Tapering Will Proceed
- Jan 09, 2014
Automated Data Processing said on Wednesday that U.S. private employers created 238,000 jobs in December, which was more than expected. In fact, according to the company’s reckonings, the last month of the year saw the largest increase for private employment in 2013, besting November’s 229,000 jobs. ADP reports don’t always jibe with the official employment numbers, but they generally point in the same direction.
ADP further reported that the bulk of job-creation in the private sector, some 108,000 positions, was among businesses that employ fewer than 50 workers, which counts as good news, since most of the time small businesses are the main generators of new jobs. Businesses of 50 to 500 workers created a net of 59,000 jobs, and businesses of 500 or more workers created 71,000 jobs. The construction industry in particular saw a sizable uptick in employment during the month.
Separately, consultancy Challenger, Grey & Christmas said on Wednesday that as the economy and job market continue to regain strength, job seekers are slowly becoming more confident, according to a survey of callers to an annual job-search advice hotline offered by the company. The survey found that 63 percent of respondents believed they would find new employment in under six months, up from 55 percent who said the same a year ago.
FOMC Says Tapering Will Proceed
On Wednesday the Federal Open Market Committee released the minutes of its Dec. 17-18 meeting, which confirmed that the tapering of bond-buying was going to proceed in January. Or, as the FOMC put it: “most members agreed that the cumulative improvement in labor market conditions and the likelihood that the improvement would be sustained indicated that the committee could appropriately begin to slow the pace of its asset purchases at this meeting.”
The Fed was at pains to note – less investors react irrationally to the news, as has been known to happen – that the central bank “should proceed cautiously in taking its first action to reduce the pace of asset purchases and should indicate that further reductions would be undertaken in measured steps. Members also stressed the need to underscore that the pace of asset purchases was not on a preset course…”
The FOMC also intends to keep interest rates low. “A few members suggested that lowering the unemployment threshold to 6 percent could effectively convey the Committee’s intention to keep the target federal funds rate low for an extended period,” it said in its statement. However, most members wanted to make no change to the threshold and instead preferred using a range of labor market indicators when considering upping the benchmark rate.
Wall Street ended the day mixed on Wednesday, with the Dow Jones Industrial Average down 68.2 points, or 0.41 percent, and the S&P 500 off a slight 0.02 percent. The Nasdaq gained 0.3 percent.