking,” Daly told Bloomberg TV in an interview, adding that policymakers don’t rely only on models but gather information from business and community leaders to shape their policies.
“You are constantly calibrating through this data dependence to risks” of not doing enough to slow the economy, or doing too much.
Right now, she said, the economy is working well, and so are markets.
“We always have the lender-of-last-resort responsibilities, and if market dislocation should come about then we would be prepared to use that, but that’s not what I’m seeing right now,” she said.
What the Fed does see, she said, is that “inflation is problematic, and we are committed to restoring price stability” by raising rates to limit the demand for goods, services and labor that is fueling inflation.
The Fed is expected to deliver a fourth straight 75-basis-point rate hike when it meets early next month, as it tightens monetary policy more aggressively than it has done since the 1980s to ease price pressures that have stayed higher for longer than policymakers had expected.
Global stock markets have gyrated as investors try to calibrate when the Fed’s rate hikes could end.
Policymakers like Daly have stuck firmly to their message that the tightening will end only when inflation comes down.
U.S. equities on Wednesday lost ground as fresh economic data showed hiring in the services sector sped up despite the rise in borrowing costs.
CLEAR PATH
The Fed’s benchmark overnight interest rate is currently in the 3.00%-3.25% range, and policymakers have signaled they expect it to rise further to 4.6% next year as they address inflation that is, when using the Fed’s preferred measure, running at more than three times the central bank’s 2% target.
Daly said she hopes the U.S. Labor Department’s jobs report for September, due to be released on Friday, will confirm the start of a hiring slowdown that her business contacts have cited.
Data earlier this week showed businesses in August posted dramatically fewer job openings, a trend she said her contacts had begun to tell her about months earlier.
Daly also hopes the release next week of the monthly consumer price index report, the most widely followed gauge of U.S. inflation, will show underlying price pressures either stabilizing or falling.
Those data points, she said, will inform her own decision as to the pace of the Fed’s rate hikes.
But overall, she emphasized, the “path has been very clear: we are going to raise the rate until we get into restrictive territory, and then we are going to hold it there” until inflation comes down closer to 2%.
Daly said she does not expect that to occur until 2024.
“It really is the idea that you hold for a while so that we can see inflation come back down, and our path hasn’t really changed; we haven’t pivoted on that and we’re resolute at restoring price stability,” she said.
“We’re in a vulnerable position when we have high inflation.”
On Wednesday, however, traders of futures tied to short-term interest rates were betting the Fed will have started to ease policy again before the end of next year.
Reporting by Ann Saphir; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/article/usa-fed ... SL1N3161GT
"Fed's Daly: inflation 'problematic,' interest rates to rise"
By Reuters Staff
OCTOBER 5, 2022
(Reuters) - San Francisco Federal Reserve President Mary Daly on Wednesday underscored the U.S. central bank’s commitment to curbing inflation with more interest rate hikes, even as she said the Fed will not simply barrel ahead if the economy starts to crack.
“We definitely don’t raise rates until something breaks; we actually are forward-looking,” Daly told Bloomberg TV in an interview, adding that policymakers don’t rely only on models but gather information from business and community leaders to shape their policies.
“You are constantly calibrating through this data dependence to risks” of not doing enough to slow the economy, or doing too much.
Right now, she said, the economy is working well, and so are markets.
“We always have the lender-of-last-resort responsibilities, and if market dislocation should come about then we would be prepared to use that, but that’s not what I’m seeing right now,” she said.
What the Fed does see, she said, is that “inflation is problematic, and we are committed to restoring price stability” by raising rates to limit the demand for goods, services and labor that is fueling inflation.
The Fed is expected to deliver a fourth straight 75-basis-point rate hike when it meets early next month, as it tightens monetary policy more aggressively than it has done since the 1980s to ease price pressures that have stayed higher for longer than policymakers had expected.
Global stock markets have gyrated as investors try to calibrate when the Fed’s rate hikes could end.
Policymakers like Daly have stuck firmly to their message that the tightening will end only when inflation comes down.
U.S. equities on Wednesday lost ground as fresh economic data showed hiring in the services sector sped up despite the rise in borrowing costs.
CLEAR PATH
The Fed’s benchmark overnight interest rate is currently in the 3.00%-3.25% range, and policymakers have signaled they expect it to rise further to 4.6% next year as they address inflation that is, when using the Fed’s preferred measure, running at more than three times the central bank’s 2% target.
Daly said she hopes the U.S. Labor Department’s jobs report for September, due to be released on Friday, will confirm the start of a hiring slowdown that her business contacts have cited.
Data earlier this week showed businesses in August posted dramatically fewer job openings, a trend she said her contacts had begun to tell her about months earlier.
Daly also hopes the release next week of the monthly consumer price index report, the most widely followed gauge of U.S. inflation, will show underlying price pressures either stabilizing or falling.
Those data points, she said, will inform her own decision as to the pace of the Fed’s rate hikes.
But overall, she emphasized, the “path has been very clear: we are going to raise the rate until we get into restrictive territory, and then we are going to hold it there” until inflation comes down closer to 2%.
Daly said she does not expect that to occur until 2024.
“It really is the idea that you hold for a while so that we can see inflation come back down, and our path hasn’t really changed; we haven’t pivoted on that and we’re resolute at restoring price stability,” she said.
“We’re in a vulnerable position when we have high inflation.”
On Wednesday, however, traders of futures tied to short-term interest rates were betting the Fed will have started to ease policy again before the end of next year.
Reporting by Ann Saphir; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/article/usa-fed ... SL1N3161GT
Re: THE ECONOMY
REUTERS
"U.S. service sector growth solid in September; price pressures easing - ISM survey"
Reuters
October 5, 2022
WASHINGTON, Oct 5 (Reuters) - The U.S. services industry slowed modestly in September, while employment surged and a measure of prices paid by businesses for inputs fell to more than a 1-1/2-year low, suggesting underlying strength in the economy despite rising interest rates.
The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing PMI dipped to a reading on 56.7 last month from 56.9 in August.
Economists polled by Reuters had forecast the non-manufacturing PMI falling to 56.0.
A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The economy is slowing as the Federal Reserve aggressively tightens monetary policy to quell inflation.
The U.S. central bank has hiked its policy rate from the near-zero level at the beginning of this year to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
Higher borrowing costs are weighing on the housing market and starting to strain the manufacturing industry.
The ISM reported on Monday that its manufacturing PMI dropped in September to the lowest reading since May 2020.
Services activity is being supported by a shift in spending from goods, though demand for services is starting to slow.
The ISM's measure of new orders received by services businesses slipped to 60.6 from 61.8 in August.
Businesses, however, reported a rise in exports.
Its services industry employment gauge shot up to 53.0 from a reading of 50.2 in August.
The jump suggested that demand for labor remains strong, even though job openings fell in August by the most in nearly 2-1/2 years.
The government reported on Tuesday that there were 10.1 million job openings in August, down from 11.2 million in July.
The ISM survey's measure of supplier deliveries fell to 53.9 from 54.5 in August.
With supply chains continuing to improve and employment increasing, the backlog of unfinished work was reduced further.
That resulted in services inflation decelerating considerably last month.
A gauge of prices paid by services industries for inputs dropped to 68.7, the lowest reading since January 2021, from 71.5 in August.
It mirrored a decrease in the manufacturing survey, raising hope that inflation had peaked, though the descent will probably be slow amid higher prices for sticky components like rents.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-s ... 022-10-05/
"U.S. service sector growth solid in September; price pressures easing - ISM survey"
Reuters
October 5, 2022
WASHINGTON, Oct 5 (Reuters) - The U.S. services industry slowed modestly in September, while employment surged and a measure of prices paid by businesses for inputs fell to more than a 1-1/2-year low, suggesting underlying strength in the economy despite rising interest rates.
The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing PMI dipped to a reading on 56.7 last month from 56.9 in August.
Economists polled by Reuters had forecast the non-manufacturing PMI falling to 56.0.
A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The economy is slowing as the Federal Reserve aggressively tightens monetary policy to quell inflation.
The U.S. central bank has hiked its policy rate from the near-zero level at the beginning of this year to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
Higher borrowing costs are weighing on the housing market and starting to strain the manufacturing industry.
The ISM reported on Monday that its manufacturing PMI dropped in September to the lowest reading since May 2020.
Services activity is being supported by a shift in spending from goods, though demand for services is starting to slow.
The ISM's measure of new orders received by services businesses slipped to 60.6 from 61.8 in August.
Businesses, however, reported a rise in exports.
Its services industry employment gauge shot up to 53.0 from a reading of 50.2 in August.
The jump suggested that demand for labor remains strong, even though job openings fell in August by the most in nearly 2-1/2 years.
The government reported on Tuesday that there were 10.1 million job openings in August, down from 11.2 million in July.
The ISM survey's measure of supplier deliveries fell to 53.9 from 54.5 in August.
With supply chains continuing to improve and employment increasing, the backlog of unfinished work was reduced further.
That resulted in services inflation decelerating considerably last month.
A gauge of prices paid by services industries for inputs dropped to 68.7, the lowest reading since January 2021, from 71.5 in August.
It mirrored a decrease in the manufacturing survey, raising hope that inflation had peaked, though the descent will probably be slow amid higher prices for sticky components like rents.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-s ... 022-10-05/
Re: THE ECONOMY
REUTERS
"U.S. services sector slows modestly, trade deficit narrows sharply"
By Lucia Mutikani
October 5, 2022
Summary
* Services sector activity slows slightly in September
* ADP private payrolls increase 208,000
* Trade deficit shrinks 4.3% to $67.4 billion
WASHINGTON, Oct 5 (Reuters) - The U.S. services industry slowed modestly in September while employment surged and a measure of prices paid by businesses for inputs fell to more than a 1-1/2-year low, suggesting underlying strength in the economy despite rising interest rates.
That was underscored by other data on Wednesday showing private employers increased hiring last month.
The trade deficit also narrowed in August to the lowest level in more than a year amid falling imports, prompting Goldman Sachs to boost its third-quarter gross domestic product tracking estimate by a full percentage point to a 1.9% annualized rate.
"Rate hikes are meant to slow the economy and labor demand enough to fight inflation," said Will Compernolle, a senior economist at FHN Financial in New York.
"The services side of the economy appears too resilient to suggest the kind of slowdown the Federal Reserve wants."
The Institute for Supply Management (ISM) said its non-manufacturing PMI dipped to a reading of 56.7 last month from 56.9 in August.
Economists polled by Reuters had forecast the non-manufacturing PMI would fall to 56.0.
A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The U.S. central bank has hiked its policy rate from the near-zero level at the beginning of this year to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
Services activity is being supported by a shift in spending from goods.
Fifteen industries, including mining, public administration, retail trade, information and construction, reported growth.
But accommodation and food services, arts, entertainment and recreation, as well as transportation and warehousing reported a decline in activity.
While job openings dropped by 1.1 million, the largest decline since April 2020, to 10.1 million on the last day of August, demand for labor remains strong.
Professional, scientific and technical services business reported that "hiring continues to be a challenge across most industry sectors," adding that "there are far more open roles than candidates to fill them."
Businesses in the healthcare and social assistance sector said "labor pressures continue to depress business activity, as insufficient staffing levels are not allowing the hospital system to operate at capacity."
The ISM report's services industry employment gauge shot up to 53.0 from a reading of 50.2 in August, suggesting job growth was likely solid in September.
That expectation was supported by the release on Wednesday of the ADP National Employment Report, which showed private employment increased by 208,000 jobs last month after rising by 185,000 in August.
Stocks on Wall Street were trading lower.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell.
SOLID LABOR MARKET
The Labor Department's more comprehensive and closely watched employment report on Friday is expected to show nonfarm payrolls increased by 250,000 jobs in September, according to a Reuters survey of economists.
The economy created 315,000 jobs in August.
"The labor market remains solid, but job growth is slowing in the second half of 2022 to a more sustainable pace," said Gus Faucher, chief economist at PNC Financial in Pittsburgh.
"The key question is whether the Fed can raise rates enough to slow job growth and inflation without pushing the U.S. economy into recession."
The ISM report's measure of new orders received by services businesses slipped to 60.6 from 61.8 in August.
Some of the decrease was likely due to some businesses holding too much inventory on their shelves and in warehouses as high inflation forces customers to cut back on spending.
Wholesalers reported that though inventory levels were starting to drop from record highs, "overstocked items are still a problem," adding that "we expect lower demand and inventory rebalancing to impact business activity through the end of the calendar year."
Inflation was hurting spending in the accommodation and food services industry as well as agriculture.
Supply chains continued to ease, but retailers as well as the transportation and warehousing industry are still facing shortages.
The ISM survey's measure of supplier deliveries fell to 53.9 from 54.5 in August.
Services inflation decelerated further last month.
A gauge of prices paid by services industries for inputs dropped to 68.7, the lowest reading since January 2021, from 71.5 in August, raising hopes that inflation had peaked, though the descent will probably be slow.
A third report from the Commerce Department showed the trade deficit narrowed 4.3% to $67.4 billion in August, the lowest level since May 2021.
The smaller trade deficit could spur a rebound in GDP after it contracted at a 0.6% pace in the second quarter.
Imports declined 1.1% to $326.3 billion, likely driven by slowing demand and unsold goods.
There were big declines in crude oil and capital goods imports.
Motor vehicle imports, however, increased and were the highest on record.
Imports of services rose, lifted by gains in travel and charges for the use of intellectual property.
"The real volume of imports has fallen at a 19.0% annualized rate over the last five months," said Conrad DeQuadros, a senior economic advisor at Brean Capital in New York.
"Such a decline in imports is unprecedented outside of recessions, but we do not see the U.S. economy as being in recession."
With tighter monetary policy boosting the dollar by 10.7% against the currencies of the United States' main trade partners since the start of the year, U.S.-manufactured goods are becoming less competitive.
Exports slipped 0.3% to $258.9 billion, also reflecting slowing demand in Europe and elsewhere.
The decline in exports occurred almost across the board, with large decreases in non-monetary gold, crude oil and motor vehicles and parts.
But exports of consumer goods increased, mostly reflecting pharmaceutical preparations, while exports of capital goods were the highest on record.
Exports of services fell as gains in business and financial services were offset by a drop in travel.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-p ... 022-10-05/
"U.S. services sector slows modestly, trade deficit narrows sharply"
By Lucia Mutikani
October 5, 2022
Summary
* Services sector activity slows slightly in September
* ADP private payrolls increase 208,000
* Trade deficit shrinks 4.3% to $67.4 billion
WASHINGTON, Oct 5 (Reuters) - The U.S. services industry slowed modestly in September while employment surged and a measure of prices paid by businesses for inputs fell to more than a 1-1/2-year low, suggesting underlying strength in the economy despite rising interest rates.
That was underscored by other data on Wednesday showing private employers increased hiring last month.
The trade deficit also narrowed in August to the lowest level in more than a year amid falling imports, prompting Goldman Sachs to boost its third-quarter gross domestic product tracking estimate by a full percentage point to a 1.9% annualized rate.
"Rate hikes are meant to slow the economy and labor demand enough to fight inflation," said Will Compernolle, a senior economist at FHN Financial in New York.
"The services side of the economy appears too resilient to suggest the kind of slowdown the Federal Reserve wants."
The Institute for Supply Management (ISM) said its non-manufacturing PMI dipped to a reading of 56.7 last month from 56.9 in August.
Economists polled by Reuters had forecast the non-manufacturing PMI would fall to 56.0.
A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity.
The U.S. central bank has hiked its policy rate from the near-zero level at the beginning of this year to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year.
Services activity is being supported by a shift in spending from goods.
Fifteen industries, including mining, public administration, retail trade, information and construction, reported growth.
But accommodation and food services, arts, entertainment and recreation, as well as transportation and warehousing reported a decline in activity.
While job openings dropped by 1.1 million, the largest decline since April 2020, to 10.1 million on the last day of August, demand for labor remains strong.
Professional, scientific and technical services business reported that "hiring continues to be a challenge across most industry sectors," adding that "there are far more open roles than candidates to fill them."
Businesses in the healthcare and social assistance sector said "labor pressures continue to depress business activity, as insufficient staffing levels are not allowing the hospital system to operate at capacity."
The ISM report's services industry employment gauge shot up to 53.0 from a reading of 50.2 in August, suggesting job growth was likely solid in September.
That expectation was supported by the release on Wednesday of the ADP National Employment Report, which showed private employment increased by 208,000 jobs last month after rising by 185,000 in August.
Stocks on Wall Street were trading lower.
The dollar rose against a basket of currencies.
U.S. Treasury prices fell.
SOLID LABOR MARKET
The Labor Department's more comprehensive and closely watched employment report on Friday is expected to show nonfarm payrolls increased by 250,000 jobs in September, according to a Reuters survey of economists.
The economy created 315,000 jobs in August.
"The labor market remains solid, but job growth is slowing in the second half of 2022 to a more sustainable pace," said Gus Faucher, chief economist at PNC Financial in Pittsburgh.
"The key question is whether the Fed can raise rates enough to slow job growth and inflation without pushing the U.S. economy into recession."
The ISM report's measure of new orders received by services businesses slipped to 60.6 from 61.8 in August.
Some of the decrease was likely due to some businesses holding too much inventory on their shelves and in warehouses as high inflation forces customers to cut back on spending.
Wholesalers reported that though inventory levels were starting to drop from record highs, "overstocked items are still a problem," adding that "we expect lower demand and inventory rebalancing to impact business activity through the end of the calendar year."
Inflation was hurting spending in the accommodation and food services industry as well as agriculture.
Supply chains continued to ease, but retailers as well as the transportation and warehousing industry are still facing shortages.
The ISM survey's measure of supplier deliveries fell to 53.9 from 54.5 in August.
Services inflation decelerated further last month.
A gauge of prices paid by services industries for inputs dropped to 68.7, the lowest reading since January 2021, from 71.5 in August, raising hopes that inflation had peaked, though the descent will probably be slow.
A third report from the Commerce Department showed the trade deficit narrowed 4.3% to $67.4 billion in August, the lowest level since May 2021.
The smaller trade deficit could spur a rebound in GDP after it contracted at a 0.6% pace in the second quarter.
Imports declined 1.1% to $326.3 billion, likely driven by slowing demand and unsold goods.
There were big declines in crude oil and capital goods imports.
Motor vehicle imports, however, increased and were the highest on record.
Imports of services rose, lifted by gains in travel and charges for the use of intellectual property.
"The real volume of imports has fallen at a 19.0% annualized rate over the last five months," said Conrad DeQuadros, a senior economic advisor at Brean Capital in New York.
"Such a decline in imports is unprecedented outside of recessions, but we do not see the U.S. economy as being in recession."
With tighter monetary policy boosting the dollar by 10.7% against the currencies of the United States' main trade partners since the start of the year, U.S.-manufactured goods are becoming less competitive.
Exports slipped 0.3% to $258.9 billion, also reflecting slowing demand in Europe and elsewhere.
The decline in exports occurred almost across the board, with large decreases in non-monetary gold, crude oil and motor vehicles and parts.
But exports of consumer goods increased, mostly reflecting pharmaceutical preparations, while exports of capital goods were the highest on record.
Exports of services fell as gains in business and financial services were offset by a drop in travel.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-p ... 022-10-05/