MetroIntelligence Economic Update by P. DUFFY
Federal Reserve hikes Federal Funds rate 50 basis points to combat inflation
With appropriate firming in the stance of monetary policy, the Federal Reserve Open Market Committee (FOMC) expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1.
1Q2022 labor productivity falls 7.5 percent, steepest decline since 1947
Nonfarm business sector labor productivity decreased 7.5 percent in the first quarter of 2022, as output decreased 2.4 percent and hours worked increased 5.5 percent. This is the largest decline in quarterly productivity since the third quarter of 1947, when the measure decreased 11.7 percent. From the same quarter a year ago, nonfarm business sector labor productivity decreased 0.6 percent, reflecting a 4.2-percent increase in output that was outpaced by a 4.8-percent increase in hours worked. This is the largest four-quarter decline since the fourth quarter of 1993, when the measure also declined 0.6 percent.
Private sector job growth slows to 247,000 in April as small businesses lose jobs
According to ADP, private sector employment rose by 247,000 in April versus 479,000 in March and 619,000 in April of 2021. The majority of job gains were for large businesses (+321,000) and mid-sized businesses (+46,000), while small businesses lost 120,000 workers. Most jobs gained were in services (+202,000) versus goods (+46,000). We’ll have a more complete read on the job market when the BLS releases their figures for April on Friday, May 6.