Latest news with #KathyBostjancic
Yahoo
3 days ago
- Business
- Yahoo
May jobs report released: Employers added 139K jobs; unemployment held steady
U.S. payroll growth slowed modestly in May as employers added 139,000 jobs amid uncertainty about President Trump's sweeping import tariffs, federal government layoffs and immigration crackdown. The unemployment rate held steady at 4.2%, the Labor Department said Friday. Before the report's release, economists surveyed by Bloomberg estimated 125,000 jobs were added last month. Job gains for March and April were revised down by a combined 95,000, portraying a weaker labor market than believed in late winter and early spring. March's total was downgraded from 185,000 to 120,000 and April's from 177,000 to 147,000. "Employment gains are many companies remain in a holding pattern and are hesitant to hire new workers amid heightened uncertainty about the impact of tariff policies on economic growth," Nationwide Chief Economist Kathy Bostjancic wrote in a note to clients. "At the same time, they are not laying off workers in a large way." Health care, a reliable job generator the past couple of years, again led the employment gains with 62,000. Leisure and hospitality added 48,000. But the scope of job creation is narrowing, possibly signaling a broader slowdown ahead. Professional and business services shed 18,000 jobs, retail lost 6,500 and manufacturing, which has been struggling because of the tariffs, lost 8,000. The federal government cut 22,000 positions amid the Trump administration's widespread layoffs and has slashed 59,000 since January. Average hourly earnings rose 15 cents to $36.24, nudging the yearly from 3.8% to 3.9%. Wage growth has slowed in recent months and, after peaking at 5.9% in March 2022 due to pandemic-related worker shortages, is now roughly in line with the Federal Reserve's 2% inflation goal, Oxford Economics has said. May's solid job gains likely won't do anything to coax the Fed to reduce its key rate at a mid-June meeting. Since cutting interest rates by a percentage point late last year, Fed officials have said they'll probably remain on hold until they determine if Trump's tariffs will do more harm by driving up inflation or hobbling the economy. A weak May jobs total at least could have prompted officials to start thinking about lowering rates soon, especially if it were followed by another soft reading for June. The Fed raises rates or keeps them higher for longer to battle inflation. It lowers rates to head off – or dig the economy out of – recession. Trump's immigration crackdown, though, could complicate the Fed's mission. Last month, a sharp drop in employment in Labor's household survey was offset by a big decline in the labor force - the pool of Americans working or looking for jobs - that can be partly traced to immigration curbs. That kept the unemployment rate from rising and a similar a dynamic in coming months could make it tougher for the Fed to lower rates despite weakening job growth, economists have said. The labor market has slowed but held up well despite the hurdles posed by Trump's economic policies, with employment gains averaging 124,000 a month so far this year, down from 168,000 in 2024. But many forecasters reckon the pullback will intensify in the months ahead. Trump's trade strategy lies at the center of the projected downshift. He paused the high double-digit tariffs he slapped on dozens of countries in April and in May agreed to slash levies on Chinese imports from 145% to a still-elevated 30%. China agreed to broadly similar concessions. But the moves hinge on further U.S. deals with China and other countries. And 25% tariffs remain in effect on all imported cars and many goods from Canada and Mexico. This week, Trump hiked fees on steel and aluminum imports to 50% from 25%. And while a trade court last month struck down many of Trump's tariffs, they remain in effect during an appeal, prolonging the uncertainty for businesses. Economists expect the duties to reignite inflation within a month or two and dampen consumer spending. The costs also have heightened business uncertainty, curtailing hiring and investment. The Trump administration's Department of Government Efficiency has cut as many as 120,000 federal jobs but many workers have been placed on administrative leave, leaving them on U.S. payrolls pending court cases, Morgan Stanley said in a report. Others who are on paid leave or receiving severance ar also counted as employed. Still, the reductions have started to filter into the jobs numbers, underscored by the 22,000 federal job losses in May and 59,000 since January. Besides toughening enforcement at the southern border, the administration has canceled or declined to renew work permits and other protections for hundreds of thousands of migrants, economist Lydia Boussour of EY-Parthenon wrote in a note to clients. That will likely mean a smaller labor supply that further constrains hiring, especially in industries such as construction and hospitality, she said. Yet while hiring generally has slowed, other economists figured job growth remained sturdy last month as companies frustrated by labor shortages during the pandemic continued to curtail layoffs. Initial jobless claims, a reliable gauge of layoffs, have risen recently but remained historically low. Capital Economics and Barclays both predicted 150,000 jobs gains for May. By the end of the year, however, Barclays believes tariffs, federal layoffs and immigration curbs will slow average monthly job gains to about 75,000. (This story was updated to add new information.) This article originally appeared on USA TODAY: May jobs report data reveals 139K jobs added; unemployment steady
CNBC
5 days ago
- Business
- CNBC
Friday's jobs report will be final arbiter for labor in May: Nationwide Mutual's Kathy Bostjancic
Kathy Bostjancic, Nationwide Mutual chief economist, joins 'Power Lunch' to discuss how the recent economic data impacts the Federal Reserve, concerns around the quality of recent economic data and much more.
Los Angeles Times
30-05-2025
- Business
- Los Angeles Times
U.S. inflation gauge cools with little sign of tariff impact, so far
WASHINGTON — A key U.S. inflation gauge slowed last month as President Trump's tariffs have yet to noticeably push up prices. Spending by Americans slowed despite rising incomes, potentially an early reaction to higher prices on some imported goods. Friday's report from the Commerce Department showed that consumer prices rose just 2.1% in April compared with a year earlier, down from 2.3% in March and the lowest since September. Excluding the volatile food and energy categories, core prices rose 2.5% from a year earlier, below the March figure of 2.7%, and the lowest in more than four years. Economists track core prices because they typically provide a better read on where inflation is headed. The figures show inflation is still declining from its post-pandemic spike, which reached the highest level in four decades in July 2022. Economists and some business executives have warned that prices will likely head higher as Trump's widespread tariffs take effect, though the timing and impact of those duties are now in doubt after they were struck down late Wednesday in court. On a monthly basis, overall prices and core prices both increased just 0.1% from March to April. The cost of big-ticket manufactured goods rose a hefty 0.5%, though that increase was offset by a 0.1 decline in other goods, such as groceries. The cost of services rose just 0.1% from March to April. The big increase in durable goods prices could reflect the early impact of tariffs. Americans also cut back their spending on longer-lasting factory goods in April, the report showed. Overall consumer spending — which includes spending on services — rose 0.2% in April from March, the report said, but that's down from a big 0.7% rise in March. The slowdown in spending could reflect some early caution on the part of consumers, economists said, in response to higher goods prices. It also suggests that some of the spending jump in March reflected consumers purchasing items like cars to get in front of the impact of tariffs. 'The pulling forward of consumer spending ahead of the tariff increases will continue to dampen household spending in the coming months, especially as they face higher prices and a softening labor market,' Kathy Bostjancic, chief economist at Nationwide, said in an email. 'We anticipate that the improved inflation trend will reverse in the second half of the year as companies are forced to begin passing along a portion of the increased tariffs in order to protect profit margins.' Walmart executives said earlier this month that the retail giant would increase prices for many products in May and June to account for the tariffs, while electronics chain Best Buy's CEO Corie Barry said Thursday the company is increasing some prices as well because of the duties, as a 'last resort.' Makeup company E.l.f. Beauty, which sources 75% of its products from China, said earlier this week it would raise its prices by $1 a product starting Aug. 1 to offset the cost of tariffs. And on Thursday, warehouse retailer Costco said it has already raised prices for some products, but has held the line on others. The company largely absorbed the duties on pineapples and bananas 'because they are key staple items' and 'we felt it was important to really eliminate the impact there,' said Gary Millerchip, Costco's chief financial officer. But the company did increase prices for flowers from Central and Source America, for example, 'because we felt that was something that the member would be able to absorb,' Millerchip added. At the same time, incomes — before adjusting for inflation — rose a healthy 0.8% in April. Much of that gain reflected an increase in Social Security benefits for some retired teachers, fire fighters, and federal workers whose incomes previously weren't fully counted toward Social Security benefits. The inflation-fighters at the Federal Reserve said at their most recent meeting May 6-7 that inflation is still elevated, compared to their target of 2%. Fed officials, who focus more on core prices, broadly support keeping their key interest rate steady while they evaluate the impact of the tariffs on inflation and jobs. The court ruling last Wednesday said that most of Trump's tariffs were unlawful, including his duties on imports from Canada, Mexico, and China, as well as those on more than 50 other countries. Tariffs on steel, aluminum, and cars were implemented under different laws and remain in place. But the duties were allowed to remain in effect while the Trump administration appeals the ruling against them. And administration officials say they will find other legal authorities, if needed, to implement the tariffs. As a result, what tariffs will end up in place and for how long remains highly uncertain. Rugaber writes for the Associated Press.
The Hill
15-05-2025
- Business
- The Hill
Wholesale prices fell off a cliff in April amid trade war
Wholesale prices took their largest month-to-month dive in April since the height of the coronavirus pandemic amid Trump's ongoing trade war. The producer price index (PPI), a measure of wholesale inflation, declined 0.5 percent from March to April, the largest monthly drop since April 2020 immediately following the onset of the pandemic when the global economy started a series of shutdowns. On an annual basis, the PPI rose in April by 2.4 percent, the lowest level since September of last year, the Labor Department reported Thursday. Removing the more volatile categories of food and energy, the PPI declined 0.1 percent to mark an annual increase of 2.9 percent. Economists noted profit margin contraction associated with the price level decline. 'Over two-thirds of the decrease [was] due to shrinkage in margins for final demand trade services, which dropped 1.6 percent,' Nationwide economist Kathy Bostjancic said in an analysis. 'At the product level over 40 percent of the decline came from reduced margins for machinery and vehicle wholesaling, which dropped 6.1 percent.' The numbers follow recent declines in retail inflation. The consumer price index (CPI) dropped to a 2.3-percent annual increase in April from 2.4 percent in March, off a recent high of a 3-percent increase hit in January. Companies have been saying that Trump's trade war will result in higher inflation but so far those higher prices have yet to materialize. Retail giant Walmart said Thursday it will raise its prices this summer in response to higher costs resulting from President Trump's trade war. 'The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history,' John David Rainey, Walmart's chief financial officer, said to The Wall Street Journal. Economists on Thursday noted the recent downward trend in prices. 'Today's wholesale inflation numbers and earlier consumer inflation figures suggest inflation continues to cool,' Elizabeth Renter, senior economist at Nerd Wallet, wrote in an analysis. Raymond James chief economist Eugenio Aleman said Thursday's CPI number was a 'positive surprise.' 'While today's report delivered a positive surprise, we anticipate continued volatility in inflation data,' he wrote in a commentary. Federal Reserve Chair Jerome Powell said Thursday that the economy could be in for a period of more frequent supply shocks with increased staying power. 'We may be entering a period of more frequent, and potentially more persistent supply shocks, a difficult challenge for the economy and for central banks,' Powell said at a conference Thursday. U.S. retail sales clocked a marked slowdown in April in line with economists' expectation, falling to a 0.1-percent increase from 1.7 percent in March. 'Retail sales were pretty good, despite the pull forward last month,' investment company Global X's head of strategy Scott Helfstein said. Looking ahead, economists expect more pullback in spending from consumers. 'Going forward, we anticipate further weakness in consumer spending as pay back from the front-loading of consumption ahead of the tariffs,' Nationwide's Kathy Bostjancic said. Consumer and business sentiment has tanked in many recent surveys during Trump's trade war, but adverse price data has yet to show up in force, economists say. 'Recall that while US sentiment surveys have seen a sharp weakening over the past few months, hard data have so far held up quite well,' Peter Sidorov and others wrote in a Thursday analysis for Deutsche Bank.
Malay Mail
07-05-2025
- Business
- Malay Mail
Will the US Federal Reserve bow to Trump or wait for ‘decisive evidence' before cutting rates?
WASHINGTON, May 7 — The US Federal Reserve faces a tough choice today as it contends with President Donald Trump's tariff rollout: prioritise tackling inflation by holding interest rates high, do nothing, or stimulate growth and employment by cutting them. Analysts and investors overwhelmingly think the Fed will choose to sit tight, preferring to wait and see how the new levies affect the US economy before moving on rates. 'It's an unfavourable mix for the Federal Reserve,' Nationwide chief economist Kathy Bostjancic told AFP. 'They're going to see upward price pressures at the same time when economic growth is slowing,' she said. 'And then they'll have to put a weight on what do they believe?' The US central bank has a dual mandate from Congress to act independently to achieve stable prices and maximum sustainable employment, which it does mainly by raising and lowering the level of its key short-term lending rate. That acts as either a throttle or a brake for demand in the US economy, and feeds through into borrowing costs for everything from car loans to mortgages. Futures traders see a probability of more than 95 per cent that the Fed will make no cuts this week, according to data from financial services company CME Group. 'Decisive evidence' Last month, Trump introduced steep levies on China and lower 'baseline' levies of 10 per cent on goods from most other countries, sparking weeks of turbulence in the financial markets. The White House also introduced higher tariffs on dozens of other trading partners, and then abruptly paused them until July to give the US time to renegotiate existing trade arrangements. Data published in recent weeks point to an economic contraction in the first quarter of the year, as consumers and businesses stocked up on imports ahead of the introduction of the new measures. At the same time, the unemployment rate has hovered close to historic lows, and the inflation rate has trended towards — but remained just above — the Fed's long-term target of two per cent. 'We continue to think that Fed officials will be willing to 'look through' tariff related goods inflation and cut policy rates to support the labour market,' economists at Citi bank wrote in a recent investor note. 'But that will not occur until they see decisive evidence in hard data that labour markets are loosening,' they added. Other analysts, including those at Deutsche Bank, expect the Fed will pause for longer to see how the economic picture unfolds over the coming months. If, as is widely expected, the Fed sits tight this week, its baseline rate will remain at between 4.25 per cent and 4.50 per cent, where it has sat since December 2024. 'Neither good nor bad enough' 'Incoming data are neither good nor bad enough to force the FOMC to reveal its intentions,' Steve Englander, Standard Chartered bank's head of North America macro strategy, wrote in a note to clients, referring to the bank's rate-setting Federal Open Market Committee. Fed Chair Jerome Powell will likely try to make 'very little news' during his regular press conference after the rate decision is published, said Bostjancic from Nationwide. Powell will likely face additional questions about the Trump administration's support for his leadership of the independent central bank, given public criticism levelled at him and the Fed by senior government officials — including the president. 'He should lower them,' Trump said of Powell and the interest rates in an interview published over the weekend, repeating his past criticism of the Fed chair while insisting he had no plans to try to fire him before his term ends next year. 'By commenting publicly on what the Fed should do, they potentially public's perception of the institution's commitment to price stability,' former Fed economist Rodney Ramcharan wrote in a note shared with AFP. 'If the Fed were to cut rates, markets could perceive that decision as 'political' rather than a reaction to actual economic conditions,' he added. — AFP
