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U.S. private payrolls beat expectations in October; worker shortages linger

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November 3, 2021

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. private payrolls increased more than expected in October, suggesting the labor market and overall economy were regaining momentum early in the fourth quarter, though worker and raw material shortages remain constraints.

Private employment rose by 571,000 jobs last month, the ADP National Employment Report showed on Wednesday. Data for September was revised down to show 523,000 jobs added instead of the initially reported 568,000. Economists polled by Reuters had forecast private payrolls would increase by 400,000 jobs.

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“For the labor market, shortages remain a constraint,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “Our base case remains that shortages will ease as health concerns recede, school reopenings are smoother owing to vaccinations and as savings diminish.”

The ADP report is jointly developed with Moody’s Analytics and was published ahead of the Labor Department’s more comprehensive, and closely watched employment report for October due on Friday. But it has a poor record predicting the private payrolls count in the department’s Bureau of Labor Statistics (BLS) employment report because of methodology differences.

Still, the report was consistent with an improvement in other labor market indicators in October as the summer wave of COVID-19 infections driven by the Delta variant subsided significantly. Coronavirus infections worsened supply chain problems, restraining economic growth to its slowest pace in more than a year in the third quarter.

Last month’s broad-based gains in private payrolls were led by leisure/hospitality, where businesses added 185,000 jobs.

Manufacturing employment increased by 53,000 jobs, while construction hiring rose 54,000. Large corporations accounted for the bulk of the increase in private payrolls last month.

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Economists expect hiring picked up in October, though persistent worker shortages remain a challenge. According to a Reuters survey of economists, private payrolls likely increased by 400,000 jobs in October. With government hiring anticipated to have rebounded by 50,000, that would lead to overall payrolls rising by 450,000 jobs. The economy created 194,000 jobs in September, the fewest in nine months.

Economists were generally content to keep their estimates for October nonfarm payrolls, citing ADP’s spotty record.

“The ADP report provides only a rough guide to the official figures,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York. “It tells us little about what happened to public education payrolls in October following the more than 150,000 decline in September in seasonally adjusted terms.”

The labor market recovery is regaining traction. Initial claims for unemployment benefits have dropped below 300,000 for the first time since the coronavirus pandemic barreled through the United States about 20 months ago.

The Conference Board’s labor market differential – derived from data on consumers’ views on whether jobs are plentiful or hard to get – hit a 21-year high. The Institute for Supply Management’s measure of factory employment also rose.

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But workers continue to be scarce. There were 10.4 million job openings at the end of August. Labor supply has remained tight despite the expiration of federal government-funded unemployment benefits, which businesses and Republicans had argued were a disincentive for the jobless to seek work.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

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Buying the Omicron dip

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November 29, 2021

A look at the day ahead from Danilo Masoni.

Sell first, get answers later. With stocks near lifetime peaks, the Black Friday reaction to the new fast-spreading virus strain Omicron was hardly surprising.

But a weekend later, investors look heavily engaged in buying the dip, as markets take a more balanced view of risks attached to what the WHO called a “variant of concern”.

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After their ninth biggest drop ever on Friday, gains in crude prices topped 5% earlier in Asia and stock futures point to a solid bounce across Europe and America.

A South African doctor said patients with Omicron have “very mild” symptoms and investment houses don’t look to have budged that much. Credit Suisse, for example, made no portfolio changes, staying slight overweight on equities.

Perhaps more telling is that retail traders poured north of $2 billion into U.S. stocks on Friday, setting the second biggest daily inflow on record, per Vanda Research data.

Of course there are uncertainties and that will likely make for volatile days heading into the Christmas shopping season.

Understanding the level of severity of the variant “will take days to several weeks”, said WHO. And vaccine maker BioNTech needs up to two weeks to figure out whether the shot it makes with Pfizer needs to be reworked.

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So while Omicron has spread from Australia to the Netherlands and governments ban travel and mull lockdowns, markets may also gamble on central bankers turning more patient in their path towards rates normalisation.

Lots of speakers from the Federal Reserve and the European Central Bank are lined up for today. On Sunday, speaking about risks to the recovery, ECB’s Lagarde said: “We now know our enemy and what measures to take.”

Key developments that should provide more direction to markets on Monday:

* ECB speakers: Governor Lagarde, ECB board members AndreaEnria, Isabel Schnabel, Pentti Hakkarainen; ECB Vice PresidentLuis de Guindos * Euro zone consumer sentiment/inflation expectations * German preliminary CPI/HICP * Fed speakers: Chairman Jerome Powell, New York PresidentJohn Williams, Governor Bowman * Emerging markets: Kenya central bank meets; Turkey tradebalance and bank NPL ratios (This story refiles to fix chart)

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)

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UK regulator set to block Meta’s Giphy deal – FT

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November 29, 2021

(Reuters) -The UK competition regulator is expected to block Meta Platforms’ acquisition of online GIF platform Giphy in the coming days, the Financial Times reported https://www.ft.com/content/662c8e3f-4909-4bec-9131-c0237bb4897d on Monday.

The Competition and Markets Authority is set to reverse the deal in what would be the first time the watchdog has reversed a Big Tech acquisition, the report said, citing individuals close to the matter.

Meta Platforms and the regulator did not respond to requests for comment from Reuters sent outside working hours.

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The regulator had in October fined the U.S. social media giant Facebook, now Meta, 50.5 million pound ($67.35 million) for breaching an order that was imposed during an investigation into its purchase of the GIF platform, Giphy.

Facebook bought Giphy, a website for making and sharing animated images, or GIFs, in May last year to integrate it with its photo-sharing app, Instagram. The deal was then pegged at $400 million by Axios.

($1 = 0.7499 pounds)

(Reporting by Sneha Bhowmik in Bengaluru; Editing by Uttaresh.V)

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Evergrande shares fall after chairman cuts stake; Fantasia suspends trading

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November 29, 2021

HONG KONG (Reuters) – Shares in China Evergrande Group fell as much as 4.8% on Monday morning, after its chairman trimmed his stake in the cash-strapped property developer to raise about $344 million.

The group’s electric vehicle unit, China Evergrande New Energy Vehicle Group Ltd, also dropped more than 5% after it said the company was still exploring ways to pump capital into the unit with different investors.

Evergrande has been scrambling to raise capital as it grapples with more than $300 billion in liabilities and Chinese authorities have told its chairman, Hui Ka Yan, to use some of his personal wealth to help pay bondholders, sources have said.

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Evergrande failed to pay coupons totalling $82.5 million due on Nov. 6 and investors are on tenterhooks to see if it can meet its obligations before a 30-day grace period ends on Dec 6.

The developer disclosed late on Friday that Hui had sold 1.2 billion shares in the company at an average price of HK$2.23 each, lowering his stake in the Shenzhen-based real estate developer to 67.9% from 77%.

Once China’s top-selling developer, Evergrand’e troubles have hit the broader Chinese property sector with a string of debt defaults and credit rating downgrades of its peers in the last couple of months.

Fantasia Holdings suspended trading in company shares on Monday pending release of information. On Thursday, the developer said a winding-up petition was filed against a unit related to an outstanding loan.

(Reporting by Sumeet Chatterjee; Editing by Stephen Coates)

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