Economy

WASHINGTON (Reuters) -The United States on Friday added 31 Chinese companies, including memory chip maker YMTC Yangtze Memory Technologies Co, to a list of entities that U.S. officials could not inspect to verify they can be trusted to responsibly handle sensitive technology exports.The U.S. also removed nine entities from the “unverified list,” including Wuxi Biologics, which was placed on the list in February sending its shares plummeting on the news.U.S. exporters must conduct additional due diligence before sending goods to companies on the list and may have to apply for more licenses.    The “unverified list” is also a potential stepping stone to a tougher trade blacklist from the Commerce Department. More

(Reuters) – Wall Street was set to open sharply lower on Friday as solid job growth and a drop in the unemployment rate last month pointed to a tight labor market, giving more room for the Federal Reserve to stick to big-sized interest-rate hikes. The Labor Department’s closely watched employment report showed nonfarm payrolls increased by 263,000 jobs last month after rising 315,000 in August.The report also showed the jobless rate fell to 3.5% in September, lower than expectations of 3.7%. Traders now see a 89.8% chance of 75 basis-point hike by the Fed, up from 83.4% before data.Aggressive rise in borrowing costs have stoked fears of slowing economic growth and a hit to corporate profits, but with the labor market remaining tight, the Fed was likely to continue with its monetary tightening plan. “The markets are worried that the Fed is going to rely on information like this that’s really a month old and they’re going to overshoot and kill the economy,” said Kim Forrest, chief investment officer at Bokeh Capital Partners. “Investors don’t have confidence in a soft landing because the Fed continues to have to ramp higher and higher to begin to slow the economy down.”Meanwhile, losses in chipmakers after a revenue warning from Advanced Micro Devices (NASDAQ:AMD) Inc weighed on the indexes as it signaling the chip slump could be much worse than expected. AMD fell 6.1% in premarket trading as its third-quarter revenue estimates were about a billion dollars less than previously forecast.Other chipmakers Qualcomm (NASDAQ:QCOM) Inc, Intel Corp (NASDAQ:INTC), ON Semiconductors, Lam Research (NASDAQ:LRCX), and Nvidia (NASDAQ:NVDA) Corp shed between 3.3% and 3.9%. At 08:51 a.m. ET, Dow e-minis were down 322 points, or 1.07%, S&P 500 e-minis were down 52.75 points, or 1.4%, and Nasdaq 100 e-minis were down 216.5 points, or 1.88%. All three main Wall Street indexes are still set to snap a three-week losing streak, heading for their biggest weekly gain since late June. With the benchmark 10-year Treasury yield rising to 3.9038%, most rate-sensitive technology and growth stocks such as Alphabet (NASDAQ:GOOGL) Inc, Amazon.com (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) fell between 1.7% and 2.4%. [US/]With most Fed officials supporting the need for rapid rate hikes, investors will monitor comments from New York President John Williams, Minneapolis President Neel Kashkari, and Atlanta President Raphael Bostic for any slight deviation in narrative. More

Nonfarm payrolls increased 263,000 for the month, short of the Dow Jones estimate for 275,000.
The unemployment rate was 3.5%, down 0.2 percentage point as the labor force participation rate edged lower.

Job growth fell just short of expectations in September and the unemployment rate declined despite efforts by the Federal Reserve to slow the economy, the Labor Department reported Friday.
Nonfarm payrolls increased 263,000 for the month, compared to the Dow Jones estimate of 275,000.

The unemployment rate was 3.5% vs the forecast of 3.7% as the labor force participation rate edged lower to 62.3% and the size of the labor force decreased by 57,000. A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons saw an even sharper decline, to 6.7% from 7%.
September’s payroll figure marked a deceleration from the 315,000 gain in August and tied for the lowest monthly increase since April 2021.
In the closely watched wage numbers, average hourly earnings rose 0.3% on the month, in line with estimates, and 5% from a year ago, an increase that is still well above the pre-pandemic norm but 0.1 percentage point below the forecast.
Stock market futures moved lower after the release while government bond yields rose. Investors were looking at the numbers for an indication of how the Federal Reserve will react as it tries to tamp down inflation.
“This puts the nail in the coffin for another 75 [basis point rate increase] in November,” said Jeffrey Roach, chief economist at LPL Financial. A basis point is 0.01 percentage point.

From a sector view, leisure and hospitality led the gains with an increase of 83,000, a gain that still left the industry 1.1 million jobs short of its February 2020 pre-pandemic levels.
Elsewhere, health care added 60,000, professional and business services rose 46,000 and manufacturing contributed 22,000. Construction was up 19,000 and wholesale trade was up 11,000.
A drop of 25,000 in government jobs was a big contributor to the report missing expectations. Hiring at the state and local level is highly seasonal, so the decline points to a report that otherwise was largely in line with expectations and shows a resilient jobs market.
Also on the negative side, financial activities and transportation and warehousing both saw losses of 8,000 jobs.
The report comes amid a months-long Fed effort to bring down inflation running near its highest annual rate in more than 40 years. The central bank has raised rates five times this year for a total of 3 percentage points and is expected to continue hiking through at least the end of the year.
Despite the increases, job growth had remained relatively strong as companies face a massive mismatch between supply and demand that has left about 1.7 job openings for every available worker. That in turn has helped drive up wages, though the increase in average hourly earnings has fallen well short of the inflation rate, which most recently was at 8.3%.
Fed officials including Chairman Jerome Powell have said they expect the rate hikes to inflict “some pain” on the economy. Federal Open Market Committee members in September indicated they expect the unemployment rate to rise to 4.4% in 2023 and hold around that level before dropping down to 4% over the long run.
Markets widely expect the Fed to continue the pace of its rate hikes with another 0.75 percentage point increase in November. Traders assigned a 78% chance of a three-quarter point move following the jobs numbers, and expect another half-point increase in December that would take the federal funds rate to a range of 4.25%-4.5%.
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The annual headline inflation rate came in at the same level reported last month, when it had reached its highest since December 2000, and compares to expectations of 8.75% in a Reuters poll of economists.Even so, consumer prices rose 0.62% in September, according to non-seasonally adjusted figures, reinforcing bets that the nation’s central bank will continue to hike the benchmark interest rate.”Inflation has halted,” Mexico President Andres Manuel Lopez Obrador said in a regular news conference. “It hit its maximum level and it’s going to start to lower,” he added.The Bank of Mexico last week raised its key interest rate by 75 basis points to a record 9.25%, citing the “ongoing tightening of global financial conditions” and stating that the balance of risks to inflation’s trajectory remains biased significantly to the upside.Banxico, as the central bank is known, has raised rates by 525 basis points since the current hiking cycle began in June 2021 in a bid to tamp down inflation, which has blown past the bank’s target of 3% plus or minus 1 percentage point.”With the (U.S. Federal Reserve) still in a hawkish mood too, the tightening cycle has a bit further to run,” Capital Economics analyst Jason Tuvey said in a note.Amid the context of soaring consumer prices, Mexico’s government on Monday announced new measures in an anti-inflationary plan made in agreement with food producers and retailers to keep food affordable.Annual core inflation, which strips out some volatile food and energy prices, reached 8.28%, while in September alone core inflation hit 0.67%, both slightly below market expectations. More

AMD, Nvidia (NASDAQ:NVDA) Corp, Intel Corp (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM) Inc and Micron Technology Inc (NASDAQ:MU) were down between 1.2% and 6.0%, weighing on smaller peers such as Marvell (NASDAQ:MRVL) Technology Inc and Applied Materials Inc (NASDAQ:AMAT).Samsung (KS:005930), the world’s top maker of memory chips, smartphones and televisions, is a bellwether for global consumer demand and its disappointing preliminary results add to a flurry of earnings downgrades and gloomy forecasts.The chip sector has been grappling with weak demand, spurred by decades-high inflation, rising interest rates, geopolitical tensions and pandemic-related lockdowns in China, hitting the PC and smartphone market as businesses and consumers rein in expenses.Nearly a dozen analysts cut their price targets on AMD’s shares by as much as $50 after the U.S.-based chipmaker slashed its third-quarter revenue outlook by about a billion dollars.”We believe AMD’s warning will have the most negative read-across for PC peer Intel, but also somewhat for Nvidia and related memory and data center peers,” BofA Securities analyst Vivek Arya said.Memory chip buyers such as smartphone and PC makers are holding off on new purchases and using up existing inventory, leading to lower shipments and ushering in an industry downcycle.”We still think the industry is heading for its deepest downcycle in a decade, thanks to high supply chain inventories and falling end demand,” Jefferies analysts said.Global chip sales grew just 0.1% in August, making it the 15th month of a downcycle since June 2021, when sales rose more than 30%, according to Jefferies.Shares of major U.S. chipmakers have already lost between a third and half of their value so far this year, following huge gains last year when Nvidia was inching closer to a trillion-dollar valuation. More

LONDON (Reuters) -The Bank of England must stick to its plan to quash the surge in inflation even if it means more pain for Britain’s economy, Deputy Governor Dave Ramsden said, adding the new government’s tax cuts could add to the inflation challenge.Two weeks since finance minister Kwasi Kwarteng roiled markets with his plans to give a growth jolt to an economy heading for a recession, Ramsden said the BoE would not shirk its main job to tackle an inflation rate currently touching 10%.”However difficult the consequences might be for the economy, the MPC must stay the course and set monetary policy to return inflation to achieve the 2% target,” he said in a speech to the Securities Industry Conference 2022 on Friday.Ramsden was one of three of the Monetary Policy Committee’s nine members to vote for a three-quarters-of-a-percentage-point rate hike last month, but a majority decided to raise Bank Rate by a less dramatic 50 basis points.Since then, investors have ramped up their expectations for how high the MPC will take borrowing costs, due largely to Kwarteng’s mini-budget.Kwarteng was forced to drop his plan to eliminate the top rate of income tax but plans for other tax cuts remain in place. Investors are betting on the BoE raising Bank Rate by a full percentage point to 3.25% in its next scheduled policy announcement on Nov. 3, and then to around 5.75% by next June.Ramsden said the BoE would factor Kwarteng’s economic stimulus plan into its next economic forecasts due in November.”Based on what we know so far, these impacts are likely to be material for the economic outlook over the next three years, which is also the horizon relevant for monetary policy,” he said.Ramsden said the big movements in financial markets – which he said reflected UK-specific factors and not just global trends as suggested by Prime Minister Liz Truss – could have a “significant direct effect” on the BoE’s next forecasts.”One key consideration for the MPC at its upcoming meetings will be whether the recent repricing of UK assets reflects a changed assessment by markets of the UK macroeconomic policy mix between fiscal and monetary policy,” he said.The International Monetary Fund has warned Britain to ensure its fiscal and monetary policies do not work at cross-purposes.Ramsden said the BoE’s decision to launch a temporary bond-buying programme to stabilise the government bond market after Kwarteng’s “mini-budget” was “an operation designed to buy time – I won’t say any more about it here.”That programme is due to end on Oct. 14. More

WASHINGTON(Reuters) – U.S. employers hired more workers than expected in September, while the unemployment rate dropped to 3.5%, pointing to a tight labor market which keeps the Federal Reserve on its aggressive monetary policy tightening campaign for a while.Nonfarm payrolls increased by 263,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for August was unrevised to show 315,000 jobs added as previously reported.Economists polled by Reuters had forecast 250,000 job gains, with estimates ranging from as low as 127,000 to as high as 375,000.The unemployment rate was at 3.7% in August. With the labor market still tight, wage gains remained solid. Average hourly earnings increased 0.3% after a similar rise in August. That lowered the annual increase in wages to 5.0% from 5.2% in August. The Atlanta Fed’s wage tracker, which controls for compositional effects like skill level, occupation and geography, is running above 6%.The labor market has largely been resilient to the higher borrowing costs and tighter financial conditions, with economists saying businesses are reluctant to lay off workers following difficulties hiring in the past year as the COVID-19 pandemic forced some people out of the workforce, partly due to prolonged illness caused by the virus.While government data this week showed job openings dropped by 1.1 million, the largest decline since April 2020, to 10.1 million on the last day of August, there are still 4 million more vacancies than there are unemployed Americans. An Institute for Supply Management survey on Wednesday also showed several services industries reporting labor shortages in September.But with the headwinds from higher borrowing costs and slowing demand rising, economists expect companies will significantly pull back on hiring, with negative payrolls likely next year. Economists say businesses have been backfilling open positions as they struggled to expand headcount to match increased demand for their products, driving up job gains.The U.S. central bank has hiked its policy rate from near-zero at the beginning of this year to the current range of 3.00% to 3.25%, and last month signaled more large increases were on the way this year. September’s consumer price report next Thursday will also help policymakers to assess their progress in the battle against inflation ahead of their Nov. 1-2 policy meeting. Financial markets have almost priced-in a fourth 75-basis points rate increase at that meeting, according to according to CME’s FedWatch Tool. More

Data from the Labor Department showed 263,000 workers were added to non-farm payrolls in September, compared with expectations for a rise of 250,000 and a 315,000 increase in August. The euro was last down 0.2% at $0.9776, having traded around $0.97965 prior to the data, while the pound was up 0.1% at $1.1173, compared with $1.12085 before the numbers. Fed fund futures showed investors were betting on the Fed’s key rate reaching as high as 4.625% by next March, compared with 4.615% at that same point earlier in the day.The STOXX-600 index was flat on the day, having traded 0.15% higher before the figures. The banks sub-index, which is the most sensitive to changes in rate expectations, rose 0.3%, paring some of the day’s gains.In euro area government bond markets, Germany’s 10-year government bond yield, the benchmark for the euro area, extended gains after the data. It was last up 10 basis points to 2.181%, its highest since Sept. 30. More