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CNN Business
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September’s highly anticipated jobs data ended up chilling markets on Friday. Stocks fell sharply as investors weighed the report, which indicated that more jobs had been added to the U.S. economy than expected and that more painful interest rate hikes were expected from the Federal Reserve.
But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may not be working for everyone.
White-collar office workers seem to be feeling the brunt of the Fed’s actions: The financial and business sectors saw a big drop in employment last month. Legal and advertising services also experienced drops.. Service and construction workers are still thriving.
what’s happening: The US economy added 263,000 jobs in September, beating analysts’ estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.
The gain in jobs was led by the entertainment and hospitality industry, which added 83,000 jobs in September – and jobs in food service and beverage establishments accounted for only 60,000 of those jobs. Manufacturing and construction were also hot, adding 22,000 and 19,000 jobs, respectively.
The biggest non-government losses in jobs came from the financial industry, which shed 8,000 between August and September. Big banks hire cycles in the early fall, extending offers to recent graduates. This makes the fall in September particularly significant.
Business support services — such as telemarketing, accounting, and administrative and clerical work — are also bleeding edge jobs. The sector lost 12,000 in September. MeanwhileLAg services lost 5,000 jobs, while advertising services cut 5,000 jobs.
what does it mean: The Federal Reserve’s hawkish policy appears to be cooling some parts of the economy, but not others. Financial workers, whose industries depend on the stock and credit markets, will be particularly concerned about the most affected by the federal actions.
Friday’s numbers indicate that we are starting to see that impact in employment data.
What remains to be seen is whether the Fed can slow the economy by just cutting jobs in white-collar industries, or if those losses trickle down to other industries, hurting low-income workers.
Coming up: Earnings season begins in earnest at big banks like JPMorgan, Citigroup ( C ), Morgan Stanley ( MS ) and BlackRock ( BLK ). Investors will be watching closely for any guidance on employment and employment plans.
Two key inflation indicators, PPI and CPI, are set for release. If inflation gets too hot, expect markets to react well.
A panel of the United States’ top economists recently released its economic outlook for the coming year, and it’s not good.
A panel of 45 forecasters led by the National Association of Business Economics (NABE) said they expect slower-than-expected growth, higher inflation, higher interest rates and weaker employment in 2022 and 2023.
Most of the worries come down to the Federal Reserve’s interest rate policy.
“More than three-quarters of respondents believe the odds are 50-50 or less that the economy will lead to a ‘soft landing,'” said NABE Vice President Julia Coronado. “More than half of panelists say the biggest downside risk to the U.S. economic outlook is too much monetary tightening.”
NABE panellists revised their average forecast for real GDP growth to 0.1% for the fourth quarter of 2022, compared with a 1.8% increase in the May 2022 survey. Most of the respondents They put the odds of a recession in 2023 at just over 25%, a date that would probably start in the first quarter.
It’s the latest report as a growing number of economists predict a recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that the US could be heading into recession as a result of the “economy’s past surplus”.
Friday’s jobs report showed that the share of workers telecommuting or working from home was lower because of the pandemic — down from 6.5% in August to 5.2% in September.
Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be easing, especially as the labor market for white-collar workers and their workers has less capacity.
Last week, a KPMG survey of US CEOs found that two-thirds of them believe that working in the office will become the norm in the next three years.
Still, it may not be enough to help an ailing commercial real estate market where the outlook is grim. New York City office properties are projected to decline by nearly 45% in 2020 and remain 39% below their pre-pandemic levels for the long term, as hybrid policies continue, according to a recent study by the National Bureau of Economic Research.
looking forward: The Bureau of Labor Statistics says that while hybrid jobs may still be popular, Covid-19 has no longer fueled the work-at-home trend. The October report repeats telework questions to remove references to the pandemic.
Since May 2020, every job report has asked: “At any time in the last four weeks, did you telecommute or work at home for pay?” Because of the coronavirus pandemic?”
In May 2020, 35.4% answered yes.
From next month, the question will be updated. “Have you worked on the telly or worked at home for pay any time in the last week?” He asks, limiting the timeline and removing any reference to the pandemic.
US bond markets are closed for Columbus Day/Indigenous Peoples Day.
Coming up later this week:
â–¸ The third quarter earnings season begins. Big banks like JPMorgan Chase ( JPM ), Wells Fargo ( WFC ), Citigroup ( C ), Morgan Stanley ( MS ), PNC ( PNC ) and US Bancorp ( USB ) and big banks like Pepsi ( PEP ), Walgreen ( consumer staples Await reports). WBA) and Domino (DMPZF).
â–¸ The two most closely watched inflation measures in the United States, CPI and PPI, are about to be released.
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