US unemployment rate spikes to 3.8%; labor market still has momentum
U.S. job growth picked up in August, but the unemployment rate jumped to 3.8% and wage gains moderated, suggesting that labor market conditions were easing and cementing expectations that the Federal Reserve will not raise interestratesthismonth.
The closely watched employment report from the Labor Department on Friday also showed 736,000 peopleenteredthejobmarketlastmonth,boosting the participation rate to the highest level in 3-1/2 years. Concerns about an economic slowdown are probablyluringpeoplebackintothelabormarket.
The economy created 110,000 fewer jobs than previously reported in June and July, which some economists said suggested there had been businessclosuresthatwerenotpreviouslycaptured. The report followed news this week that job openings dropped to the lowest level in nearly 2-1/2 yearsinJuly.
The labor market is slowing in response to the U.S. centralbank'sheftyratehikestocooldemandinthe economy.
Souce:
https://www.reuters.com/markets/us/us-job-growth-picks-up-august-wages-gainsslow-2023-09-01/
Hollywood walkouts have wiped $5 billion from California's economy
Hollywood'sfirstdoublestrikeinover60yearshas dealta$5billionblowtoCalifornia'seconomy.
The entertainment industry has been largely on pause since the Writers Guild of America and the actors' union SAG-AFTRA joined the picket line together.
Now, the consequences are reverberating across Los Angeles, as the slowdown creates a knock-on effectforenterprisesacrosstheboard.
Caterers, dry cleaners, truckers, car rental companies and other small businesses that support the moviemaking industry all bear the bruntofthewalkout,accordingtoKevinKlowden, chief global strategist at the Milken Institute, whichconductedtheresearch.
As a result, Hollywood studios have begun delaying new releases, as strike rules prohibit actorsfrompromotingtheirfilms.Dune:PartTwo, Ghostbusters: Afterlife, and Spider-Man: Beyond the Spider-Verse have all either been postponed orremovedfromthereleasecalendar.
Wall St slides as economic data stokes inflation and interest rate worries
Wall Street's three major averages closed lower on Wednesday with the Nasdaq's 1% loss leading declines after stronger-than-expected services sector data fueled concerns that still sticky inflation would mean that interest rates stay higher for longer.
The Institute for Supply Management (ISM) said on Wednesday its non-manufacturing Purchasing Managers' Index rose to 54.5 last month against expectationsof52.5,whileagaugeofpricespaidby service-sectorbusinessesforinputsincreased.
Traders were betting on a 93% chance that the Federal Reserve would leave interest rates unchangedafteritsmeetingonSept.20,whilebets on another pause in November were around 57%, CMEGroup'sFedWatchToolshowed.
Theprospectofhigherratesputparticularpressure on growth stocks with the S&P 500 growth index (.IGX)underperforming thebenchmarkthroughout the session. Equity investors were also reacting to rising yields in 10-year and the two-year U.S. Treasuries.
Souce: https://money.usnews.com/investing/news/articles/2023-09-06/futures-fall-asinvestors-await-more-economic-data-to-assess-fed-rate-path
Dollar Set for Longest Rally in Years With US Defying Global Gloom
The US dollar extended its gains, sending the currency toward its longest rally in years as the strength of the economy fuels speculation the FederalReservewillkeepinterestrateselevated.
The expectation is drawing money into the US as investors seek higher rates than they can get in EuropeandAsia,exertingupwardpressureonthe dollar.
TheBloombergDollarSpotIndex,whichisheavily weighted against the euro and yen, edged up Thursday, extending a three-day advance that’s pusheditupnearly1%.That’sputitontrackforits eighth weekly gain, the longest since the index begins in January 2005. The ICE dollar index has seen a similar jump, leaving it poised for the longestadvancein9years.
The rally reflects the fissures that are opening in the global economy, with reports signaling that the US economy is accelerating even as growth coolsinEuropeandChinaandmarketsanticipate ratecutsinthedevelopingworld.
Banking industry faces 'significant downside risks': FDIC chair
FDIC Chair Martin Gruenberg said that the US banking industry "continues to face significant downside risks"frominflationandhighinterestrates,whichcouldcauseprofitabilityandcreditqualitytoweaken.
The top regulator issued his warning as the FDIC released a comprehensive look at how thousands of institutions fared during the second quarter, one of the most tumultuous periods for banking since the 2008financialcrisis.
ThequarterincludedtheseizureofSanFranciscolenderFirstRepublic,whichwasthesecond-largestbank failureinUShistory,andwildfluctuationsinthestocksofotherregionalbanks.Twoothermid-sizedlenders, SiliconValleyBankandSignatureBank,wentdownduringthefirstquarter.
What the report showed is that deposits declined for the fifth quarter in a row, largely due to the exit of uninsuredaccountholders.
Thedeclineof$98.6billion,or0.5%,"moderatedsubstantially"fromthe$472billionoutflowduringthefirst quarter, but it continued to place pressure on banks to raise their funding costs to keep account holders whoaresearchingforhigheryields.That,inturn, ateintoakeymeasureofprofitability.
Those pressures, Gruenberg said in a separate release, pose "significant challenges" to the industry, along withconcernsaboutaweakeningmarketforcommercialrealestate.
Souce:
https://finance.yahoo.com/news/banking-industry-faces-significant-downside-risks-fdic-chair-151714051.html