Coffee With Greta: Private Job Growth Misses Big In August
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Good morning friends!
Futures are higher as the market looks to recover from three straight days of losses but traders are digesting some disappointing data.
Let’s get right to it!
Private Sector Job Growth Disappoints
Job growth in the U.S. private sector sharply missed expectations in August.
Payroll firm ADP reported the U.S. economy added just 132,000 private jobs last month vs 300,000 expected.
That was down from 270,000 in July.
ADP’s chief economist said the data “suggests a shift toward a more conservative pace of hiring, possibly as companies try to decipher the economy’s conflicting signals. We could be at an inflection point, from super-charged job gains to something more normal.”
The report also adds to inflation worries as wages jumped 7.6% year over year.
The services sector added 110,000 jobs, leisure and hospitality gained 96,000 and trade, transportation and utilities added 54,000.
But several sectors saw decreases.
Financial activities lost 20,000 jobs, education and health services list 15,000, and professional and business services lost 14,000.
This comes ahead of the official August jobs report on Friday which is expected to show a gain of 318,000 jobs and the unemployment rate unchanged at 3.5%.
Bed Bath & Beyond Plunges After Announcing Layoffs, Store Closures
Bed Bath & Beyond (BBBY) shares are cratering 31.4% ahead of the open after announcing store closures and layoffs.
The retailer said today it will close about 150 “lower producing” stores and layoff 20% of its corporate and supply chain staff.
The company also announced it has secured more than $500 million in new financing as it works to turnaround its business.
Bed Bath said its sales have continued to slow sharply in the current fiscal quarter, with same-store sales down 26% so far in Q3.
The retailer said it will overhaul its merchandise and bring back popular national brands in an effort to win back customers.
The interim CEO said, “We are embracing a straight-forward, back-to-basics philosophy that focuses on better serving our customers, driving growth, and delivering business returns.”
Bed Bath also announced its COO is leaving the company and it has eliminated that role and the chief stores officer role.
Snap Plans Massive Layoffs
Snap (SNAP) shares are tumbling 10.2% in premarket trade after reports the company is planning a massive round of layoffs.
The Verge first reported on Tuesday the social media company plans to lay off 20% of its employees.
The cuts are expected to begin today, impacting nearly 1,300 employees.
The hardware and developer products divisions will likely see the largest impact.
Snap hired aggressively during the pandemic-era tech boom but its business has taken a hit coming out of the pandemic.
Oil Prices Drop on Recession Fears
Oil prices are lower today as recession fears once again grip the market.
West Texas Intermediate crude futures are down 2.9% to under $89 bbl while Brent crude futures are down 3.5% to under $96 bbl.
The drop comes as factory activity continued to contract in China in August and amid ongoing worries about aggressive rate hikes at Central Banks around the world.
Hawkish Fed Comments Continue
Cleveland Fed President Loretta Mester struck a hawkish tone in a speech this morning.
Mester said, “My current view is that it will be necessary to move the fed funds rate up to somewhat above 4 percent by early next year and hold it there. I do not anticipate the Fed cutting the fed funds rate target next year.”
Benchmark rates are currently in a range of 2.25% to 2.5%.
Mester also said she expects the rate hikes to slow economic growth and predicted higher unemployment and continued volatility in the financial market.
She said the bank must remain aggressive on inflation until substantial progress is seen.
“It would be a mistake to declare victory over the inflation beast too soon. Doing so would put us back in the stop-and-go monetary policy world of the 1970s, which was very costly to households and businesses,” she said.
In Case You Missed It
- Consumer confidence rose for the first time in 4 months. The Conference Board’s consumer confidence index jumped 7.5 points in August to 103.2 vs 97.4 expected.
- U.S. job openings jumped to 11.2 million in July vs an expected decrease to 10.3 million. Openings were nearly double the amount of unemployed workers in the month.
- National U.S. home price gains slowed in June to an annual pace of 18% vs 19.9% in May. The housing market has slowed sharply as mortgage rates rise.
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