Saturday, October 3, 2015

Slow Saturday Special: Mixed Me$$ages

I should have seen the signs:

"US hiring slowed sharply in September" by Christopher S. Rugaber Associated Press  October 02, 2015

WASHINGTON (AP) — US employers cut back sharply on hiring in September and added fewer jobs in July and August than previously thought — a sour note for a labor market that had been steadily improving.

Meaning we were lied to once more, and here we go again:

A sagging global economy has finally caught up with the United States. 

A result is that economists now expect the Federal Reserve to delay a long-awaited increase in interest rates, possibly until next year. 

The government sharply lowered its estimate of gains in July and August by a combined 59,000.

Wait, just saw some verbatim print:

The unemployment rate remained 5.1 percent, but only because many Americans have stopped looking for work and are no longer counted as unemployed. The proportion of adults either with a job or looking for one is at a 38-year low.

Some recovery, huh?

And then:

Friday’s tepid jobs report from the government suggested that the US economy, which has been outshining others around the world, is weakening. Lackluster growth overseas has reduced exports of US factory goods. China, the world’s second-largest economy after the United States, is slowing. Europe is struggling. Emerging economies from Brazil to Turkey are straining to grow at all.

U.S. stock prices have tumbled as fears of a global slowdown have intensified. Volatile financial markets can make businesses too anxious to expand and hire.

‘‘The weakness in the global economy is washing onto American shores, James Marple, senior economist at TD Bank, said in a note to clients.

“We’re back to a period of what I call corporate caution,” says Nariman Behravesh, chief economist at IHS. “It’s wait and see. If things stabilize, we could see hiring come back.”

Meaning it never did.

The sluggish data sent stock prices tumbling. The Dow Jones industrial average, which had been up before the jobs report was released, was down about 200 points two hours later. The yield on the 10-year Treasury note dipped to 1.92 percent, its lowest level since April. Investors tend to buy bonds when they expect sluggish growth and low inflation.

That's not the snapshot the Globe bu$ine$$ section gave me on the opposite page!

Heavy equipment maker Caterpillar has said it will cut up to 5,000 jobs by year’s end. Lower oil prices have hurt its sales of drilling equipment, and overseas sales of its construction machines have fallen. Hershey has said it will shed 300 positions in the U.S. this year after sales in China plunged.

Caterpillar is axing 10,000 jobs, and looks like a real healthy job market, huh? One flinch and the job cuts are a-comin'!

The dollar has risen about 15 percent against overseas currencies in the past year, making U.S. goods costlier overseas and imports cheaper. Lower exports likely helped hold growth in the July-September quarter to a meager 1.5 percent annual rate, according to Michael Feroli, an economist at JPMorgan Chase. In addition, sharply lower oil prices have led U.S. drilling firms to lay off workers and slash spending on equipment.

A host of other companies have announced layoffs in recent weeks, including Wal-Mart, the world’s largest retailer; ConAgra Foods, which makes Chef Boyardee and Slim Jims; and Chesapeake Energy, which has been hurt by lower oil prices.

But hiring could come back.

That is where my print ended.

The tepid pace of hiring complicates the picture for the Federal Reserve, which is considering whether to raise interest rates from record lows. Fed Chair Janet Yellen has said that the job market is nearly healed. But she has also said she wants to see further hiring and pay growth for reassurance that inflation is moving toward the Fed’s 2 percent target. Average hourly wages slipped a penny in September and have now risen just 2.2 percent in the past year.

‘‘Every aspect of the September jobs report was disappointing,’’ said Michelle Girard, an economist at RBS Securities. It ‘‘strengthens the case that the Fed will be forced to stay on hold over the remainder of the year.’’

The shrinking of the U.S. labor force — the number of people either working or looking for work — reflects in part the first wave of retirements of the vast baby boom generation. But it also signals that many Americans remain discouraged about their job prospects. Modest growth and steady, if unspectacular, hiring hasn’t encouraged more people to look for work.

Though the overall job market has lost some vigor, U.S. consumers are spending at a healthy pace and boosting job growth in sectors like retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.

Sick of the excu$es yet?

So far this year, job gains have averaged 198,000 a month this year, a solid total, but below last year’s average of 260,000.

Last month, construction companies added 8,000 jobs and professional services, which includes accounting and architects, gained 31,000. Government added 24,000. But financial services reported no gain. And hiring in education and health fell to its lowest level in nearly a year.



"News of slower hiring last month jolted markets early, driving government bonds up and the dollar down. In the end, however, the stock market finished the day with solid gains. A jump in crude oil helped turn things around, as Chevron, Exxon Mobil, and other oil giants charged higher. But the swing was also a result of traders speculating that the weak jobs report will prevent Federal Reserve policy makers from raising its benchmark interest rate anytime soon. The Fed has only two meetings left to make a move this year: one later this month and another in December. Nordstrom’s stock climbed 5.11 percent to $75.08 after announcing that it will pay a special dividend and spend up to $1 billion to buy its own shares. US crude gained 80 cents to $45.54 a barrel in New York."

Good for Nordstrom.