Data & Economics – Page 10 – The Fund Society

Here’s what to expect from the April jobs report on Friday

Nonfarm payrolls are expected to show a gain of 240,000 for the month, according to the Dow Jones consensus that also sees the unemployment rate holding steady at 3.8%. The labor market has been full of surprises this year, topping Wall Street estimates at a time when many economists expected hiring to have slowed down. Markets also will be closely watching the wage numbers. A jobseeker takes a flyer at a job fair at Brunswick Community College in Bolivia, North Carolina, on April 11, 2024. Allison Joyce | Bloomberg | Getty Images

Hiring likely continued at a brisk pace in April as investors look for any cracks in the labor market that could sway the Federal Reserve.

Nonfarm payrolls are expected to show a gain of 240,000 for the month, according to the Dow Jones consensus that also sees the unemployment rate holding steady at 3.8%.

If that top-line number is accurate, it actually would reflect a small step back from the average 276,000 jobs a month created so far in 2024. In addition, such growth could add to the Fed’s reluctance to lower interest rates, with the labor market humming along and inflation still above the central bank’s 2% target.

“There are definitely still tailwinds left,” said Amy Glaser, senior vice president of business operations at job staffing site Adecco. “For April, the name of the game is steady-Eddie as resiliency continues, and then we’re looking forward to some of the seasonal trends we would expect going into the summer.”

April’s jobs market featured more strength in health care and leisure and hospitality, Glaser added. Those have been two of the major sectors for employment growth this year, with health care adding about 240,000 jobs so far and leisure and hospitality contributing 89,000 jobs.

However, growth in the coming months could spread to areas such as education, manufacturing and warehousing, part of the usual seasonal trends as educators look for alternative employment in the summer and students head out seeking jobs, she said.

“I don’t expect to see major surprises this month based on what I’m seeing on the ground,” Glaser said. “But we’ve been surprised before.”

Beating expectations

Indeed, the labor market has been full of surprises this year, topping Wall Street estimates at a time when

CNBC

Wall Street is confused and divided over how many times the Fed will cut rates this year

Wall Street reacted Thursday to this week’s Fed meeting, with forecasts scattered across a range of outcomes for where monetary policy heads next. Most economists for the biggest forecasting firms expect the central bank to lower benchmark interest rates sometime later this year. But the outlooks ranged from one cut to four, with most saying that only time will really tell how much the rate-setting Federal Open Market Committee can take its foot off the brake. “The May FOMC meeting was mostly uneventful but dovish overall,” Goldman Sachs economist David Mericle said in a client note that underscored the uncertainty following this week’s meeting. “While the Committee added a hawkish acknowledgment of the ‘lack of further progress’ on inflation so far this year to its statement, Chair Powell offered a dovish message in his press conference.” The result of the conflicting signals? Goldman left in place its call for two rate cuts this year of a quarter percentage point each, with one in July and the other in November. However, the firm noted that “even moderate upside surprises” on inflation could thwart that outlook and “delay cuts further.” Indeed, there was considerable uncertainty on the Street over the extent and timing of cuts. Futures market traders on Thursday continued to price in the likelihood of just one reduction this year and even about a 15% chance of a hike, according to CME Group data . Here’s a quick look at where the major firms lined up: Citigroup is an outlier in how many cuts it sees coming, though its reasoning for easier policy ahead doesn’t differ that sharply from other firms. Essentially, most economists believe the Fed is correct that inflation metrics will show more easing through the year and get the central bank closer to its 2% annual goal. The issue is how much convincing that cautious policymakers will need and how quickly they’re willing to make a move without showing that they are vacillating on their commitment to stable prices. “Powell’s comments were consistent with our view that the Fed will proceed to lower rates as soon as either core inflation data softens or labor market data weakens,” Citigroup economist Andrew Hollenhorst wrote. Lower inflation numbers along with “a sharper deterioration” in the jobs outlook will lead the Fed to start cutting in July and keep

CNBC

UK to suffer slowest growth of all rich nations next year, OECD says

The U.K.’s “sluggish” growth prospects have put it on course to be the worst-performing economy of all advanced nations next year, according to the OECD. The downbeat prediction comes as the global economy shows signs of recovery, with growth forecast to remain steady at 3.1% in 2024, before rising modestly to 3.2% in 2025. Alvaro Pereira, director of the OECD’s policy studies branch, told CNBC the forecasts indicated that central banks’ efforts to quell inflation were working. People walk in the rain over London Bridge in central London. Picture date: Tuesday March 12, 2024. Lucy North – Pa Images | Pa Images | Getty Images

The U.K.’s “sluggish” growth prospects have put it on course to be the worst-performing economy of all advanced nations next year, according to new forecasts from the Organisation for Economic Cooperation and Development.

U.K. gross domestic product (GDP) is expected to grow by 0.4% in 2024, down from a previous prediction of 0.7%, and less than all other G7 countries besides Germany (0.2%), the Paris-based think tank said Thursday in its latest global economic outlook.

The British economy is then forecast to expand by 1% in 2025, behind Canada, France, Germany, Japan and the U.S., as the lingering effects of high interest rates and inflation continue to weigh.

The downbeat prediction comes as the global economy shows signs of recovery, with growth forecast to remain steady at 3.1% in 2024, before rising modestly to 3.2% in 2025.

“We start seeing some recovery in many parts of the world,” Alvaro Pereira, director of the OECD’s policy studies branch, told CNBC’s Silvia Amaro Thursday.

Growth among advanced nations next year is set to be led by North America, which Pereira said follows “strong growth” forecasts of 2.6% in the U.S. in 2024. Growth in Europe, meanwhile, is expected to pick up next year after a sluggish 2024.

Among emerging economies, the OECD said there were also signs of strength. In China, where the economy has struggled in part due to a protracted downturn in the property market, growth projections were revised upward slightly from earlier forecasts, which Pereira said was down to “stronger performance than in the recent past.”

The OECD said the global outlook was an indication that central banks’ efforts to quell inflation were working.

“Monetary policy is doing

CNBC

US Rate Cuts Are Far Off, But Fed Rules Out a Hike

US interest rate cuts remain far off, although Federal Reserve Chair Jerome Powell and the rest of the central bank seem unfazed by the inflationary uptick in recent months.

As widely expected, the Fed kept the federal-funds rate unchanged at 5.25%-5.50% at its May meeting. While back at the start of 2024, markets expected the central bank to begin cutting rates as soon as its March meeting, inflation has run much higher than expected, delaying expected rate cuts until September 2024 or later. The Fed’s official statement Wednesday and remarks from Powell did little to alter that view.

The Fed’s official statement did acknowledge a “lack of further progress” in inflation reduction in recent months. But Powell expressed the strong belief that current monetary policy is “sufficiently restrictive” to eventually return inflation to the central bank’s 2% target, and it’s therefore “unlikely the next policy move will be a [rate] hike.”

While the Fed kept rates steady, it did announce the details of a long-awaited change in its effort to reduce its massive holdings of bonds, a process known as quantitative tightening.

Fed Waiting for More Confidence on Inflation Progress

Inflation in the core Personal Consumption Expenditures Price Index rose to a hot 4.4% annualised in the three months ending in March. Core PCE inflation had been 1.9% annualized in the six months ending December 2023. That strong performance made most market participants expect rate cuts starting in early 2024, but those expectations have been seesawing because of data in recent months.

Meanwhile, the Fed has focused more on year-on-year data, which is less volatile than the three- or six-month indicators. In year-on-year terms, core PCE inflation was 2.9% in December 2023 and stood at 2.8% as of March 2024. This led the central bank to be far less ebullient than most investors at the beginning of 2024, and conversely not overly perturbed by the bumpiness of a few months of bad data.

Powell stated that “gaining sufficient confidence” on inflation progress to begin cutting rates “will take longer than previously expected.” But this likely references the Fed’s prior projections from March, which incorporated three rate cuts in 2024, while markets had shifted to expecting just one cut in 2024 well before today’s meeting.

Fed Announces Quantitative Tightening Change

Longer-term bond yields moved a bit more than the shorter end, with the 10-year Treasury yield down about 5 basis points on

FEDERAL RESERVE, US INTEREST RATES

BlackRock is opening a Saudi investment firm with initial $5 billion from PIF

Asset manager BlackRock will launch an investment platform in Riyadh with the help of a $5 billion anchor investment from Saudi Arabia’s Public Investment Fund (PIF), the kingdom’s sovereign wealth fund. The new platform will be called BlackRock Riyadh Investment Management, or BRIM. BlackRock CEO Larry Fink said in a statement that the kingdom “has become an increasingly attractive destination for international investment as Vision 2030 comes to life.” The BlackRock logo is displayed at the company’s headquarters in New York City on Nov. 14, 2022. Leonardo Munoz | Getty Images

The announcement Tuesday followed the signing of a memorandum of understanding between BlackRock’s Saudi division and the PIF with the aim of spurring capital markets growth in the oil-rich Gulf country.

BlackRock, the world’s largest asset manager with $10 trillion in assets under management, will “launch investment strategies across asset classes for the Saudi market, including both public and private markets, managed by a Riyadh-based investment team,” a joint press release from the firm and the PIF read.

The new platform will be called BlackRock Riyadh Investment Management, or BRIM.

BRIM aims to help bring foreign institutional investment into Saudi Arabia as well as develop the Saudi asset management industry, expand local capital markets and investor diversification, and support the development of the kingdom’s asset management talent, the release said.

The initiative, as well as many others by the PIF, which oversees $925 billion in assets under management, contributes to Saudi Arabia’s Vision 2030, a multi-trillion dollar project aiming to modernize the kingdom’s economy and diversify it away from oil. Central to that effort is bringing major international institutions, investment, and foreign talent into Saudi Arabia itself.

The establishment of BRIM aims to foster “further growth in the Saudi capital market ecosystem and enable a growing international investment management sector based in Saudi Arabia,” the press statement said.

Larry Fink, CEO of BlackRock, said in the statement that the kingdom “has become an increasingly attractive destination for international investment as Vision 2030 comes to life.”

The asset managing giant has been doing work

CNBC

Private payrolls increased by 192,000 in April, more than expected for resilient labor market

Private employers added 192,000 workers in April, better than the Dow Jones consensus outlook for 183,000 though a slight step down from the upwardly revised 208,000 in March, ADP reported. The firm’s wage measure showed annual pay gains up 5% from a year ago, the smallest gain since August 2021.

Private payrolls increased at a faster than expected pace in April, indicating there are still plenty of tailwinds for the U.S. labor market, according to ADP.

The payrolls processing firm reported Wednesday that companies added 192,000 workers for the month, better than the Dow Jones consensus outlook for 183,000 though a slight step down from the upwardly revised 208,000 in March.

At the same time, the firm’s wage measure showed worker pay up 5% from a year ago, a multiyear low that provided some welcome news against multiple other signs showing inflation has proved more resilient than many economists and policymakers had expected.

“Hiring was broad-based in April,” ADP chief economist Nela Richardson said. “Only the information sector – telecommunications, media, and information technology – showed weakness, posting job losses and the smallest pace of pay gains since August 2021.”

Job gains were strongest in leisure and hospitality, which posted an increase of 56,000. Other industries showing gains included construction (35,000) and sectors covering trade, transportation and utilities as well as education and health services, both of which saw increases of 26,000.

Professional and business services contributed 22,000 to the total while financial activities added 16,000.

Companies with 500 or more workers showed the biggest gain in hiring with 98,000.

The ADP release comes two days ahead of the more closely watched nonfarm payrolls report. In recent months, ADP has consistently undershot the Labor Department’s count, though the numbers were fairly close in March. The department’s Bureau of Labor Statistics reported that private payrolls increased by 232,000 for the month versus ADP’s 208,000.

Friday’s report is expected to show growth of 204,000 in total nonfarm payrolls for April, down from March’s 303,000, according to the consensus Dow Jones estimate.