Evelyn Reynolds

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    January hiring was the lowest for the month on record as layoffs surged

    A UPS driver makes a delivery on January 30, 2024 in Miami Beach, Florida. 
    Joe Raedle | Getty Images

    Companies announced the highest level of job cuts in January since early 2023, a potential trouble spot for a labor market that will be in sharp focus this year, according to a report Thursday from Challenger, Gray & Christmas.
    The job outplacement firm said planned layoffs totaled 82,307 for the month, a jump of 136% from December though still down 20% from the same period a year ago.

    It was the second-highest layoff total and the lowest planned hiring level for the month of January in data going back to 2009.
    Technology and finance were the hardest-hit sectors, with high-flying Silicon Valley leaders such as Microsoft, Alphabet and PayPal announcing workforce cuts to start the year. Amazon also said it would be cutting as did UPS in the biggest month for layoffs since March 2023.
    “Waves of layoff announcements hit US-based companies in January after a quiet fourth quarter,” said Andrew Challenger, senior vice president of the firm. The cuts were “driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs,”
    Financial sector layoffs totaled 23,238, the worst month for the category since September 2018. Tech layoffs totaled 15,806, the highest since May 2023. Food producers announced 6,656, the highest since November 2012.
    “High costs and advancing automation technology are reshaping the food production industry. Additionally, climate change and immigration policies are influencing labor dynamics and operational challenges in this sector,” Challenger said.

    The report follows news Wednesday from ADP that private payrolls increased by just 107,000 for the month. On Friday, the Labor Department will be releasing its nonfarm payrolls count, which is expected to show growth of 185,000.
    Initial jobless claims totaled 224,000 for the week ended Jan. 27, up 9,000 from the previous week. Continuing claims, which run a week behind, jumped by 70,000, the Labor Department reported Thursday.
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    Euro zone inflation eases as expected, but core figures disappoint

    Euro zone headline inflation eased slightly in January, flash figures published by the European Union’s statistics agency showed on Thursday, while core figures declined less than expected.
    Annual headline price rises came in at 2.8%, in line with a forecast of economists polled by Reuters. Inflation stood at 2.9% in December, up from 2.4% in November, largely due to the wind-down of energy price support measures.
    Core inflation dipped to 3.3% in January from 3.4% in December. A Reuters forecast indicated a fall to 3.2% for last month.

    Patrons at sidewalk tables of Janis bar in Cais do Sodre in Lisbon, Portugal.
    Horacio Villalobos | Corbis News | Getty Images

    Euro zone headline inflation eased slightly in January, flash figures published by the European Union’s statistics agency showed on Thursday, while core figures declined less than expected.
    Annual headline price rises came in at 2.8%, in line with a forecast of economists polled by Reuters. Inflation stood at 2.9% in December, up from 2.4% in November, largely due to the wind-down of energy price support measures.

    Core inflation dipped to 3.3% in January from 3.4% in December. A Reuters forecast indicated a fall to 3.2% for last month.
    By sector, services inflation — an important gauge for policymakers due to its link to domestic wage pressures — held steady at 4%. Disinflationary effects from the energy market continued to reduce, from -6.7% to -6.3%.
    Economic growth has been stagnating in the bloc.
    Preliminary figures out earlier this week showed inflation in Germany easing slightly more than had been forecast, reaching 3.1%. The euro zone’s biggest economy has become one of its main drags on growth, with the German GDP contracting by 0.3% in the fourth quarter.
    European Central Bank officials are monitoring a host of data to see if and when they can begin bringing interest rates down from their current record highs. Price rises have cooled significantly from a peak of 10.6% in October 2022, with the central bank’s 2% target coming into sight.

    While markets continue to price in cuts starting in April, some policymakers have pushed back with suggestions that declines are likelier to take place in the summer or even later. The ECB stresses it remains data-dependent.
    At last week’s monetary policy meeting, when interest rates were left unchanged, ECB President Christine Lagarde said that the “disinflation process is at work” despite the December uptick.
    Kamil Kovar, senior economist at Moody’s Analytics, said the figures presented a “mixed bag.”
    “The decline to 2.8% was welcome news, especially relative to ECB projections that were for an increase in the inflation rate. But it was driven by a downside surprise in energy, which is all the more shocking given the end of government interventions,” Kovar said in emailed comments.
    “However, core inflation only inched lower, with services especially coming in quite hot. While some of this hot reading is explained by regular annual re-pricing and a change in weights, it nevertheless makes a March rate cut a pipe dream, and raises [the] bar for a cut in April. A cut in June remains our baseline forecast.” More

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    Walmart to Add 150 U.S. Stores in Five-Year Expansion Drive

    The retail giant, which last opened a domestic location in 2021, said most of the stores would be newly built.Walmart will add 150 stores in the United States over the next five years, a major expansion drive for the retail giant.The company said the move, which it announced in a statement on Wednesday, would involve millions of dollars in investment. Walmart employs roughly 1.6 million people in the United States, and said it hires hundreds of people each time it opens a new store.Walmart had just over 4,600 stores nationwide at the end of October, down from more than 4,700 a year earlier. The company has not opened a new U.S. store since late 2021.Most of the stores that Walmart plans to open will be newly built, while others will be conversions of existing locations to new formats. The first two new stores will open in the spring, in Florida and Georgia, and the company is completing construction plans for 12 other stores this year. It also said it would remodel 650 locations.Walmart announced this week that it was raising salaries and benefits for store managers and offering them stock grants.The company reported sharply higher profit in the first three quarters of 2023, and its share price is hovering near a record high. It has yet to report earnings for its most recent quarter, which included the holiday season.Consumer spending, which powers the U.S. economy, has been resilient even though shoppers have been squeezed by high inflation and rising interest rates. Credit card data from the holiday season showed retail sales increased from a year earlier.“This is a huge vote of confidence in the American consumer,” Craig Johnson, the founder of the retail consultancy Customer Growth Partners, said of Walmart’s announcement.Mr. Johnson said investors might be concerned over how this could affect Walmart’s Sam’s Club stores, which have increasingly moved from a destination for business owners to stock up on supplies to a place where individuals shop for groceries.Walmart’s choice to open new stores and remodel some existing ones reflects the company’s focus on enhancing its in-store and pickup experiences even as e-commerce has gained popularity, said Edward Yruma, an analyst at the investment bank Piper Sandler.“As we settle into the new normal, what we’ve come to is that the consumer likes great, physical retail locations,” he said.Jordyn Holman More

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    Private payroll growth slowed to just 107,000 in January, below expectations, ADP reports

    Companies added 107,000 workers in the first month of 2024, off from the downwardly revised 158,000 in December, ADP reported Wednesday.
    Leisure and hospitality reported the biggest increase, with an addition of 28,000 workers, while trade, transportation and utilities added 23,000 and construction rose by 22,000.
    The release comes two days ahead of the Labor Department’s nonfarm payrolls report, which is expected to show growth of 185,000.

    A 7-Eleven convenience store has a sign in the window reading “Now Hiring” in Cambridge, Massachusetts, U.S., July 8, 2022. 
    Brian Snyder | Reuters

    Private payroll growth declined sharply in January, a possible sign that the U.S. labor market is heading for a slowdown this year, ADP reported Wednesday.
    Companies added 107,000 workers in the first month of 2024, off from the downwardly revised 158,000 in December and below the Dow Jones estimate for 150,000, according to the payrolls processing firm.

    Only one sector — information services (-9,000) — reported a decline, but hiring was slow across virtually all sectors.
    Leisure and hospitality reported the biggest increase, with an addition of 28,000 workers, while trade, transportation and utilities added 23,000 and construction rose by 22,000. Services-providing companies were responsible for 77,000 jobs, with goods producers adding the rest.
    The release comes two days ahead of the Labor Department’s nonfarm payrolls report, which is expected to show growth of 185,000, against the 216,000 increase in December. While the ADP report can provide a barometer for private-sector hiring, the two reports often differ, with ADP often undershooting the Labor Department’s numbers.
    On wage gains, ADP reported a 5.2% annual increase, a number that has run above the government’s measure of average hourly earnings.
    “Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally,” said ADP chief economist Nela Richardson.
    Mid-size establishments, with between 50 and 499 employees, led job creation, adding 61,000. Small business added just 25,000. More

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    The Federal Reserve Meets Wednesday. Here’s What to Watch.

    Officials are likely to keep interest rates unchanged at the conclusion of their January meeting. Here’s a look at what might come next.Federal Reserve officials will conclude their two-day meeting on Wednesday, and they are widely expected to keep interest rates steady at a two-decade high when they release their policy decision at 2 p.m.But investors are likely to closely watch the meeting — particularly Chair Jerome H. Powell’s 2:30 p.m. news conference — for hints of when policymakers might begin to lower interest rates. The Fed has held its policy rate in a range of 5.25 to 5.5 percent since July, and officials projected in December that they might lower borrowing costs by three-quarters of a percentage point over the course of 2024.But both the timing and the magnitude of those rate cuts remain uncertain. On the one hand, inflation has come down more swiftly than many economists had expected in recent months. On the other, economic growth is proving stronger than anticipated, which could give companies the wherewithal to keep raising prices into the future.Here’s what to know about this meeting.The Fed’s statement could change.The Fed’s post-meeting policy statement has suggested that officials will watch economic data “in determining the extent of any additional policy firming that may be appropriate.” Now that further rate increases are looking less and less likely, that language may be in for a tweak.Powell has a delicate balancing act.Fed officials do not want to keep interest rates so high for so long that they squeeze the economy too much and tip it into a recession. On the other hand, they do not want to cut rates too much too early, allowing the economy to accelerate and risking a renewed pickup in inflation. Mr. Powell could talk about how officials will try to strike that balance.Growth vs. inflation will be critical.A lot of what comes next will hinge on which numbers Mr. Powell and his colleagues decide to focus on — growth or inflation — and investors might get a hint at that this week. Growth and consumer spending are both faster than many economists had expected. But the Fed’s preferred inflation gauge is also below 3 percent for the first time since early 2021, even after stripping out food and fuel costs, which can fluctuate from month to month.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    IMF warns British government against more tax cuts

    “What we are seeing in the U.K. and a number of other countries is a need to put in place medium-term fiscal plans that will accommodate a significant increase in spending pressures,” Pierre-Olivier Gourinchas said during a press briefing.
    In the U.K., he said, this included spending on the National Health Service, social care, education and the climate transition, as well as measures to boost growth, while preventing debt levels from increasing.

    British Finance Minister Jeremy Hunt said earlier this month the U.K. would not enter a recession this year.
    Hannah Mckay | Reuters

    LONDON — The U.K. government should not introduce further tax cuts this year, the International Monetary Fund said Tuesday, as its chief economist argued the national budget needed the money for public services and growth-friendly investments.
    “What we are seeing in the U.K. and a number of other countries is a need to put in place medium-term fiscal plans that will accommodate a significant increase in spending pressures,” Pierre-Olivier Gourinchas said during a press briefing.

    In the U.K., he said, this included spending on the National Health Service, social care, education and the climate transition, as well as measures to boost growth, while preventing debt levels from increasing.
    “In that context, we would advise against further discretionary tax cuts, as envisioned or discussed now,” he said.
    An IMF spokesperson separately said the U.K. had higher spending needs across public services and investments than were currently reflected in the government’s budget plans. The IMF has recommended the U.K. strengthens taxes on carbon emissions and property, eliminates loopholes in wealth and income taxation, and reforms rules which set pension levels.
    British Finance Minister Jeremy Hunt will announce his latest budget in early March, in what may be the last major fiscal announcement before a General Election is held. The timing of the vote is uncertain, but it must be called by the Conservative government at some point this year.
    The Conservatives face an uphill battle, with the opposition Labour party ahead in most polls.

    Hunt announced several tax cuts in his fall budget, and made several suggestions he wants to introduce more in the spring.
    U.K. public sector net borrowing has fallen sharply, and in December 2023 was around half that of the prior year due to higher VAT (a sales levy) and income tax receipts and lower spending.
    The IMF on Tuesday forecast 0.6% growth for the U.K. economy this year, up slightly from an estimated 0.5% figure for 2023. It revised its forecast for 2025 lower by 0.4 percentage points, to 1.6%, when it said disinflation will ease financial conditionals and allow real incomes to recover.

    The downgrade, it said, “reflects reduced scope for growth to catch up in light of recent upward statistical revisions to the level of output through the pandemic period.”
    Gourinchas told CNBC on Tuesday that despite a weak growth outlook for the year, the U.K. had seen positive news on inflation, which is forecast to average 2.8%.
    “We’re at that point, we think, that the Bank of England will be in a position like the Federal Reserve and [European Central Bank] to ease policy rates as inflation is finally brought towards target,” he said. More

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    Global Economy Is Heading Toward ‘Soft Landing,’ I.M.F. Says

    The International Monetary Fund upgraded its growth forecasts and offered a more optimistic outlook for the world economy.The global economy has been battered by a pandemic, record levels of inflation, protracted wars and skyrocketing interest rates over the past four years, raising fears of a painful worldwide downturn. But fresh forecasts published on Tuesday suggest that the world has managed to defy the odds, averting the threat of a so-called hard landing.Projections from the International Monetary Fund painted a picture of economic durability — one that policymakers have been hoping to achieve while trying to manage a series of cascading crises.In its latest economic outlook, the I.M.F. projected global growth of 3.1 percent this year — the same pace as in 2023 and an upgrade from its previous forecast of 2.9 percent. Predictions of a global recession have receded, with inflation easing faster than economists anticipated. Central bankers, including the Federal Reserve, are expected to begin cutting interest rates in the coming months.“The global economy has shown remarkable resilience, and we are now in the final descent to a soft landing,” said Pierre-Olivier Gourinchas, the chief economist of the I.M.F.Policymakers who feared they would need to hit the brakes on economic growth to contain rising prices have managed to tame inflation without tipping the world into a recession. The I.M.F. expects global inflation to fall to 5.8 percent this year and 4.4 percent in 2025 from 6.8 percent in 2023. It estimates that 80 percent of the world’s economies will experience lower annual inflation this year.The brighter outlook is due largely to the strength of the U.S. economy, which grew 3.1 percent last year. That robust growth came despite the Fed’s aggressive series of rate increases, which raised borrowing costs to their highest levels in 22 years. Consumer spending in America has held strong while businesses have continued to invest. The I.M.F. now expects the U.S. economy to grow 2.1 percent this year, up from its previous prediction of 1.5 percent.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More