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US labor market sizzles; delivers large job and wage gains

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US labor market sizzles; delivers large job and wage gains
© Reuters. FILE PHOTO: A “Help Wanted” sign hangs in a restaurant window in Medford, Massachusetts, U.S., January 25, 2023. REUTERS/Brian Snyder/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in January and wages increased by the most in nearly two years, signs of persistent strength in the labor market that could make it difficult for the Federal Reserve to start cutting interest rates in May as currently envisaged by financial markets.

Nonfarm payrolls increased by 353,000 jobs last month. The closely watched employment report from the Labor Department’s Bureau of Labor Statistics on Friday also showed the unemployment rate at 3.7% last month.

The economy added 126,000 more jobs in November and December than previously estimated. Financial markets lowered their expectations for a May rate cut on the data.

Resilient demand and strong worker productivity are likely encouraging businesses to hire and retain more employees, a trend that could shield the economy from a recession this year.

“Given the Fed now wants strong job growth, as (Fed Chair) Jerome Powell told us just two days ago, this report should not discourage the Fed from cutting rates,” said Chris Low, chief economist at FHN Financial in New York. “By the same token, however, it is not going to encourage them to rush into rate cutting.”

Economists polled by Reuters had forecast payrolls increasing 180,000 last month.

Estimates ranged from 120,000 to 290,000. Employment gains remain well above the roughly 100,000 jobs per month needed to keep up with growth in the working age population. Nonetheless, labor market momentum has slowed from the robust pace in 2022 because of hefty interest rate hikes from the Federal Reserve.

Annual “benchmark” revisions showed the economy created 266,000 fewer jobs in the 12 months through March 2023 than previously reported. The revisions were derived from updated data from state unemployment insurance tax records that nearly all employers are required to file.

Still, job gains are more than sufficient to sustain the economy through strong consumer spending.

Average hourly earnings increased 0.6% last month, the biggest gain since March 2022, after rising 0.4% in December. In the 12 months through January, wages increased 4.5% after advancing 4.3% in December.

Annual wage growth is well above its pre-pandemic average and the 3.0% to 3.5% range that most policymakers view as consistent with the U.S. central bank’s 2% inflation target, supporting views that March is probably too early for the Fed to start cutting rates.

Financial markets reduced the odds of a rate cut at the Fed’s April 30 and May 1 policy meeting to near 60% from about 90% before the data. The Fed left interest rates unchanged on Wednesday. Fed Chair Jerome Powell offered a sweeping endorsement of the economy’s strength, telling reporters that interest rates had peaked and would move lower in coming months.

Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25% to 5.50% range.

The dollar rose against a basket of currencies. U.S. Treasury prices fell.


Most economists were dismissive of recent high-profile layoffs including 12,000 job cuts announced by United Parcel Service (NYSE:) this week, arguing that the focus should be on worker productivity, which has exceeded a 3% annualized growth pace for three straight quarters, and cooling labor costs.

Employers are generally wary of sending workers home following difficulties finding labor during and after the COVID-19 pandemic. But some companies, which enjoyed a boom in business during the pandemic, are laying off workers as conditions return to normal.

“We know that most layoffs in recent years were from cost cutting and not from weaker demand,” said Jeffrey Roach, chief economist at LPL Financial (NASDAQ:) in Charlotte, North Carolina. “This means businesses are in a good position despite the macro headwinds and uncertainty about growth expectations.”

Job gains last month were across the board. Professional and business services added 74,000 jobs, with temporary help services employment rebounding 3,900. Healthcare payrolls rose by 70,000 jobs, spread across ambulatory, hospitals as well as nursing and residential care facilities.

Retail trade employment increased by 45,000 jobs, while manufacturing hired 23,000 more workers. Government payrolls increased by 36,000, driven by federal government hiring as well as local government, excluding education.

The unemployment rate was at 3.7% in January. New population estimates were incorporated into the household survey, from which the unemployment rate is derived, creating a break in the series. The population controls had no impact on the jobless rate, which was at 3.7% in December.

Stock Markets

Wendy’s, blasted over CEO’s pricing comment, vows no price hikes at busy times

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Wendy's, blasted over CEO's pricing comment, vows no price hikes at busy times
© Reuters. FILE PHOTO: A Wendy?s restaurant displays a “Now Hiring” sign in Tampa, Florida, U.S., June 1, 2021. REUTERS/Octavio Jones/File Photo

By Waylon Cunningham and Deborah Mary Sophia

DALLAS (Reuters) -Wendy’s said on Wednesday it has no plans to raise menu prices at times of peak demand, after the burger chain weathered heavy criticism on social media since its CEO said earlier this month it would start testing “dynamic pricing”.

CEO Kirk Tanner told investors on a call this month that starting as early as 2025, Wendy’s (NASDAQ:) would begin testing features including “dynamic pricing and daypart offerings”. Dynamic pricing refers to surge pricing based on demand, especially during peak hours of the day.

This practice often raises prices at busy times, similar to how Uber (NYSE:) adjusts ride fares.

Tanner’s comment this week sparked an online backlash. U.S. Senator Elizabeth Warren in a post on the social media platform X on Wednesday called it “price gouging plain and simple.”

Wendy’s, in a statement to Reuters, said on Wednesday it “would not raise prices when our customers are visiting us most.”

Its initiative to add digital menuboards to certain stores would instead allow Wendy’s to offer discounts to customers more easily, “particularly in the slower times of day,” it added.

“We said these menuboards would give us more flexibility to change the display of featured items. This was misconstrued in some media reports as an intent to raise prices when demand is highest … We have no plans to do that,” the company said.

Warren’s post on X, previously Twitter, said Wendy’s plan “means you could pay more for your lunch, even if the cost to Wendy’s stays exactly the same. It’s price gouging plain and simple, and American families have had enough.”

“I guess I won’t be eating at Wendy’s anymore,” one Reddit user said in a post, while others on X called for boycotts.

Analysts and consultants were skeptical of the idea of surge pricing at restaurants.

Wendy’s “dynamic pricing” was a hot topic at a restaurant conference in the Dallas area, with several executives saying customers – already skittish after recent price increases – would likely be scared off by unpredictable prices.

“I don’t see it taking off any time soon,” said Victor Fernandez, a senior analyst at restaurant analytics firm Black Box Intelligence.

Michael Lukianoff, CEO of, who has consulted with restaurants about pricing for years, said that “dynamic pricing” is a great success in other industries such as airlines, but would not work in restaurants.

“Customers will shop elsewhere,” he said.

Wendy’s sales have already slowed. data showed visits to Wendy’s outlets declined in all three months of the fourth quarter of 2023.

Wendy’s shares, which dropped about 14% in 2023, were up 1% on Wednesday. The company also recently issued a profit forecast for this year below Wall Street estimates, hurt by higher commodity and labor costs.

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Stock Markets

Apple shareholders reject AI disclosure proposal

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Apple to disclose AI plans later this year, CEO Tim Cook says
© Reuters. Apple logo is seen in this illustration taken, August 22, 2022. REUTERS/Dado Ruvic/Illustration

By Stephen Nellis

(Reuters) -Apple plans to disclose more about its plans to put generative artificial intelligence to use later this year, Chief Executive Officer Tim Cook said during the company’s annual shareholder meeting on Wednesday.

Cook said that the iPhone maker sees “incredible breakthrough potential for generative AI, which is why we’re currently investing significantly in this area. We believe that will unlock transformative opportunities for users when it comes to productivity, problem solving and more.”

Apple (NASDAQ:) has been slower in rolling out generative AI, which can generate human-like responses to written prompts, than rivals such as Microsoft (NASDAQ:) and Alphabet (NASDAQ:)’s Google, which are weaving them into products.

On Wednesday, Cook argued that AI is already at work behind the scenes in Apple’s products but said there would be more news on explicit AI features later this year. Bloomberg previously reported Apple plans to use AI to improve the ability to search through data stored on Apple devices.

“Every Mac that is powered by Apple silicon is an extraordinarily capable AI machine. In fact, there’s no better computer for AI on the market today,” Cook said.

Apple shareholders on Wednesday rejected a measure asking the company to disclose more information about how it uses artificial intelligence in its business and its ethical guidelines for the technology.

The proposal, which was defeated at the company’s annual shareholder meeting, was put forth by the pension trust of the AFL-CIO, the largest American labor union federation, which has also proposed AI measures at other technology companies.

A similar proposal will be heard at Walt Disney (NYSE:)’s annual meeting in April.

At Apple, the AFL-CIO asked for a report on the company’s use of AI “in its business operations and disclose any ethical guidelines that the company has adopted regarding the company’s use of AI technology.”

In its supporting statement in Apple’s proxy materials, the AFL-CIO wrote that “AI systems should not be trained on copyrighted works, or the voices, likenesses and performances of professional performers, without transparency, consent and compensation to creators and rights holders.”

Apple opposed the measure, saying that disclosures could tip its hand on strategy as it competes against rivals in the fast-moving AI field.

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Stock Markets

UMG to generate 250 million euros in savings by 2026, flags job cuts

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UMG to generate 250 million euros in savings by 2026, flags job cuts
© Reuters. FILE PHOTO: Universal Music Group logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – Universal Music Group (AS:) will cut jobs and streamline its operations with the aim of generating 250 million euros ($271.03 million) in run-rate savings by 2026.

In the first phase of the plan, which will be introduced immediately, the group plans to save 125 million euros in 2025, including 75 million euros in 2024, the company said.

“Our organizational redesign achieves efficiencies in targeted cost areas while providing our labels with unprecedented capabilities to deepen artist and fan connections via new experiential, commerce, and content offerings,” the group said in a statement.

UMG also posted a 9.2% year-on-year increase in adjusted core profit (EBITDA), to 677 million euros in the fourth quarter, as its revenue rose to 3.21 billion euros, up 9.0% from previous year.

It proposed a year-end dividend of 0.27 euros per share, bringing total dividend payout in 2023 to 0.51 per share.

($1 = 0.9224 euros)

(This story has been refiled to add ‘euros’ in the headline)

(Reportin by Dagmarah Mackos, editing by Tassilo Hummel)

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