Slow hiring doesn’t mean increased layoffs

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Hiring’s shrinking
Private sector companies hired 99,000 workers in August, according to payroll company ADP. That’s the lowest figure in more than three-and-a-half years, and sharply lower than the expected 140,000. Payroll reports by ADP often diverge from official Labor Department job numbers, but they differed by just 8,000 in July.

Markets continue falling
U.S. markets were mixed on Thursday. The Nasdaq Composite was the only major index to eke out an increase, though it still shed some gains it had made earlier in the day. Europe’s regional Stoxx 600 lost 0.54%. That’s its fourth day in the red, a reversal in fortune after closing at a record high Friday.

50 or 25, that’s the question
The U.S. Federal Reserve should slash interest rates by 50 basis points at its September meeting, JPMorgan’s chief U.S. economist Michael Feroli told CNBC. That’s so the Fed can balance full employment with stable inflation. On the other hand, George Lagarias, chief economist at Forvis Mazars, thinks a 50-basis-point cut “would be very dangerous.”

Turning down the tap
The price of oil has been falling over the past few days. Perhaps in response to that, OPEC+ members have decided to delay its oil production hike for two months, according to two anonymous OPEC+ sources. October futures for West Texas Intermediate crude rose 0.23% Thursday, but at $69.31 a barrel, is still lower than it was at the start of the year.

[PRO] Nvidia, a cheap stock?
Nvidia lost $279 billion in market capitalization on Tuesday alone, and continued sliding Wednesday. That may have triggered panic among investors, but Bank of America thinks the drop in Nvidia’s stock price makes it a prime buying opportunity. The stock is actually the cheapest it’s been in five years, in terms of price-to-earnings ratio.

Even though it can be a struggle to behave demurely and respectfully at our jobs, jobs give us money. And everyone likes money. So, everyone, more or less, likes jobs.

Thus, when people want jobs and there aren’t enough for them, it’s a really bad thing. If there are no jobs, people have no money. No money means there’s less spending in the economy, which lowers companies’ bottom lines, which means they’ll reduce hiring, which means even fewer jobs to go around.

On Thursday, ADP reported private payrolls in the U.S. grew by just 99,000 in August – the first time it’s dipped below six figures since January 2021, and 41,000 fewer than expected. That’s not a great sign for the U.S. economy. Worse, it comes after July’s dismal jobs report, which sparked the panic-driven sell-off last month.

While not as morbid as that Monday in August, markets mostly fell on the ADP report. The S&P 500 retreated 0.3% and the Dow Jones Industrial Average declined 0.54%. The Nasdaq Composite, however, managed to rise 0.25%, buoyed by Tesla popping 4.9%.

Losses were perhaps moderated because labor market data was mixed. There were only 227,000 jobless claims for the week ending Aug. 31, lower than both the Dow Jones consensus forecast and the previous week’s number of claims.

That might seem contradictory with the negative news about the jobs market. But it, in fact, corroborates ADP data, which indicated only a few sectors shed jobs even though hiring slowed down.

So, we might want to refine our earlier statements. Having a job is nice. Looking for a job but being unable to find one is bad. Losing a job you once had is perhaps the worst of all.

The U.S. Labor Department will release its August jobs report later today, U.S. time. Be  mindful when digesting it: it’ll indicate whether we’re in the slowing hiring state, or the increased firing one.

– CNBC’s Jeff Cox, Jesse Pound and Samantha Subin contributed to this report.