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ADP jobs report January 2022:

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Job creation in the private sector plunged in January as weather-related issues sent workers to the sidelines, payroll processing firm ADP reported Wednesday.

Companies added just 106,000 new workers for the month, down from an upwardly revised 253,000 the month before. Economists surveyed by Dow Jones had been looking for a gain of 190,000.

Most of the growth came in the hospitality industry, as bars, restaurants, hotels and the like added 95,000 positions. Other growth industries included financial activities (30,000), manufacturing (23,000), and education and health services (12,000).

However, the trade, transportation and utilities sector lost 41,000, construction was off 24,000, and natural resources and mining declined by 3,000.

In all, goods-producing industries saw a net loss of 3,000 jobs, while service providers added 119,000.

Pay growth was little changed for the month, but up 7.3% from a year ago.

Despite the low headline number, ADP’s chief economist, Nela Richardson, said weather factors were at play and job growth may not have been as weak as the number indicates.

Heavy rainfall hit New Jersey’s Edgewater and caused flooding on Monday, in New Jersey, United States on January 23, 2023.

Fatih Aktas | Anadolu Agency | Getty Images

“In January, we saw the impact of weather-related disruptions on employment during our reference week,” Richardson said. “Hiring was stronger during other weeks of the month, in line with the strength we saw late last year.”

Like the Bureau of Labor Statistics, ADP uses the week of the 12th for its payroll sampling. The firm noted that extreme weather events, including snowstorms in the Midwest and floods in California, impacted the jobs picture.

The Midwest region saw a decline of 40,000 jobs, while the Pacific Rim lost 4,000, according to ADP.

Companies with fewer than 50 employees struggled the most during the period, down 75,000 workers. Big firms employing 500 or more workers added 128,000.

The numbers come with the Federal Reserve trying to slow the economy through a series of interest rate hikes specifically aimed at bringing down inflation.

The report also comes two days before the more closely watched BLS count of nonfarm payroll growth for the month. Economists surveyed by Dow Jones expect to see growth of 187,000 in that report.

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IMF hikes global growth forecast as inflation cools

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The IMF has revised its global economic outlook upwards.

Norberto Duarte | Afp | Getty Images

The International Monetary Fund on Monday revised upward its global growth projections for the year, but warned that higher interest rates and Russia’s invasion of Ukraine would likely still weigh on activity.

In its latest economic update, the IMF said the global economy will grow 2.9% this year — which represents a 0.2 percentage point improvement from its previous forecast in October. However, that number would still mean a fall from an expansion of 3.4% in 2022.

It also revised its projection for 2024 down to 3.1%.

“Growth will remain weak by historical standards, as the fight against inflation and Russia’s war in Ukraine weigh on activity,” Pierre-Olivier Gourinchas, director of the research department at the IMF, said in a blog post.

The outlook turned more positive on the global economy due to better-than-expected domestic factors in several countries, such as the United States.

“Economic growth proved surprisingly resilient in the third quarter of last year, with strong labor markets, robust household consumption and business investment, and better-than-expected adaptation to the energy crisis in Europe,” Gourinchas said, also noting that inflationary pressures have come down.

In addition, China announced the reopening of its economy after strict Covid lockdowns, which is expected to contribute to higher global growth. A weaker U.S. dollar has also brightened the prospects for emerging market countries that hold debt in foreign currency.

However, the picture isn’t totally positive. IMF Managing Director Kristalina Georgieva warned earlier this month that the economy was not as bad as some feared “but less bad doesn’t quite yet mean good.”

“We have to be cautious,” Georgieva said during a CNBC-moderated panel at the World Economic Forum in Davos, Switzerland.

The IMF on Monday warned of several factors that could deteriorate the outlook in the coming months. These included the fact that China’s Covid reopening could stall; inflation could remain high; Russia’s protracted invasion of Ukraine could shake energy and food costs even further; and markets could turn sour on worse-than-expected inflation prints.

IMF calculations say that about 84% of nations will face lower headline inflation this year compared to 2022, but they still forecast an annual average rate of 6.6% in 2023 and of 4.3% the following year.

As such, the Washington, D.C.-based institution said one of the main policy priorities is that central banks keep addressing the surge in consumer prices.

“Clear central bank communication and appropriate reactions to shifts in the data will help keep inflation expectations anchored and lessen wage and price pressures,” the IMF said in its latest report.

“Central banks’ balance sheets will need to be unwound carefully, amid market liquidity risks,” it added.

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Powell stresses need for Fed’s political independence while tackling inflation

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U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., on Dec. 14, 2022.

Liu Jie | Xinhua News Agency | Getty Images

Federal Reserve Chairman Jerome Powell on Tuesday stressed the need for the central bank to be free of political influence while it tackles persistently high inflation.

In a speech delivered to Sweden’s Riksbank, Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically.

“Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” the chair said in prepared remarks.

“The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors,” he added.

Powell’s remarks came at a forum to discuss central bank independence, and were to be followed by a question-and-answer session.

The speech did not contain any direct clues about where policy is ahead for a Fed that raised interest rates seven times in 2022, for a total of 4.25 percentage points, and has indicated that more increases likely are on the way this year.

While criticism of Fed actions by elected leaders is often done in quieter tones, the Powell Fed has faced vocal opposition from both sides of the political aisle.

Former President Donald Trump ripped the central bank when it was raising rates during his administration, while progressive leaders such as Sen. Elizabeth Warren (D-Mass.) have criticized the current round of hikes. President Joe Biden has largely resisted commenting on Fed moves while noting that it is primarily the central bank’s responsibility to tackle inflation.

Powell has repeatedly stressed that political factors have not weighed on his actions.

In another part of Tuesday’s speech, he addressed calls from some lawmakers for the Fed to use its regulatory powers to address climate change. Powell noted that the Fed should “stick to our knitting and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities.”

While the Fed has asked big banks to examine their financial readiness in case of major climate-related events such as hurricanes and floods, Powell said that’s as far as it should go.

“Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public’s will as expressed through elections,” he said. “But without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals. We are not, and will not be, a ‘climate policymaker.'”

The Fed this year will, however, launch a pilot program that calls for the nation’s six biggest banks to take part in a “scenario analysis” aimed at testing institutions’ stability in the event of major climate events.

The exercise will take place apart from the so-called stress tests that the Fed uses to test how banks would fare under hypothetical economic downturns. Participating institutions are Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo.

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Nonfarm payrolls rose 223,000 in December, as strong jobs market tops expectations

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Payroll growth decelerated in December but was still better than expected, a sign that the labor market remains strong even as the Federal Reserve tries to slow economic growth.

Nonfarm payrolls increased by 223,000 for the month, above the Dow Jones estimate for 200,000, while the unemployment rate fell to 3.5%, 0.2 percentage point below the expectation. The job growth marked a small decrease from the 256,000 gain in November, which was revised down 7,000 from the initial estimate.

Wage growth was less than expected in an indication that inflation pressures could be weakening. Average hourly earnings rose 0.3% for the month and increased 4.6% from a year ago. The respective estimates were for growth of 0.4% and 5%.

By sector, leisure and hospitality led with 67,000 added jobs, followed by health care (55,000), construction (28,000) and social assistance (20,000).

Stock market futures rallied following the release as investors look for signs that the jobs picture is cooling and taking inflation lower as well.

“From the market’s perspective, the main thing they’re responding to is the softer average hourly earnings number,” said Drew Matus, chief market strategist at MetLife Investment Management. “People are turning this into a one-trick pony, and that one trick is whether this is inflationary or not inflationary. The unemployment rate doesn’t matter much if average hourly earnings continue to soften.”

The relative strength in job growth comes despite repeated efforts by the Fed to slow the economy, the labor market in particular. The central bank raised its benchmark interest rate seven times in 2022 for a total of 4.25 percentage points, with more increases likely on the way.

Primarily, the Fed is looking to bridge a gap between demand and supply. As of November, there were about 1.7 job openings for every available worker, an imbalance that has held steady despite the Fed’s rate hikes. The strong demand has pushed wages higher, though they mostly haven’t kept up with inflation.

The drop in the unemployment rate came as the labor force participation rate edged higher to 62.3%, still a full percentage point below where it was in February 2020, the month before the Covid-19 pandemic hit.

A more encompassing measure of unemployment that takes into account discouraged workers and those holding part-time jobs for economic reasons also declined, falling to 6.5%, its lowest-ever reading in a data set that goes back to 1994. The headline unemployment rate is tied for the lowest since 1969.

The household count of employment, used to calculate the unemployment rate, showed a huge gain for the month, rising 717,000. Economists have been watching the household survey, which has generally been lagging the establishment count.

The U.S. heads into 2023 with most economists expecting at least a shallow recession, the result of Fed policy tightening aimed at tamping down inflation still running near its highest level since the early 1980s. However, the economy closed 2022 on a strong note, with GDP growth tracking at a 3.8% rate, according to the Atlanta Fed.

Fed officials at their last meeting noted that they are encouraged by the latest inflation readings but will need to see continued progress before they are convinced that inflation is coming down and they can ease up on rate hikes.

As things stand, markets are largely expecting the Fed to increase rates another quarter-percentage point at its next meeting, which concludes Feb. 1.

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ADP jobs report October 2022

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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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Mortgage demand from homebuyers is nearly half what it was in 2021

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A house’s real estate for sale sign is seen in front of a home in Arlington, Virginia, November 19, 2020.

Saul Loeb | AFP | Getty Images

Mortgage demand fell last week to nearly half what it was a year ago, according to the Mortgage Bankers Association, as rates hit their highest level in 21 years.

Overall, demand for mortgages is at the lowest level since 1997.

Mortgage applications to purchase a home dropped 2% from the prior week and were 42% lower than the same week in 2021. The annual comparison continues to jump each week, as fewer buyers either want or can afford to get into this very pricey housing market.

Applications to refinance a home loan fell just 0.1% for the week, but only because they were so low to begin with – down 86% from a year ago. There are currently fewer than 150,000 qualified borrowers who could benefit from a refinance at today’s rates, according to Black Knight.

Mortgage rates declined slightly to start this week, but are still well over 7% after beginning the year at around 3%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 7.16% from 6.94%, with points decreasing to 0.88 from 0.95 (including the origination fee) for loans with a 20% down payment.

Federal Housing Administration loans, which come with lower rates and smaller down payment requirements, did experience a slight uptick during the week.

“Despite higher rates and lower overall application activity, there was a slight increase in FHA purchase applications, as FHA rates remained lower than conventional loan rates,” said Joel Kan, an economist at the Mortgage Bankers Association.

The share of homebuyers applying for adjustable-rate mortgages remained high at more than four times what it was at the start of this year. ARMs offer lower rates but are considered a riskier product.

High interest rates are also weighing on home prices. While prices are still higher than they were a year ago, the gains are now slowing at a record pace. Homebuyers are also reconsidering their purchases. Pulte Group reported a 24% cancellation rate in its latest quarterly earnings report Tuesday and said it expected an even higher rate for the next quarter.

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Elon Musk says a global recession could last until the spring of 2024

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Tesla Inc CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China August 29, 2019.

Aly Song | Reuters

Tesla founder and CEO Elon Musk thinks the global economic decline can last for another year and a half.

In a Twitter exchange early Friday morning Eastern time, the mercurial electric car executive and world’s richest man said a recession could continue “until spring of ’24.”

The remarks came in response to a tweet from Shibetoshi Nakamoto, the online name for Dogecoin co-creator Billy Markus, who noted that current coronavirus numbers “are actually pretty low. i [sic] guess all we have to worry about now is the impending global recession and nuclear apocalypse.”

“It sure would be nice to have one year without a horrible global event,” Musk replied.

Tesla Owners Silicon Valley, a Twitter account with nearly 600,000 followers, then asked Musk how long he thought the recession would last, to which he replied, “Just guessing, but probably until spring of ’24.”

Global GDP grew 6% in 2021 but is expected to decelerate to 3.2% this year and 2.7% in 2023, according to the International Monetary Fund. That would mark the weakest pace of growth since 2021 outside of the financial crisis in 2008 and the brief plunge in the early days of the Covid pandemic. The Federal Reserve projects GDP in the U.S. to grow just 0.2% this year and 1.2% in 2023.

Musk becomes the latest corporate titan to express reservations about the economy.

In a tweet Wednesday, Amazon founder Jeff Bezos said it’s time to “batten down the hatches” in preparation for rough economic waters ahead. That tweet accompanied a video of Goldman Sachs CEO David Solomon, who said in a CNBC interview that he thinks there’s a “good chance” of a recession in the U.S.

JPMorgan Chase CEO Jamie Dimon also has been warning of economic turmoil ahead.

Musk’s comment also came amid a rough week for Tesla stock as the automaker missed revenue estimates and cautioned about a potential delivery shortfall this year.

During the analyst call, he expressed more confidence in the U.S. economy than other parts of the world. He did note the impact that interest rate increases are having on the economy.

“The U.S. actually is in – North America’s in pretty good health,” he said. “A little bit of that is raising interest rates more than they should, but I think they’ll eventually realize that and bring back down, I think.”

However, he said China is in “quite a burst of a recession of sorts” driven by the real estate market, while Europe “has a recession of sorts, driven by energy.”

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Amazon founder Jeff Bezos warns it’s time to ‘batten down the hatches’

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Amazon CEO Jeff Bezos speaks during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021.

Paul Ellis | Reuters

Amazon founder Jeff Bezos has become the latest corporate leader to warn about the state of the economy, cautioning that rougher times are likely ahead.

In a tweet posted Tuesday evening, the former president and CEO of the online retailing giant echoed comments that Goldman Sachs Chief Executive David Solomon made to CNBC earlier in the day.

“Yep, the probabilities in this economy tell you batten down the hatches,” Bezos said in a comment attached to a clip of Solomon’s “Squawk Box” interview.

Solomon, the head of the Wall Street financial giant, said it’s time for both corporate leaders and investors to understand the risks building up, and to prepare accordingly.

Solomon spoke after his firm had just posted quarterly earnings results that beat Wall Street estimates. Yet he said a recession could be looming as the economy deals with persistently high inflation and a Federal Reserve trying to lower prices through a series of aggressive interest rate increases.

“I think you have to expect that there’s more volatility on the horizon,” Solomon said. “Now, that doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

Fed officials have also been warning that a recession is possible as a result of the monetary policy tightening, though they hope to avoid a downturn. Policymakers in September estimated that gross domestic product would grow just 0.2% in 2022 and rebound in 2023, but to only 1.2%. GDP contracted in both the first and second quarters this year, meeting a commonly held definition of a recession.

There have been mixed signals lately from corporate leaders.

JPMorgan Chase CEO Jamie Dimon has been warning of troubles ahead, saying recently that the situation is “very, very serious” and that the U.S. could slip into recession in the next six months.

However, Bank of America CEO Brian Moynihan told CNBC on Monday that credit card data and related information show that consumer spending has held up.

“In the current environment, the consumer is quite good and strong,” he said on “Closing Bell.”

Moynihan acknowledged that the Fed’s efforts could slow the economy, but noted that “the consumer’s hanging in there.”

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Retail sales September 2022:

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Customers shop at the GU Co. store in the SoHo neighborhood of New York, US, on Friday, Oct. 7, 2022.

Gabby Jones | Bloomberg | Getty Images

Consumer spending was flat in September as prices moved sharply higher and the Federal Reserve implemented higher interest rates to slow the economy, according to government figures released Thursday.

Retail and food services sales were little changed for the month after rising 0.4% in August, according to the advance estimate from the Commerce Department. That was below the Dow Jones estimate for a 0.3% gain. Excluding autos, sales rose 0.1%, against an estimate for no change.

Considering that the retail sales numbers are not adjusted for inflation, the report shows that real spending across the range of sectors the report covers retreated for the month.

A Bureau of Labor Statistics report Thursday indicated that consumer prices rose 0.4% including all goods and services, and 0.6% when excluding food and energy.

Miscellaneous store retailers saw a decline of 2.5% for the month, while gasoline stations were off 1.4% as energy prices declined.

A slew of other sectors also posted drops, including sporting goods, hobby, books and music stores as well as furniture and home furnishing stores, both of which posted a -0.7% drop, while electronics and appliances were off 0.8% and motor vehicle and parts dealers fell 0.4%.

General merchandise store sales rose 0.7%. Gainers also included online stores, bars and restaurants, clothing retailers and health and personal care stores, all of which saw 0.5% increases.

While the gains for the month were muted, retail sales rose 8.2% from a year ago, matching the rise in the consumer price index. Shoppers remain generally flush with cash though there are indications of late that they are dipping into savings to make ends meet.

The Fed has enacted multiple interest rate hikes aimed at reducing inflation and bringing the economy back into balance. Markets expect the central bank to raise rates up to 1.5 percentage points more through the end of the year.

A separate report Thursday showed that import prices fell 1.2% in September, slightly more than the 1.1% estimate. Exports declined 0.8%.

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ADP jobs report September 2022:

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The U.S. labor market showed strength in September, with private companies adding more jobs than expected, payroll services firm ADP reported Wednesday.

Businesses added 208,000 for the month, better than the 200,000 Dow Jones estimate and ahead of the upwardly revised 185,000 in August.

Those gains came even as goods-producing industries reported a loss of 29,000 positions, with manufacturing down 13,000 and natural resources and mining losing 16,000.

However, a big jump in trade, transportation and utilities helped offset those losses, as the sector saw a jobs gain of 147,000.

Professional and business services added 57,000, while education and health services picked up 38,000 and leisure and hospitality grew by 31,000. There also were losers within the services sector, as information declined by 19,000 and financial activities saw a loss of 16,000 positions.

By size, companies employing 50-499 workers led with a 90,000 gain, while large firms added 60,000 and small businesses contributed 58,000.

The tight job market saw another month of sizeable pay hikes, with annual pay trending up 7.8% from a year ago, according to ADP, which compiles the report in tandem with the Stanford Digital Economy Lab. Those changing jobs saw a median change in annual pay of 15.7%, down from 16.2% in August for the biggest monthly drop in the three years ADP has been tracking the data.

ADP’s report comes two days before the closely watched nonfarm payrolls report issued by the Bureau of Labor Statistics.

The estimate for the Friday report is a growth of 275,000 jobs. Though ADP revised its methodology over the summer, the August total, which was revised up sharply from the originally reported 132,000, was still well shy of the BLS count of 315,000 added jobs.

Federal Reserve officials are watching the jobs numbers closely as the central bank looks to stem high inflation.

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