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Business Standard
03-07-2025
- Business
- Business Standard
US job growth masks weakness amid Trump's aggressive tariffs on imports
US job growth was unexpectedly solid in June, but nearly half of the increase in nonfarm payrolls came from the government sector, with private sector gains slowing considerably as industries like manufacturing and retail grappled with the Trump administration's aggressive tariffs on imports. While the Labor Department's closely watched employment report also showed the unemployment rate falling to 4.1 per cent last month from 4.2 per cent in May, that was partly because some people left the labor force. The average workweek was shorter last month, suggesting that businesses were probably reducing hours amid rising economic headwinds. "Although the overall number of jobs was very strong, the weakness was broad-based across the private sector," said Eugenio Aleman, chief economist at Raymond James. "The labor market continued to weaken in June, which is in line with our view and should reignite the conversation regarding the Federal Reserve's interest rate path." Nonfarm payrolls increased by 147,000 jobs last month after an upwardly revised 144,000 advance in May, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls rising 110,000 following a previously reported 139,000 gain in May. Estimates ranged from an increase of 50,000 to 160,000 jobs. The report was published a day early because of the Independence Day holiday on Friday. Despite the bigger-than-expected rise in payrolls, job growth is slowing and concentrated in a few sectors. Government employment rose by 73,000, boosted by a 40,000 increase in state government education, which economists brushed off as a seasonal quirk related to the end of the school year. Local government education increased 23,000. Federal government job losses continued, with 7,000 positions lost, and employment is now down by 69,000 since reaching a recent peak in January. Private payrolls increased by 74,000 jobs, the fewest since October of 2024. Healthcare added 39,000 jobs, spread across hospitals nursing and residential care facilities. Social assistance employment increased by 19,000. Outside these non-cyclical sectors, job gains were weak. US stocks fell. The dollar advanced against a basket of currencies. US Treasury yields rose. Weak details Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. Manufacturing shed 7,000 jobs, while wholesale trade lost 6,600 positions. Professional and business services payrolls decreased 7,000. Retailers added a paltry 2,400 jobs. The average workweek fell to 34.2 hours from 34.3 hours in May. The unemployment rate fell from 4.2 per cent in May. Economists had expected the jobless rate to tick up to 4.3 per cent. Indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, have pointed to labor market fatigue after a strong performance that shielded the economy from recession as the US central bank aggressively tightened monetary policy to combat high inflation. Most economists expect the jobless rate will rise through the second half of this year, and potentially encourage the Fed to resume its monetary policy easing cycle in September. Some economists, however, see limited scope for the unemployment rate to rise as the immigration crackdown shrinks the labor pool. With the White House having revoked the temporary legal status of hundreds of thousands of migrants, economists said fewer than 100,000 additional jobs per month would likely be needed to keep the jobless rate stable. The Fed last month left its benchmark overnight interest rate in the 4.25 per cent-4.50 per cent range, where it has been since December. Fed Chair Jerome Powell on Tuesday reiterated the central bank's plans to "wait and learn more" about the impact of tariffs on inflation before lowering rates again.
Business Times
03-07-2025
- Business
- Business Times
Solid US job growth masks weakness underneath
[WASHINGTON] US job growth was unexpectedly solid in June, but nearly half of the increase in nonfarm payrolls came from the government sector, with private sector gains slowing considerably as industries like manufacturing and retail grappled with the Trump administration's aggressive tariffs on imports. While the Labor Department's closely watched employment report also showed the unemployment rate falling to 4.1 per cent last month from 4.2 per cent in May, that was partly because some people left the labour force. The average workweek was shorter last month, suggesting that businesses were probably reducing hours amid rising economic headwinds. 'Although the overall number of jobs was very strong, the weakness was broad-based across the private sector,' said Eugenio Aleman, chief economist at Raymond James. 'The labour market continued to weaken in June, which is in line with our view and should reignite the conversation regarding the Federal Reserve's interest rate path.' Nonfarm payrolls increased by 147,000 jobs last month after an upwardly revised 144,000 advance in May, the Labor Department's Bureau of Labor Statistics said on Thursday (Jul 3). Economists polled by Reuters had forecast payrolls rising 110,000 following a previously reported 139,000 gain in May. Estimates ranged from an increase of 50,000 to 160,000 jobs. The report was published a day early because of the Independence Day holiday on Friday. Despite the bigger-than-expected rise in payrolls, job growth is slowing and concentrated in a few sectors. Government employment rose by 73,000, boosted by a 40,000 increase in state government education, which economists brushed off as a seasonal quirk related to the end of the school year. Local government education increased 23,000. Federal government job losses continued, with 7,000 positions lost, and employment is now down by 69,000 since reaching a recent peak in January. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Private payrolls increased by 74,000 jobs, the fewest since October of 2024. Healthcare added 39,000 jobs, spread across hospitals nursing and residential care facilities. Social assistance employment increased by 19,000. Outside these non-cyclical sectors, job gains were weak. US stocks fell. The US dollar advanced against a basket of currencies. US Treasury yields rose. Economists say President Donald Trump's focus on what they call anti-growth policies, including sweeping tariffs on imported goods, mass deportations of migrants and sharp government spending cuts, has changed the public's perceptions of the economy. Business and consumer sentiment surged in the wake of Trump's victory in the presidential election last November in anticipation of tax cuts and a less stringent regulatory environment before slumping about two months later. Manufacturing shed 7,000 jobs, while wholesale trade lost 6,600 positions. Professional and business services payrolls decreased 7,000. Retailers added a paltry 2,400 jobs. The average workweek fell to 34.2 hours from 34.3 hours in May. The unemployment rate fell from 4.2 per cent in May. Economists had expected the jobless rate to tick up to 4.3 per cent. Indicators, including the number of people filing for state jobless benefits and receiving unemployment checks, have pointed to labour market fatigue after a strong performance that shielded the economy from recession as the US central bank aggressively tightened monetary policy to combat high inflation. Most economists expect the jobless rate will rise through the second half of this year, and potentially encourage the Fed to resume its monetary policy easing cycle in September. Some economists, however, see limited scope for the unemployment rate to rise as the immigration crackdown shrinks the labour pool. With the White House having revoked the temporary legal status of hundreds of thousands of migrants, economists said fewer than 100,000 additional jobs per month would likely be needed to keep the jobless rate stable. The Fed last month left its benchmark overnight interest rate in the 4.25-to-4.50 per cent range, where it has been since December. Fed chair Jerome Powell on Tuesday reiterated the central bank's plans to 'wait and learn more' about the impact of tariffs on inflation before lowering rates again. REUTERS
Yahoo
28-06-2025
- Business
- Yahoo
Consumers saw a double whammy of bad news in May, pulling back on spending as inflation heated up
Consumer spending in May fell for the first time this year, the Commerce Department reported Friday, indicating that weakening consumer confidence is starting to affect the checkout line. Meanwhile, inflation ticked up and is projected to rise even more due to tariffs, economists say, predicting a 'summer slowdown.' For the first time this year, consumers pulled back on spending as the bad mood that's been pervasive since tariffs hit caught up with retail data. Overall spending in May fell 0.1% from the prior month and incomes fell 0.4%, the Commerce Department reported Friday. Coming on the heels of a report that first-quarter GDP shrank more than expected, the data show a rapidly downshifting economy. 'Personal consumption expenditures are weak and continue to weaken,' Eugenio Aleman, chief economist at Raymond James, told Fortune. 'We knew that consumer demand has been on the weak side, but yesterday we had the revision to the first-quarter GDP, which reaffirmed that consumption wasn't that strong. Today's number just confirmed that this wasn't a one-off.' Both spending and income figures were distorted by one-time changes. Spending on cars plunged, pulling down overall spending, because Americans had moved more quickly to buy vehicles in the spring to get ahead of tariffs. But spending on airfares, meals, and hotels all fell last month—signs of underlying consumer pressure rather than mere timing shifts. Spending on services overall rose just 0.1% in May, the lowest one-month increase in four and a half years. 'Because consumers are not in a strong enough shape to handle those (higher prices), they are spending less on recreation, travel, hotels, that type of thing,' said Luke Tilley, chief economist at Wilmington Trust. Retail sales also dropped sharply last month, contracting 0.9%, according to a separate report released last week. Incomes also dropped after a one-time adjustment to Social Security benefits boosted payments in March and April, allowing some retirees who had worked for state and local governments to get higher Social Security payments. Inflation heated up modestly, with prices rising at a 2.3% annual rate in May, compared with 2.1% in April. Core prices, which exclude volatile food and energy costs, increased 2.7% from a year earlier, up from April's 2.6% rate. In the first three months of this year, consumer spending rose just 0.5% and has been sluggish in the first two months of the second quarter. Most economists think May's figures signal a dramatic downshift to come. 'The US economy is poised for a summer slowdown,' EY economists wrote. 'Both consumer spending and business investment are expected to decelerate significantly.' In recent years, consumers have been able to keep spending more thanks to real income growth and a boost to some government benefits. 'But these two supports have now mostly faded, and the real income picture is about to deteriorate rapidly, as tariffs drive up prices,' economist at Pantheon Macroeconomics said. With personal savings low and consumers too skittish to borrow, 'consumption is likely to slow much further, and soon,' they said. Real incomes are set to flatten this year, due partly to a weaker job market but also because prices are rising, they wrote. At the same time, the rate of inflation—2.7% annually—is significantly higher than the Federal Reserve's 2% target, making it unlikely rate cuts are coming anytime soon. 'With so many uncertainties still lingering, the Fed will likely hold off on rate cuts for the time being,' Nationwide Financial Markets Economist Oren Klachkin said. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-06-2025
- Business
- Yahoo
Consumers saw a double whammy of bad news in May, pulling back on spending as inflation heated up
Consumer spending in May fell for the first time this year, the Commerce Department reported Friday, indicating that weakening consumer confidence is starting to affect the checkout line. Meanwhile, inflation ticked up and is projected to rise even more due to tariffs, economists say, predicting a 'summer slowdown.' For the first time this year, consumers pulled back on spending as the bad mood that's been pervasive since tariffs hit caught up with retail data. Overall spending in May fell 0.1% from the prior month and incomes fell 0.4%, the Commerce Department reported Friday. Coming on the heels of a report that first-quarter GDP shrank more than expected, the data show a rapidly downshifting economy. 'Personal consumption expenditures are weak and continue to weaken,' Eugenio Aleman, chief economist at Raymond James, told Fortune. 'We knew that consumer demand has been on the weak side, but yesterday we had the revision to the first-quarter GDP, which reaffirmed that consumption wasn't that strong. Today's number just confirmed that this wasn't a one-off.' Both spending and income figures were distorted by one-time changes. Spending on cars plunged, pulling down overall spending, because Americans had moved more quickly to buy vehicles in the spring to get ahead of tariffs. But spending on airfares, meals, and hotels all fell last month—signs of underlying consumer pressure rather than mere timing shifts. Spending on services overall rose just 0.1% in May, the lowest one-month increase in four and a half years. 'Because consumers are not in a strong enough shape to handle those (higher prices), they are spending less on recreation, travel, hotels, that type of thing,' said Luke Tilley, chief economist at Wilmington Trust. Retail sales also dropped sharply last month, contracting 0.9%, according to a separate report released last week. Incomes also dropped after a one-time adjustment to Social Security benefits boosted payments in March and April, allowing some retirees who had worked for state and local governments to get higher Social Security payments. Inflation heated up modestly, with prices rising at a 2.3% annual rate in May, compared with 2.1% in April. Core prices, which exclude volatile food and energy costs, increased 2.7% from a year earlier, up from April's 2.6% rate. In the first three months of this year, consumer spending rose just 0.5% and has been sluggish in the first two months of the second quarter. Most economists think May's figures signal a dramatic downshift to come. 'The US economy is poised for a summer slowdown,' EY economists wrote. 'Both consumer spending and business investment are expected to decelerate significantly.' In recent years, consumers have been able to keep spending more thanks to real income growth and a boost to some government benefits. 'But these two supports have now mostly faded, and the real income picture is about to deteriorate rapidly, as tariffs drive up prices,' economist at Pantheon Macroeconomics said. With personal savings low and consumers too skittish to borrow, 'consumption is likely to slow much further, and soon,' they said. Real incomes are set to flatten this year, due partly to a weaker job market but also because prices are rising, they wrote. At the same time, the rate of inflation—2.7% annually—is significantly higher than the Federal Reserve's 2% target, making it unlikely rate cuts are coming anytime soon. 'With so many uncertainties still lingering, the Fed will likely hold off on rate cuts for the time being,' Nationwide Financial Markets Economist Oren Klachkin said. This story was originally featured on Sign in to access your portfolio
NBC News
09-05-2025
- Business
- NBC News
No buy, low buy, slow buy: How many consumers are preparing for an economic hit
Americans have been worried about being able to maintain their standard of living since inflation first began to spike in 2021. With renewed cost concerns after President Donald Trump implemented his tariff agenda, many people are prepared to do something about it. A whopping 83% of consumers said that if their financial situation worsens in the coming months, they will strongly consider cutting back on their non-essential spending, according to a new study by Intuit Credit Karma, which polled more than 2,000 U.S. adults in April. On TikTok, money saving hacks, with hashtags such as no buy, slow buy, low buy and underconsumption, have skyrocketed in popularity, especially among young adults. All are aimed at making the most of what you already have and resisting the temptation to buy more stuff, or even anything at all. How no buy, low buy and slow buy challenges work 'No buy 2025' encourages shoppers to cut out all non-essential purchases for the year, including clothing, books, electronics and entertainment. Alternatively, low buy and slow buy advocate for a more mindful approach to buying decisions, such as following ' the 48-hour rule ' before making any discretionary purchases and limiting purchases altogether. The goal is to break the habit of overspending — or ' doom spending ' — as fears of a recession rise. Recent data from H&R Block's Spruce also found that 68% of Generation Z consumers reported being influenced by social media finance trends, with over one-third of them looking specifically to social media for financial knowledge. (America's young adults are also increasingly turning to social media to express their financial dissatisfaction, making a joke of so-called recession indicators.) Why savings challenges are so popular To be sure, Americans are feeling the pain of higher prices, with various reports showing many have exhausted their savings and have been leaning on credit cards to make ends meet. With sweeping U.S. tariffs now going into effect, concern is heightened about the rising cost of goods and making ends meet, especially as the economy shows signs of contracting. 'Consumers are going to have to pay for the increase in prices these tariffs are going to cause and there is no way around it,' said Eugenio Aleman, chief economist at Raymond James. 'The alternative is to reduce consumption, especially in discretionary items.' A survey by Gallup last month found that inflation, housing costs and lack of money are the most commonly cited financial challenges by U.S. adults. According to the poll, which was conducted during a period of extreme market volatility after the Trump administration announced new tariffs on most U.S. trading partners, a record 53% of consumers said their financial situation was getting worse, while just 38% said it was getting better. Additionally, 57% worried about not being able to maintain their standard of living. A separate report by Bankrate found that 43% of adults said money now negatively affects their mental health, at least occasionally, causing anxiety, stress, worrisome thoughts, loss of sleep and depression. 'Tariffs, inflation, higher interest rates and a recession are all forces that Americans can't prevent, no matter how much they want to,' Sarah Foster, Bankrate's economic analyst, said in an email. 'Taking proactive steps to manage your finances can provide a sense of stability and security.' A better way to improve your finances Financial experts say TikTok's latest microtrends can provide a short-term boost to help reach some savings goals, however, there is no substitute for practicing good long-term habits. 'Ignore what others are doing with their money,' said Daniel Milan, managing partner of Cornerstone Financial Services in Southfield, Michigan. 'That to me is a very foundational tenet for any household.' Milan says financial planning starts with a budget. 'People don't like that word,' he said. But rather than jumping on the latest TikTok trend, 'sit down and pencil out what you actually are spending.' Milan recommends flagging excess expenses that can be cut, considering which are 'wants' or 'needs.' Milan says he did this himself at the start of the year after getting married, and was able to cut out some recurring bills as well as subscription services that overlapped with his wife's — to the tune of $800 a month. 'That type of exercise can be extraordinarily powerful from a cash flow perspective,' he said.
