Connect with us

BUSINESS

US adds 678,000 jobs in February in sign of economic strength

Published

on

United States employers added a robust 678,000 jobs in February, another gain that underscored the economy’s solid health as the wave of Omicron infections fades and more Americans venture out to spend at restaurants, shops and hotels despite surging inflation.

The US Department of Labor’s report Friday also showed that the unemployment rate dropped from 4 percent to 3.8 percent, extending a sharp drop in joblessness as the economy rebounds from the recession spurred by the coronavirus pandemic.

The latest jobs data follows recent reports that have shown an economy maintaining strength as new COVID-19 infections have plummeted since late January. Consumer spending has risen, spurred by higher wages and savings. Restaurant traffic has regained pre-pandemic levels, hotel reservations are up and far more Americans are flying than at the height of Omicron’s spread.

Average hourly pay barely rose last month but has increased 5.1 percent in the past year, a sign that companies feel compelled to raise wages to attract and keep workers. Many employers, in turn, have been raising prices to offset their higher labour costs, a process that has fuelled inflation.

Consumer inflation has reached its highest level since 1982, squeezing US households and businesses, with price spikes especially high for such necessities as food, gasoline and rent. In response, the US Federal Reserve is set to raise interest rates several times this year beginning later this month. Those increases will eventually mean higher borrowing rates for consumers and businesses, including for homes, autos and credit cards.

Federal Reserve Chair Jerome Powell said this week that he plans to propose that the Fed raise its benchmark short-term rate by a quarter point when it meets in about two weeks. Powell has acknowledged that high inflation has proved more persistent and has spread more broadly than he and many economists had expected.

The Fed chief cautioned that if inflation failed to ease later this year as he expects, he would consider carrying out half-point increases at future central bank meetings. Larger hikes would raise the risk of weakening the economy or even tipping it into recession.

Powell also warned that Russia’s invasion of Ukraine will lead to higher prices for gas as well as for such other commodities as aluminium, wheat and corn, thereby keeping inflation higher than it would otherwise have been. Oil prices, which have been soaring since the war in Ukraine began more than a week ago, are critically important to the global economy.

For now, though, despite high inflation, the rapid fading of the Omicron variant of the coronavirus is likely to accelerate the US economy and job growth. A survey by The Associated Press-NORC Center for Public Affairs Research found that Americans are now much less worried about COVID-19 than they were in December and January. Mask mandates and other restrictions are ending. More companies are returning to pre-pandemic operations, including working in offices.

Data from the restaurant reservation software provider OpenTable showed that the number of seated diners surpassed pre-pandemic levels late last month. And figures from the Transportation Security Administration reflected a sharp increase in the number of people willing to take plane flights.

During the Omicron wave, businesses barely wavered in their demand for workers. Job openings at the end of December reached near-record levels, with an average of 1.7 available positions for every unemployed person. Historically, there are usually more people out of work than there are jobs.

With many companies desperate for employees, layoffs have plunged. The number of people receiving unemployment aid fell two weeks ago to its lowest level since 1970.

Americans’ concerns about inflation have eroded their optimism about the economy. The Conference Board’s measure of consumer confidence slipped in February for a second straight month.

Still, other surveys show that Americans are increasingly satisfied with their own financial situations. And people clearly see that many jobs are available, the Conference Board’s survey shows.

SOURCE: AP

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published.

BUSINESS

US stocks suffer biggest daily drop in almost two years

Published

on

US stocks posted the biggest daily drop in almost two years as investors assess the impact of higher prices on earnings and prospects for monetary policy tightening on economic growth. The dollar and Treasuries gained amid a pickup in haven bids.

The selloff sent the S&P 500 down 4%, with the plunge in consumer shares surpassing 6%. Target Corp. tumbled more than 20% in its worst rout since 1987, after trimming its profit forecast due to a surge in costs. Shares of retailers from Walmart Inc. to Macy’s Inc. were caught in the downdraft. The Nasdaq 100 fell the most among major benchmarks, dropping more than 5% as growth-related tech stocks sank. Megacaps Apple Inc. and Amazon.com Inc. slid at least 5%.

Treasuries rose across the board, sending the 10- and 30-year Treasury yields down as much as 11 basis points. The dollar rose against all of its Group-of-10 counterparts, except the yen and Swiss franc. Gold caught bids in the move into havens.

The benchmark S&P 500 is emerging from the longest weekly slump since 2011, but any rebounds in risk sentiment are proving fragile amid tightening monetary settings, Russia’s war in Ukraine and China’s Covid lockdowns.

In some of his most hawkish remarks to date, Federal Reserve Chair Jerome Powell said Tuesday that the US central bank will raise interest rates until there is “clear and convincing” evidence that inflation is in retreat. Chicago Fed President Charles Evans said Wednesday he sees a half-point rate increase at next month’s meeting and “probably thereafter.”

In Europe, new-vehicle sales shrank for a 10th month in a row as the industry remains mired in supply-chain crises, while euro-area inflation plateaued at a record high. Meanwhile, UK inflation rose to its highest level since Margaret Thatcher was prime minister 40 years ago, adding to pressure for action from the government and central bank.

Continue Reading

BUSINESS

Netflix lays off 150 employees due to slow revenue growth and business needs

Published

on

Netflix is reportedly laying off nearly 150 employees in the coming days due to disappointing earnings and slow revenue growth.

According to a Variety report, the Amazon Prime Video rival might also terminate its contract with contractual contributors.

The layoffs are about 2 per cent of Netflix’s US workforce. “As we explained [in reporting Q1] earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly U.S.-based,” a Netflix spokesperson said.

The statement further revealed that the decision was primarily driven by business needs rather than individual performance. Netflix reported $7.87 billion in Q1, which was short of Wall Street’s estimates of $7.93 billion.

The report further reveals that nearly 70 part-time employees in Netflix’s animation studio will have to pack up and leave. A report by The Verge stated that about 26 contractors working on Netflix’s fan-focused Tudum website might see a termination.

“A number of agency contractors have also been impacted by the news announced this morning. We are grateful for their contributions to Netflix,” the company said.

Netflix, in its recent earnings call, revealed that it lost thousands of subscribers, which is a first for the company in over a decade.

The company expects to lose an additional 2 million in the next quarter due to the ongoing war between Russia and Ukraine. Netflix has shut shop in Russia following the country’s invasion of Ukraine.

Continue Reading

BUSINESS

Dollar breaks N600/$ ceiling ahead of party’s presidential primaries

Published

on

Less than two weeks to the presidential primaries of the political parties ahead of the 2023 elections, the US dollar has broken the N600/$ mark at the parallel market and set the tone for a possible uptick in the coming days.

The black market rate had traded between N570/$ and N590/$ since the beginning of the year while the Central bank of Nigeria (CBN)’s intervention at the Nigerian Autonomous Foreign Exchange (NAFEX) has kept its rate under N420/$.

With the latest slump of the naira, the arbitrage between the parallel and NAFEX, which is regarded as the official window, is now inching close to N200/$. The spread measures the deviation of the controlled official rate from the real rate of exchange, with experts calling for liberalisation of the market to enable naira to find its true value.

The World Bank and the International Monetary Fund (IMF) have also warned of the repercussions of sustaining an artificially high naira while calling on the CBN to embark on market reform.

But the CBN has maintained that Nigeria, with the current high level of importation and underperformance of the industrial sector, cannot afford to float the naira completely as the exchange rate could spill out of control.

At the Lagos street market, yesterday, naira traded between N595/$ and N600/$ band. With the presidential primaries of the two leading political parties scheduled for Abuja next weekend, there is an expectation the demand pressure has not peaked, suggesting that naira is in for a protracted pressure.

At peer-to-peer (P2P) trading platforms, the dollar has been trading above N600 in the past three weeks, which had signaled that the black market rate could break through the psychological ceiling.

With that eventually happening, naira could be on a renewed free fall.

But there is also hope that it is a season to offload warehoused hard currencies for political campaigns to possibly shore up supply.

Experts are not sure where rising demand and supply of foreign exchange would lead the naira to, but the interplay between the movements of the two variables is a key factor in predicting the value of the naira in the tense political season. Godwin Owoh, a professor of applied economics, advised Nigerians to prepare for a steeper fall of the local currency, saying partisan politics and intra-party meetings, which are highly dollarised would bring much pressure to bear.

The CBN has promised to continue to protect the naira but its ability could be constrained by the equally falling reserve. For the first time in eight months, the gross reserves dropped below N39 billion on Monday, when CBN data put the figures at N38.92 billion. Effectively, the country’s reserves have depleted by $160 billion year-to-date.

Bismarck Rewane, an economist, had projected the reserve to collapse to $32 billion in the year as he expected the CBN to spend $8 to $10 billion defending the naira, which is taking much pressure from excessive importation.

The value of Nigeria’s imports increased by 64 per cent last year to N20.84 trillion. Sadly, the value of exports increased at a slower rate – 51 per cent – to N18. 91 trillion in the same period. The falling reserves and rising imports have put the apex bank in dire straits in its efforts to continue to defend the naira.

Continue Reading
Advertisement

Latest News

Advertisement

Trending