2024-03-06 19:46

Job openings fall 26,000 to 8.863 million in January Hiring declines 100,000 to 5687 million Quits decrease 54,000 to 3.385 million WASHINGTON, March 6 (Reuters) - U.S. job openings fell marginally in January, while the number of workers quitting their jobs dropped to a three-year low, indicating that labor market conditions were gradually easing. The decline in resignations, which pushed the quits rate to the lowest level in 3-1/2 years, over time bodes well for slower wage inflation and overall price pressures in the economy. There were 1.45 jobs for every unemployed person in January up from 1.42 in December, indicating the labor market remains strong. This is well above the average of 1.2 during the year before the COVID-19 pandemic. The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department was published on Wednesday as Federal Reserve Chair Jerome Powell presented the U.S. central bank's semiannual Monetary Policy Report to lawmakers. Powell said policymakers expected "inflation to come down, the economy to keep growing," but shied away from committing to any timetable for interest rate cuts. "The JOLTS data signal that the jobs market is slowly settling down, consistent with wage, and thus inflation, pressures cooling without a worrisome slowdown in net job creation and overall economic activity," said Sarah House, a senior economist a Wells Fargo in Charlotte, North Carolina. "The gradual, rather than marked, softening in the labor market will likely keep the Fed comfortable in waiting a little while longer before beginning to cut rates." Job openings, a measure of labor demand, slipped 26,000 to 8.863 million on the last day of January, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast 8.9 million job openings in January. Job openings peaked at a record 12.182 million in March 2022. A separate report from the Fed said "labor market tightness eased further," in February, but noted that "difficulties persisted attracting workers for highly skilled positions." Job openings rose in nondurable goods manufacturing, with 82,000 more positions reported. There were also increases in unfilled jobs in financial activities, professional and business services as well as leisure and hospitality industries. But government job openings dropped 105,000. Government hiring has significantly contributed to payrolls growth in recent months, which had raised worries among some economists that job gains were too concentrated in a handful of sectors. The decline in job openings was in state and local governments. Private educational services had 41,000 fewer unfilled positions. Vacancies also declined in the retail as well as transportation, warehousing and utilities sectors. Medium-sized and large businesses accounted for the decrease in overall job openings. Small businesses with one to 49 employees had a large number of vacancies. Job openings dropped in the South, West and Midwest, but increased in the Northeast. The job openings rate was unchanged at 5.3%. Hiring decreased 100,000 to 5.687 million. There were notable declines in transportation, warehousing and utilities, healthcare and social assistance as well as state and local education sectors. The hires rate dipped to 3.6% from 3.7% in December. The labor market is gradually slowing following 525 basis points worth of rate hikes from the Fed since March 2022. Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices rose. LOW LAYOFFS The number of workers resigning from their jobs, presumably in search of greener pastures, dropped 54,000 to 3.385 million, the lowest level since January 2021. A surge in resignations during and after the pandemic was one of the factors behind robust wage growth. But as more workers stay put, inflation is cooling, with the ADP National Employment report separately showing on Wednesday that wages for workers remaining in their jobs increased 5.1% in the 12 months through February. That was the smallest annual gain since August 2021 and followed a 5.3% rise in January. Fewer workers quit their jobs in the retail sector. There were also significant decreases in quits in healthcare and social assistance as well as professional and business services. But more accommodation and food services workers resigned. The quits rate, viewed as a measure of labor market confidence, dropped to 2.1%, the lowest since August 2020 and down from 2.2%. Job cuts were low despite high-profile layoffs at the start of the year. Layoffs dropped 35,000 to 1.572 million in January, keeping the layoffs rate at 1.0% for a third straight month. The Labor Department is expected to report on Friday that nonfarm payrolls increased by 200,000 jobs in February, according to a Reuters survey. The economy added 353,000 positions in January. Job growth has cooled from the brisk pace in 2022, but payroll gains are well above the roughly 100,000 jobs needed per month to keep up with growth in the working-age population. The unemployment rate is forecast unchanged at 3.7% and annual wage growth slowing to 4.4% from 4.5% in January. "The data are pointing to some rebalancing in supply and demand in the labor market," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. https://www.reuters.com/markets/us/us-private-payrolls-rise-slightly-less-than-expected-february-adp-report-shows-2024-03-06/

2024-03-06 18:42

WASHINGTON, March 6 (Reuters) - U.S. wholesale inventories fell more than initially thought in January, which could negatively impact economic growth estimates for the first quarter. The Commerce Department's Census Bureau said on Wednesday that wholesale inventories dropped 0.3% instead of dipping 0.1% as estimated last month. Stocks at wholesalers increased 0.4% in December. Economists polled by Reuters had expected that inventories would be unrevised. Inventories are a key part of gross domestic product. They fell 2.5% on a year-on-year basis in January. Private inventory investment subtracted 0.3% percentage point from GDP growth last quarter after providing a large boost in the third quarter. The economy grew at a 3.2% annualized rate in the fourth quarter. Growth estimates for first quarter are converging around a 2.0% pace. Wholesale motor vehicle inventories rose 0.7%. But there were decreases in stocks of farm products, chemicals, apparel and paper. Excluding autos, wholesale inventories dropped 0.4% in January. This component goes into the calculation of GDP. Sales at wholesalers declined 1.7% after rising 0.3% in December. At January's sales pace it would take wholesalers 1.36 months to clear shelves, up from 1.34 months in December. https://www.reuters.com/markets/us/us-wholesale-inventories-revised-down-january-2024-03-06/

2024-03-06 18:22

WASHINGTON, March 6 (Reuters) - Federal Reserve Chairman Jerome Powell said Wednesday the central bank and other regulators will be making significant changes to a contentious plan to raise large bank capital requirements. Testifying before Congress, Powell said officials have begun reconsidering the so-called "Basel III endgame" proposal unveiled in July, and are aware of industry complaints about its cost and potential economic impact. "We do hear the concerns and I do expect there will be broad material changes to the proposal," he told the House Financial Services Committee. "I’ll add that I’m confident that the final product will be one that has broad support at the Fed and in the broader world." Powell also did not rule out reproposing the rule to solicit further feedback, a step that could significantly delay the project and potentially push it into a new presidential administration. Reuters reported before Powell's testimony that regulators were looking into major changes to the proposal that would significantly reduce the impact on banks. The proposal, part of an international accord with other bank regulators, would change how banks gauge their risk and how much cash they should hold against potential losses. Banks have intensely opposed the proposal, which would direct roughly three dozen of the biggest banks to set aside billions of dollars more in capital, calling it misguided and warning it would hinder lending. Powell declined to get into specifics on changes, noting that regulators were in the early stages of absorbing feedback and evaluating possible changes. But he also noted that other rulewriting projects that intersect with that effort, such as a plan to require banks to issue more long-term debt, may need to be reconsidered as well. Powell's comments suggest the opposition from banks, as well as critiques from members of Congress and other businesses, are resonating with regulators. When asked about an external study that found 97% of the comments filed on the proposal were critical, Powell said, "It's unlike anything I've seen." https://www.reuters.com/markets/us/powell-says-he-expects-broad-material-changes-basel-proposal-2024-03-06/

2024-03-06 18:18

NEW YORK, March 6 (Reuters) - An uneasy calm that has pervaded the U.S. bond market could break in coming days, as looming data on employment and consumer prices shed more light on how long the Federal Reserve might need to keep rates elevated in its battle to decisively defeat inflation. While investors still expect rate cuts this year, unexpected economic strength has forced many to recalibrate how deeply the Fed will be able to lower borrowing costs without reigniting inflation, aligning the market’s views on easing more closely with those of the central bank. Yields on the benchmark U.S. 10-year Treasury, which move inversely to bond prices, have traded in a narrower range over the last few weeks. Fed Chairman Jerome Powell echoed that sentiment on Wednesday, when he told lawmakers that continued progress on lowering inflation "is not assured" though the central bank still expects to cut rates in 2024. Things could grow more precarious for bond investors if Friday’s employment data and next week’s consumer prices report show continued strength in the economy and more stickiness in inflation, further pushing back expectations for Fed cuts. That, in theory, could drive yields higher, further hurting investors who had jumped into Treasuries over the last few months betting on imminent easing. "The worst case scenario for the fixed income market is if we get a ‘no-landing’ scenario, where the economic picture is still solid and inflation picks up,” said Lawrence Gillum, chief fixed income strategist for LPL Financial. “If we get that reacceleration in inflation or the economy, the 10-year could retest 5%”, he said. In his remarks, Powell noted that inflation had "eased substantially" since hitting 40-year highs in 2022. He said there were risks of both cutting rates too soon and allowing inflation to reaccelerate, and of keeping monetary policy too tight for too long and damaging an ongoing economic expansion. The 10-year yield was recently at 4.11%, little changed after Powell’s comments. Yields have bounced between about 4.05% and 4.35% since early February, following a swift decline from a 16-year high of just above 5% hit in October 2023. That range of just over 30 basis points compares to a 38 basis point range from the start of the year through the first two trading days of February, and an almost 57 point swing in December. Futures tied to the fed funds rate on Wednesday showed traders pricing in about 90 basis points in rate cuts this year, much less than the 150 basis points they had priced in early January. The Fed penciled in 75 basis points of cuts in its projections late last year. "If we get additional prints above 2% that will force the market to rethink the rate picture for the balance of the year,” causing more short-term volatility and a steepening of the yield curve, said Charlie Ripley, senior investment strategist at Allianz Investment Management. Like many investors, however, Ripley believes the peak for rates likely came last year. “Yields might move up marginally from a rangebound perspective, but this is an attractive entry point,” he said. Net shorts in two-year Treasury futures last week fell to their lowest level since May, data from the Commodity Futures Trading Commission showed, suggesting lowered expectations for yields to spike further. Others, however, are less certain that the economy will cool or the Fed will be in any hurry to ease monetary policy. Easing financial conditions – including record high investment grade bond issuance, rising IPO activity, and new all-time highs for the US stock market – will likely continue to push inflation higher over the course of 2024 and undercut the case for rate cuts, warned Torsten Slok, chief economist at Apollo Global Management, in a March 1 note. “The reality is that the US economy is simply not slowing down,” he said. Economists polled by Reuters expect the U.S. to have added 200,000 jobs in February, after a blockbuster 353,000 jobs added in the previous month. The U.S. consumer price report, slated for March 12, is expected to show prices growing by 0.4% in February. Consumer prices grew at a faster than expected rate of 0.3% in the previous month. “The market is going to be most sensitive to rates and rates are going to be sensitive to inflation, so we’re watching inflation more closely than anything right now as the predominant risk for markets,” said Michael Reynolds, vice president of investment strategy at Glenmede. “The next CPI report is going to be very closely watched.” https://www.reuters.com/markets/us/worst-case-inflation-fears-threaten-bond-market-calm-powell-addresses-lawmakers-2024-03-06/

2024-03-06 17:33

WASHINGTON, March 6 (Reuters) - The soft landing, it appears, will not be televised. At least it won't be announced, declared, or advertised, Federal Reserve Chair Jerome Powell told members of the U.S. House Financial Services Committee in testimony that wove around direct mentions of the upcoming presidential election and efforts to pull him into disputes over fiscal spending, energy policy, and housing, or any claim that the Fed's sought-after "soft landing" - of low inflation and low unemployment - had already arrived. "Will there be some announcement at some point that we've had a soft landing?...Some official statement that would give people some comfort?," Representative Al Green, a Texas Democrat, asked Powell while also noting a campaign-year climate in which claims the economy was sliding into recession competed against data showing a low jobless rate, falling inflation, and steady growth. "I don't think by us, no," Powell said. "We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us. We wouldn't be declaring victory like that." The exchange highlighted how central Powell and Fed policy could figure into the coming rematch between President Joe Biden and former President Donald Trump. Regardless of their differences, both men share having appointed Powell as Fed chair. They may now see their electoral fate tied, to some degree, to Powell's actions as chair - and whether the November vote approaches in a climate of continued low unemployment, slowing inflation, and perhaps falling interest rates, or not. Powell's aim in what could be a volatile few months in U.S. political discourse is to avoid appearing to favor either candidate as Fed decisions spool out, or get caught too much in the crossfire. In the middle of a four-year term that expires in May, 2026, regardless of who wins in November, Powell said the U.S. was on "a good path" with conditions consistent with a soft landing. In fact some analysts feel it has already arrived, with inflation by some measures near the central bank's 2% target and an unemployment rate that has remained below 4% for two years. But don't expect a victory lap. "That's the economy that we're trying to achieve. We're on a good path so far to be able to get there," Powell said, but "I don't want to put the label on it. Other people can do that." (This story has been refiled to correct the spelling of ‘arch rival’ in paragraph 3) https://www.reuters.com/markets/us/feds-powell-dont-expect-soft-landing-victory-lap-2024-03-06/

2024-03-06 17:32

March 6 (Reuters) - San Francisco Federal Reserve Bank President Mary Daly on Wednesday said the U.S. central bank is committed to "finishing the job" on attaining price stability, particularly with rising housing costs a key driver of higher inflation. "This burden has fallen especially harshly on those least able to afford it," Daly said in remarks prepared for delivery at conference in Portland, Oregon on the Community Reinvestment Act. "That is why the Federal Reserve has been so focused and resolute on getting inflation down." https://www.reuters.com/markets/us/fed-focused-resolute-beating-inflation-daly-says-2024-03-06/