Economy

2024-02-02 14:55:00

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2024-02-02 13:41:00

(CNN) — The US economy added a surprising 353,000 jobs during January, according to data from the Bureau of Labor Statistics (BLS) released this Friday, recording a larger-than-expected increase at the start of 2024.

The unemployment rate remained at 3.7% compared to the previous month. It is the 24th consecutive month that the country’s unemployment rate has been below 4%.

“The fact that the unemployment rate has been below 4% for 24 months in a row for the first time since 1967 is truly remarkable,” Joe Brusuelas, chief economist and director of RSM US, told CNN Business. “And that’s the word I keep saying as I read this report: ‘Extraordinary’. Extraordinary’ is the conclusion here.”

More than a year ago, it seemed almost certain that the labor market would feel the effects of the Federal Reserve’s aggressive rate-hiking campaign (and potentially reel from it). But 11 gains and four pauses later, the U.S. labor market is seeing one of the longest periods of expansion this century.

January’s job gains dashed market expectations that the Federal Reserve would cut rates sooner rather than later, perhaps as early as March, and that the central bank would cut rates as much as six times in 2024. Investors’ likelihood of a rate cut in March fell from 38% to less than 20% this Friday, according to the CME FedWatch tool.

However, the higher-than-expected figure should not derail the Fed from its current path, as officials have telegraphed a trio of rate cuts that will occur this year, Brusuelas said.

“The Federal Reserve will have to manage expectations very carefully going forward,” he said. Powell noted that the central bank wants to make cuts, and now “the question is not if it will happen, but when.”

A positive surprise

Most industries added jobs last month, with health care and social assistance posting the biggest gains of 100,400, according to the BLS.

Hiring accelerated starting in December, when job growth was much higher than previously estimated. December employment gains were revised upward by 117,000 positions for a total of 333,000 for the month. November was also revised upward, but by only 9,000 jobs, to a net increase of 182,000.

January’s gains dashed economists’ expectations: Forecasts had predicted a net gain of 176,500 jobs last month, according to FactSet.

Still, economists have warned that January’s report is one of the trickiest to forecast because it’s typically a month with big job losses (with seasonal workers laid off following the holidays and other companies tightening their belts in the New Year). Additionally, the BLS applies new seasonal adjustment factors at the beginning of the year to help smooth the data and better understand trends.

For these reasons, some economists told CNN this week that it was possible that January might offer a bullish surprise. It happened like that.

Also a surprise were wage gains, which rose 0.6% on the month and 4.5% year over year.

“This raises the risk that nominal wage growth will not fall back to levels consistent with meeting the inflation target on a sustained basis, particularly as the labor force participation rate refuses to rise further,” wrote Brian Coulton , chief economist of Fitch Ratings in a note published this Friday. “For wages to grow at this rate, in such a tight labor market, is a problem for the Federal Reserve.”

This story is developing and will be updated.

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2024-02-02 15:56:15

At the food delivery company Foodora (formerly Mjam) in Vienna, the works council and union representatives were denied access to the company yesterday, as the vida union announced today. The employee representatives wanted to take part in an online works meeting in the works council office that was announced in a timely manner in order to inform the workforce regarding the stalled collective agreement negotiations.

At Foodora, employees’ statutory co-determination rights are being trampled on, criticized Markus Petritsch, chairman of the road department in the vida union.

“Elected works councils are prevented from carrying out the activities to which they are entitled under the Labor Constitution Act by being locked out of the works council office.” The union announced that it would examine legal action once morest the company.

Foodora: Works council member would have had access

The employer said in an email to ORF.at that they were informed in advance that the works council meeting would take place online and that no space would be required for it. “A few minutes before the meeting, a single member of the works council and several union members wanted unplanned access,” said a spokesman.

According to Foodora, the works council member was given access to the company premises, but it was pointed out that “union members, as people outside the company, do not have unauthorized access to the company premises”.

Only a few are employed under a collective agreement

There has been a separate collective agreement for bicycle messengers and food delivery workers since 2020. However, this only applies to around 2,000 of the industry’s total of around 4,000 to 5,000 employees.

The rest are freelancers or one-person companies (EPU), i.e. self-employed. However, they are not really free because they have to adhere to the delivery service’s rules defined in the delivery app.

According to the union, the vast majority of the approximately 3,000 drivers at Foodora receive their orders as freelancers; only a small number are employed under the collective agreement.

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2024-02-02 15:40:33

The IMF announces an “imminent” agreement with Egypt regarding a new financial package

The International Monetary Fund said, in a statement at dawn on Friday, that it had agreed with Egypt on the main policy elements of the economic reform program, in another indication that the final agreement to increase the country’s loan, amounting to $3 billion, is nearing completion.

Ivana Vladkova Hollar, head of the International Monetary Fund mission to Egypt, said the two sides had made “excellent progress” in discussions on a comprehensive policy package that might begin long-awaited reviews of the country’s economic reform program.

Hollar added in a statement: “To this end, the IMF team and the Egyptian authorities agreed on the main policy elements of the program. The authorities expressed their strong commitment to move quickly on all important aspects of Egypt’s economic reform program.”

Earlier, Thursday evening, Kristalina Georgieva, Director of the International Monetary Fund, said that the Fund and Egypt are in the “final stage” of negotiations to increase the loan program. Following the announcement, Egypt’s sovereign dollar bonds rose by more than a cent during the first hours on Friday.

Egypt held talks over the past two weeks with the International Monetary Fund. To revive and expand the loan agreement, which was signed in December 2022.

The Fund suspended the disbursement of loan shares last year following Egypt fixed the exchange rate of the pound once morest the dollar at 30.85 pounds to the dollar since last March, while the dollar is currently trading in the parallel (black) market at a level of 71 pounds.

Hollar, who concluded a two-week visit to Cairo on Thursday evening, said that discussions will continue virtually in the coming days “to determine the amount of additional support needed to help fill Egypt’s growing financing gaps from the International Monetary Fund and other bilateral and multilateral development partners in the context of the most recent shocks.”

Georgieva said, in a press conference held in Washington late on Thursday evening: “We are now in the very last stage, where we are working on the implementation details… We have come very close, and we are not talking regarding a prolonged period at all,” adding that the talks represent “a priority.” “maximum” for the IMF, given Egypt’s importance to the region.

The Monetary Policy Committee of the Central Bank of Egypt decided at its meeting, on Thursday evening, to raise key interest rates by 200 basis points. The bank said, in a statement published on its website, that it decided to increase the overnight deposit and lending yield, and the central bank’s main operation rate, by 200 basis points, to reach 21.25, 22.25, and 21.75 percent, respectively. The credit and discount rates were also raised by 200 basis points to reach 21.758 percent.

The bank indicated a slowdown in economic activity. The result of restrictive monetary policies pursued by major central banks on demand. Global inflationary pressures have also recently decreased; As a result of the restrictive monetary policies that were followed in many advanced and emerging economies, expectations of inflation rates for those economies declined, compared to what was presented at the previous meeting.

Despite this, there is a state of uncertainty regarding inflation expectations, especially with regard to global commodity prices, as a result of the geopolitical tensions that the world is currently witnessing, as well as the disruption of shipping traffic in the Red Sea.

On the local level, the bank said that it expects the GDP growth rate to slow during the fiscal year 2023-2024, compared to the previous fiscal year, and that it will gradually recover later. This was in line with the actual developments in the data, as well as the negative repercussions resulting from the state of regional instability and the disruption of navigation in the Red Sea on the services sector. Regarding the labor market, the unemployment rate stabilized to record 7.1 percent during the third quarter of 2023.

The bank indicated that general and core inflation rates continued to decline to 33.7 and 34.2 percent, respectively, annually during last December, while current developments indicate the continuation of inflationary pressures and their rise above their usual pattern, which is reflected in the inflation of both food and non-food commodities.

Most analysts were not expecting the rate hike move. The average expectation in a Reuters poll of 16 analysts was for the central bank to stabilize interest rates. Six analysts expected an increase ranging between 100 and 300 basis points.

Rania Yaqoub from Three Way Securities Trading attributed the interest rate hike to the rise in inflation in January, especially with regard to basic commodity prices, with the expectation that this rise will continue during the current and next months.

She added: “It is known that raising the interest rate has a negative impact on the investment climate… but in reality, under the current circumstances, and given that we expect flexible exchange rate movements and a devaluation of the local currency once morest the dollar, I believe that the matter will have no effects.” It is more harmful to the economic climate than the current situation, especially since we are almost in a state of recession and a cessation of economic activity. Because of exchange rates.”

Monica Malik from Abu Dhabi Commercial Bank said: “It is likely that this increase comes before the devaluation of the pound and the announcement of an agreement to increase the value of the International Monetary Fund loan.”

Farouk Soussa of Goldman Sachs disagreed with the opinion of the imminent devaluation of the currency, and said that raising the interest rate “is the beginning of a process of tightening monetary policy,” but added that this process “will take some time, and must be supported by enhanced liquidity in the foreign exchange market.” ».

Egypt’s economy was damaged by the Gaza war, which affected tourism and reduced shipping through the Suez Canal, a major source of foreign currency.

The Monetary Policy Committee said that growth fell to 2.7 percent in the third quarter of 2023, down from 2.9 percent in the second quarter, and is expected to continue to decline until next June.

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