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Private payrolls expanded by 183,000 in January, topping expectations, ADP says

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Private payrolls expanded by 183,000 in January, topping expectations: ADP

Private sector companies added more jobs than expected in January, furthering the case for a stable labor market that allows the Federal Reserve time as it contemplates its next policy move, ADP reported Wednesday.

The payrolls processing firm said companies created a net 183,000 jobs on the month, slightly more than the 176,000 in December, a number that was revised sharply upward from the initial figure of 122,000. Economists surveyed by Dow Jones had been looking for a gain of 150,000.

Pay for workers who stayed in their jobs grew at a 4.7% annual rate, or 0.1 percentage point more than in December.

Though the headline ADP number topped expectations, the internals showed an unbalanced picture.

All of the job creation came from service providers, who added 190,000 positions while goods producers lost 6,000. (The numbers don’t add up to the 183,000 due to rounding.)

“We had a strong start to 2025 but it masked a dichotomy in the labor market,” APD’s chief economist, Nela Richardson, said. “Consumer-facing industries drove hiring, while job growth was weaker in business services and production.”

Trade, transportation and utilities topped sectors with 56,000 new jobs, with leisure and hospitality close behind at 54,000 and education and health services adding 20,000. However, manufacturing lost 13,000 positions.

Job creation was spread fairly evenly across business size, with companies that employ workers leading with 92,000.

Fed officials are watching the jobs picture closely as they consider whether to continue lowering interest rates. The Fed last year cut 1 percentage point off its key borrowing rate in an effort to support a labor market that had showed signs of slowing. Recently, policymakers have stressed the importance of staying patient as they watch the tariff battle in Washington as well as the impact from the rate reductions.

The ADP report serves as a run-up to the more closely watched nonfarm payrolls report, due Friday from the Bureau of Labor Statistics, which unlike ADP includes government workers. The consensus view for the BLS report is a gain of 169,000 in payrolls in January, with the unemployment rate holding at 4.1%.

The two reports sometimes differ significantly. However, ADP said it continues to expand its sample size for the pay measure portion, which is now at 14.8 million compared with nearly 10 million when it launched.

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Inflation rate slipped to 2.1% in April, lower than expected, Fed’s preferred gauge shows

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Inflation rate slipped to 2.1% in April, lower than expected, Fed’s preferred gauge shows

Inflation barely budged in April as tariffs President Donald Trump implemented in the early part of the month had yet to show up in consumer prices, the Commerce Department reported Friday.

The personal consumption expenditures price index, the Federal Reserve’s key inflation measure, increased just 0.1% for the month, putting the annual inflation rate at 2.1%. The monthly reading was in line with the Dow Jones consensus forecast while the annual level was 0.1 percentage point lower.

Excluding food and energy, the core reading that tends to get even greater focus from Fed policymakers showed readings of 0.1% and 2.5%, against respective estimates of 0.1% and 2.6%.

Consumer spending, though, slowed sharply for the month, posting just a 0.2% increase, in line with the consensus but slower than the 0.7% rate in March. A more cautious consumer mood also was reflected in the personal savings rate, which jumped to 4.9%, up from 0.6 percentage point in March to the highest level in nearly a year.

Personal income surged 0.8%, a slight increase from the prior month but well ahead of the forecast for 0.3%.

Markets showed little reaction to the news, with stock futures continuing to point lower and Treasury yields mixed.

People shop at a grocery store in Brooklyn on May 13, 2025 in New York City.

Spencer Platt | Getty Images

Trump has been pushing the Fed to lower its key interest rate as inflation has continued to gravitate back to the central bank’s 2% target. However, policymakers have been hesitant to move as they await the longer-term impacts of the president’s trade policy.

On Thursday, Trump and Fed Chair Jerome Powell held their first face-to-face meeting since the president started his second term. However, a Fed statement indicated the future path of monetary policy was not discussed and stressed that decisions would be made free of political considerations.

Trump slapped across-the-board 10% duties on all U.S. imports, part of an effort to even out a trading landscape in which the U.S. ran a record $140.5 billion deficit in March. In addition to the general tariffs, Trump launched selective reciprocal tariffs much higher than the 10% general charge.

Since then, though, Trump has backed off the more severe tariffs in favor of a 90-day negotiating period with the affected countries. Earlier this week, an international court struck down the tariffs, saying Trump exceeded his authority and didn’t prove that national security was threatened by the trade issues.

Then in the latest installment of the drama, an appeals court allowed a White House effort for a temporary stay of the order from the U.S. Court of International Trade.

Economists worry that tariffs could spark another round of inflation, though the historical record shows that their impact is often minimal.

At their policy meeting earlier this month, Fed officials also expressed worry about potential tariff inflation, particularly at a time when concerns are rising about the labor market. Higher prices and slower economic growth can yield stagflation, a phenomenon the U.S. hasn’t seen since the early 1980s.

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German inflation May 2025

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19 May 2025, Berlin: Apricots are sold at a greengrocer for 7.98 euros per kilogram. Grapes and papaya are also on offer.

Photo by Jens Kalaene/picture alliance via Getty Images

Germany’s annual inflation hit 2.1% in May approaching the European Central Bank’s 2% target but coming in slightly hotter than analyst estimates, preliminary data from statistics office Destatis showed Friday.

The print compares with a 2.2% reading in April and with a Reuters projection of 2%.

The print is harmonized across the euro zone for comparability.

So-called core inflation, which strips out more volatile food and energy prices, dipped slightly from April’s 2.8% to 2.9% in May. The closely watched services print meanwhile eased sharply, coming in at 3.4% compared to 3.9% in the previous month.

Energy prices fell markedly for the second month in a row, tumbling by 4.6% in May.

Germany’s consumer price index has been closing in on the European Central Bank’s 2% target over recent months, in a positive signal amid ongoing uncertainty about the economic outlook for Europe’s largest economy.

Domestic and global issues have mired expectations for Germany’s financial future.

One the one hand, U.S. President Donald Trump’s tariffs could damage economic growth, given Germany’s status as an export-reliant country, though the potential impact of such duties on inflation remains unclear. But frequent policy shifts and developments have been muddying the picture.

On the other hand, Germany’s newly minted government is starting to get to work and has made the economy a top priority. Questions linger about when and to what extent the new Berlin administration’s policy plans might be realized.

The ECB is set to make its next interest rate decision on June 5, with traders last pricing in an over 96% chance of a quarter point interest rate reduction, according to LSEG data. Back in April, the central bank had cut its deposit facility rate by 25 basis points to 2.25%.

This is a breaking news story, please check back for updates.

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