Powell’s favorite work chart will not be updated on Friday: Morning Brief

This article first appeared in the Morning Brief. Get the Morning Brief sent straight to your inbox Monday through Friday by 6:30 am ET. subscribe

Friday 5th August 2022

Today’s newsletter is from Myles Udland, senior market editor at Yahoo Finance. Follow him on Twitter @MylesUdland and go LinkedIn.

The July employment report is expected to show another month of steady, but slowing, hiring in the US economy.

But the Federal Reserve’s preferred health measure for the job market won’t get an update when the BLS releases its latest monthly report on Friday morning.

Earlier this week, we learned that job openings are heading in the Fed’s preferred direction, which is lower.

In June, there were about 10.7 million jobs open in the United States, down from 11.3 million in the previous month and 11.9 million in March, which set a record.

Job openings fell to 10.7 million in June, the fourth consecutive month of declines.  (Source: FRED)
Job openings fell to 10.7 million in June, the fourth consecutive month of declines. (Source: FRED)

Over the past few months, Fed Chairman Jay Powell has been talking at length about the number of open jobs and has stated in various ways that there are simply too many vacancies in the US job market.

As early as March of this year, Powell said high job openings indicated a “tight to an unhealthy level” job market.

“If you were to simply reduce the number of job opportunities so that they were more like one-to-one,” Powell said, “you’d have less upward pressure on wages. economy”.

Speaking to reporters in late July, Powell said: “There is a sense that the job market is returning to equilibrium. If you look at job openings or resignations, you see them shift sideways or maybe a little down. But it is only the beginning of an adjustment ».

And whether this “adjustment” will actually reduce job opportunities without increasing unemployment has also become the subject of heated debate in the business community.

US Federal Reserve Chairman Jerome Powell attends a press conference in Washington, DC, US, on July 27, 2022. The US Federal Reserve raised its benchmark interest rate by 75 basis points on Wednesday, the second in a row for that size. , as high inflation showed no clear signs of easing.  (Photo by Liu Jie / Xinhua via Getty Images)

US Federal Reserve Chairman Jerome Powell attends a press conference in Washington, DC, United States on July 27, 2022. (Photo by Liu Jie / Xinhua via Getty Images)

Fed economists Andrew Figura and Chris Waller said last month that the number of open jobs can be reduced without causing an increase in unemployment.

Economists Olivier Blanchard, Alex Domash and Larry Summers wrote in response that this analysis “contains misleading conclusions, errors and errors of fact”, arguing that “vacancies are very unlikely to normalize without a major increase in unemployment.”

In June, the last month for which both unemployment and job openings data are available, the unemployment rate stood at 3.6%. Wall Street expects the unemployment rate to remain stable in July.

After Powell’s comments in March, of course, things began to change dramatically on the job front.

In the tech sector, job cuts became an unfortunate reality for many companies that were very ambitious during the pandemic, with the announcement of Robinhood (HOOD) this week the latest example. Meanwhile, weekly claims for unemployment insurance – the best real-time indicator of the labor market – rose again last week and are close to an 8-month high.

“The job market is not immune to the slowdown in spending and investment already underway,” Wells Fargo economist Sarah House wrote in a statement published Thursday. “The cracks have begun to show.”

Economists expect the US economy to have created 250,000 jobs in July, data that would be consistent with a “growing but slowing” view of the economy seen in data across all sectors.

And from Powell’s point of view, slowing growth isn’t just what is at stake, it’s the Fed’s desired outcome.

“We think growth needs to be slowed down,” Powell said last week. “We actually think we need a period of below-potential growth in order to create some easing so the supply side can catch up. We also think there will, in all likelihood, be a weakening. labor market conditions. And those are things we expect … to bring inflation back to the 2 percent path. “

What to watch today

Economic calendar

  • 8:30 am ET: Change in non-farm payrollsJuly (250,000 expected, 372,000 in the previous month)

  • 8:30 am ET: Modification of private payslipsJuly (230,000 expected, 381,000 in the previous month)

  • 8:30 am ET: Change in production payslipsJuly (20,000 expected, 29,000 in the previous month)

  • 8:30 am ET: Unemployment rateJuly (3.6% expected, 3.6% in previous month)

  • 8:30 am ET: Average hourly earningsmonth-over-month, July (0.3% expected, 0.3% in previous month)

  • 8:30 am ET: Average hourly earningsyear-over-year, July (4.9% expected, 5.1% previous month)

  • 8:30 am ET: Average weekly hours All employeesJuly (34.5 expected, 34.5 during the previous month)

  • 8:30 am ET: Workforce participation rateJuly (62.2% expected, 62.2% in previous month)

  • 8:30 am ET: Underemployment rateJuly (6.7% previous month)

  • 3pm ET: Consumer creditJune (expected $ 25 billion, $ 22.347 billion in the previous month)

I earn

  • Atlas Air Worldwid (AAWW), Brookfield Renewable Partners (BEP), Canopy Growth (CGC), Gogo (GOGO) Goodyear Tire (GT), Western Digital (WDC), WideOpenWest (WOW)

Highlights of Yahoo Finance

Click here for the latest economic news and economic indicators to help you with your investment decisions

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedInAnd Youtube

Leave a Reply

%d bloggers like this: