US ECONOMY & POLITICS

U.S. Hiring Slows Sharply Amid Delta, Complicating Fed Taper – Bloomberg, 9/3/2021

• U.S. hiring downshifted abruptly in August with the smallest jobs gain in seven months, complicating a potential decision by the Federal Reserve to begin scaling back monetary support by year end.
• Nonfarm payrolls increased 235,000 last month, trailing all forecasts, after an upwardly revised 1.05 million gain in July, a Labor Department report showed Friday.
• The median estimate in a Bloomberg survey of economists was for a 733,000 monthly advance in August.
• The unemployment rate fell to 5.2% from 5.4%.
• In August, 5.6 million people reported they were unable to work because of the pandemic, up from 5.2 million a month earlier, the Labor Department said.
• Employment in leisure and hospitality was flat in August, held back by a 42,000 decrease in payrolls at restaurants and bars.
• Retail trade, construction, government and health care employment also declined last month.
• Meantime, the participation rate — the share of Americans who are employed or looking for work — was unchanged last month at 61.7% and remains restrained by persistent child-care challenges and virus concerns.
• Overall average hourly earnings rose 0.6% last month, twice as much as forecast though possibly a reflection of the composition of August employment. Average weekly hours were unchanged at 34.7 in August.

Half of U.S. small businesses have unfilled job openings -NFIB – Reuters, 9/3/2021

• Half of U.S. small-business owners reported unfilled job openings in August as finding qualified workers remains an ongoing challenge, a trade group said on Thursday.
• The National Federation of Independent Business said in its monthly jobs report that 50% of small business owners reported unfilled job openings in August on a seasonally adjusted basis, up from 49% in July.
• August’s reading is 28 percentage points higher than the 48-year average of 22%.
• The report also showed that 91% of owners reported few or no qualified applicants for the positions they were trying to fill last month.
• Furthermore, 44% of small businesses surveyed currently have job openings for skilled workers and 27% have openings for unskilled labor.

U.S. Service Industry Expansion Cools From Month-Earlier Record – Bloomberg, 9/3/2021

• U.S. service providers expanded at a robust pace in August, though a step slower than the record rate seen a month earlier as a gauge of business activity moderated.
• The Institute for Supply Management’s services index fell to 61.7 last month from 64.1 in July.
• Readings above 50 indicate expansion.
• The ISM gauge of business activity, which parallels the group’s factory production measure, fell to six-month low of 60.1.
• Inventories contracted further in August, falling to the lowest level in a year, while a measure of services employment eased slightly.
• The ISM’s prices paid index fell to the lowest since March after hitting an almost 16-year high in July. Meantime, supplier delivery times and order backlogs indexes eased.

Joe Manchin Calls for Pause in Democrats’ $3.5 Trillion Spending Push – Wall Street Journal, 9/3/2021

• Centrist Democratic Sen. Joe Manchin of West Virginia stepped up his campaign to cut the price tag of Democrats’ $3.5 trillion healthcare, education and climate legislation, calling for a “strategic pause” in the effort, which Democrats are working to wrap up this month.
• Democrats are aiming to get the expansive spending package to President Biden’s desk alongside a roughly $1 trillion bipartisan infrastructure bill that already passed the Senate, while keeping almost all of the party’s lawmakers on board.
• “Instead of rushing to spend trillions on new government programs and additional stimulus funding, Congress should hit a strategic pause,” Mr. Manchin said in an opinion article in The Wall Street Journal.
• “While some have suggested this reconciliation legislation must be passed now, I believe that making budgetary decisions under artificial political deadlines never leads to good policy or sound decisions,” he said.
• Sen. Kyrsten Sinema (D., Ariz.) also has said she doesn’t support the current price tag, although she and Mr. Manchin both voted for Democrats’ budget that got the reconciliation process under way.

Senate Democrats Eye Taxes on Stock Buybacks, Excess CEO Pay – Bloomberg, 9/3/2021

• Senate Democrats are discussing a wider range of tax proposals than President Joe Biden has proposed, including levies on stock buybacks, carbon emissions and executive compensation, as part of a package of measures to help fund a ramping up in social spending.
• One idea is applying an excise tax on stock buybacks or treating them as taxable dividends to shareholders, according to two people familiar with Senate Finance Committee discussions.
• Corporate deductions for executive compensation could also be limited, and companies could face an excise tax if their chief executive officer’s pay exceeds that of an average company worker by a certain ratio, the people said.
• Billionaires, meanwhile, could potentially face new “mark to market” rules requiring them to pay taxes on unrealized capital gains, potentially raising hundreds of billions of dollars from about 600 of the richest Americans.
• And new limits are being considered for the size of tax-advantaged retirement accounts, targeting an increase in the number of accounts shielding millions in wealth.

EUROPE & WORLD

Supply shortages sap strength of euro zone recovery – Reuters, 9/3/2021

• Euro zone business activity remained strong last month, despite fears about the Delta variant of the coronavirus and widespread supply chain issues, according to a survey which suggested the bloc’s economy could be back to pre-COVID-19 levels by year-end.
• IHS Markit’s final composite Purchasing Managers’ Index (PMI), seen as a good guide to economic health, dropped to 59.0 last month from July’s 15-year high of 60.2, still well above the 50 mark separating growth from contraction but below a 59.5 “flash” estimate.
• But ongoing supply chain disruptions caused by the pandemic meant the cost of raw materials soared again this month.
• The input prices index was a near record 69.5 – although down from July’s 69.9.
• Still, with much of the service industry reopening after the lifting of many restrictions its PMI remained well above breakeven at 59.0, albeit below July’s 59.8 which was the highest reading since June 2006.
• Services activity in Germany, Europe’s largest economy, expanded at a strong pace as businesses which had been hit by coronavirus lockdowns catered for pent-up demand, although staff shortages and costs pressures put a dent in France’s growth.
• Italy’s services industry recorded another month of steep growth, sustaining hopes of a strong economic rebound, and in Spain the sector expanded for the fifth month in a row as more COVID-19 travel restrictions were phased out.
• In Britain, outside the common currency union, the recovery lost more momentum than originally estimated as staff shortages and supply chain issues weighed on companies in the country’s huge services sector.
• Fears lockdown measures could be re-imposed have also put a dent in optimism.
• The euro zone services business expectations index in the PMI survey dipped to a four-month low of 68.9 from 69.1.

Japan’s Prime Minister Yoshihide Suga to Step Down – Wall Street Journal, 9/3/2021

• Prime Minister Yoshihide Suga said he won’t seek re-election as ruling-party leader, effectively ending his term after just a year and bringing back political instability in one of Washington’s most important allies.
• Japan’s recent wave of Covid-19 cases caused by the Delta variant did irreparable damage to Mr. Suga’s leadership, and his support rating in recent polls fell below 30%. Public dissatisfaction rose even after a relatively problem-free Tokyo Olympics, which included a record medal haul for the home team.
• Mr. Suga, 72 years old, said he wouldn’t be a candidate in the election for president of the ruling Liberal Democratic Party set for late September. Traditionally the party’s president concurrently serves as prime minister because the LDP has long dominated Japanese politics.

Trudeau Tumbles Further Behind Conservative ‘Freight Train’ – Bloomberg, 9/3/2021

• Prime Minister Justin Trudeau’s odds of retaining power in Canada are slipping as his Liberal Party falls further behind in the polls ahead of a snap election.
• The main opposition Conservatives under Leader Erin O’Toole have climbed to nearly 36% support in the latest Nanos Research Group survey. The Liberals are trailing at 31% and the left-leaning New Democratic Party is in third at just over 18%.
• Trudeau, facing a tough fight to win back the parliamentary majority he lost in the 2019 ballot, was repeatedly pushed to defend his decision to force an election the middle of a pandemic in a televised debate Thursday night. O’Toole, who is running a low-key campaign focused on a centrist platform, faced questions over mandatory vaccines, funding for child care and his less-ambitious climate policy during the first of three debates.
• The leaders will square off again in French on Wednesday, with the sole English debate the following day. Voting day is Sept. 20.

China’s SMIC to Build $8.87 Billion Chip Production Line in Shanghai – Wall Street Journal, 9/3/2021

• Semiconductor Manufacturing International Corp., China’s largest chip maker, said it is teaming up with the Shanghai government to build an $8.87 billion chip production line in the city, furthering China’s ambitions for semiconductor self-sufficiency in the middle of a global chip shortage.
• In a Friday regulatory filing, SMIC said that the chip production facility will be built through a joint venture with the Shanghai government’s Lin-Gang Free Trade Zone Administration.
• It would specialize in the mature technologies of 28-nanometer process nodes and higher and churn out 100,000 12-inch wafers a month when complete, SMIC said.
• The joint venture will have a registered capital of $5.5 billion. The remaining funds will be raised through third-party investors, SMIC said.

Factmonster – TODAY in HISTORY

• The Treaty of Paris officially ended the Revolutionary War between the United States and Great Britain. (1783)
• Great Britain and France declared war on Germany during World War II. (1939)
• The unmanned U.S. spacecraft Viking II landed on Mars and took the first pictures of the planet’s surface. (1976)
• Pope John Paul I was installed as the 264th pontiff of the Roman Catholic Church. (1978)