U.S. Lost 32,000 Jobs in September, Says Payroll Processor ADP report shows a labor force that continues to deteriorate

The U.S. shed 32,000 private-sector jobs in September, payroll-processing giant ADP said on Wednesday.

That is down from a revised loss of 3,000 in August. Economists polled by The Wall Street Journal had expected an increase of 45,000. (…)

The leisure and hospitality sector shed 19,000 jobs last month, the largest decline among major sectors, according to ADP. Education and health services were bright spots, with a collective gain of 33,000 jobs. (…)

Small establishments with fewer than 50 employees shed 40,000 jobs, while those with 500 or more employees added 33,000 jobs.

ADP’s report is based on data from more than 26 million workers whose employers use ADP to manage payrolls. That is a large sample of U.S. private-sector employment, which includes about 136 million workers. ADP’s monthly numbers sometimes diverge widely from BLS figures, which are based on a broader survey of employers.

Still, ADP’s methodology was substantially revised in 2022 in an effort to make it an independent reading of the labor market, as opposed to a forecast of the BLS readings. As a result, economists say that ADP’s numbers have become a more useful measure. In recent months the ADP report registered weakness in the job market before it showed up in revised, official figures.

Ed Yardeni:

The previous month’s job growth was also significantly revised down from an increase of 54,000 to a loss of 3,000 jobs. The three-month average change in ADP payrolls was only 23,000 through September.

As we noted on Tuesday, following the August JOLTS report, companies hired 5.1 million workers during the month; however, this number matched the separations resulting from quits and firings. So there was no net gain in employment. Companies appear to be freezing their payrolls while they assess how AI can help them boost their productivity.

The blue line below is ADP (private), red is BLS (total). Second chart is YoY:

The shutdown could prevent the BLS report due tomorrow. ADP data are not encouraging, nor are Indeed Job Postings, down 2.6% in August from July.

BTW, the 5.1M hires Ed Yardeni refers to above was down big time from earlier this year:

Data: Bureau of Labor Statistics; Chart: Axios Visuals

Meanwhile,

The new Axios Vibes survey by the Harris Poll shows 65% of Americans see themselves as either sometimes or regularly financially squeezed each month, up from 58% in June 2024.

• Surveys with longer track records tell a similar story. The University of Michigan Consumer Sentiment Index was 21.4% lower in September than a year earlier. It is now lower than at any point during the 2008-2009 recession.
• The Conference Board’s Consumer Confidence Index fell in September to 94.2, below the 98.7 recorded in June 2022 when inflation peaked.

Compared to February 2020, during Trump 1.0, both Republicans and Democrats are sharply more negative about the economy now.

• The Consumer Sentiment Index for Republicans in September was 33.5 points below February 2020, while for Democrats it was 39.1 points below.

• In the Axios Vibes poll, 47% of survey respondents said it has gotten harder to afford groceries since this time last year, compared to 19% who said it has gotten easier.

“Consumers continue to express frustration over the persistence of high prices, with 44% spontaneously mentioning that high prices are eroding their personal finances” — the highest in a year, noted Joanne Hsu, director of the Michigan survey.

Soft data is getting harder…

MANUFACTURING PMIs

USA: Production growth slows in September amid ongoing tariff disruptions

The headline index from the report, the seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index™ (PMI^®), recorded 52.0 in September. That was down from 53.0 in the previous month and therefore signaled a weaker rate of expansion of the manufacturing economy.

Weaker growth emanated from a slowdown in new order book gains. Although up for a ninth successive month, new orders rose only modestly and at a pace below the survey average. Exports were a source of demand weakness, falling overall for a third month in a row. Tariffs were reported to have weighed on export sales especially to Canada and Mexico.

A slowdown in demand growth led to weaker output gains in September. Overall output increased at a much weaker pace than August’s recent high. However, rising to a faster degree than new orders, production increased sufficiently for firms to add to their stocks of finished goods for a second month in succession.

Work outstanding declined at the fastest pace for five months, in part due to an expansion of labor capacity. September’s survey showed that employment rose solidly as firms filled vacancies and as part of business expansion plans.

A positive outlook also helped encourage manufacturers to take on additional staff, with several anticipating an increase in sales over the next 12 months. In some instances, tariffs were seen as driving an expansion of domestic focused industrial output. Overall business activity expectations subsequently improved slightly compared to August. That was despite some ongoing uncertainty amongst the panel related to trade and wider federal government policies.

Meanwhile, tariffs continued to push up input prices during September, with vendors reportedly raising their charges. Although input cost inflation weakened since August, it remained elevated in the context of the survey history.

High prices discouraged purchasing activity in September, which overall rose only slightly on the month. Where buying rose, this was linked to a desire to bolster inventories, in part due to tariff and supply-side uncertainty. Difficulties importing goods and stock shortages were again noted as driving average vendor delivery times higher in September.

Regarding manufacturers’ own selling prices, these rose at a noticeably slower pace in September as competitive pressures and slower demand growth weighed on company pricing power. Although still rising at a historically strong pace, output price inflation softened in September to its lowest level since January.

Wells Fargo on the ISM:

Just about every facet of the economic picture for manufacturing was evident in the morning’s release of the ISM index for September. Start with the headline: For the seventh straight consecutive month, the manufacturing index was in contraction territory. That said, the 49.1 reading is the mildest pace of contraction throughout that period. Trade policy may be no less uncertain than it was earlier this year, but to some degree at least, firms have acclimatized to the ever-changing tariff landscape.

The adjustments are evident in the details. Of the various sub-components that feed into the headline, just two are above 50, signaling expansion: supplier deliveries at 52.6 and production at 51.0. In a report earlier this year (…). So longer wait times push the ISM higher. The wait-times today have more to do with supply chain disruption from trade policy.

In the absence of the “boost” from supplier deliveries, the ISM would be deeper in contraction. That is not to say that things are universally grim. The 51.0 reading for production indicates that factories are still producing, just at a somewhat below-average rate. In the 10 years that preceded the pandemic, the production index averaged 56.6, a bit [?] more firmly in expansion than the 51.0 reading today.

The remaining components that feed into the headline are all still in contraction. The employment component climbed 1.5 points, but still remains low at 45.3 and points to potential risk for more manufacturing layoffs).

New orders fell 2.5 points, the biggest move of the main sub-components, and, critically, that moves this proxy for future work into contraction after it had broken out into expansion in August. That leaves inventories at 47.7, a bit lower than it was last month. Many firms stocked up on key inputs prior to tariff implementation. The contractionary readings here for inventories signal that many of them are drawing down those supplies. That could eventually have implications for pricing.

The prices paid component, which does not feed into the headline, came down for the third straight month. That development is a positive one for anyone hoping for a less-restrictive policy stance from the Federal Reserve. Still, the current reading of 61.9 is firmly in expansion territory and thus not exactly the “all clear” when it comes to scope for sustained inflationary pressure in the months ahead.

Canada: Downturn in manufacturing sector continues inSeptember

The S&P Global Canada Manufacturing Purchasing Managers’ Index™ (PMI^®) remained below the critical 50.0 no-change mark in September for an eighth successive month. Posting 47.7, down from 48.3 in August, the PMI pointed to a solid and slightly faster deterioration in operating conditions.

Both output and new orders contracted in September, and at quicker rates than in August. Panellists continued to bemoan the adverse impact on demand of tariffs and wider economic uncertainty. Production and new orders have now fallen for eight months in a row. New export sales were again especially hard hit due to tariffs, with firms again pointing to continued weakness in sales to the United States.

The lack of overall new orders and cuts to production meant firms generally chose to not replace leavers at their plants. Some firms also reported enforced layoffs. The net result was a decline in employment for an eighth successive month, although the rate of contraction was modest and the softest since February. (…)

Tariffs meanwhile remained an ongoing source of cost pressures in September. Input prices again rose sharply, although the rate of inflation eased noticeably since August and was the second-lowest of the year so far. Prices for metals like steel, plus shipping costs in general, were reported to have increased during the month. Firms also pointed to ongoing delivery delays, especially for imported goods which was again linked to tariffs.

Manufacturers struggled to pass on their higher input costs to clients in the form of increased selling prices during the month. This was highlighted by the latest data on output charges, which increased only modestly in September and to the softest degree in nearly a year. Panellists attributed their lack of pricing power to market competition and a soft demand environment.

Unsold Oil From Middle East Hints at Early Signs of Global Glut

(…) The volume of unsold oil set to be loaded in November ranged from 6 million barrels to 12 million barrels, according to estimates from traders familiar with the matter, asking not to be identified as they’re not authorized to speak to the media. Sellers include the United Arab Emirates and Qatar, they added.

As the monthly spot trading cycle ends, shipments are usually discounted to move them, and price-sensitive buyers in China and India are the typical purchasers. However, there’s no indication that these unsold cargoes have been snapped up yet, according to the traders.

Still, for a clearer picture on overall supply and demand balances, the market will need to see the November allocations from suppliers such as Saudi Arabia to their buyers, which purchase crude under long-term contracts. Those allocations to refiners will be due early this month. (…)

Other metrics are pointing to a softening market. The futures curve for Abu Dhabi’s flagship Murban crude, which is in a bullish backwardation structure, has weakened in recent sessions. Price premiums for December-loading cargoes against Middle Eastern oil benchmarks also shrunk earlier this week.

Weaker-than-expected Chinese demand — including a possible slowdown of China’s strategic stockpiling — along with OPEC+’s push to continue returning idled output are weighing on the market, traders said.

A Once Unstoppable Luxury Housing Market Is Starting to Crack Economic uncertainty has taken a toll on wealthy buyers and sellers

The number of luxury-home sales nationwide dropped 0.7% during the three months ended Aug. 31, compared with the same period last year, according to data from real-estate brokerage Redfin, which said luxury sales nationwide dropped to the lowest level for that period since it began tracking the market in 2013.

Price growth also slowed. During the three months ended Aug. 31, the median sale price for luxury properties—defined as the top 5% of the market—increased 3.9% year over year to $1.25 million, according to Redfin. But that is down from a 6.1% year-over-year price jump for the three months ended Aug. 31, 2024.

“The luxury market seems to be weaker than the rest of the housing market right now—which is already pretty weak,” said Chen Zhao, head of economics research at Redfin, citing a 0.6% drop in nonluxury sales during the period, compared with the luxury market’s 0.7% drop. (…)

Following the tariff shock of early April, however, buyers and sellers across the spectrum saw dramatic swings in household wealth that took a toll on spring and summer purchasing.

“This injected a substantial hesitancy to make large financial decisions among many prospective luxury-home buyers and sellers,” said Patrick Carlisle, Compass’s chief market analyst in the San Francisco Bay Area, where August home sales above $5 million dropped 13% from August 2024.

“Buyers are being cautious about their investments,” said Kim Bedwell of Briggs Freeman Sotheby’s International Realty in Dallas, who said there are more $5 million-plus homes on the market in the city’s affluent suburbs than she has seen in a while.

Luxury prices, which became “overinflated” during Covid, are returning to prepandemic norms, said Bedwell. In August, she sold a roughly 13,600-square-foot home in Westlake, a suburb of Dallas-Fort Worth, that was last asking $10.995 million, down from the original asking price of $12.5 million in January. (…)

Nationally, Redfin found the number of luxury listings is on the upswing. During the three months ended Aug. 31, inventory rose 9.5% year over year to the highest level—for that time period—since 2020, Redfin data show. Nonluxury inventory rose 13.4% year over year. (…)

China curbs use of Nokia and Ericsson in telecoms networks Beijing’s national security drive hits European groups even as Huawei maintains its business on the continent

China is curbing the use of European telecom kit suppliers Nokia and Ericsson in its networks as President Xi Jinping pushes to decouple the country’s critical tech infrastructure from the west.  Two people familiar with the matter said Chinese state-backed buyers of IT equipment — which include mobile network operators, utilities and other industries — have begun more closely analysing and policing foreign bids.

That process has required contracts by Sweden’s Ericsson and Finland’s Nokia to be submitted for “black box” national security reviews by the Cyberspace Administration of China where the companies are not told how their gear is assessed. The reviews by the powerful tech watchdog can stretch three months or longer.

Even in cases where the European groups ultimately secure approval, the lengthy and uncertain audits often leave them at a disadvantage to Chinese rivals that face no such scrutiny, the people said. “If China is doing this for national security reasons, the question is why Europe does not reciprocate by applying the same standard,” said one of the people, who asked not to be named. 

Beijing’s effort to curtail European vendors follows a similar drive in Europe, where some governments have warned against working with Chinese telecoms giants Huawei and ZTE. But those calls have had an only limited impact on the Chinese companies’ market share on the continent.

China’s national security reviews come as Xi pushes a self-strengthening drive aiming to replace broad swaths of foreign technology. Last month, with Russia’s Vladimir Putin and North Korea’s Kim Jong Un at his side, Xi declared China “does not fear power or coercion” as it “stands strongly on its own with self-reliance”. (…)

State buyers of telecom equipment now require bidders to include detailed documentation on every component in their systems and the portion of local content, said the people familiar with the process, noting foreign groups were even including the details of Chinese R&D efforts to try to bolster their applications.  (…)

Beijing’s growing sales restrictions have collapsed Ericsson’s and Nokia’s combined market share in China’s mobile telecoms networks to about 4 per cent last year from 12 per cent in 2020, according to analyst Stefan Pongratz at research provider Dell’Oro Group. (…)

The EU Chamber of Commerce in China recently said the localisation requirements in IT and telecom posed an “existential threat” to the continent’s tech groups. Nearly three quarters of respondents to the chamber’s recent member survey said the restrictions had lost them business. 

European policymakers have also voiced security concerns about Chinese telecom vendors, warning of espionage risks and potential backdoor access. But most capitals have been slow to impose bans, deterred by the low cost of Chinese equipment and the desire to avoid provoking Beijing.

Around five years after the European Commission urged member states to bar high-risk suppliers such as Huawei and ZTE, only 10 of the EU’s 27 countries had introduced restrictions as of June 2025, according to regulatory research firm Cullen International. (…) Huawei and ZTE have retained 30 to 35 per cent of the European mobile infrastructure market, down only 5 to 10 percentage points from 2020, data from Dell’Oro Group shows.  

Germany has 59 per cent of installed 5G gear sourced from Chinese groups, according to John Strand of Strand Consult, even though the country plans to phase out some equipment from high risk Chinese vendors by 2029. “All the mobile network equipment in Berlin is Chinese,” said Strand. “Germany has big industries like chemicals and cars that don’t want relations with China to be hurt.”

AI CORNER

10% of the world’s population now uses ChatGPT

A recent publication by OpenAI reported that the number of users ChatGPT sees each week is now around 700 million, which translates to roughly 10% of the world population. With a deployment that vast, GenAI is not only being increasingly adopted in enterprises but is also becoming a part of our everyday lives.

In June 2024, 53% of the messages were non-work-related, which in June 2025 stands at 73%, leaving 27% categorised as work-related messages.

77% of the conversations are reported being used for practical guidance (29%), information seeking (24%), and writing (24%). However, when it comes to only work-related messages, it is largely used for writing (40%), practical guidance (24%) and technical help (10%).

Based on the output that the user wants to receive, the messages sent to ChatGPT can also be classified into three types: doing, asking and expressing. These have different economic implications.

Doing messages – using ChatGPT to perform tasks such as writing, generating code, analysing data, etc. – produce directly usable output and can be seen as automation of tasks.

Asking messages – seeking information to be better informed – help in supporting user decisions but do not directly produce output, serving as an augmentation tool.

Expressing messages, which are neither for information seeking nor performing a task, contribute negligibly to productive output.

Currently, 35% of messages are doing related and 52% are asking, highlighting the dual role of ChatGPT as a co-worker producing output and a co-pilot aiding problem-solving. The most common tasks can be combined into two main functions; a) gathering, documenting, analysing, and interpreting information, and b) thinking, solving problems and providing consultation. This shows that generative AI currently aids people with either the quality or speed of their work, which is a productivity improvement.

Share of work-related messages sent to ChatGPT

Sample from May 2024 to June 2025

Source: NBER, OpenAI

Currently, usage is roughly balanced between men and women but there are differences in how they use it. Women tend to send mostly writing and practical guidance queries, while men tend to use it more for technical help, information seeking, and multimedia.

The share of work-related messages also increases with age, education level, and for highly paid professional occupations. This suggests that GenAI might currently be providing more productivity benefits for users who already have access to better jobs and education, validating earlier concerns about its disproportionate impact.

A recent Standford study in the US further supports this, by showing a decline in employment for early-career employees.

The disparities in usage might suggest unequal benefits. Men tend to use GenAI at work for tasks centred around asking – such as information seeking – reflecting a more augmented, decision-supported role for AI. In contrast, women more often use AI for doing tasks like writing, which are more closely linked to automation and have a higher risk of replacement. Moreover, highly educated employed users stand to gain more, while opportunities for junior employees could be limited.

This makes us think about something Nvidia CEO Jensen Huang’s said recently: “You’re not going to lose your job to AI, you’re going to lose your job to someone who uses AI.” While embracing this technology offers clear productivity gains, those who use it best will have a distinct advantage.

Russell 2000 Is For Losers, But Is Currently Winning

The Russell 2000 small-cap stock price index is outperforming the S&P 600, another small-cap index. The former includes many more companies that are losing money than the latter. This is yet another sign of mounting speculative froth in financial markets in response to the Fed’s 25bps cut in the federal funds rate on September 17.

The S&P 600’s requirement that companies demonstrate positive earnings before being included acts as a screening tool, filtering out many of the most speculative or financially distressed businesses that are often found in the broader Russell 2000.

The percentage of companies in the Russell 2000 Index that lose money has generally been quite high in recent years, often hovering around 40%. The similar percentage for the S&P 600 is closer to 20%. (…)

‘Crazy, Right?’: More PE Funds Than McDonald’s Signals Pressure

“There are 19,000 private equity funds in the US. There are 14,000 McDonald’s in the US. How are there more private equity funds than McDonald’s? That’s actually crazy, right?” KKR & Co. partner Alisa Wood said Wednesday at Bloomberg’s Women, Money and Power event in London. “Capital coming back is really important. The mark-to-market paper gains only take you so far.” (…)

Private equity firms are now raising and deploying billions of dollars into artificial intelligence, particularly data centers, with hopes the emerging asset class will deliver the beleaguered industry the next surge of growth. They’re acquiring AI companies and data-center providers through their equity and real estate businesses, as well as lending against those assets. (…)

“Data centers are a great place to be positioned” because “you’re not picking like which specific application within artificial intelligence is going to be the winner,” she said. “You win when you see the digitization of our world playing out, as we are all demanding more information, more compute, more content as well.”

McCarthy-Baldwin also pointed to another promising sign for the industry — the prospect of retail investors rushing into alternatives markets. Looser regulations are making it easier for Blackstone and its peers to expand beyond their traditional investor base to find new sources of capital that fuel investments. (…)

This embrace has prompted investors like Greenlight Capital founder David Einhorn to warn of the perils of pouring a deluge of cash into AI infrastructure. (…)

Trust in Media at New Low of 28% in U.S.

MANUFACTURING PMIs

Eurozone: PMI dips back into contraction as eurozone factory orders decline

The HCOB Eurozone Manufacturing PMI slipped back into contraction in September, reversing the first improvement seen in over three years during August. Falling from 50.7 in August to 49.8, the headline index signalled a deterioration in factory operating conditions across the euro area. That said, the decline was only marginal overall.

Across the eight monitored euro area nations covered by the Manufacturing PMI survey, there was an even split between those in expansion and those in contraction. At the top of the rankings was the Netherlands, where conditions improved at the fastest pace since July 2022. Greece and Spain continued their growth trends, although upturns slowed on the month. The final eurozone country in expansion mode was Ireland. Weakness was recorded across the currency union’s three biggest economies – Germany, France and Italy – with respective Manufacturing PMIs posting below the critical 50.0 level.

Pulling the headline index into the contraction zone was a marked decline in its weightiest component, new orders. After rising for the first time in almost three-and-a-half years in August, the volume of new orders received by eurozone manufacturers decreased in September. The pace of contraction was mild but nevertheless the fastest since March. Export markets were a drag on total sales, with new business received from overseas falling for a third month in succession and to a slightly stronger degree. That said, manufacturing production volumes expanded, stretching the current sequence of growth that began in March. The upturn lost momentum, however, easing from August’s solid pace.

Further growth in output was achieved despite ramped up job cutting at eurozone factories. Workforce numbers fell at the quickest rate in three months. Manufacturers were also able to make greater inroads to their backlogs of work in September. The rate of reduction in outstanding orders was the most marked since June.

Purchasing was reduced by surveyed companies at the end of the third quarter. After coming close to stabilising as recently as July, the rate of decline in buying activity has accelerated in back-to-back months. Subsequently, manufacturers’ demand for inputs shrank at the steepest pace since April. Destocking remained prevalent across the goods-producing sector, with both pre- and post-production inventories falling at solid rates during the latest survey period. Stock depletion came amid evidence of pressure on supply chains as delivery times lengthened to the greatest extent in just shy of three years.

For the first time since June, eurozone manufacturers reported lower operating costs – a notable deviation from the solid inflationary trend witnessed across the survey on average. The decrease was only marginal, however. In turn, eurozone manufacturers responded by lowering their own charges. This marked the fifth month in succession that surveyed businesses have discounted prices.

Looking ahead, euro area goods producers were optimistic that output would be higher than present levels in 12 months’ time, although expectations were their weakest since April.

Japan: Output declines at quickest rate in six months in September

The headline S&P Global Japan Manufacturing Purchasing Managers’ Index™ (PMI^®) fell from 49.7 in August to 48.5 in September. Posting below the crucial 50.0 value, the index signalled a modest deterioration in the health of the sector that was the most pronounced since March. Business conditions have now worsened in 14 of the past 15 months.

Intermediate goods producers recorded a solid deterioration in conditions, while both consumer and investment goods segments recorded only marginal rates of decline.

Weighing on the headline PMI was a solid and accelerated decrease in manufacturing output during September. Furthermore, the rate of contraction was the quickest seen in six months, with survey respondents often linking the fall to reduced inflows of new work.

The overall amount of new business placed with Japanese manufacturers fell at a solid rate that was the fastest since April. Companies often mentioned that weaker market conditions had dampened customer spending and made clients more cautious with regards to their inventory levels.

New export orders also decreased again at the end of the third quarter. Though solid, the rate of contraction eased from August’s 17-month record. The latest drop in export sales was partly linked to lower demand across China and the impact of US tariffs.

Hiring activity meanwhile slowed notably in September. Moreover, the latest increase in employment at Japanese manufacturers was the weakest recorded since February and only fractional.

At the same time, there were further signs of spare capacity, with outstanding orders falling further in September. Notably, the rate of backlog depletion was the sharpest seen since January. Companies often mentioned that fewer new orders had enabled them to process and complete unfinished workloads.

Reduced customer demand also led firms to cut back on purchasing activity again in the latest survey period. The rate of reduction was the second-quickest recorded over the past year-and-a-half and solid. Companies also downwardly adjusted their inventories of both purchased and finished items.

Although input buying continued to decline, average supplier performance deteriorated again in September, and at the fastest rate in a year. Some monitored companies linked longer lead times to stock and labour shortages at suppliers.

The rate of input price inflation edged up to a three-month high and was sharp. Companies often linked higher expenses to increased raw material and labour costs. However, the pace of inflation remained much slower than that seen on average over the first half of the year.

Manufacturers responded to higher input prices by raising their output charges in September. The rate of inflation quickened from August to a solid pace that was stronger than the series long-run trend.

Japanese goods producers were generally confident that output will rise over the next year. However, the degree of positive sentiment slipped to a five-month low, with some firms concerned that reduced customer spending and US tariffs could dampen their performance.

Asia Manufacturing PMIs Show Diverging Impact of Tariffs Goods producers in Japan and Taiwan flagged deteriorating demand

S&P Global’s latest purchasing managers indexes showed a broad uptick in output at the end of the third quarter, but also weak spots in exports as trade uncertainty simmers, keeping demand subdued.

Goods producers in export powerhouses Japan and Taiwan flagged deteriorating demand in September, and optimism about the outlook soured.

Firms in Taiwan noted steeper falls in output and new orders, amid reports of muted global demand tied to U.S. tariffs and client hesitancy, S&P said.

That was echoed in the Japan survey too, where sentiment hit a five-month low and manufacturers reported softer demand in key markets like China, said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.

On the flipside was South Korea. S&P’s manufacturing PMI for the export heavyweight rose above the 50 mark separating expansion from contraction last month. New export orders rose for the first time in six months amid improving demand from key markets in Asia.

Things were brighter in China too. Both production and demand stayed in expansionary territory in September, with new export orders returning to growth for the first time since March, according to the RatingDog PMI compiled by S&P Global.

Other countries in Southeast Asia also saw a pickup in new orders and purchasing activity. (…)

For Shivaan Tandon, emerging markets economist at Capital Economics, the Asian PMI data wasn’t much to cheer about.

“The September PMI readings for most countries in Asia remained weak and we continue to expect manufacturing activity in the region to struggle in the near term,” Tandon said in a note.

Growth in Asia’s economies looks set to weaken through the end of 2026, he said, as tighter fiscal policy and softer exports offset resilient consumption.

Labor Market Going Nowhere

The latest JOLTS report furthered the notion that the labor market is merely running in place. Openings were little changed in August, keeping the vacancy rate at a cycle low of 4.3% and the number of openings just below the number of unemployed workers. With hiring demand still tepid, more workers are opting to stay put in their current job, further tempering upward pressure on wages. A low rate of layoffs remains one of the few bright spots in the jobs market, but the low quit rate elevates the risk of layoffs jumping higher.

Source: U.S. Department of Labor and Wells Fargo Economics

Demand for labor is being hit on multiple fronts. Rapid technological change, concerns over the growth outlook following changes to trade and immigration policy and the federal government’s efforts to shrink its workforce have all weighed on job availability this year. These forces were on display in the August JOLTS figures, which showed the vacancy rate remaining at a cycle low of 4.3%.

The dwindling availability of jobs has been noticed by consumers. In a separate report this morning from the Conference Board, the share of workers viewing jobs as “plentiful” less those viewing jobs as “hard to get” fell to a fresh cycle low. The more timely (and stable) picture from Indeed job posting shows the downward slide in hiring intentions, while moderating, has yet to be arrested, fueling our caution over the near-term pace of employment growth even as layoffs remain low.

Overall, firms’ appetite to hire remains tepid. The hiring rate slipped to 3.2%, its lowest since last summer’s lull in June 2024 and unseen in nearly a decade before then. At the same time, employers remain reluctant to let go of existing workers. The layoff rate held steady at 1.1% for the third straight month. Yet, the “no hire” side of the “no hire, no fire” environment has stymied job switching opportunities and has weighed on workers’ propensity to voluntarily exit current roles. The quit rate dipped to 1.9% in August, back down to its cycle low. (…)

Source: U.S. Department of Labor, Indeed Inc., Conference Board and Wells Fargo Economics

The delicate balance between labor demand and supply has been well proxied by the job opening-to-unemployed ratio, which slipped below 1 in August (0.98 to be specific). With hiring intentions still subdued and retention remaining strong, the pressure on employers to hike wages remains contained. Taken together with solid productivity growth since the pandemic, the labor market is not a significant source of inflationary pressure at present.

Ed Yardeni:

The “jobs-hard-to-get” series is highly correlated with the unemployment rate and suggests that it might have risen in September from August’s 4.3%. However, while the former indicates that the duration of unemployment may be increasing, weekly initial unemployment claims indicates that layoffs remain low.

Taiwan Rejects US Demand for Half of Chips to Be Made in America

(…) “This issue was not discussed in this round of negotiation, and we will not agree to such a condition,” Vice Premier Cheng said.

US Commerce Secretary Howard Lutnick said in a NewsNation interview published this week that the US has held discussions with Taipei about the proposal as a way to reduce the risks of over-reliance on overseas chipmaking. (…)

Brookfield Predicts $7 Trillion of Capital Needed for AI Growth

(…) Brookfield AM is launching a dedicated strategy focused on developing infrastructure for AI. The firm is marrying up its infrastructure, renewables and real estate into one AI strategy to “produce holistic solutions because a lot of these are going to be large industrial investments that we need to make,” Peer Marshall said in an interview with Bloomberg TV on Wednesday. (…)

GDP – AI = 0?

Harvard economist Jason Furman:

Investment in information processing equipment & software is four per cent of GDP. But it was responsible for 92 per cent of GDP growth in the first half of this year. GDP excluding these categories grew at a 0.1 per cent annual rate in the first half.

If so, Tariff Man has been twice lucky with the AI boom and lower oil prices.

The unanswered questions: will AI capex continue, at what pace, and how profitable will it actually be?

Pfizer to cut drug prices in exchange for tariff relief, Trump says

Pfizer and U.S. President Donald Trump on Tuesday said they had cut a deal in which the U.S.-based drugmaker agreed to lower prescription drug prices in the Medicaid program to what it charges in other developed countries in exchange for tariff relief.

Trump also said Pfizer would offer that most-favoured-nation pricing on all new drugs launched in the U.S. and flagged that other drugmakers will follow suit. (…)

U.S. patients currently pay by far the most for prescription medicines, often nearly three times more than in other developed nations, and Trump has been pressuring drugmakers to lower their prices to what patients pay elsewhere.

Pfizer will be part of the White House’s new direct-to-consumer website for Americans to buy drugs, called TrumpRx, that will launch in 2026. (…)

Several drugmakers have already set up direct-to-consumer pricing for some of their drugs, to be listed on a new website from the U.S. lobby group PhRMA, and raised the prices of their therapies in Britain in line with Trump’s desire to offset price decreases in the U.S. (…)

Pfizer is the first drugmaker to announce a deal. Trump sent letters to 17 leading drug companies in July telling them to slash prices to match those paid overseas. He asked them to respond with binding commitments by Sept. 29.

Sources at five large drugmakers told Reuters the Trump-Pfizer announcement caught their companies by surprise and that they watched the White House news conference to gauge its implications.

Pfizer will invest US$70-billion in research and development and domestic manufacturing and received a three-year grace period during which its products will not be subject to the pharmaceutical-targeted tariffs, “as long as, of course, we move the products here,” Bourla said.

Pfizer said a large majority of its primary care treatments and some select specialty brands will be offered at savings that will range as high as 85 per cent and on average 50 per cent. According to a poster on display at the event, those will include rheumatoid arthritis drug Xeljanz, which carries a list price of over US$6,000 a month, migraine treatment Zavzpret, dermatitis drug Eucrisa and post-menopausal osteoporosis medication Duavee.

Drugmakers’ shares rose because the price concessions are limited to Medicaid, said Daniel Barasa, portfolio manager at investment firm Gabelli Funds.

Barasa said the deal was “a highly favourable outcome for the industry. Given that Medicaid already benefits from substantial discounts and rebates – exceeding 80 per cent in certain cases – the incremental impact on manufacturers is relatively minimal.”

New Medicaid prices are also set to launch in 2026, a senior administration official said on a media call. The most-favoured-nation pricing is based on the lowest price paid in eight other wealthy countries after fees and rebates.

More than 70 million people are covered by Medicaid, the state and federal government program for low-income people. But drug spending in the program is dwarfed by that of its sister program Medicare, which covers people aged 65 and older or who have disabilities and is not included in Tuesday’s announcement.

Medicare’s drug spending reached US$216-billion in 2021, while Medicaid’s gross spending was around US$80-billion.

Anna Kaltenboeck, a health economist at Verdant Research, said that if Pfizer and other companies provide supplemental rebates to Medicaid, that could be significant, as it would support states struggling with the cost of specialty drugs.

Medicaid spends less on drugs than other payers, however, so the impact would be less dramatic than if the reductions applied to Medicare, she said.