Pre-market actions: the job market may never be the same again
What’s happening: The US economy created 531,000 jobs in October, according to government data released Friday. This is stronger than in August and September, although gains for both months have been revised up.
Yet economists are increasingly starting to wonder: As labor shortages persist, has the labor market changed for good? If the answer is yes, the ramifications for policymakers could be enormous.
Break down: Businesses are still struggling to attract and retain enough staff to cope with an explosion in demand. Employers hoped that better access to child care services and a reduction in fears related to Covid-19 would increase the number of people looking for work this fall. Instead, the number of people actively seeking work remained stable in September and October, according to Indeed, which recently surveyed 5,000 people in the United States.
The churn rate also remains an issue. In August, the most recent month for which data are available, a record 4.3 million workers left their jobs.
Joseph Brusuelas, chief economist at RSM US, told me he is closely monitoring what happens in the coming months with two demographic groups: women aged 25 to 54 and baby boomers who may -be taken early retirement.
“In previous cycles, once the unemployment rate tended to drop below 5%, retirees tended to show up,” Brusuelas said. The US unemployment rate fell to 4.6% in October. “We should start to see this now.”
What if these workers don’t come back? It could indicate a deeper change.
“This may signal the lasting structural damage to the workforce from the pandemic,” Brusuelas said.
Overview: If an unemployment rate of 4.5% now means “full employment” in the United States, and not 3.5%, as before the pandemic, it could prompt the Federal Reserve to reverse crisis policies even faster than expected.
For now, the Fed has said it waits for the employment situation to improve before raising interest rates from their all-time lows.
Watch this space: Central banks are trying to wire their next steps to investors to avoid disrupting markets. But the data on employment and inflation remain difficult to read. The Bank of England surprised investors on Thursday by choosing not to raise interest rates, citing uncertainty over the effects of the end of the country’s holiday program.
OPEC does not give in to American demands
“Our view is that the global recovery should not be jeopardized by a mismatch between supply and demand,” a spokesperson for the US National Security Council said in a statement. “OPEC + does not appear willing to use the capacity and power it currently has at this critical time of global recovery for countries around the world.”
The price of Brent crude oil, the global benchmark, has roughly doubled in the past year to $ 81 a barrel as the global economy rebounds from its pandemic slump. Bank of America predicts prices could reach $ 120 a barrel by June 2022.
Soaring oil prices are fueling inflation, hurting vulnerable households and slowing global economic recovery at a critical time. The United States, Japan and India have all called on OPEC + to turn on the taps wider to help bring prices down.
Take a step back: High gasoline prices could have political ramifications for Democrats in the run-up to next year’s midterm elections. Gas prices in the United States hit a seven-year high of $ 3.40 per gallon nationally. Petrol and diesel prices have also reached record highs in parts of Europe and the UK.
But OPEC + showed on Thursday it was in no rush to respond to Biden’s call for increased production.
On the radar: The United States alone could ease conditions by tapping into the Strategic Oil Reserve, which can hold up to 714 million barrels of crude and is the world’s largest reserve of emergency oil. Will he do it?
Vaccine stocks have skyrocketed. They are not bulletproof
The latest: Revenue soared to more than $ 24 billion, up 134% from the previous year. Pfizer’s vaccines business was responsible for more than 60% of the company’s sales, with sales of Covid-19 grossing $ 13 billion. Stocks jumped more than 4% on the news.
Setback: both companies profit. Pfizer stock is up 19% this year. Moderna’s stock has jumped more than 170% after posting huge gains in 2020. The coronavirus vaccine is the company’s first major product.
But their actions are not made of Teflon when expectations are so high.
Following
Also today: The U.S. jobs report arrives at 8:30 a.m. ET.
Coming next week: For the first time in nearly two years, the United States will welcome fully vaccinated visitors from all countries. This could give the travel industry a much needed boost.