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    U.S. payrolls surged by 261,000 in October, better than expected as hiring remains strong

    Nonfarm payrolls grew by 261,000 in October, better than the estimate for 205,000.
    The unemployment rate moved higher to 3.7%, while a broader jobless measure also increased, to 6.8%.
    Big job gainers by industry included health care, professional and technical services, and leisure and hospitality.
    Average hourly earnings rose 0.4% for the month and were up 4.7% from a year ago.

    Job growth was stronger than expected in October despite Federal Reserve interest rate increases aimed at slowing what is still a strong labor market.
    Nonfarm payrolls grew by 261,000 for the month while the unemployment rate moved higher to 3.7%, the Labor Department reported Friday. Those payroll numbers were better than the Dow Jones estimate for 205,000 more jobs, but worse than the 3.5% estimate for the unemployment rate.

    Although the number was better than expected, it still marked the slowest pace of job gains since December 2020.

    Average hourly earnings grew 4.7% from a year ago and 0.4% for the month, indicating that wage growth is still likely to serve as a price pressure as worker pay is still well short of the rate of inflation. The yearly growth met expectations while the monthly gain was slightly ahead of the 0.3% estimate.
    Health care led job gains, adding 53,000 positions, while professional and technical services contributed 43,000, and manufacturing grew by 32,000.
    Leisure and hospitality also posted solid growth, up 35,000 jobs, though the pace of increases has slowed considerably from the gains posted in 2021. The group, which includes hotel, restaurant and bar jobs along with related sectors, is averaging gains of 78,000 a month this year, compared with 196,000 last year.
    Heading into the holiday shopping season, retail posted only a modest gain of 7,200 jobs. Wholesale trade added 15,000, while transportation and warehousing was up 8,000.

    The unemployment rate rose 0.2 percentage point even though the labor force participation rate declined by one-tenth of a point to 62.2%. An alternative measure of unemployment, which includes discouraged workers and those holding part-time jobs for economic reasons, also edged higher to 6.8%.
    Stock market futures rose following the nonfarm payrolls release, while Treasury yields also were higher.
    September’s jobs number was revised higher, to 315,000, an increase of 52,000 from the original estimate. August’s number moved lower by 23,000 to 292,000.
    The new figures come as the Fed is on a campaign to bring down inflation running at an annual rate of 8.2%, according to one government gauge. Earlier this week, the central bank approved its fourth consecutive 0.75 percentage point interest rate increase, taking benchmark borrowing rates to a range of 3.75%-4%.
    Those hikes are aimed in part at cooling a labor market where there are still nearly two jobs for every available unemployed worker. Even with the reduced pace, job growth has been well ahead of its pre-pandemic level, in which monthly payroll growth averaged 164,000 in 2019.
    But Tom Porcelli, chief U.S. economist at RBC Capital Markets, said the broader picture is of a slowly deteriorating labor market.
    “This thing doesn’t fall of a cliff. It’s a grind into a slower backdrop,” he said. “It works this way every time. So the fact that people want to hang their hat on this lagging indicator to determine where we are going is sort of laughable.”
    Indeed, there have been signs of cracks lately.
    Amazon on Thursday said it is pausing hiring for roles in its corporate workforce, an announcement that came after the online retail behemoth said it was halting new hires for its corporate retail jobs.
    Also, Apple said it will be freezing new hires except for research and development. Ride-hailing company Lyft reported it will be slicing 13% of its workforce, while online payments company Stripe said it is cutting 14% of its workers.
    Fed Chairman Jerome Powell on Wednesday characterized the labor market as “overheated” and said the current pace of wage gains is “well above” what would be consistent with the central bank’s 2% inflation target.
    “Demand is still strong,” said Amy Glaser, senior vice president of business operations at Adecco, a staffing and recruiting firm. “Everyone is anticipating at some point that we’ll start to see a shift in demand. But so far we’re continuing to see the labor market defying the law of supply and demand.”
    Glaser said demand is especially strong in warehousing, retail and hospitality, the sector hardest hit by the Covid pandemic.
    This is breaking news. Please check back here for updates.

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    Workers Expect Fast Inflation Next Year. Could That Make It a Reality?

    The Federal Reserve chair is eyeing near-term inflation expectations, which might shape wages — and help keep prices rising rapidly.Amitis Oskoui, a consultant who works mostly with nonprofits and philanthropies, has not had a wage increase since inflation began to noticeably eat away at her paycheck early this year. What she has had are job offers.Ms. Oskoui, 36, has tried to leverage those prospects to argue for a raise as the rising cost of food, child care and life in general in Orange County, Calif., has cut into her family budget.“Generally, in the past, it was taboo to say: I need it to survive, and I know what I’m worth on the market,” she said. “In this environment, I think it’s more acceptable. Inflation is so front of mind, and it’s a big part of the public conversation about the economy.”That logic, reasonable at an individual level, is making the Federal Reserve nervous as it echoes across America.When employees successfully push for raises to cover their cost of living, companies face higher wage bills. To offset those expenses, firms may lift prices, creating a cycle in which fast inflation today begets fast — and maybe even faster — inflation tomorrow.So far, Fed officials do not think that wage growth has been a primary driver of America’s rapid inflation, Jerome H. Powell, the Fed chair, said on Wednesday.But an employment report set for release Friday is likely to show that average hourly earnings climbed 4.7 percent over the past year, economists predict. That is far faster than the 3 percent pace that prevailed before the pandemic, and is so quick that it could make it difficult for inflation to fully fade. Plus, policymakers remain anxious that today’s pressures could yet turn into a spiral in which wages and prices chase each other higher.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Elon Musk Begins Layoffs at Twitter

    The social media company’s 7,500 employees have been bracing for job cuts since Mr. Musk took it over last week.SAN FRANCISCO — Elon Musk will begin laying off Twitter employees on Friday, culling the social media company’s 7,500-person work force a little over a week after completing his blockbuster buyout.Twitter employees were notified in a company-wide email that the layoffs were set to begin, according to a copy of the message seen by The New York Times. About half the company’s workers appeared set to lose their jobs, according to internal messages and an investor, though the final count may take time to become clear. The email instructed Twitter employees to go home and not return to the offices on Friday as the cuts proceeded. Mr. Musk completed his $44 billion purchase of Twitter on Oct. 27 and immediately fired its chief executive and other top managers. More executives have since resigned or were let go, while managers were asked to draw up lists of high- and low-performing employees, likely with an eye toward job cuts.Mr. Musk, the world’s richest man, faces pressure to make Twitter work financially. The deal was the largest leveraged buyout of a technology company in history. The billionaire also loaded about $13 billion in debt on Twitter for the acquisition and is on the hook to pay about $1 billion a year in interest payments. But Twitter has often lost money, and its cash flow is not robust. Mr. Musk may benefit from cutting costs so the company is less expensive to operate.Twitter’s layoffs are unlikely to be the largest in the tech industry by total number. The computer manufacturer HP cut 24,600 of its employees, about 7.5 percent, in 2008. It later cut tens of thousands more, reaching about 30 percent of its work force.Elon Musk’s Acquisition of TwitterCard 1 of 8A blockbuster deal. More

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    Labor costs show slower rise, while trade deficit widens and jobless claims nudge lower

    Unit labor costs increased 3.5% for the July-to-September period, below the 4% Dow Jones estimate.
    The September trade deficit widened to $73.3 billion, $1 billion more than expected and up from August’s $65.7 billion.
    Weekly unemployment insurance claims totaled 217,000 for the week ended Oct. 29, down 1,000 from the previous period.

    The cost of labor rose less than expected, but low productivity helped keep the pressure on inflation in the third quarter, according to Labor Department data released Thursday.
    Unit labor costs, a measure of productivity against compensation, increased 3.5% for the July-to-September period, below the 4% Dow Jones estimate and down from 8.9% in the second quarter.

    However, productivity rose at just a 0.3% annualized rate, below the 0.4% estimate — a reflection of upward price pressures that have kept inflation running around 40-year highs.
    In an effort to bring down soaring prices, the Federal Reserve on Wednesday enacted its sixth interest rate increase of the year, bringing its benchmark short-term borrowing rate to a target range of 3.75%-4%. Fed Chair Jerome Powell said he doesn’t think wage pressures have been a major contributor to inflation, though he added that the current pace is not consistent with the Fed’s 2% inflation goal.
    “In such a high inflation environment, productivity growth could play a critical role in alleviating cost pressures and shielding companies against a rising wage bill,” said Lydia Boussour, senior economist at EY Parthenon. “But today’s report indicate businesses still can’t count on productivity gains to mitigate the effects of high inflation on their bottom line.”
    In other economic news, the September trade deficit widened to $73.3 billion. That’s $1 billion more than expected and up from August’s $65.7 billion.
    An unexpected increase in exports helped fuel a 2.6% gain in gross domestic product for the third quarter. September’s numbers, though, indicate that average exports fell $300 million, though they are up 20.2% year to date.

    Labor market data released Thursday showed that the jobs picture hasn’t changed much.
    Weekly unemployment insurance claims totaled 217,000 for the week ended Oct. 29, lower by 1,000 from the previous period and slightly below the 220,000 estimate. Continuing claims, which run a week behind the headline number, increased 47,000 to 1.485 million, the Labor Department reported.
    At the same time, outplacement firm Challenger, Gray & Christmas reported that announced layoffs for October jumped 13% to the highest monthly rate since February 2021.
    The jobs data come the day before the Labor Department releases its nonfarm payrolls report for October, which is expected to show a gain of 205,000.

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    Private payrolls rose 239,000 in October, better than expected, while wages increased 7.7%, ADP says

    Companies added 239,000 positions in October, ahead of the Dow Jones estimate of 195,000 and up slightly from the previous month, ADP reported Wednesday.
    Most of the gains came from the leisure and hospitality industry, which added 210,000 positions while wages rose 11.2% for the sector.
    Wages overall rose 7.7% from a year ago, down just slightly from the September pace.

    Private payroll growth held strong in October while worker pay rose as well, particularly in the leisure and hospitality industry, according to a report Wednesday from payroll processing firm ADP.
    Companies added 239,000 positions for the month, ahead of the Dow Jones estimate of 195,000 and better than the downwardly revised 192,000 in September. Wages increased 7.7% on an annual basis, down 0.1 percentage point from the previous month.

    Job gains were especially strong in the pivotal leisure and hospitality sector, which added 210,000 positions while wage growth accelerated 11.2%. The industry, which includes hotels, restaurants, bars and related businesses, is seen as a bellwether as it took the hardest Covid and is still below pre-pandemic levels.
    All the job growth came from services-related industries, which added 247,000 jobs, while goods-producing sectors lost 8,000 jobs, due largely to a loss of 20,000 manufacturing positions. Trade, transportation and utilities rose by 84,000.
    “This is a really strong number given the maturity of the economic recovery but the hiring was not broad-based,” ADP’s chief economist, Nela Richardson, said. “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market.”
    The Federal Reserve has been raising interest rates in an effort to cool inflation running near its highest level in more than 40 years. One primary aim is the historically tight labor market, where job openings outnumber available workers by a nearly 2-to-1 margin.
    While the headline ADP number was strong, the details looked weaker.

    Along with the decline in construction jobs, information (-17,000), professional and business services (-14,000) and financial activities (-10,000) also showed losses.
    By business size, companies with between 50 and 249 employees had virtually all the gains, adding 241,000.
    The ADP report comes two days before the more closely watched nonfarm payrolls count from the Bureau of Labor Statistics. That report is expected to show growth of 205,000, from September’s 263,000.

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    Fed Faces Tough Decisions as Inflation Lingers and Economic Risks Loom

    The central bank is expected to raise rates three-quarters of a point today, but what it says about its next steps will be even more important.The Federal Reserve is expected to continue its fight against the fastest inflation in 40 years on Wednesday by raising rates three-quarters of a percentage point for the fourth time in a row. What officials signal about the central bank’s future plans is likely to be even more important.Jerome H. Powell, the Fed chair, and his colleagues have been rapidly increasing interest rates this year to try to wrestle inflation lower. Rates, which were near zero as recently as March, are expected to stand around 3.9 percent after this meeting.Wednesday’s move would be the sixth consecutive rate increase by the Fed. The last time it moved this quickly was during the 1980s, when inflation peaked at 14 percent and interest rates rose to nearly 20 percent. Fed officials have suggested that at some point it will be appropriate to dial back their increases to allow the full economic effect of these rapid moves to play out. The question now is when that slowdown might happen.The Fed’s most recent economic projections, released in September, suggested that it could begin next month. But prices have remained uncomfortably high since those estimates were published. That could make it difficult for Mr. Powell and his colleagues to explain why backing down in December makes sense — even if they think it still does.Officials do not want investors to conclude that the Fed is easing up on its inflation fight, because market conditions could become more friendly to lending and economic growth as a result. That would be the opposite of what central bankers are aiming for: They are trying to slow conditions down so companies will lose their ability to charge more.“There are good reasons to believe that the Fed should pause relatively soon,” Tiffany Wilding, a U.S. economist at PIMCO. “There are going to be communication challenges to manage with this.”It’s a challenge that could be on full display when the Fed releases its rate decision at 2 p.m. and Mr. Powell holds his news conference at 2:30 p.m.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Corporate America Has a Message for the Fed About Inflation

    If the Federal Reserve’s chair, Jerome H. Powell, and his colleagues look at company earnings reports, these themes might catch their eye.Federal Reserve officials are battling the fastest inflation in four decades, and as they do they are parsing a wide variety of data sources to see what might happen next. If they check in on how executives are describing their companies’ latest financial results, they might have reasons to worry.It’s not because the corporate chiefs are overly gloomy about their prospects as the Fed aggressively raises interest rates to control rapid inflation. Quite the opposite: Many executives across a range of industries over the last few weeks have said they expect to see sustained demand. In many cases, they plan to continue raising prices in the months ahead.That is good for investors — the S&P 500 index gained 8 percent last month as companies began reporting quarterly profits — but not necessarily welcome news for the Fed, which has been trying hard to slow consumer spending. The central bank has already raised rates five times this year and is expected to do so again on Wednesday as part of its campaign to cool off the economy. Although companies have warned that the economy may slow and often talk about a tough environment, many are not seeing customers crack yet.“While we are seeing signs of economic slowing, consumers and corporates remain healthy,” Jane Fraser, the chief executive of Citigroup, told investors recently. “So it is all a question of what it takes to truly tame persistently high core inflation.”If companies continue to charge more and consumers are still willing to pay, inflation will be harder to stamp out. That could push the Fed to keep up its push to curb momentum — and if officials must do more to wrestle prices down, it could increase the risk of financial turmoil, higher unemployment or other bad outcomes. Although some companies are reporting a nascent slowdown, the signs are far from conclusive.Demand remains strong despite higher prices.McDonald’s expects to raise prices 10 percent at its restaurants in the United States this year, its leaders said when reporting better-than-expected sales and profits for the third quarter.“I think because of the strength of the brand and the proposition as evidenced by the results, the consumers are willing to tolerate it,” said Chris Kempczinski, the fast-food giant’s chief executive.Inflation F.A.Q.Card 1 of 5What is inflation? More