An onslaught of economic indicators arrived this week. To summarize: higher interest rates and inflation appear to be weighing on manufacturing and construction, yet service sector activity remains fairly resilient. Financial markets were largely focused on signs that the labor market is starting to loosen. Notably, stocks rallied early in the week following a surprisingly sharp drop in job openings. According to the latest Job Openings and Labor Turnover Survey (JOLTS), the count of job openings plummeted by 1.1 million vacancies in August. The monthly decline was the sharpest drop since 2020 during the throes of the pandemic.
The JOLTS plunge will come as welcome news to the FOMC. Fed Chair Powell has frequently cited the high number of openings relative to the number of unemployed workers as indicative of a labor market that is too tight. August's plunge in openings is a sign that tighter monetary policy is starting to slow hiring, and possibly the inflation pressures stemming from rapid wage growth. The market reaction to the news was likely owed to the belief that a pivot towards less-hawkish monetary policy could be coming sooner than expected.
Given the steep drop in job openings, Friday’s employment report took on new significance. Payrolls rose by 263K jobs during September, a gain just a shade above market expectations. The monthly improvement reflects a slowing pace of job growth this year, however labor markets remain remarkably tight. The unemployment rate ticked back down to 3.5% during the month, matching a 50-year low. The dip in the jobless rate occurred alongside a solid rise in household employment and only mild decline in the labor force. The labor force participation rate, which is still hovering below prepandemic averages, inched down to 62.3%.
Wells Fargo Economics & Financial Report / Jul 04, 2020
It was a mildly busy week for foreign economic data and events, while global COVID-19 cases continued to rise.
Wells Fargo Economics & Financial Report / Jan 18, 2020
Mild weather helped housing starts surge 16.9% in December to a 1.61 million-unit pace, the highest in 13 years. Manufacturing surveys from the New York Fed and Philadelphia Fed both rose more than expected in December.
Wells Fargo Economics & Financial Report / Aug 13, 2022
The FOMC has made it clear that it needs to see inflation slowing on a sustained basis before pivoting from its current stance. The data seems to be going in multiple directions all at once.
Wells Fargo Economics & Financial Report / Aug 11, 2020
There were more signs of global recovery this week and PMI surveys improved further across the world.
Wells Fargo Economics & Financial Report / Sep 22, 2020
European activity is surging. Germany and Italy are leading the way, but France is close behind despite an ongoing rise in cases. The Google data are a bit outdated, but are hard to reconcile with today’s weak Eurozone services PMI figures.
Wells Fargo Economics & Financial Report / Oct 31, 2022
Headline GDP continues to send mixed signals on the direction of the U.S. economy. During Q3, real GDP rose at a 2.6% annualized rate, ending the recent string of quarterly declines in growth registered in the first half of 2022.
Wells Fargo Economics & Financial Report / May 29, 2022
it looks like higher mortgage rates are starting to have some effect on the housing market as April...
Wells Fargo Economics & Financial Report / Jan 19, 2021
The U.S. economy appears to be losing some momentum as the calendar turns to 2021 and the public health situation continues to deteriorate.
Wells Fargo Economics & Financial Report / Apr 26, 2021
This week\'s lighter economic calendar allowed forecasters more time to assess the implications from the prior week\'s blowout retail sales report.
Wells Fargo Economics & Financial Report / Feb 09, 2021
Economic data came in largely as expected this week and suggest continued economic recovery.