REUTERS
"Fed's Kashkari, citing inflation risks, sees 2 rate hikes this year"
By Ann Saphir and Jonnelle Marte
January 4, 2022
Jan 4 (Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari on Tuesday said he expects the U.S. central bank to need to raise interest rates two times this year to address persistently high inflation, reversing his long-held view that rates will need to stay at zero until at least 2024.
The surge in inflation seen over the past six months has surprised Fed officials, and they are now trying to determine how long those pressures may last, the policymaker said.
"I brought forward two rate increases into 2022 because inflation has been higher and more persistent than I had expected," Kashkari said in a post on Medium.
The Fed last month sped up reductions to its bond-buying program and signaled three rate hikes were coming in 2022.
Kashkari said Tuesday he supported the faster taper as "a prudent decision that provides flexibility in the future for raising rates sooner if necessary."
The abrupt shift to embrace rate hikes by one of the Fed's most dovish policymakers underscores the level of concern at the central bank over the threat of high inflation, now running more than twice the Fed's 2% goal.
"The truth is, inflation has been higher than I expected and it has lasted longer than I had expected," Kashkari said during a virtual event hosted by the Wisconsin Bankers Association.
"And so the key question is, is it still going to be transitory or not?"
Kashkari's remarks signaled he may be ready to sacrifice some gains in employment in order to keep inflation in check, a difficult tradeoff that Fed policymakers had hoped to avoid.
But he also warned of the need to stay on alert for signs that once-entrenched low-inflation is returning.
"If the macroeconomic forces that kept advanced economies in a low-inflation regime are ultimately going to reassert themselves, the challenge for the FOMC will be to recognize this as soon as possible so we can avoid needlessly slowing the recovery, while at the same time protecting against the risk of entering a new, high-inflation regime," he wrote.
The Fed official said he expects the demand pressures contributing to higher inflation to weaken as the fiscal aid provided to support the economy during the pandemic fades.
However, Kashkari said it is less clear how long it will take the economy to resolve supply side challenges leading to higher prices, with some companies saying they may continue into next year.
Reporting by Ann Saphir, Howard Schneider and Jonnelle Marte; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/feds ... 022-01-04/
THE ECONOMY
Re: THE ECONOMY
REUTERS
"U.S. manufacturing catches breath; supply logjam starting to break up"
By Lucia Mutikani
January 4, 2022
Summary
* Manufacturing activity slows in December
* Signs supply constraints, price pressures starting to ease
* Record 4.5 million Americans quit jobs in November
WASHINGTON, Jan 4 (Reuters) - U.S. manufacturing activity slowed in December amid a cooling in demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade.
The Institute for Supply Management (ISM) survey on Tuesday also suggested some improvement in labor supply, with a gauge of factory employment rising to an eight-month high.
Still, Timothy Fiore, chair of the ISM manufacturing business survey committee, noted that "shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption."
The survey does not fully capture the impact of the Omicron COVID-19 variant, which is rapidly spreading across the United States and abroad.
Sky-rocketing infections could force workers to stay home and halt the tentative supply-chain progress.
"There's still a lot of ground to make up before supply chains fully normalize, but cooling prices and increased employment are positive signs," said Will Compernolle, a senior economist at FHN Financial in New York.
The ISM's index of national factory activity fell to a reading of 58.7 last month, the lowest level since January 2021, from 61.1 in November.
A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy.
Economists polled by Reuters had forecast the index would fall to 60.1.
All of the six biggest manufacturing industries - chemical products, fabricated metal products, computer and electronic products, food, transportation equipment, and petroleum and coal products - reported moderate-to-strong growth.
Manufacturers of fabricated metal products expressed optimism that "we have reached the top of the hill to start down a gentle slope that lets us get back to something that resembles normal."
Their counterparts in the chemical products industry said the "gut feeling says it's getting easier to source chemical raw materials."
Machinery makers reported that "costs for steel seem to be coming down some."
They also noted improvements in "performance by suppliers" and "on-time deliveries."
But transportation equipment manufacturers said capacity remained "limited due to the global chip shortage."
The ISM survey's measure of supplier deliveries declined to a reading of 64.9 from 72.2 in November.
A reading above 50% indicates slower deliveries to factories.
The ISM's Fiore said transportation networks, a harbinger of future supplier delivery performance, were still performing erratically, but there are signs of improvement.
Raw materials have been in short supply as global economies rebounded from the coronavirus pandemic.
Shortages have also been exacerbated by the shift in demand to goods from services early in the pandemic.
Millions of workers needed to produce and move raw materials remain sidelined.
U.S. stocks were trading mixed, with the Dow Jones Industrial Average and the S&P 500 index having hit fresh record highs earlier in the session.
The dollar was flat against a basket of currencies.
U.S. Treasury prices were mostly lower.
PRICE GAUGE FALLS
The nascent signs of improvement in supply chains suggest inflation at the factory gate could soon begin to subside.
The survey's measure of prices paid by manufacturers tumbled to 68.2 last month, the lowest level since November 2020, from 82.4 in November.
The 14.2-point plunge was the biggest since October 2011.
This supports the Federal Reserve's long-held view that the current period of high inflation is transitory.
Inflation is well above the U.S. central bank's flexible 2% target.
"The report is consistent with our expectation that inflation will hit an inflection point probably in the first quarter of this year," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
The ISM survey's forward-looking new orders sub-index fell to a still-high reading of 60.4 from 61.5 in November.
With customer inventories remaining depressed, the slowdown in new order growth is likely to be temporary or limited.
Factories hired more workers, but turnover rates remained high, a trend which manufacturers said started in August.
Indeed, a separate report from the Labor Department on Tuesday showed a record 4.5 million Americans voluntarily quit their jobs in November, which will put pressure on businesses to raise wages to attract workers.
"Replacing those workers is proving unusually challenging," said Julia Pollak, chief economist at ZipRecruiter.
"This is the tightest labor market ever."
There were 10.6 million job openings at the end of November.
The high number of vacancies meant there was 0.65 unemployed person per job opening, an all-time low.
Before the pandemic, there were normally about 2.3 unemployed people per job opening.
The ISM's measure of manufacturing employment rose to an eight-month high of 54.2 from 53.3 in November.
This, together with very low first-time applications for unemployment benefits, supports the view that job growth accelerated in December.
According to a preliminary Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising by 210,000 in November.
The Labor Department is scheduled to publish December's employment report on Friday.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-m ... 022-01-04/
"U.S. manufacturing catches breath; supply logjam starting to break up"
By Lucia Mutikani
January 4, 2022
Summary
* Manufacturing activity slows in December
* Signs supply constraints, price pressures starting to ease
* Record 4.5 million Americans quit jobs in November
WASHINGTON, Jan 4 (Reuters) - U.S. manufacturing activity slowed in December amid a cooling in demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade.
The Institute for Supply Management (ISM) survey on Tuesday also suggested some improvement in labor supply, with a gauge of factory employment rising to an eight-month high.
Still, Timothy Fiore, chair of the ISM manufacturing business survey committee, noted that "shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption."
The survey does not fully capture the impact of the Omicron COVID-19 variant, which is rapidly spreading across the United States and abroad.
Sky-rocketing infections could force workers to stay home and halt the tentative supply-chain progress.
"There's still a lot of ground to make up before supply chains fully normalize, but cooling prices and increased employment are positive signs," said Will Compernolle, a senior economist at FHN Financial in New York.
The ISM's index of national factory activity fell to a reading of 58.7 last month, the lowest level since January 2021, from 61.1 in November.
A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy.
Economists polled by Reuters had forecast the index would fall to 60.1.
All of the six biggest manufacturing industries - chemical products, fabricated metal products, computer and electronic products, food, transportation equipment, and petroleum and coal products - reported moderate-to-strong growth.
Manufacturers of fabricated metal products expressed optimism that "we have reached the top of the hill to start down a gentle slope that lets us get back to something that resembles normal."
Their counterparts in the chemical products industry said the "gut feeling says it's getting easier to source chemical raw materials."
Machinery makers reported that "costs for steel seem to be coming down some."
They also noted improvements in "performance by suppliers" and "on-time deliveries."
But transportation equipment manufacturers said capacity remained "limited due to the global chip shortage."
The ISM survey's measure of supplier deliveries declined to a reading of 64.9 from 72.2 in November.
A reading above 50% indicates slower deliveries to factories.
The ISM's Fiore said transportation networks, a harbinger of future supplier delivery performance, were still performing erratically, but there are signs of improvement.
Raw materials have been in short supply as global economies rebounded from the coronavirus pandemic.
Shortages have also been exacerbated by the shift in demand to goods from services early in the pandemic.
Millions of workers needed to produce and move raw materials remain sidelined.
U.S. stocks were trading mixed, with the Dow Jones Industrial Average and the S&P 500 index having hit fresh record highs earlier in the session.
The dollar was flat against a basket of currencies.
U.S. Treasury prices were mostly lower.
PRICE GAUGE FALLS
The nascent signs of improvement in supply chains suggest inflation at the factory gate could soon begin to subside.
The survey's measure of prices paid by manufacturers tumbled to 68.2 last month, the lowest level since November 2020, from 82.4 in November.
The 14.2-point plunge was the biggest since October 2011.
This supports the Federal Reserve's long-held view that the current period of high inflation is transitory.
Inflation is well above the U.S. central bank's flexible 2% target.
"The report is consistent with our expectation that inflation will hit an inflection point probably in the first quarter of this year," said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina.
The ISM survey's forward-looking new orders sub-index fell to a still-high reading of 60.4 from 61.5 in November.
With customer inventories remaining depressed, the slowdown in new order growth is likely to be temporary or limited.
Factories hired more workers, but turnover rates remained high, a trend which manufacturers said started in August.
Indeed, a separate report from the Labor Department on Tuesday showed a record 4.5 million Americans voluntarily quit their jobs in November, which will put pressure on businesses to raise wages to attract workers.
"Replacing those workers is proving unusually challenging," said Julia Pollak, chief economist at ZipRecruiter.
"This is the tightest labor market ever."
There were 10.6 million job openings at the end of November.
The high number of vacancies meant there was 0.65 unemployed person per job opening, an all-time low.
Before the pandemic, there were normally about 2.3 unemployed people per job opening.
The ISM's measure of manufacturing employment rose to an eight-month high of 54.2 from 53.3 in November.
This, together with very low first-time applications for unemployment benefits, supports the view that job growth accelerated in December.
According to a preliminary Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising by 210,000 in November.
The Labor Department is scheduled to publish December's employment report on Friday.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-m ... 022-01-04/
Re: THE ECONOMY
CNBC
"Private job growth totals 807,000 in December, more than doubling expectations, ADP says"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, JAN 5 2022
KEY POINTS
* Private job growth totaled 807,000 for the month, well ahead of the Dow Jones estimate for 375,000 and the November gain of 505,000 according to ADP.
* Hiring was broad-based, though leisure and hospitality led with 246,000 new positions.
* Businesses with 500 or more employees accounted for the bulk of the gains in December, adding 389,000 jobs.
Companies hired at the fastest pace in seven months in December ahead of escalating concerns over surging Covid cases, according to a report Wednesday from payroll processing firm ADP.
Private job growth totaled 807,000 for the month, well ahead of the Dow Jones estimate for 375,000 and the November gain of 505,000.
The November total was revised lower from the initially reported 534,000.
The total was the best for the job market since May 2021′s 882,000 figure, according to the ADP data.
Hiring was broad-based, though leisure and hospitality led with 246,000 new positions.
Trade, transportation and utilities contributed 138,000, professional and business services increased by 130,000, and education and health services added 85,000.
While service-related professions led with 669,000 new hires, the goods-producing side also showed strong gains.
Manufacturing rose 74,000 and construction contributed 62,000 to the total.
The job gains came the same month that soaring Covid cases sparked renewed fears of an economic slowdown.
The U.S. earlier this week reported 1 million new positive cases in a single day as the omicron variant has run rampant through the population.
However, the ADP report, compiled with Moody’s Analytics, covers through the middle of December, before the worst of the escalation.
“December’s job market strengthened as the fallout from the Delta variant faded and Omicron’s impact had yet to be seen,” said Nela Richardson, ADP’s chief economist.
“Job gains were broad-based, as goods producers added the strongest reading of the year, while service providers dominated growth.”
The release comes two days before the more closely watched nonfarm payrolls report from the Labor Department’s Bureau of Labor Statistics that is expected to show growth of 422,000, according to the consensus Dow Jones estimate.
Following the ADP release, Goldman Sachs raised its estimate for the December nonfarm payrolls count to 500,000, a 50,000 increase from its prior estimate.
The two counts can differ substantially: For the 12 months prior to December, ADP’s tally averaged about 441,000 a month, while the BLS averaged 483,500.
Businesses with 500 or more employees accounted for the bulk of the gains in December, adding 389,000 jobs.
Medium-sized firms added 214,000, while companies with fewer than 50 workers contributed 204,000.
The rapid pace of hiring reflects trends in weekly jobless claims, which are running around their lowest levels in more than 50 years.
However, total employment remains well below pre-pandemic levels.
Even with the unemployment rate dropping from its pandemic high of 14.8% to the current 4.2%, there are some 3.6 million fewer Americans at work compared with February 2020, and the labor force is smaller by nearly 2.4 million as the labor force participation rate is down 1.5 percentage points, according to BLS data through November.
https://www.cnbc.com/2022/01/05/adp-december-2021.html
"Private job growth totals 807,000 in December, more than doubling expectations, ADP says"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, JAN 5 2022
KEY POINTS
* Private job growth totaled 807,000 for the month, well ahead of the Dow Jones estimate for 375,000 and the November gain of 505,000 according to ADP.
* Hiring was broad-based, though leisure and hospitality led with 246,000 new positions.
* Businesses with 500 or more employees accounted for the bulk of the gains in December, adding 389,000 jobs.
Companies hired at the fastest pace in seven months in December ahead of escalating concerns over surging Covid cases, according to a report Wednesday from payroll processing firm ADP.
Private job growth totaled 807,000 for the month, well ahead of the Dow Jones estimate for 375,000 and the November gain of 505,000.
The November total was revised lower from the initially reported 534,000.
The total was the best for the job market since May 2021′s 882,000 figure, according to the ADP data.
Hiring was broad-based, though leisure and hospitality led with 246,000 new positions.
Trade, transportation and utilities contributed 138,000, professional and business services increased by 130,000, and education and health services added 85,000.
While service-related professions led with 669,000 new hires, the goods-producing side also showed strong gains.
Manufacturing rose 74,000 and construction contributed 62,000 to the total.
The job gains came the same month that soaring Covid cases sparked renewed fears of an economic slowdown.
The U.S. earlier this week reported 1 million new positive cases in a single day as the omicron variant has run rampant through the population.
However, the ADP report, compiled with Moody’s Analytics, covers through the middle of December, before the worst of the escalation.
“December’s job market strengthened as the fallout from the Delta variant faded and Omicron’s impact had yet to be seen,” said Nela Richardson, ADP’s chief economist.
“Job gains were broad-based, as goods producers added the strongest reading of the year, while service providers dominated growth.”
The release comes two days before the more closely watched nonfarm payrolls report from the Labor Department’s Bureau of Labor Statistics that is expected to show growth of 422,000, according to the consensus Dow Jones estimate.
Following the ADP release, Goldman Sachs raised its estimate for the December nonfarm payrolls count to 500,000, a 50,000 increase from its prior estimate.
The two counts can differ substantially: For the 12 months prior to December, ADP’s tally averaged about 441,000 a month, while the BLS averaged 483,500.
Businesses with 500 or more employees accounted for the bulk of the gains in December, adding 389,000 jobs.
Medium-sized firms added 214,000, while companies with fewer than 50 workers contributed 204,000.
The rapid pace of hiring reflects trends in weekly jobless claims, which are running around their lowest levels in more than 50 years.
However, total employment remains well below pre-pandemic levels.
Even with the unemployment rate dropping from its pandemic high of 14.8% to the current 4.2%, there are some 3.6 million fewer Americans at work compared with February 2020, and the labor force is smaller by nearly 2.4 million as the labor force participation rate is down 1.5 percentage points, according to BLS data through November.
https://www.cnbc.com/2022/01/05/adp-december-2021.html
Re: THE ECONOMY
REUTERS
"Hawkish Fed signals it may have to raise rates sooner to fight inflation"
By Howard Schneider, Jonnelle Marte
JANUARY 5, 2022
WASHINGTON (Reuters) - A “very tight” job market and unabated inflation might require the Federal Reserve to raise interest rates sooner than expected and begin reducing its overall asset holdings as a second brake on the economy, U.S. central bank policymakers said in their meeting last month.
In a document released on Wednesday that markets took as decidedly hawkish, the minutes from the Dec. 14-15 policy meeting showed Fed officials uniformly concerned about the pace of price increases that promised to persist, alongside global supply bottlenecks “well into” 2022.
Those concerns, at least as of mid-December, even appeared to outweigh the risks potentially posed by the fast-surging Omicron variant of the coronavirus, seen by some Fed officials as likely adding further to inflation pressures but not “fundamentally altering the path of economic recovery in the United States.”
“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated."
"Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes stated.
The language showed the depth of the consensus that has emerged at the Fed in recent weeks over the need to move against high inflation - not just by raising borrowing costs but by acting with a second lever and reducing the central bank’s holdings of Treasury bonds and mortgage-backed securities.
The Fed has about $8.8 trillion on its balance sheet, much of it accumulated during the coronavirus pandemic to keep financial markets stable and hold down long-term interest rates.
Markets swiftly took note.
The probability that the Fed would lift interest rates in March for the first time since the pandemic’s onset rose to greater than 70%, as tracked by CME Group’s FedWatch tool.
That, plus the prospect of the Fed reducing its presence in long-term bond markets, pushed the U.S. 10-year Treasury yield to its strongest level since April 2021.
U.S. stocks tumbled, with the S&P 500 index down about 1.6%, as the readout of last month’s meeting showed perhaps even more conviction than investors had expected among Fed policymakers to tackle inflation.
The yield on the 2-year Treasury note, the maturity most sensitive to Fed policy expectations, shot to its highest level since March 2020 when the pandemic-fueled economic crisis was unfolding.
“This is news."
"This is more hawkish than expected,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
MAXIMUM EMPLOYMENT
The minutes offered more details on the Fed’s abrupt shift in policy last month, taken to counter inflation running at more than twice the central bank’s 2% target.
Along with outlining their inflation concerns, officials said that even with the U.S. labor market more than 3 million jobs short of its pre-pandemic peak, the economy was closing in fast on what might be considered maximum employment, given the retirements and other departures from the job market that have been prompted by the health crisis.
“Participants pointed to a number of signs that the U.S. labor market was very tight, including near-record rates of quits and job vacancies, as well as a notable pickup in wage growth,” the minutes said.
“Many participants judged that, if the current pace of improvement continued, labor markets would fast approach maximum employment.”
Policymakers in December agreed to hasten the end of their pandemic-era program of bond purchases, and issued forecasts anticipating three quarter-percentage-point rate increases during 2022.
The Fed’s benchmark overnight interest rate is currently set near zero.
The December meeting was held as coronavirus case counts had begun to climb due to the spread of the Omicron variant.
Infections have exploded since then, and there has been no commentary from senior Fed officials yet to indicate whether the changing health situation has altered their views about appropriate monetary policy.
Fed Chair Jerome Powell will appear before the Senate Banking Committee next week for a hearing on his nomination for a second four-year term as head of the central bank, and is likely to update his views about the economy at that time.
Reporting by Howard Schneider; Additional reporting by Stephen Culp and Jamie McGeever; Editing by Paul Simao
https://www.reuters.com/article/usa-fed ... SL1N2TL1UH
"Hawkish Fed signals it may have to raise rates sooner to fight inflation"
By Howard Schneider, Jonnelle Marte
JANUARY 5, 2022
WASHINGTON (Reuters) - A “very tight” job market and unabated inflation might require the Federal Reserve to raise interest rates sooner than expected and begin reducing its overall asset holdings as a second brake on the economy, U.S. central bank policymakers said in their meeting last month.
In a document released on Wednesday that markets took as decidedly hawkish, the minutes from the Dec. 14-15 policy meeting showed Fed officials uniformly concerned about the pace of price increases that promised to persist, alongside global supply bottlenecks “well into” 2022.
Those concerns, at least as of mid-December, even appeared to outweigh the risks potentially posed by the fast-surging Omicron variant of the coronavirus, seen by some Fed officials as likely adding further to inflation pressures but not “fundamentally altering the path of economic recovery in the United States.”
“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated."
"Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes stated.
The language showed the depth of the consensus that has emerged at the Fed in recent weeks over the need to move against high inflation - not just by raising borrowing costs but by acting with a second lever and reducing the central bank’s holdings of Treasury bonds and mortgage-backed securities.
The Fed has about $8.8 trillion on its balance sheet, much of it accumulated during the coronavirus pandemic to keep financial markets stable and hold down long-term interest rates.
Markets swiftly took note.
The probability that the Fed would lift interest rates in March for the first time since the pandemic’s onset rose to greater than 70%, as tracked by CME Group’s FedWatch tool.
That, plus the prospect of the Fed reducing its presence in long-term bond markets, pushed the U.S. 10-year Treasury yield to its strongest level since April 2021.
U.S. stocks tumbled, with the S&P 500 index down about 1.6%, as the readout of last month’s meeting showed perhaps even more conviction than investors had expected among Fed policymakers to tackle inflation.
The yield on the 2-year Treasury note, the maturity most sensitive to Fed policy expectations, shot to its highest level since March 2020 when the pandemic-fueled economic crisis was unfolding.
“This is news."
"This is more hawkish than expected,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
MAXIMUM EMPLOYMENT
The minutes offered more details on the Fed’s abrupt shift in policy last month, taken to counter inflation running at more than twice the central bank’s 2% target.
Along with outlining their inflation concerns, officials said that even with the U.S. labor market more than 3 million jobs short of its pre-pandemic peak, the economy was closing in fast on what might be considered maximum employment, given the retirements and other departures from the job market that have been prompted by the health crisis.
“Participants pointed to a number of signs that the U.S. labor market was very tight, including near-record rates of quits and job vacancies, as well as a notable pickup in wage growth,” the minutes said.
“Many participants judged that, if the current pace of improvement continued, labor markets would fast approach maximum employment.”
Policymakers in December agreed to hasten the end of their pandemic-era program of bond purchases, and issued forecasts anticipating three quarter-percentage-point rate increases during 2022.
The Fed’s benchmark overnight interest rate is currently set near zero.
The December meeting was held as coronavirus case counts had begun to climb due to the spread of the Omicron variant.
Infections have exploded since then, and there has been no commentary from senior Fed officials yet to indicate whether the changing health situation has altered their views about appropriate monetary policy.
Fed Chair Jerome Powell will appear before the Senate Banking Committee next week for a hearing on his nomination for a second four-year term as head of the central bank, and is likely to update his views about the economy at that time.
Reporting by Howard Schneider; Additional reporting by Stephen Culp and Jamie McGeever; Editing by Paul Simao
https://www.reuters.com/article/usa-fed ... SL1N2TL1UH
Re: THE ECONOMY
REUTERS
"Fed's Daly sees rate hikes ahead, but says 'measured' approach needed"
By Ann Saphir
January 6, 2022
Jan 6 (Reuters) - With the U.S. labor market "very strong" and high inflation acting as a "repressive tax" that puts a particular burden on the poor, the Federal Reserve should raise interest rates this year, San Francisco Fed President Mary Daly said on Thursday.
Still, she added, with the U.S. economy supporting millions of fewer jobs than before the onset of the COVID-19 pandemic, as many workers remain cautious in the face of the virus, the U.S. central bank's approach ought to be data-driven and "measured."
"If we act too aggressively to offset the high inflation that’s caused by the supply and demand imbalances, we won't actually do very much to solve the supply chain problems, but we will absolutely bridal the economy in a way that will mean less job creation down the road," Daly said during an Irish central bank virtual event.
While the economy is "closing in" on full employment in the context of an ongoing pandemic, she added, "there's a difference in the short run and the long run ... balancing those things as we move forward in 2022 will be the critical point of business for monetary policy."
Inflation has been running at more than twice the Fed's 2% goal for months, and has broadened from sectors directly impacted by COVID-19, such as used cars, to most of the basket of goods that Americans buy regularly.
In response, and with the U.S. unemployment rate now at 4.2%, Fed policymakers in December decided to end their asset purchase program by March to make room for interest rate hikes later this year.
Minutes of the Dec. 14-15 meeting released on Wednesday showed that some Fed policymakers want to move even faster to tighten policy, including by shrinking the Fed's $8 trillion-plus balance sheet.
"I'm of the mind that we might need to, likely will need to, raise interest rates ... in order to keep the economy in balance," Daly said.
But with interest rates as low as they are - the Fed has kept its benchmark overnight interest rate pinned near zero since March of 2020 - "raising them a little bit is not the same as constraining the economy," she said.
Daly added that it is a "very different conversation" from reducing the balance sheet, as doing so would only come after the Fed has begun normalizing interest rates.
Reporting by Ann Saphir; Editing by Paul Simao
https://www.reuters.com/world/us/feds-d ... 022-01-06/
"Fed's Daly sees rate hikes ahead, but says 'measured' approach needed"
By Ann Saphir
January 6, 2022
Jan 6 (Reuters) - With the U.S. labor market "very strong" and high inflation acting as a "repressive tax" that puts a particular burden on the poor, the Federal Reserve should raise interest rates this year, San Francisco Fed President Mary Daly said on Thursday.
Still, she added, with the U.S. economy supporting millions of fewer jobs than before the onset of the COVID-19 pandemic, as many workers remain cautious in the face of the virus, the U.S. central bank's approach ought to be data-driven and "measured."
"If we act too aggressively to offset the high inflation that’s caused by the supply and demand imbalances, we won't actually do very much to solve the supply chain problems, but we will absolutely bridal the economy in a way that will mean less job creation down the road," Daly said during an Irish central bank virtual event.
While the economy is "closing in" on full employment in the context of an ongoing pandemic, she added, "there's a difference in the short run and the long run ... balancing those things as we move forward in 2022 will be the critical point of business for monetary policy."
Inflation has been running at more than twice the Fed's 2% goal for months, and has broadened from sectors directly impacted by COVID-19, such as used cars, to most of the basket of goods that Americans buy regularly.
In response, and with the U.S. unemployment rate now at 4.2%, Fed policymakers in December decided to end their asset purchase program by March to make room for interest rate hikes later this year.
Minutes of the Dec. 14-15 meeting released on Wednesday showed that some Fed policymakers want to move even faster to tighten policy, including by shrinking the Fed's $8 trillion-plus balance sheet.
"I'm of the mind that we might need to, likely will need to, raise interest rates ... in order to keep the economy in balance," Daly said.
But with interest rates as low as they are - the Fed has kept its benchmark overnight interest rate pinned near zero since March of 2020 - "raising them a little bit is not the same as constraining the economy," she said.
Daly added that it is a "very different conversation" from reducing the balance sheet, as doing so would only come after the Fed has begun normalizing interest rates.
Reporting by Ann Saphir; Editing by Paul Simao
https://www.reuters.com/world/us/feds-d ... 022-01-06/
Re: THE ECONOMY
REUTERS
"Fed's Daly says 'closing in' on achieving inflation, employment goals"
By Reuters Staff
JANUARY 6, 2022
Jan 6 (Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Thursday said the U.S. economy is “closing in” on the U.S. central bank’s two goals of full employment and 2% inflation, at least in the short run.
“There’s a difference in the short run and the long run...balancing those things as we move forward in 2022 will be the critical point of business for monetary policy,” Daly said at an Irish central bank virtual event.
While the labor market “looks like it’s very strong,” she said, the economy is supporting millions of jobs fewer than it did pre-pandemic as women and older workers stay out of the labor force due to COVID constraints.
(Reporting by Ann Saphir)
https://www.reuters.com/article/usa-fed ... SS0N2RG008
"Fed's Daly says 'closing in' on achieving inflation, employment goals"
By Reuters Staff
JANUARY 6, 2022
Jan 6 (Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Thursday said the U.S. economy is “closing in” on the U.S. central bank’s two goals of full employment and 2% inflation, at least in the short run.
“There’s a difference in the short run and the long run...balancing those things as we move forward in 2022 will be the critical point of business for monetary policy,” Daly said at an Irish central bank virtual event.
While the labor market “looks like it’s very strong,” she said, the economy is supporting millions of jobs fewer than it did pre-pandemic as women and older workers stay out of the labor force due to COVID constraints.
(Reporting by Ann Saphir)
https://www.reuters.com/article/usa-fed ... SS0N2RG008
Re: THE ECONOMY
REUTERS
"U.S. weekly jobless claims rise slightly despite spiraling Omicron cases"
By Lucia Mutikani
January 6, 2022
Summary
* Weekly jobless claims increase 7,000 to 207,000
* Continuing claims rise 36,000 to 1.754 million
* Services sector activity slows in December
* Trade deficit widens 19.4% to $80.2 billion in November
WASHINGTON, Jan 6 (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly rose last week as soaring COVID-19 infections disrupted activity at businesses.
But the increase in initial claims reported by the Labor Department on Thursday was moderate.
The labor market is tightening amid an acute shortage of workers.
With coronavirus infection, driven by the Omicron variant, expected to peak soon, a substantial rise in claims is unlikely.
"It is possible that the recent spread of COVID has put that earlier downward trend on hold," said Daniel Silver, an economist at JPMorgan in New York.
"That said, it is an encouraging sign for the labor market that claims have not meaningfully jumped in response so far."
Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 207,000 for the week ended Jan. 1.
Economists polled by Reuters had forecast 197,000 applications for the latest week.
Claims hovered around 200,000 for much of December.
They have declined from a record high of 6.149 million in early April 2020.
Unadjusted claims shot up 57,599 to 315,469 last week.
There were driven by a surge in New York, which is experiencing an explosion of cases.
There were also large increases in filings in Pennsylvania, Washington state, Michigan and Connecticut.
The United States reported nearly 1 million new coronavirus cases on Monday, the highest daily tally of any country in the world.
Some school districts are suspending in-person learning, which could force some working parents to assume childcare duties.
Workers calling in sick are causing some businesses to either temporarily close or scale back services.
Thousands of airline flights have been canceled.
Disruptions caused by the spiraling Omicron infections, together with relentless input shortages, curbed services sector activity in December, a separate report showed on Thursday.
The Institute for Supply Management said its non-manufacturing activity index fell to 62.0 last month from 69.1 in November, which was the highest reading since the series started in 1997.
The ISM said businesses continued "to struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials."
The survey found that fast food restaurants were offering sign-on bonuses and high pay for lower-level jobs.
Other businesses reported there were "not enough potential employees in the pipeline," and "employees (were) leaving for other opportunities at higher wages."
There were 10.6 million job openings at the end of November, with a record 4.5 million people voluntarily quitting jobs.
Stocks on Wall Street fell in volatile trading.
The dollar gained versus a basket of currencies.
U.S. Treasury prices fell.
The number of Americans filing new claims for unemployment benefits rose last week and could increase further in the coming weeks amid disruptions from soaring COVID-19 infections.
The number of Americans filing new claims for unemployment benefits rose last week and could increase further in the coming weeks amid disruptions from soaring COVID-19 infections.
NOT ENOUGH WORKERS
"A big problem for the labor market right now is too few workers," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
The claims report showed the number of people receiving benefits after an initial week of aid increased 36,000 to 1.754 million in the week ended Dec. 25.
These so-called continuing claims remained below the 2 million mark for the sixth straight week.
The workforce is about 2.5 million people smaller than before the pandemic.
There were signs in November that some of the unemployed were starting to wade back into the labor force.
Minutes of the Federal Reserve's Dec. 14-15 policy meeting published on Wednesday showed Fed officials viewed the labor market as "very tight."
The U.S. central bank might need to raise interest rates sooner than expected and begin reducing its overall asset holdings to tame high inflation, according to the minutes.
A third report on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S.-based employers dropped 86% to a record low 321,970 in 2021.
The claims data has no bearing on the Labor Department's closely watched employment report for December, due to be released on Friday, as it falls outside the survey period.
The government surveyed businesses and households for last month's employment report in mid-December.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising 210,000 in November.
The unemployment rate is forecast falling to 4.1% from 4.2% in November.
Prospects of a strong employment report were boosted by the ADP National employment report on Wednesday, which showed private payrolls increased by 807,00 jobs last month.
That prompted economists at Goldman Sachs to raise their December payrolls estimate by 50,000 to 500,000.
With companies raising wages to attract workers, demand remains strong, pulling in imports.
A fourth report from the Labor Department on Thursday showed the trade deficit widening 19.4% to $80.2 billion in November as imports surged to a record high.
Robust imports suggest trade likely remained a drag on economic growth in the fourth quarter for the sixth straight quarter.
"The fact that imports are growing faster than exports is a continued reflection of the more robust recovery in the United States, but it is also a sign of the incremental improvement in the easing of supply chain constraints," said Shannon Seery, an economist at Wells Fargo in Charlotte, North Carolina.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-w ... 022-01-06/
"U.S. weekly jobless claims rise slightly despite spiraling Omicron cases"
By Lucia Mutikani
January 6, 2022
Summary
* Weekly jobless claims increase 7,000 to 207,000
* Continuing claims rise 36,000 to 1.754 million
* Services sector activity slows in December
* Trade deficit widens 19.4% to $80.2 billion in November
WASHINGTON, Jan 6 (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly rose last week as soaring COVID-19 infections disrupted activity at businesses.
But the increase in initial claims reported by the Labor Department on Thursday was moderate.
The labor market is tightening amid an acute shortage of workers.
With coronavirus infection, driven by the Omicron variant, expected to peak soon, a substantial rise in claims is unlikely.
"It is possible that the recent spread of COVID has put that earlier downward trend on hold," said Daniel Silver, an economist at JPMorgan in New York.
"That said, it is an encouraging sign for the labor market that claims have not meaningfully jumped in response so far."
Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 207,000 for the week ended Jan. 1.
Economists polled by Reuters had forecast 197,000 applications for the latest week.
Claims hovered around 200,000 for much of December.
They have declined from a record high of 6.149 million in early April 2020.
Unadjusted claims shot up 57,599 to 315,469 last week.
There were driven by a surge in New York, which is experiencing an explosion of cases.
There were also large increases in filings in Pennsylvania, Washington state, Michigan and Connecticut.
The United States reported nearly 1 million new coronavirus cases on Monday, the highest daily tally of any country in the world.
Some school districts are suspending in-person learning, which could force some working parents to assume childcare duties.
Workers calling in sick are causing some businesses to either temporarily close or scale back services.
Thousands of airline flights have been canceled.
Disruptions caused by the spiraling Omicron infections, together with relentless input shortages, curbed services sector activity in December, a separate report showed on Thursday.
The Institute for Supply Management said its non-manufacturing activity index fell to 62.0 last month from 69.1 in November, which was the highest reading since the series started in 1997.
The ISM said businesses continued "to struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials."
The survey found that fast food restaurants were offering sign-on bonuses and high pay for lower-level jobs.
Other businesses reported there were "not enough potential employees in the pipeline," and "employees (were) leaving for other opportunities at higher wages."
There were 10.6 million job openings at the end of November, with a record 4.5 million people voluntarily quitting jobs.
Stocks on Wall Street fell in volatile trading.
The dollar gained versus a basket of currencies.
U.S. Treasury prices fell.
The number of Americans filing new claims for unemployment benefits rose last week and could increase further in the coming weeks amid disruptions from soaring COVID-19 infections.
The number of Americans filing new claims for unemployment benefits rose last week and could increase further in the coming weeks amid disruptions from soaring COVID-19 infections.
NOT ENOUGH WORKERS
"A big problem for the labor market right now is too few workers," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.
The claims report showed the number of people receiving benefits after an initial week of aid increased 36,000 to 1.754 million in the week ended Dec. 25.
These so-called continuing claims remained below the 2 million mark for the sixth straight week.
The workforce is about 2.5 million people smaller than before the pandemic.
There were signs in November that some of the unemployed were starting to wade back into the labor force.
Minutes of the Federal Reserve's Dec. 14-15 policy meeting published on Wednesday showed Fed officials viewed the labor market as "very tight."
The U.S. central bank might need to raise interest rates sooner than expected and begin reducing its overall asset holdings to tame high inflation, according to the minutes.
A third report on Thursday from global outplacement firm Challenger, Gray & Christmas showed job cuts announced by U.S.-based employers dropped 86% to a record low 321,970 in 2021.
The claims data has no bearing on the Labor Department's closely watched employment report for December, due to be released on Friday, as it falls outside the survey period.
The government surveyed businesses and households for last month's employment report in mid-December.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising 210,000 in November.
The unemployment rate is forecast falling to 4.1% from 4.2% in November.
Prospects of a strong employment report were boosted by the ADP National employment report on Wednesday, which showed private payrolls increased by 807,00 jobs last month.
That prompted economists at Goldman Sachs to raise their December payrolls estimate by 50,000 to 500,000.
With companies raising wages to attract workers, demand remains strong, pulling in imports.
A fourth report from the Labor Department on Thursday showed the trade deficit widening 19.4% to $80.2 billion in November as imports surged to a record high.
Robust imports suggest trade likely remained a drag on economic growth in the fourth quarter for the sixth straight quarter.
"The fact that imports are growing faster than exports is a continued reflection of the more robust recovery in the United States, but it is also a sign of the incremental improvement in the easing of supply chain constraints," said Shannon Seery, an economist at Wells Fargo in Charlotte, North Carolina.
Reporting By Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-w ... 022-01-06/
Re: THE ECONOMY
CNBC
"Hiring falters in December as payrolls rise only 199,000, though the unemployment rate fell to 3.9%"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED FRI, JAN 7 2022
KEY POINTS
* Nonfarm payrolls rose by 199,000 in December, far fewer than the 422,000 estimate.
* The unemployment rate dropped to 3.9%, better than the 4.1% estimate.
* Wages increased more than expected, rising 4.7% year over year.
* Leisure and hospitality showed the biggest gain by industry.
The U.S. economy added far fewer jobs than expected in December just as the nation was grappling with a massive surge in Covid cases, the Labor Department said Friday.
Nonfarm payrolls grew by 199,000, while the unemployment rate fell to 3.9%, according to Bureau of Labor Statistics data.
That compared with the Dow Jones estimate of 422,000 for the payrolls number and 4.1% for the unemployment rate.
Stock market futures edged lower after the report, while bond yields were in positive territory though off their highs of the morning.
Major indexes turned mixed in early afternoon trading, with the Dow up more than 50 points but tech stocks holding back the Nasdaq and S&P 500.
Job creation was highest in leisure and hospitality, a key recovery sector, which added 53,000.
Professional and business services contributed 43,000, while manufacturing added 26,000.
The unemployment rate was a fresh pandemic-era low and near the 50-year low of 3.5% in February 2020.
That decline came even though the labor force participation rate was unchanged at 61.9% amid an ongoing labor shortage in the U.S.
A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons slid to 7.3%, down 0.4 percentage point.
Though the overall jobless rates fell, unemployment for Blacks spiked during the month, rising to 7.1% from 6.5%.
The rate for white women 20 years and older fell sharply, to 3.1% from 3.7%.
“The new year is off to a rocky start,” wrote Nick Bunker, economic research director at job placement site Indeed.
“These less than stellar numbers were recorded before the omicron variant started to spread significantly in the United States."
"Hopefully the current wave of the pandemic will lead to limited labor market damage."
"The labor market is still recovering, but a more sustainable comeback is only possible in a post-pandemic environment.”
Average hourly earnings rose more than expected as the U.S. sees its fastest inflation pace in nearly 40 years.
Wages climbed 0.6% for the month and were up 4.7% year over year.
That compares with respective estimates of 0.4% and 4.2%.
While the establishment survey showed much lower-than-expected job gains, the household count told a different story, with a gain of 651,000.
There also were upward revisions for prior months, with the final October tally pushed up to 648,000, an increase of 102,000, while November’s disappointing report gained 39,000 in its first revision to 249,000.
The data left the total employment level still 2.9 million shy of where it stood in February 2020, before the pandemic declaration.
The labor force participation rate is 1.5 percentage points lower, representing a workforce decline of nearly 2.3 million for the period.
There were nearly 4 million more jobs than there were unemployed workers through November.
The numbers “suggest that worker shortages were becoming a bigger restraint on employment growth, even before the Omicron surge in infections, which could knock hundreds of thousands off payrolls in January,” wrote Michael Pearce, senior U.S. economist at Capital Economics.
Other sectors seeing job gains included construction (22,000), transportation and warehousing (19,000), and wholesale trade (14,000).
Job creation for the year totaled 6.45 million, easily the highest aggregate gain on record going back to 1940.
The numbers come at a crossroads for the U.S. economy as more than half a million new Covid cases per day, many related to the omicron variant, threaten to stall an economic recovery that looks to accelerate in 2022.
While growth decelerated through the summer, economists expect that GDP rose sharply at the end of the year, with the Atlanta Fed tracking 6.7% growth.
Federal Reserve officials have been watching the data closely.
The central bank has indicated it will begin slowing the help it has been providing the economy since the pandemic began.
Friday’s report covered the week including Dec. 12, which came before the worst of an omicron spike that began heading into Christmas.
The BLS data conflicted strongly with a report earlier in the week from payrolls processing firm ADP, which said private payrolls surged by 807,000.
Weekly jobless claims also have been trending near a 52-year low, mostly recently coming in at 207,000 for the week ended Jan. 1.
Economist forecasts have been wildly inaccurate for the payrolls report and revisions have been substantial over the past four months.
In September, November and December, estimates overshot the actual counts by an average of nearly 223,000.
For October, the estimate was 198,000 below the final count.
Monthly revisions for 2021 through November added an average 101,000 to the final counts.
— CNBC’s Peter Schacknow and Steve Liesman contributed to this report.
https://www.cnbc.com/2022/01/07/hiring- ... 99000.html
"Hiring falters in December as payrolls rise only 199,000, though the unemployment rate fell to 3.9%"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED FRI, JAN 7 2022
KEY POINTS
* Nonfarm payrolls rose by 199,000 in December, far fewer than the 422,000 estimate.
* The unemployment rate dropped to 3.9%, better than the 4.1% estimate.
* Wages increased more than expected, rising 4.7% year over year.
* Leisure and hospitality showed the biggest gain by industry.
The U.S. economy added far fewer jobs than expected in December just as the nation was grappling with a massive surge in Covid cases, the Labor Department said Friday.
Nonfarm payrolls grew by 199,000, while the unemployment rate fell to 3.9%, according to Bureau of Labor Statistics data.
That compared with the Dow Jones estimate of 422,000 for the payrolls number and 4.1% for the unemployment rate.
Stock market futures edged lower after the report, while bond yields were in positive territory though off their highs of the morning.
Major indexes turned mixed in early afternoon trading, with the Dow up more than 50 points but tech stocks holding back the Nasdaq and S&P 500.
Job creation was highest in leisure and hospitality, a key recovery sector, which added 53,000.
Professional and business services contributed 43,000, while manufacturing added 26,000.
The unemployment rate was a fresh pandemic-era low and near the 50-year low of 3.5% in February 2020.
That decline came even though the labor force participation rate was unchanged at 61.9% amid an ongoing labor shortage in the U.S.
A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons slid to 7.3%, down 0.4 percentage point.
Though the overall jobless rates fell, unemployment for Blacks spiked during the month, rising to 7.1% from 6.5%.
The rate for white women 20 years and older fell sharply, to 3.1% from 3.7%.
“The new year is off to a rocky start,” wrote Nick Bunker, economic research director at job placement site Indeed.
“These less than stellar numbers were recorded before the omicron variant started to spread significantly in the United States."
"Hopefully the current wave of the pandemic will lead to limited labor market damage."
"The labor market is still recovering, but a more sustainable comeback is only possible in a post-pandemic environment.”
Average hourly earnings rose more than expected as the U.S. sees its fastest inflation pace in nearly 40 years.
Wages climbed 0.6% for the month and were up 4.7% year over year.
That compares with respective estimates of 0.4% and 4.2%.
While the establishment survey showed much lower-than-expected job gains, the household count told a different story, with a gain of 651,000.
There also were upward revisions for prior months, with the final October tally pushed up to 648,000, an increase of 102,000, while November’s disappointing report gained 39,000 in its first revision to 249,000.
The data left the total employment level still 2.9 million shy of where it stood in February 2020, before the pandemic declaration.
The labor force participation rate is 1.5 percentage points lower, representing a workforce decline of nearly 2.3 million for the period.
There were nearly 4 million more jobs than there were unemployed workers through November.
The numbers “suggest that worker shortages were becoming a bigger restraint on employment growth, even before the Omicron surge in infections, which could knock hundreds of thousands off payrolls in January,” wrote Michael Pearce, senior U.S. economist at Capital Economics.
Other sectors seeing job gains included construction (22,000), transportation and warehousing (19,000), and wholesale trade (14,000).
Job creation for the year totaled 6.45 million, easily the highest aggregate gain on record going back to 1940.
The numbers come at a crossroads for the U.S. economy as more than half a million new Covid cases per day, many related to the omicron variant, threaten to stall an economic recovery that looks to accelerate in 2022.
While growth decelerated through the summer, economists expect that GDP rose sharply at the end of the year, with the Atlanta Fed tracking 6.7% growth.
Federal Reserve officials have been watching the data closely.
The central bank has indicated it will begin slowing the help it has been providing the economy since the pandemic began.
Friday’s report covered the week including Dec. 12, which came before the worst of an omicron spike that began heading into Christmas.
The BLS data conflicted strongly with a report earlier in the week from payrolls processing firm ADP, which said private payrolls surged by 807,000.
Weekly jobless claims also have been trending near a 52-year low, mostly recently coming in at 207,000 for the week ended Jan. 1.
Economist forecasts have been wildly inaccurate for the payrolls report and revisions have been substantial over the past four months.
In September, November and December, estimates overshot the actual counts by an average of nearly 223,000.
For October, the estimate was 198,000 below the final count.
Monthly revisions for 2021 through November added an average 101,000 to the final counts.
— CNBC’s Peter Schacknow and Steve Liesman contributed to this report.
https://www.cnbc.com/2022/01/07/hiring- ... 99000.html
Re: THE ECONOMY
REUTERS
"U.S. labor market eyes maximum employment despite underwhelming December payrolls"
By Lucia Mutikani
January 7, 2022
Summary
* Nonfarm payrolls increase 199,000 in December
* Unemployment rate drops to 3.9% from 4.2%
* Average hourly earnings rise 0.6%
* Record 6.4 million jobs created in 2021
WASHINGTON, Jan 7 (Reuters) - U.S. employment rose far less than expected in December amid worker shortages, and job gains could remain moderate in the near term as spiraling COVID-19 cases disrupt economic activity.
But the Labor Department's closely watched employment report on Friday suggested the jobs market was at or near maximum employment.
The unemployment rate tumbled to a 22-month low of 3.9% from 4.2% in November.
The second straight big monthly decline occurred even as more people entered the labor force.
Wages increased solidly, underscoring labor market tightness.
"The U.S. labor market may have lost a little momentum at the end of a stellar year, largely due to the lack of available workers rather than available positions, but it is holding up nicely, at least so far," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
Nonfarm payrolls rose by 199,000 jobs last month, the survey of establishments showed.
Data for November was revised up to show payrolls advancing by 249,000 jobs instead of the previously reported 210,000.
Economists polled by Reuters had forecast payrolls would rise by 400,000 and the unemployment rate to dip to 4.1%.
A record 6.4 million jobs were created last year.
This was the largest annual increase in employment since record-keeping started in 1939, a milestone cheered by President Joe Biden, who celebrates his first anniversary in the White House on Jan. 20.
"I would argue the Biden economic plan is working," Biden said at the White House.
"And it's getting America back to work, back on its feet."
Still, employment is 3.6 million jobs below its peak in February 2020.
With the jobless rate flirting with the pre-pandemic low of 3.5% and falling below the Federal Reserve's longer-run estimate of 4.0%, some economists say the U.S. central bank could start raising interest rates in March.
"Most Fed officials will conclude that full employment has been reached, and we now expect liftoff in March and four hikes in 2022," said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
Minutes of the Fed's Dec. 14-15 policy meeting published on Wednesday showed officials at the U.S. central bank viewed the labor market as "very tight."
The underwhelming job growth in December likely reflects labor shortages as well as anomalies with the so-called seasonal adjustment, the model used by the government to strip out seasonal fluctuations from the data.
There were 10.6 million job openings at the end of November.
December is typically a weak month for payrolls growth.
Unadjusted payrolls increased by 72,000.
The seasonal factor added 127,000 jobs to the December tally, less than the 213,000 added in December 2020 and fewer than the roughly 425,000 average prior to the pandemic.
"The seasonal factor added about 300,000 less than in the pre-COVID years," said Jim O'Sullivan, chief U.S. macro strategist at TD Securities in New York.
"I'm not saying you necessarily should add 300,000, but it does look like a pretty extreme factor."
Employment was unlikely to have been impacted by surging infections driven by the Omicron variant of COVID-19.
The government surveyed businesses and households for last month's report in mid-December just as Omicron was barreling across the country.
The variant's hit to payrolls could be felt in January.
The average workweek was unchanged at 34.7 hours.
Stocks on Wall Street were mixed.
The dollar fell against a basket of currencies.
U.S. Treasury yields rose.
STRONG DETAILS
Job gains last month were led by the leisure and hospitality sector, which added 53,000 positions.
Professional and business services payrolls rose by 43,000 jobs.
Manufacturing added 26,000 jobs, while construction employment rose 22,000.
There were also gains in transportation and warehousing as well as wholesale trade and mining.
Government employment fell by 12,000 jobs.
Retail payrolls dropped as did those for utilities.
The United States reported nearly 1 million new coronavirus infections on Monday, the highest daily tally of any country in the world.
Airlines have canceled thousands of flights and some school districts have suspended in-person learning.
Some working parents may have to take on childcare duties, with the reversion to online learning.
People who are out sick or in quarantine and do not get paid during the payrolls survey period are counted as unemployed even if they still have a job.
There are more signs of unemployed people stepping back into the labor market following the end of supplemental government-funded jobless benefits early in the fall."
"But the reentry could be slowed by soaring Omicron cases.
The survey of households, from which the unemployment rate is derived, showed 168,000 people entered the labor force.
The workforce has now increased for a third straight month, though it remains 2.2 million jobs below its pre-pandemic level.
The household survey also showed an increase of 651,0000 in employment, which accounted for the three-tenths-of-a percentage-point drop in the unemployment rate.
There were fewer people working part-time for economic reasons and there was a big drop in those reporting that they could not work because of the pandemic.
Still, the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 61.9%.
It remains well below the 63.4% rate before the pandemic.
The employment-to-population ratio, viewed as a measure of an economy's ability to create employment, rose to 59.5% from 59.3% in November.
Tightening labor market conditions were highlighted by a solid 0.6% jump in average hourly earnings last month after a rise of 0.4% in November.
The annual increase, however, fell to a still-high 4.7% from 5.1% in November.
This is the result of last year's big gains falling out of the calculation.
Though inflation has outpaced wage gains, many consumers have continued to spend because of massive savings and increased job security, underpinning the economy.
Growth last year is expected to have been the strongest since 1984.
Reporting by Lucia Mutikani; Editing by Dan Burns, Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-e ... 022-01-07/
"U.S. labor market eyes maximum employment despite underwhelming December payrolls"
By Lucia Mutikani
January 7, 2022
Summary
* Nonfarm payrolls increase 199,000 in December
* Unemployment rate drops to 3.9% from 4.2%
* Average hourly earnings rise 0.6%
* Record 6.4 million jobs created in 2021
WASHINGTON, Jan 7 (Reuters) - U.S. employment rose far less than expected in December amid worker shortages, and job gains could remain moderate in the near term as spiraling COVID-19 cases disrupt economic activity.
But the Labor Department's closely watched employment report on Friday suggested the jobs market was at or near maximum employment.
The unemployment rate tumbled to a 22-month low of 3.9% from 4.2% in November.
The second straight big monthly decline occurred even as more people entered the labor force.
Wages increased solidly, underscoring labor market tightness.
"The U.S. labor market may have lost a little momentum at the end of a stellar year, largely due to the lack of available workers rather than available positions, but it is holding up nicely, at least so far," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
Nonfarm payrolls rose by 199,000 jobs last month, the survey of establishments showed.
Data for November was revised up to show payrolls advancing by 249,000 jobs instead of the previously reported 210,000.
Economists polled by Reuters had forecast payrolls would rise by 400,000 and the unemployment rate to dip to 4.1%.
A record 6.4 million jobs were created last year.
This was the largest annual increase in employment since record-keeping started in 1939, a milestone cheered by President Joe Biden, who celebrates his first anniversary in the White House on Jan. 20.
"I would argue the Biden economic plan is working," Biden said at the White House.
"And it's getting America back to work, back on its feet."
Still, employment is 3.6 million jobs below its peak in February 2020.
With the jobless rate flirting with the pre-pandemic low of 3.5% and falling below the Federal Reserve's longer-run estimate of 4.0%, some economists say the U.S. central bank could start raising interest rates in March.
"Most Fed officials will conclude that full employment has been reached, and we now expect liftoff in March and four hikes in 2022," said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
Minutes of the Fed's Dec. 14-15 policy meeting published on Wednesday showed officials at the U.S. central bank viewed the labor market as "very tight."
The underwhelming job growth in December likely reflects labor shortages as well as anomalies with the so-called seasonal adjustment, the model used by the government to strip out seasonal fluctuations from the data.
There were 10.6 million job openings at the end of November.
December is typically a weak month for payrolls growth.
Unadjusted payrolls increased by 72,000.
The seasonal factor added 127,000 jobs to the December tally, less than the 213,000 added in December 2020 and fewer than the roughly 425,000 average prior to the pandemic.
"The seasonal factor added about 300,000 less than in the pre-COVID years," said Jim O'Sullivan, chief U.S. macro strategist at TD Securities in New York.
"I'm not saying you necessarily should add 300,000, but it does look like a pretty extreme factor."
Employment was unlikely to have been impacted by surging infections driven by the Omicron variant of COVID-19.
The government surveyed businesses and households for last month's report in mid-December just as Omicron was barreling across the country.
The variant's hit to payrolls could be felt in January.
The average workweek was unchanged at 34.7 hours.
Stocks on Wall Street were mixed.
The dollar fell against a basket of currencies.
U.S. Treasury yields rose.
STRONG DETAILS
Job gains last month were led by the leisure and hospitality sector, which added 53,000 positions.
Professional and business services payrolls rose by 43,000 jobs.
Manufacturing added 26,000 jobs, while construction employment rose 22,000.
There were also gains in transportation and warehousing as well as wholesale trade and mining.
Government employment fell by 12,000 jobs.
Retail payrolls dropped as did those for utilities.
The United States reported nearly 1 million new coronavirus infections on Monday, the highest daily tally of any country in the world.
Airlines have canceled thousands of flights and some school districts have suspended in-person learning.
Some working parents may have to take on childcare duties, with the reversion to online learning.
People who are out sick or in quarantine and do not get paid during the payrolls survey period are counted as unemployed even if they still have a job.
There are more signs of unemployed people stepping back into the labor market following the end of supplemental government-funded jobless benefits early in the fall."
"But the reentry could be slowed by soaring Omicron cases.
The survey of households, from which the unemployment rate is derived, showed 168,000 people entered the labor force.
The workforce has now increased for a third straight month, though it remains 2.2 million jobs below its pre-pandemic level.
The household survey also showed an increase of 651,0000 in employment, which accounted for the three-tenths-of-a percentage-point drop in the unemployment rate.
There were fewer people working part-time for economic reasons and there was a big drop in those reporting that they could not work because of the pandemic.
Still, the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was unchanged at 61.9%.
It remains well below the 63.4% rate before the pandemic.
The employment-to-population ratio, viewed as a measure of an economy's ability to create employment, rose to 59.5% from 59.3% in November.
Tightening labor market conditions were highlighted by a solid 0.6% jump in average hourly earnings last month after a rise of 0.4% in November.
The annual increase, however, fell to a still-high 4.7% from 5.1% in November.
This is the result of last year's big gains falling out of the calculation.
Though inflation has outpaced wage gains, many consumers have continued to spend because of massive savings and increased job security, underpinning the economy.
Growth last year is expected to have been the strongest since 1984.
Reporting by Lucia Mutikani; Editing by Dan Burns, Chizu Nomiyama and Paul Simao
https://www.reuters.com/markets/us/us-e ... 022-01-07/
Re: THE ECONOMY
REUTERS
"Fed's Powell says removing policy support should not hurt employment"
By Reuters Staff
JANUARY 11, 2022
Jan 11 (Reuters) - The U.S. labor market is recovering rapidly from the hit it took during the coronavirus pandemic and it should not face added weakness as the Federal Reserve begins to remove some of the support offered during the crisis, Fed Chair Jerome Powell said on Tuesday.
“It is really time for us to begin to move away from those emergency pandemic settings to a more normal level,” Powell said during his renomination hearing before the Senate Banking Committee.
“But it really should not have negative effects on the employment market.”
(Reporting by Jonnelle Marte Editing by Paul Simao)
https://www.reuters.com/article/usa-fed ... SW1N2SF001
"Fed's Powell says removing policy support should not hurt employment"
By Reuters Staff
JANUARY 11, 2022
Jan 11 (Reuters) - The U.S. labor market is recovering rapidly from the hit it took during the coronavirus pandemic and it should not face added weakness as the Federal Reserve begins to remove some of the support offered during the crisis, Fed Chair Jerome Powell said on Tuesday.
“It is really time for us to begin to move away from those emergency pandemic settings to a more normal level,” Powell said during his renomination hearing before the Senate Banking Committee.
“But it really should not have negative effects on the employment market.”
(Reporting by Jonnelle Marte Editing by Paul Simao)
https://www.reuters.com/article/usa-fed ... SW1N2SF001