US ECONOMY & POLITICS

U.S. Companies Add Fewer Jobs Than Forecast, ADP Data Show – Bloomberg, 9/1/2021

• U.S. companies added fewer jobs than expected in August, reflecting persistent hiring challenges and suggesting a slowdown in the labor market recovery.
• Businesses’ payrolls increased by 374,000 last month, after a revised 326,000 gain in July, according to ADP Research Institute data released Wednesday. The figure fell short of all estimates in a Bloomberg survey of economists.
• Service-provider employment increased 329,000 in August. Payrolls at leisure and hospitality businesses advanced 201,000 during the month. Employment at goods producers was up 45,000, led by a 30,000 jump in construction.
• The increase in August payrolls was broad across firm sizes. Companies with 500 or more workers added 138,000 while small businesses took on 86,000.

U.S. Manufacturing Expands at Faster Pace, Backlogs Swell – Bloomberg, 9/1/2021

• U.S. manufacturing expanded at a stronger-than-expected pace in August, reflecting faster orders and production growth as well as rising backlogs consistent with global supply chain challenges.
• The Institute for Supply Management’s gauge of factory activity rose to 59.9 from 59.5 in the prior month, according to data released Wednesday. Readings above 50 indicate expansion.
• The median projection in a Bloomberg survey of economists called for the measure to fall to 58.5.
• The ISM’s index of backlogs rose to 68.2, matching the second-highest reading in data back to 1993, while the group’s measure of employment fell to 49, the lowest since November.
• The gauge of new orders advanced to 66.7.
• Fifteen of the 18 manufacturing industries reported growth in August, led by furniture, computer and electronic products, and machinery.

U.S. mortgage applications decline with drop in refinancing -MBA – Reuters, 9/1/2021

• Mortgage applications decreased last week in step with a drop in refinancing as mortgage rates remained unchanged.
• The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted market composite index tracking mortgage applications fell 2.4% from a week earlier, reflecting a 3.8% decline in applications to refinance existing loans in the week ending Aug. 27.
• The average contract interest rate for traditional 30-year mortgages was unchanged at 3.03%.
• Purchase applications rose 0.6%, hitting the highest level since early July, the MBA said.

Fed Faces ‘Ugly Fight’ Over Jobs Goal in Next Big Policy Debate – Bloomberg, 9/1/2021

• Federal Reserve officials are moving on to their next big policy debate: defining their “broad and inclusive” maximum-employment goal that they have pledged to reach before raising interest rates.
• With Chair Jerome Powell and colleagues paving the way to slowing their massive asset-purchase program this year, attention will turn to when they will hike rates for the first time since 2018.
• Seven of 18 policy makers wanted to raise in 2022 and that number could grow when the Fed releases updated economic forecasts next month.
• The discussion could be an even more heated argument than discord over scaling back bond purchases.
• That’s because the Fed’s overhaul of monetary policy last year didn’t spell out a numeric definition for the minority unemployment rates that would meet their new goal.

States That Cut Unemployment Benefits Saw Limited Impact on Job Growth – Wall Street Journal, 9/1/2021

• States that ended enhanced federal unemployment benefits early have so far seen about the same job growth as states that continued offering the pandemic-related extra aid, according to a Wall Street Journal analysis and economists.
• Nonfarm payrolls rose 1.33% in July from April in the 25 states that ended the benefits and 1.37% in the other 25 states and the District of Columbia, the Journal analysis of Labor Department data showed.
• Economists who have conducted their own analyses of the government data say the rates of job growth in states that ended and states that maintained the benefits are, from a statistical perspective, about the same.
• Jobs in the leisure-and-hospitality sector grew 6.52% in July from April in states that kept the extra unemployment benefits, compared with 4.76% in states that ended them.
• By early next week, about 11.2 million Americans will lose some form of federal unemployment benefits, according to estimates from forecasting firm Oxford Economics.
• About 3.5 million people lost benefits in the 25 states that cut them this summer.

Progressive Opposition to Jerome Powell Clouds His Chances for Second Term as Fed Chairman – Wall Street Journal, 9/1/2021

• Members of President Biden’s economic team generally support nominating Federal Reserve Chairman Jerome Powell to a second term, but growing resistance from prominent Democrats including Sen. Elizabeth Warren (D., Mass.) could lead to his replacement, according to people familiar with the matter.
• If Mr. Powell isn’t given a new four-year term next February, when his current term expires, the leading contender for the job is Fed governor Lael Brainard, an economist appointed to the board in 2014 by former President Barack Obama.
• Ms. Warren stopped short of endorsing Ms. Brainard in a recent television interview but singled out her record of dissents on regulatory matters under Mr. Powell.
• “She makes a good case for why it is the job of the Federal Reserve to be that cop on that beat,” Ms. Warren said in an Aug. 4 interview on Bloomberg TV.

White House to Unveil Steps Aimed at Easing Housing Supply Shortage – Wall Street Journal, 9/1/2021

• The Biden administration is poised to unveil a series of steps aimed at addressing the U.S. shortage of entry-level homes and rental properties, according to people familiar with the matter, moves designed to boost their financing and construction over the coming years.
• The changes would draw upon the administrative authority of government regulators such as the Federal Housing Finance Agency as Congress weighs broader policy changes tied to the debate over revamping U.S. infrastructure, according to a draft plan reviewed Tuesday by The Wall Street Journal.
• Individually, each regulatory move is technical and modest. Collectively, though, “they should have a meaningful impact, particularly because they are all focused on the lower end of the market, where there is the most need,” said Jim Parrott, a former Obama administration housing adviser, commenting on the draft.

Social Security Costs Expected to Exceed Total Income in 2021 as Covid-19 Takes Financial Toll – Wall Street Journal, 9/1/2021

• The severe economic downturn caused by the Covid-19 pandemic last year weighed on the financial health of Social Security, but not nearly as much as many forecasters originally feared, according to new projections of the program’s finances.
• Trustees for the Social Security trust fund in an annual report released Tuesday said the program is expected to pay benefits that exceed its income in 2021, the same as it anticipated last year at the outset of the pandemic.
• While the pandemic had a significant impact on the program, the trustees said, they expect Social Security’s reserves to be depleted by 2034, only one year sooner than they estimated in their April 2020 report.
• Once the reserves are exhausted, benefits would be reduced automatically unless Congress steps in to shore up the program, which lawmakers have done previously.

EUROPE & WORLD

Euro zone August factory growth strong – as were price rises, PMI shows – Reuters, 9/1/2021

• Euro zone manufacturing growth remained strong in August but supply chain issues caused by the coronavirus pandemic continued to constrain supplies of the raw materials factories need, driving up prices, a survey showed on Wednesday.
• IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) fell to 61.4 in August from July’s 62.8, below an initial 61.5 “flash” estimate.
• An index measuring output, which feeds into a composite PMI due on Friday and seen as a good guide to economic health, fell from July’s 61.1 to 59.0. Anything above 50 indicates growth.
• An ongoing shortage of materials and a lack of transport availability meant sellers of the goods factories need were again able to ramp up their charges. The input prices index thus remained high at 87.0, although shy of July’s record 89.2.

Factmonster – TODAY in HISTORY

• A devastating earthquake struck the Japanese cities of Tokyo and Yokohama. Nearly 150,000 people were killed and more than two million left homeless. (1923)
• World War II began when Nazi Germany invaded Poland. (1939)
• A coup in Libya toppled the monarchy of King Idris and brought Muammar al-Qaddafi to power. (1969)
• A joint U. S.-French expedition located the wreck of the Titanic 560 miles off the coast of Newfoundland. (1985)