Another organization lowered its forecast for U.S. economic growth this year, citing the delta variant of the coronavirus that slowed the economy’s momentum.
In its latest global economic forecast, The Conference Board, a 105-year-old business membership-driven research organization, projected that U.S. gross domestic product’s annual growth will hit 5.7% this year, down from its 6% forecast in August. The August number was a downgrade from an earlier forecast of 6.6% because of lower-than-expected economic growth in the third quarter.
The Conference Board’s forecast matches that of one from the Urban Land Institute, a Washington, D.C.-based nonprofit real estate research organization.
In a call with reporters, Conference Board economists noted that wage increases are driving inflation because of employers struggling to fill open jobs, primarily among businesses needing employees at the lower end of the wage scale.
Gad Levanon, the organization’s vice president for labor markets, said the labor shortage was a complete surprise coming out of the pandemic-induced recession. It’s a situation acerbated by many more people than expected who retired, the result of a rapid rise in home values and strong stock market gains, Levanon said.
The labor situation could persist in the United States. He said that for the first time in the country’s history the working-age population is no longer growing.
Job Growth IncreasesPrivate sector payrolls expanded more than expected in October by the largest number since June, with leisure and hospitality jobs once again leading the way.
Payroll company ADP reported Wednesday that private companies added 571,000 jobs in October, far exceeding Wall Street expectations of 395,000.
That’s an improvement over the 523,000 jobs in September, which ADP revised from its original report of 568,000 jobs.
Large companies led the hiring in October with 342,000 new workers while most of the increase in total payrolls was in the service sector with 485,000. Leisure and hospitality, which suffered major job losses last year because of the pandemic, led all sectors with a gain of 185,000.
Friday’s upcoming report from the Labor Department could present a different picture of the job market as it did in September when the report came in far below expectations, causing considerable buzz that the economic recovery had hit a bump.
Services Sector Activity Hits RecordActivity in the services sector expanded again in October to reach an all-time high.
The Institute for Supply Management reported that its services index rose to 66.7%, the highest reading recorded since the organization started measuring it in 1997. It’s the fourth time this year the index has risen to a record.
October’s number is a big jump from September’s 61.9% rating. September was the final month of the third quarter, which had gross domestic product growing 2%, lower than expected because of a spike in coronavirus cases and continuing supply chain challenges.
Sub-categories of the index that measure business activity, new orders and supplier deliveries showed big gains.
Anthony Nieves, chair of the institute’s services business survey committee, said in a statement that “demand shows no signs of slowing.” The backlog orders index rose to a record with a reading of 67.3% while the prices index hit the second-highest reading at 82.9%, Nieves said.
Source: CoStar Group, www.costar.com