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CNN Business
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The much-anticipated jobs data for September ended market cooling on friday. Stocks fell sharply as investors weighed in on the report, which showed more jobs than expected being added to the US economy and signaled more interest rate hikes from the Federal Reserve are on the way.
But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to combat persistent inflation may already be working, but not for everyone.
White-collar white-collar workers seem to be feeling the brunt of the Fed’s actions: the financial and commercial sector saw a big decline in employment last month. Legal and advertising services also experienced declines. Meanwhile, service and construction workers continue to prosper.
What’s going on: The US economy added 263,000 jobs in September, more than analyst estimates of 250,000. The unemployment rate reached 3.5%, compared to 3.7% in August.
Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September, with employment in food service and places to drink making up 60,000 of those jobs alone. Manufacturing and construction also stood out, adding 22,000 and 19,000 jobs, respectively.
The largest non-government job losses came from the financial industry, which shed 8,000 between August and September. Big banks hire in cycles, extending offers to recent graduates in the early fall months. That makes the September drop particularly significant.
Business support services such as telemarketing, accounting, and clerical and administrative jobs are also bloody jobs. The sector lost 12,000 in September. Meanwhile,llegal services lost 5,000 jobs and advertising services also lost 5,000 jobs.
What does it mean: The aggressive policy of the Federal Reserve seems to be cooling certain parts of the economy, but not others. Financial workers are likely to start to worry, as their industry relies on stock and loan markets, which have been hit particularly hard by the Fed’s actions.
Friday’s numbers indicate that we are beginning to see that impact in the employment data.
What remains to be seen is whether the Fed can cool the economy simply by loosening employment in white-collar industries or whether these losses will trickle down to other industries, hurting low-income workers.
going up: Earnings season begins seriously this week with big banks like JPMorgan, Citigroup
(C)Morgan Stanley
(MS) and black rock
(BLACK) reports Investors will be watching for any guidance on hiring and firing plans.
Two key inflation indicators, the PPI and the CPI, will also be released. Expect markets to react poorly if inflation heats up.
A panel of leading US economists has just released its economic outlook for the coming year, and it’s not very good.
The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates and weaker employment in both 2022 and 2023 than expected. they previously expected.
Most of the concerns come down to the Federal Reserve’s interest rate policy.
“More than three-quarters of those surveyed believe the odds of the economy achieving a ‘soft landing’ are 50-50 or less,” said NABE Vice President Julia Coronado. “More than half of the panelists indicate that the biggest downside risk to the US economic outlook is excessive monetary tightening.”
NABE panelists lowered their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared with a 1.8% increase in the May 2022 survey. respondents placed a more than 25% chance of a recession occurring in 2023, with the most likely start date in the first quarter.
The latest report comes as a growing number of economists predict a recession is imminent. Former US Treasury Secretary Larry Summers he told CNN on Thursday that it is “more likely than not” that the US enters a recession, calling it a consequence of the “excesses that the economy has gone through”.
Friday’s jobs report showed the share of workers working remotely or from home due to the pandemic fell, falling to just 5.2% in September from 6.5% in August.
Fully remote working in the United States, which many predicted would remain the norm long after the pandemic, appears to be disappearing, especially as the job market loosens for white-collar workers and employees have less clout.
In the past week, a KPMG survey of US-based CEOs found that two-thirds believed office work would be 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 dire. New York City office properties are down nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels in the long term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.
Looking to the future: The Bureau of Labor Statistics has noted that while hybrid working may still be popular, Covid-19 is no longer driving work-from-home trends. TThe October report will reformulate your questions about telecommuting to remove references to the pandemic.
Since May 2020, every employment report has asked, “At any point in the last four weeks, did you work remotely or work from home for pay? because of the coronavirus pandemic?”
In May 2020, 35.4% answered yes.
Starting next month, the question will be revised. “At any time in the last week, did you telecommute or work from home for pay?” will ask, limiting the timeline and removing any reference to the pandemic.
The US bond market is closed for Columbus Day/Indigenous Peoples Day.
Coming this week:
▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase
(JPM)fargo wells
(WFC)Citi Group
(C)Morgan Stanley
(MS)PNC
(PNC) and US Bancorp
(USB) and consumer staples like Pepsi
(ENERGY)Walgreen’s
(WBA)s and domino’s
(DMPZF).
▸ The CPI and PPI, two closely watched measures of inflation in the US, will also be released.
