Evelyn Reynolds

Private companies added 150,000 jobs in June, below the upwardly revised 157,000 in May and the Dow Jones consensus estimate for 160,000.
Leisure and hospitality added 63,000 jobs, easily the biggest gain among the categories that payrolls processing firm ADP measures.
The pace of wage gains also moved lower for those who stayed in their jobs, down to 4.9% on a year-over-year basis for the smallest increase since August 2021.

Private payroll growth edged lower in June, according to a report Wednesday from ADP that indicates a potential slowdown in the U.S. labor market.
Companies added 150,000 jobs for the month, below the upwardly revised 157,000 in May and the Dow Jones consensus estimate for 160,000. The total was the lowest monthly gain since January.

Without the surge in leisure and hospitality hiring, the total would have been considerably lower. The sector added 63,000 jobs, easily the biggest gain among the categories that payrolls processing firm ADP measures.
Other sectors showing gains included construction (27,000), professional and business services (25,000), other services (16,000), and trade, transportation and utilities (15,000).
On the downside, natural resources and mining showed a decline of 8,000, manufacturing lost 5,000, and information was off 3,000.
“Job growth has been solid, but not broad-based,” ADP’s chief economist, Nela Richardson, said. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”
The pace of wage gains also moved lower for those who stayed in their jobs, down to 4.9% on a year-over-year basis for the smallest rise since August 2021. Job switchers saw a 7.7% increase, a number that also has been trending lower.

The bulk of job creation came from companies that employ 50-499 workers, a group that added 88,000 on the month. Small businesses contributed just 5,000. Geographically, 80,000 jobs came from the South, or more than half the total.
ADP’s report serves as a precursor to the more closely watched nonfarm payrolls count that the Labor Department will release Friday. That report is expected to show an addition of 200,000 jobs, following May’s 272,000.
The two reports often differ, sometimes substantially, with ADP consistently undershooting the Bureau of Labor Statistics count. For May, the BLS reported that private payrolls rose by 229,000, or 72,000 more than ADP’s estimate.

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Fed Chair Jerome Powell expressed satisfaction with the progress on inflation but said he wants to see more before being confident enough to start cutting interest rates.
“We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy,” he said.
While Powell said he sees progress on inflation, he’s wary of moving too soon and threatening the downward path of price increases.

U.S. Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the Federal Reserves’ William McChesney Martin building on June 12, 2024 in Washington, DC. 
Kevin Dietsch | Getty Images

Federal Reserve Chair Jerome Powell expressed satisfaction Tuesday with the progress on inflation over the past year but said he wants to see more before being confident enough to start cutting interest rates.
“We’ve made quite a bit of progress and in bringing inflation back down to our target,” Powell said at a central banking forum in Sintra, Portugal.

“The last [inflation] reading and the one before it to a lesser extent, suggest that we are getting back on the disinflationary path. We want to be more confident that inflation is moving sustainably down toward 2% before we start the process of reducing or loosening policy,” he added.
Powell spoke at a forum that also included European Central Bank President Christine Lagarde and Brazil central bank Governor Roberto Campos Neto. The forum was presented by the ECB and the discussion was moderated by CNBC’s Sara Eisen.
The comments come with markets closely watching moves from the Fed and its global counterparts as inflation shows signs of easing and some central banks, including the ECB, have slowly started rolling back interest rates.
The Commerce Department’s personal consumption expenditures price index, which the Fed focuses on as its main inflation gauge, rose at a 2.6% 12-month pace in May. That level has come down steadily after being around 4% a year ago, though policymakers do not expect it to reach the Fed’s 2% goal until 2026.
While Powell said he sees progress on inflation, he’s wary of moving too soon and threatening the downward path of price increases, which hit their highest pace since the early 1980s two years ago.

“We’re well aware that if we go too soon, that we can undo the good work we’ve done,” he said. “If we do it too late, we could unnecessarily undermine the recovery and the expansion.”
Risks of moving too late as opposed to too soon have come into better balance this year as inflation has ebbed and the economy and labor market have stayed strong, Powell added. By contrast, the Fed spent much of the past year worried that cutting rates too soon and allowing inflation to resume its upward trek posed the greater risk.
Earlier this year, markets had expected at least six Fed rate cuts of a quarter percentage point each. Market pricing has since adjusted to anticipate two reductions, one in September and another before the end of the year. However, members of the rate-setting Federal Open Market Committee at their June meeting penciled in just one.
Asked if he thought the Fed might cut in September, Powell responded, “I’m not going to be landing on any specific dates here today.”
He also was asked about whether he was concerned about the political climate and specifically should Donald Trump, a fierce Powell critic, win the November presidential election.
“I am not focused on that at all, and that’s not just a talking point. I really think that we just keep doing our jobs,” he said.

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Source: Economy – cnbc.com More

Headline inflation in the euro area dipped to 2.5% in June, the European Union’s statistics agency said Tuesday, in line with analyst expectations.
Core inflation, excluding the volatile effects of energy, food, alcohol and tobacco, stayed at 2.9% from the prior month, narrowly missing the 2.8% analyst forecast.

Headline inflation in the euro area dipped to 2.5% in June, the European Union’s statistics agency said Tuesday, while the closely watched core and services prints held steady.
The headline figure was in line with the expectations of economists polled by Reuters. Inflation had nudged up from 2.4% in April to 2.6% in May.

Core inflation, excluding the volatile effects of energy, food, alcohol and tobacco, stayed at 2.9% from the prior month, narrowly missing the 2.8% economists had forecast.
The rate of price rises in services also failed to budge, holding at 4.1%.

Investors will now parse what the latest data means for the trajectory of interest rates in the 20-nation euro zone, following the European Central Bank’s initial 25 basis point cut in June.
Volatility in the consumer price index has long been expected this year, as choppy base effects from the energy market unwind.
In June, year-on-year energy inflation in the euro zone was 0.2%, a sharp switch from earlier in the year when the sector had a strong disinflationary pull.

On Tuesday, ECB Vice President Luis de Guindos told CNBC’s Annette Weisbach that, while the central bank was confident that inflation would converge to its 2% target, the coming months would be a “bumpy road” and there is no “predetermined path” for monetary policy. He was commenting on the sidelines of the ECB Forum on Central Banking in Sintra, Portugal.

Money markets see a high likelihood of another two interest rate trims of 25 basis points each across the ECB’s remaining four meetings this year, according to LSEG pricing data. They price only a 33% chance of a follow-up cut this month.
The euro, which has struggled in recent weeks under the shadow of political risk from the upcoming French elections, was slightly lower following the data release. It was down 0.2% against the U.S. dollar and 0.05% lower against the British pound at 10:30 a.m. London time.
Kyle Chapman, FX markets analyst at Ballinger Group, said that beyond a slight cooling in food prices — with unprocessed food inflation falling to 1.4% from 1.8% — overall, the latest consumer price index was a “virtual repeat of the May data.”
“That’s enough to set in stone a pause at this month’s ECB meeting. The stickiness in services inflation may start to become a real concern for policymakers that puts a spanner in the works for rate cuts, particularly given the backdrop of rising wage growth and falling unemployment,” Chapman said in a note.
“There has been no concrete downtrend in services inflation this year, and the ECB isn’t likely to cut rates significantly until one emerges.”
The interest rate outlook will be dependent on the quarterly ECB staff macroeconomic projections, and whether they move higher, Chapman added.
In June, ECB staff raised their annual average headline inflation outlook for 2024 to 2.5% from 2.3%, also lifting their 2025 forecast to 2.2% from 2%.
Correction: This article has been updated to more accurately reflect the rise in inflation from April to May. More

The Zeta Economic Index, launched Monday, uses generative AI to analyze what its developers call “trillions of behavioral signals” to score growth on both a broad level and for stability.
In June, both measures had good news, with the economic score at 66 and the stability index at 66.1.

David A. Steinberg, CEO of Zeta Global Holdings, at the New York Stock Exchange.
Source: NYSE

Measuring the strength of the sprawling U.S. economy is no easy task, so one firm is sending artificial intelligence in to do the job.
The Zeta Economic Index, launched Monday, uses generative AI to analyze what its developers call “trillions of behavioral signals,” largely focused on consumer activity, to score growth on both a broad level of health and a separate measure on stability.

At its core, the index will gauge online and offline activity across eight categories, aiming to give a comprehensive look that incorporates standard economic data points such as unemployment and retail sales combined with high-frequency information for the AI age.
“The algorithm is looking at traditional economic indicators that you would normally look at. But then inside of our proprietary algorithm, we’re ingesting the behavioral data and transaction data of 240 million Americans, which nobody else has,” said David Steinberg, co-founder, chairman and CEO of Zeta Global.
“So instead of looking at the data in the rearview mirror like everybody else, we’re trying to put it out in advance to give a 30-day advanced snapshot of where the economy is going,” he added.

The eight verticals the economic index uses include automotive activity, dining and entertainment, financial services such as credit line expansion, health care, retail sales, technology and travel.
For the stability measure, the index will look to gauge consumers’ ability to handle gyrations in the economy.

Together, the goal is to provide something more expansive than gross domestic product and similar measures to gauge growth.
In June, both measures had good news, with the economic score at 66 and the stability index at 66.1. Respectively, the two readings correspond to “active” and “stable” regarding the health of the economy.
“This is maybe a more holistic way of really predicting the economy because not only are you taking the existing economic indicators around GDP, employment, all the different reporting that comes down on different vertical sales, you’re layering on top of it,” Steinberg said.
“We’re really looking at what they’re actually spending. We’re looking at what they’re actually reading and researching,” he added. “We’re seeing all of that information, which allows us to build a better forecast.”

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