Tag Archives: private payrolls

U.S. private payrolls post biggest gain in six months; housing market cooling

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private employers hired the most workers in six months in March as more Americans got vaccinated against COVID-19, pushing the economy towards a broader reopening, which is expected to unleash a strong wave of pent-up demand in the coming months.

Though the private payrolls gain shown in the ADP National Employment Report on Wednesday was slightly below economists’ expectations, the jump in hiring aligned with a recent improvement in labor market conditions. The broad-based increase was led by the leisure and hospitality industry.

The labor market and economy are also being supported by the White House’s massive $1.9 trillion pandemic relief package.

“Companies were hiring again in March and the economy was roaring,” said Chris Low, chief economist at FHN Financial in New York.

Private payrolls surged by 517,000 jobs this month after rising 176,000 in February. Economists polled by Reuters had forecast private payrolls increasing by 550,000 jobs in March.

The leisure and hospitality sector added 169,000 jobs after only 51,000 in February. Construction payrolls rebounded by 32,000 jobs, while hiring at factories rose by 49,000 positions.

The ADP report is jointly developed with Moody’s Analytics.

It has a very poor track record of predicting the private payrolls count in the government’s more comprehensive, and closely watched employment report because of methodology differences. Recent reports have pointed to rapidly improving labor market conditions.

The number of Americans filing new claims for unemployment benefits has dropped to the lowest level since the start of the COVID-19 pandemic in March 2020. A report on Tuesday showed a measure of household employment rebounding by the most in a year in March after three straight monthly decreases.

Stocks on Wall Street were higher. The dollar slipped against a basket of currencies. U.S. Treasury prices fell.

STRONG JOB GAINS EXPECTED

According to a Reuters survey of economists, nonfarm payrolls likely surged by 647,000 jobs in March after rising by 379,000 in February. The government is due to publish March’s employment report on Friday.

“We still expect nonfarm payrolls to show an above-consensus 700,000 gain, with a lot of that gain reflecting the rebound in leisure and hospitality employment,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York.

Economists are hopeful that the labor market has turned the corner after shedding 306,000 jobs in December. The relief package passed this month is sending additional $1,400 checks to qualified households and extending the government safety net for the unemployed through Sept. 6.

That is expected to drive consumer spending beginning in March. In addition, Americans have amassed about $1.9 trillion in excess savings, which economists expect will fuel consumer spending when the economy fully re-opens this year and well into 2021, and spur demand for workers.

Atlanta Federal Reserve bank president Raphael Bostic said on Tuesday, “a million jobs a month could become the standard through the summer.”

Employment is 9.5 million jobs below its peak in February 2020. While the labor market is regaining its footing, the housing market appears to be stumbling as surging prices amid tight supply and rising mortgage rates reduce affordability.

A separate report on Wednesday from the National Association of Realtors showed its Pending Home Sales Index, based on contracts signed in February, tumbled 10.6%, with contracts falling in all four regions.

Economists had forecast pending home contracts, which become sales after a month or two, would decline 2.6% in February. Compared to a year ago, pending home sales slipped 0.5% in February. Contracts had increased for eight straight months on a year-on-year basis.

The supply of existing homes is at a record low. The 30-year fixed-rate mortgage has risen to a nine-month high of 3.17%, according to data from mortgage finance agency Freddie Mac. Mortgage rates have increased since February.

The decline in contracts suggested sales of previously owned homes could fall further in March after dropping sharply in February. A third report from the Mortgage Bankers Association showed applications for loans to buy a home fell last week after four straight weekly increases.

“The housing market continues to face both tailwinds and headwinds. Pent-up demand and a strong economic rebound should support sales as we head into the heart of the spring home selling season,” said Nancy Vanden Houten, lead economist at Oxford Economics in New York.

“However, tight inventories and home prices at multi-year highs will make homebuying difficult for some households.”

Data on Tuesday showed the S&P CoreLogic Case-Shiller house price index soared 11.2% in January from a year ago, the fastest in 15 years, after rising 10.4% in December.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)

U.S. private payrolls miss expectations; cost pressures rising for businesses

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private payrolls increased less than expected in February amid job losses in manufacturing and construction, suggesting the labor market was struggling to regain speed despite the nation’s improving public health picture.

Part of the labor market’s problems appear to be rooted in a shortage of workers. Other data on Wednesday showed job growth in the services industry retreated last month, with businesses reporting they were “unable to fill vacant positions with qualified applicants” and “need more resources to meet demand.”

The year-long COVID-19 pandemic is keeping some workers at home, fearful of accepting or returning to jobs that could expose them to the coronavirus. The data was published ahead of the government’s closely watched employment report on Friday, and could temper expectations for an acceleration in job growth in February. The ADP’s private payrolls report, however, has a poor track record predicting the private payrolls count in the government’s more comprehensive employment report.

“This is a disappointment given that the drop-off in coronavirus case numbers and the resulting lifting of containment measures should be giving the economy a bigger shot in the arm,” said Paul Ashworth, chief economist at Capital Economics in Toronto.

Private payrolls rose by 117,000 jobs last month after increasing 195,000 in January, the ADP National Employment Report showed. The report is jointly developed with Moody’s Analytics. Economists polled by Reuters had forecast private payrolls would increase by 177,000 jobs in February.

Construction employment fell by 3,000 jobs and manufacturing payrolls decreased 14,000. Hiring in the services sector increased by 131,000 jobs, with the leisure and hospitality industry adding 26,000 positions. Harsh weather in some parts of the country was also likely a factor holding back gains.

Still, the labor market has been slow to regain traction even as some restrictions on services businesses have been rolled back amid a drop in new COVID-19 infections and hospitalizations. Though the rate of decline in coronavirus cases has stalled, economists still believe the labor market will regain momentum in the spring and through summer.

In a separate report on Wednesday, the Institute for Supply Management (ISM) said its measure of services sector employment fell to a reading of 52.7 in February from 55.2 in January.

The lack of significant improvement in the labor market is also despite nearly $900 billion in additional pandemic relief provided by the government in late December, which boosted consumer spending and positioned the economy for faster growth in the first quarter.

Gross domestic product growth estimates for the first quarter have been raised to as high as a 10% annualized rate from as low as a 2.3% pace. The upgrades also reflect President Joe Biden’s $1.9 trillion recovery plan, under consideration by Congress. The economy grew at a 4.1% rate in the fourth quarter.

“Historically, employment lags GDP by a quarter or so,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania. “Everything from that (GDP) front looks good, we are expecting substantial job growth in the not-too-distant future.”

Stocks on Wall Street were mostly lower. The dollar rose against a basket of currencies. U.S. Treasury prices fell.

RISING COSTS

According to a Reuters poll of economists, the government will likely report on Friday that nonfarm payrolls increased by 180,000 jobs in February after rising only 49,000 in January.

Hopes for a pick-up in hiring last month were supported by a survey last week showing consumers’ perceptions of the labor market improved in February after deteriorating in January and December. In addition, a measure of manufacturing employment increased to a two-year high in February.

The retrenchment in services employment last month contributed to the ISM’s broader non-manufacturing activity index declining to a nine-month low of 55.3 in February from a reading of 58.7 in January. A reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of U.S. economic activity.

Economists had forecast the index unchanged at 58.7. The decline likely reflected brutal winter storms, which lashed Texas and parts of the populous South region in mid-February.

The lack of qualified workers at suppliers and manufacturers is creating bottlenecks in the supply chain, leaving businesses with high production costs. The survey’s measure of prices paid by services industries jumped to 71.8 last month, the highest reading since September 2008, from 64.2 in January.

It mirrored findings of the ISM’s manufacturing survey published on Monday and a surge in consumers’ near-term inflation expectations.

Inflation is expected to accelerate in the coming months in part as last year’s pandemic-driven weak readings drop out of the calculation. Economists are divided on whether the jump in price pressures will stick beyond the so-called base effects.

U.S. Treasury yields have risen, with investors betting that the Federal Reserve’s ultra-easy monetary policy stance and White House’s proposed massive stimulus will ignite inflation.

Many services businesses complained about supply delays and labor shortages. Wholesalers reported an “ongoing influx of price increases due to raw-material shortages.” Retailers said “price increases are occurring with more frequency,” while accommodation and food services noted suppliers were proposing “price increases that are above and beyond normal expectations.”

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

U.S. private payrolls surge in December; weekly jobless claims rise

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private payrolls increased by the most in nearly two years in December, suggesting sustained strength in the labor market despite ongoing financial market volatility.

While other data on Thursday showed the number of Americans filing applications for unemployment benefits increased more than expected last week, the underlying trend in claims remained low. Claims data tend to be volatile around year-end holidays.

Labor market data is being closely watched for signs of whether tightening financial conditions could be impacting on companies’ hiring decisions. A sharp stock market sell-off has stoked fears about the economy’s health.

The ADP National Employment Report showed private payrolls rose by 271,000 jobs last month after a downwardly revised 157,000 increase in November. Economists polled by Reuters had forecast private payrolls advancing 178,000 last month following a previously reported 179,000 increase in November.

The ADP report, which is jointly developed with Moody’s Analytics, was published ahead of the government’s more comprehensive employment report for December scheduled for release on Friday.

The ADP report has a spotty record predicting the private-payrolls component of the government’s employment report and last month’s jump probably exaggerates the strength of the labor market.

“The December ADP data have been especially unreliable because of the challenge of adjusting for ‘purging’ effects,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York.

“December is typically when employers drop from their listings all individuals who have left their firms permanently,” he said. “Such workers are dropped from the government data when they are no longer being paid, but some employers keep former employees on their lists for ADP until year-end tax documents have been filed.”

According to a Reuters survey of economists, nonfarm payrolls likely increased by 177,000 jobs last month after rising 155,000 in November. The unemployment rate is forecast steady near a 49-year low of 3.7 percent, not too far from the Federal Reserve’s forecast of 3.5 percent by the end of 2019.

With the labor market viewed at being at or beyond full employment, the pace of job growth is slowing as employers struggle to find workers. Some of the moderation in employment gains has been attributed to the stock market rout.

The Fed raised interest rates last month for the fourth time in 2018, but forecast fewer rate hikes this year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.

U.S. financial markets were little moved by the data.

In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 231,000 for the week ended Dec. 29. Data for the prior week was revised higher to show 5,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims increasing to 220,000 in the latest week.

The Labor Department said claims for California and Virginia were estimated last week. Unadjusted claims for both of those states declined last week.

A Labor Department official said there was no indication of an increase in filings last week from federal workers furloughed because of a partial shutdown of the government that is now in its second week.

Data on claims filed by federal employees is released with a one-week lag. The shutdown, which started on Dec. 22, was triggered by President Donald Trump’s demand for $5 billion in border wall funding.

Some 800,000 employees from the Departments of Homeland Security, Transportation, Commerce and others have been furloughed or are working without pay.

Claims data tends to be noisy around year-end holidays. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, slipped 500 to 218,750 last week.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)