Growth in US manufacturing accelerated in August
Source: AP
By MARTIN CRUTSINGER
WASHINGTON (AP) — Growth in U.S. manufacturing accelerated in August despite the fact that companies were still struggling with supply chain problems.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity rose 0.4 percentage point in August to 59.9. Manufacturing had seen a slowdown in July when activity dipped to 59.5 from 60.6 in June.
Any reading above 50 indicates growth in the manufacturing sector. August marked the 15th consecutive month that manufacturing has grown after contracting in April 2020 when the coronavirus pandemic triggered nationwide business shutdowns.
(Axios) The U.S. economy added a meager 235,000 jobs in August, while the unemployment rate fell from 5.4% to 5.2%, the government said Friday.
Why it matters: It's the first jobs report to factor in the extent of the COVID-19 surge driven by the Delta variant — showing a massive slowdown in the recovery after July's blockbuster jobs report. Economists had expected 725,000 jobs to be added.
The big picture: The pandemic is far from over, and it's still hobbling the American economic recovery. This weak report will dissuade the Federal Reserve from pulling back on the amount of cash it's injecting into the economy every month.
By the numbers: June saw 962,000 new jobs added, and July did even better with 1.05 million. In August, however, the pace of change slowed dramatically, with a gain of just 235,000 jobs — and none at all in the leisure and hospitality industries.
The other side: Wage growth was very strong, with earnings rising 0.6% in a single month, or 4.3% on a year-over-year basis. The unemployment rate also continued to decline, hitting a new pandemic-era low of 5.2%.
(Axios) There is "no question" that the Delta variant is to blame for the disappointing August jobs report, President Biden said in remarks on Friday, a fact that he argued underscores the importance of continuing to vaccinate Americans and passing his economic agenda.
(Common Dreams) Progressives and economic experts fumed Monday as boosted unemployment aid—which has kept millions of workers, their families, and the overall economy afloat during the Covid-19 pandemic—came to an unceremonious end despite the persistence of the virus and a stalled economic recovery.
"Happy Labor Day everyone!" tweeted Matt Bruenig, founder of the left-leaning People's Policy Project, in a sarcastic declaration early on Labor Day. "Today, 9.3 million unemployed workers will have their benefits cut, depriving them and 26 million members of their household of income."
As CNN reports:
Nearly 18 months after Congress came to the rescue of jobless Americans, its historic expansion of the nation's unemployment benefits system expired nationwide this weekend. Lawmakers, who extended the three pandemic programs in December and March, are not expected to renew them again.
A key component of the relief effort was a federal weekly supplement for out-of-work Americans. Initially, the jobless received a $600-a-week boost from April through July of 2020. Congress then revived the enhancement in late December but reduced it to $300 a week.
Lawmakers also created two other measures to aid the jobless when the coronavirus struck. The Pandemic Unemployment Assistance program provided payments for freelancers, the self-employed, independent contractors and certain people affected by the outbreak, while the Pandemic Emergency Unemployment Compensation program extended payments for those who've exhausted their regular state benefits.
Another record for US job openings; 10.9 million in July
Source: AP
By PAUL WISEMAN
WASHINGTON (AP) — U.S. employers posted a record job openings for the second consecutive month in July — more affirmation that the labor market is bouncing back from last year’s coronavirus recession.
Job openings rose to 10.9 million in July, up from the previous record of 10.2 million in June, the Labor Department reported Wednesday.
But the department’s Job Openings and Labor Turnover Survey (JOLTS) report showed that actual hiring dipped slightly to 6.7 million in July, from 6.8 million in June. Layoffs rose slightly to 1.3 million.
Nearly 4 million people quit their jobs, just shy of a record set in April, and up from 3.9 million in June. That suggests many Americans are confident enough in their prospects to seek something new.
Producer inflation accelerated in August, as wholesale prices rose record 8.3% from a year ago
Source: CNBC
Prices that producers get for final demand goods and services surged in August at their highest annual rate since at least 2010, the Labor Department reported Friday.
The producer price index rose 0.7% for the month, above the 0.6% Dow Jones estimate, though below the 1% increase in July.
On a year-over-year basis, the gauge rose 8.3%, which is the biggest annual increase since records have been kept going back to November 2010. That came following a 7.8% move higher in July, which also set a record.
The data comes amid heightened inflation fears fed by supply chain issues, a shortage of various consumer and producer goods and heightened demand related to the Covid-19 pandemic. Federal Reserve officials expect inflationary pressures to ease through the year, but they have remained stubbornly persistent, with Friday’s numbers indicating that the trend likely will continue.
Excluding food, energy and trade services, final demand prices increased 0.3% for the month, below the 0.5% Dow Jones estimate. Still, that left core PPI up 6.3% from a year ago, also the largest record increase for data going back to August 2014.
WASHINGTON, Sept 13 (Reuters) - Underlying U.S. consumer prices increased at their slowest pace in six months in August, suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.
The Labor Department said on Tuesday its Consumer Price Index excluding the volatile food and energy components edged up 0.1% last month. That was the smallest gain since February and followed a 0.3% rise in July. The so-called core CPI increased 4.0% on a year-on-year basis after advancing 4.3% in July.
The overall CPI rose 0.3% last month after gaining 0.5% in July. In the 12 months through August, the CPI increased 5.3% after soaring 5.4% year-on-year in July.
Growing fears of China Evergrande defaulting rattled global markets on Monday as investors worried about the potential impact on the wider economy dumped Chinese property stocks and sought refuge in safe-haven assets.
Shares in Evergrande (3333.HK), which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28 on Monday, after earlier plummeting 19% to its weakest level since May 2010.
Regulators have warned that its $305 billion of liabilities could spark broader risks to China's financial system if its debts are not stabilised.
And remember my friend, future events such as these will affect you in the future
For investors, the weather has turned ominous. Credit problems at real estate developer China Evergrande have stoked fears of contagion and a looming debt crisis in China. Investors—to cope—are going to have to watch credit default swaps again—just like they did a decade or so ago. Picking the right CDS will help investors determine just how bad the panic is getting.
A credit default swap is just what it sounds like. One party swaps the risk of a debt default with another party. It’s an insurance product. A CDS buyer is, essentially, taking out life insurance on a bond they own.
The CDS to watch isn’t China Evergrande (ticker: 3333.Hong Kong), however, That won’t tell investors anything they don’t already know. Evergrande stock is at a new 52-week low Monday, down another 10% in overseas trading. Shares are now down almost 90% from their October 2020 52-week high of $20.40 Hong Kong dollars per share.
The problem is too much debt. With today’s decline, Evergrande has about a $4 billion market capitalization and $90 billion in debt on its balance sheet, but $300 billion including unpaid bills. Fears of default are hitting markets everywhere. European stock markets are down about 2%. S&P 500 and Dow Jones Industrial Average futures are down 1.3% and 1.6%, respectively.
Evergrande debt isn’t enough to derail the global economy on its own. The problem is if Evergrande problems lead to problems for lenders to Evergrande and then for other companies that need to borrow money from banks and the bond markets. That’s the nature of credit contagion.
And remember my friend, future events such as these will affect you in the future
(Investigate Midwest) Meat prices are continuing to climb, according to data and projections from the U.S. Bureau of Labor Statistics (BLS).
The BLS collects data to produce the Consumer Price Index, which tracks the average change over time of many consumer items.
The Consumer Price Index is used to calculate overall inflation in the economy, as well as price changes for certain items. While the current estimated inflation rate for 2021 so far is around 5%, meat price increases are outpacing overall inflation.
From July 2020 to July 2021, meat prices increased by about 6%. Beef and veal prices grew by 6.5% and pork prices went up by 7.8%. Price increases for eggs, fish and seafood and poultry also outpaced inflation.
A U.S. Department of Agriculture press release* attributed the price increases to “strong domestic and international demand, high feed costs, and supply chain disruptions” including storms, drought and a May cyberattack against meatpacking giant JBS that temporarily halted operations.
(Axios) The Fed downgraded near-term expectations for the economy and the labor market, alongside hotter-than-expected inflation, in new estimates out on Wednesday.
Why it matters: It's the first time those closely-watched estimates reflect impact from the delta variant that's already rattled the labor market. Still, Fed chairman Jerome Powell said enough progress has been made to begin to pull back emergency-era measures that have supported the economy.
By the numbers: The Fed expects the economy will grow 5.9% this year — a rapid pace, but slower than the 7% estimated in June. (GDP expectations for next year though jumped by 0.5 percentage points).
Following last month's softer-than-expected jobs report, it says the unemployment rate will be 4.8% by year-end, higher than the previously forecast 4.5%.
What's new: Still, the Fed sent its strongest signal yet that it will slow the bond purchases that have supported the economy and buoyed the stock market.
If Evergrande survives, it will be by the skin of its teeth.
Chinese authorities are asking local governments to prepare for the potential downfall of China Evergrande Group, EGRNF -11.25% according to officials familiar with the discussions, signaling a reluctance to bail out the debt-saddled property developer while bracing for any economic and social fallout from the company’s travails.
The officials characterized the actions being ordered as “getting ready for the possible storm,” saying that local-level government agencies and state-owned enterprises have been instructed to step in to handle the aftermath only at the last minute should Evergrande fail to manage its affairs in an orderly fashion.
They said that local governments have been tasked with preventing unrest and mitigating the ripple effect on home buyers and the broader economy, for example by limiting job losses—scenarios that have grown in likelihood as Evergrande’s situation has worsened.
US slightly revises up its GDP estimate for Q2 to 6.7%
By MARTIN CRUTSINGER
The Associated Press
WASHINGTON (AP) -- The U.S. economy expanded at a 6.7% annual pace from April through June, the Commerce Department said Thursday, slightly upgrading its estimate of last quarter's growth in the face of a resurgence of COVID-19 in the form of the delta variant.
The government's estimate of growth in the second quarter -- its last of three -- was up from its previous estimate of a 6.6% annual pace that will likely mark a high point for the economy's expansion this year as the virus slows some activity, government support programs wind down and manufacturing supply-chain issues persist.
Thursday's report from the government showed that the nation's gross domestic product -- its total output of goods and services -- accelerated from a 6.3% annual rate in the first three months of the year.
A key factor in the upgraded growth estimate for the April-June quarter was a slightly higher level of consumer spending, which accounts for roughly 70% of economic activity. Consumer spending grew at a 12% annual rate, the fastest expansion since a surge in the third quarter last year, when the economy began to re-open.
Stronger export sales also added to the increased growth estimate for the second quarter. Exports rose at an annual rate of 7.6% after having fallen in the first quarter. Business equipment investment was also up from the government's previous estimate, expanding at a solid 12.3% rate.
It was all going so well. Successful vaccination programmes were driving the post-pandemic recovery of the global economy, stock markets were back at record highs, and prices were rising just enough to make deflation fears a thing of the past.
But a supply crunch that initially put a question mark over the availability of luxury cars or whether there would be enough PlayStations under our Christmas trees is instead morphing into a full-blown crisis featuring a shortage of energy, labour and transport from Liverpool to Los Angeles, and from Qingdao to Queensland.
All the problems are in one way or another tangled up in the surge of post-pandemic consumer demand, but taken together they threaten what one leading economist calls a “stagflationary wind” that could blow the global economy off course.
And remember my friend, future events such as these will affect you in the future
(Robert Reich via Substack) The media and most economists measure the economy’s success by the number of jobs it creates, while ignoring the quality of those jobs. But when I was Secretary of Labor I met with working people all over the country who complained that their jobs paid too little and had few benefits, or were unsafe, or required lengthy or unpredictable hours. Many said their employers treated them badly, harassed them, and did not respect them.
In order to lure workers back, employers are now raising wages and offering other inducements. Average earnings rose 19 cents an hour in September and are up more than $1 an hour – or 4.6 percent -- over the last year.
Clearly, that’s not enough.
Corporate America wants to frame this as a “labor shortage.” But what’s really going on is more accurately described as a living-wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a health care shortage.
Unless these shortages are rectified, many Americans won’t return to work anytime soon. That’s the real lesson of yesterday’s jobs report.
Yahoo Finance September jobs report: Economy adds back disappointing 194,000 jobs, unemployment rate
Source: Yahoo!Finance
U.S. employers unexpectedly hired at a slower pace in September than in August.
The Labor Department released its September jobs report Friday morning. Here were the main metrics from the report, compared to consensus estimates compiled by Bloomberg:
Change in non-farm payrolls, September: +194,000 vs. +500,000 expected, +235,000 in August
Unemployment rate: 4.8% vs. 5.1% expected, 5.2% in August
Average hourly earnings, month-over-month: 0.6% vs. 0.4% expected, 0.6% in August
Average hourly earnings, year-over-year: 4.6% vs. 4.6% expected, 4.3% in August
Non-farm payrolls were expected to pick up from August's much weaker-than-expected print, when renewed fears over the coronavirus deterred more workers from reentering the labor market. The September report also showed a ninth consecutive month of net payroll gains in the U.S. economy. But even after months of growth, total employment has yet to return to pre-pandemic levels. The civilian labor force was still down by 2.9 million individuals compared to February 2020 as of August.
US budget deficit hits $2.77 trillion in 2021, 2nd highest
Source: AP
By MARTIN CRUTSINGER
WASHINGTON (AP) — The U.S. budget deficit totaled $2.77 trillion for 2021, the second highest on record but an improvement from the all-time high of $3.13 trillion reached in 2020. The deficits in both years reflect trillions of dollars in government spending to counteract the devastating effects of a global pandemic.
The Biden administration said Friday that the 2021 deficit, for the budget year that ended Sept. 30 was $360 billion lower than 2020 as a recovering economy boosted revenues, helping to offset government spending from pandemic relief efforts.
Before the deficit ballooned during two years of a global pandemic, the highest the biggest deficit had been a shortfall of $1.4 trillion in 2009 as the U.S. spent heavily to lift the country out of a severe recession following the 2008 financial crisis.
For 2021, the joint report from Treasury and the Office of Management and Budget said that government spending increased 4.1% to $6.82 trillion. This was offset by an increase of 18.3% in government revenues, a gain that reflected an improving economy as millions of people who had lost jobs at the start of the pandemic went back to work and corporate profits were rejuvenated after a horrendous 2020.
