>> announcer: this is "nightly business report," with tyler mathisen and sue herera. sizzling september. consumers are heading into showrooms and buying up new cars at a blistering pace. turning point. with layoff announcements rising sharply in september, has the job market peaked? and california dreaming. is the largest state economy hit hardest by the recession roaring back to life? all that and more tonight on "nightly business report" for thursday october 1st. good evening, everyone. and welcome. a blockbuster month for auto sales. best annualized pace in a decade. it's one area of the economy that is going gangbusters while other sectors continue to just chug along. september auto sales adjusted to a seasonally adjusted annual rate of 18.2 million units. this according to auto data and

that smashed expectations. ford sales up 23%. fiat chrysler saw a 13 1/2% rise. and gm posted a 12 1/2% jump. phil lebeau tells us why sales are so strong at the big three. >> reporter: call it a sizzling september in the showroom. u.s. auto sales roared to their strongest monthly sales pace since july of 2005. most of the major automakers posted double-digit gains, with some like general motors doing far better than expected. what drove those strong numbers? labor day, which is traditionally one of the busiest weekends of the year for auto dealers, gave september sales an early pop. meanwhile, trucks and suvs remain red hot thanks to low gas prices. and the combination of strong consumer confidence and low interest rates is convincing millions this is the time to buy a new vehicle. even volkswagen, which has been

rocked by the diesel emissions scandal, pulled out a slight gain in sales last month. impressive, since massive negative publicity and an order not to sell clean diesel models left many vw dealers struggling to bring in customers. now, heading into the fourth quarter, the auto industry is on pace to have its best year since 2000. >> and after a huge september some are even talking about 2015 sales climbing to an all-time high of greater than 17.4 million vehicles. phil lebeau, "nightly business report," chicago. general motors plans to cut $5.5 billion in costs during the next three years. during an annual investor presentation ceo mary barra said the company seems double-digit earnings growth in 2016. the nation's biggest automaker will increase its return to investors with stronger profit margins and share buybacks. members of the united auto

workers have now rejected a four-year contract that its leadership had negotiated with fiat chrysler. the tentative agreement was voted down by 65% of the 40,000 unionized workers at the fiat chrysler plant. this development could set the stage for some localized strikes against the auto maker. and from the auto sector to the labor market recovery, which so far has been solid. even with today's slight increase in first-time claims for unemployment benefits, the overall number of weekly applications remains below 300,000. the 30th straight week below that level. but on the day before the release of the government employment report there's news of possible job cuts at walmart headquarters. the nation's largest private employer. conagra also says it plans to cut 1,500 positions. and amd will cut 5% of its global workforce. this follows similar announcements from hewlett-packard, caterpillar, chesapeake, bank of america, and others. in fact a new report by

challenger, gray & christmas, which is a firm that tracks the job market, says the number of announced layoffs last month topped 58,000, up more than 40% from the prior month. so is the labor market at a turning point? hampton pearson takes a look. >> reporter: ahead of the september jobs report tomorrow, cost currents from the economy. headline weekly jobless claims up by 10,000 last week, topping 277,000, but the more closely watched four-week moving average dropped to just over 270,000. a 15-year low. but a surge in announced layoffs last month in energy and high tech is raising concerns the job expansion may be nearing an end. u.s. firms announcing plans for nearly 60,000 layoffs, mostly in the computer sector, with hewlett-packard accounting for nearly half the job cuts. according to a closely watched private sector survey. >> but one of the things you start to see as you get near the

end of a period of expansion but before it really turns su start to see major layoffs occurring, big mega layoffs like we're seeing now. so the layoffs aren't that heavy but they are on pace to be the heaviest since 2009. >> reporter: earlier this week a closely watched private sector survey says employers added 200,000 workers to payrolls last month, matching the consensus forecast for overall job growth. the author of that survey predicts a full employment economy by this time next year. >> here's a prediction for you. a year and a half from now election day we're going to have -- the problem isn't going to be unemployment. it's going to be a significant lack of labor. >> reporter: new data out today shows a slowdown in manufacturing, tied to a strong dollar and slowing global economy making u.s. exports less competitive. but with home building leading the way, construction spending here in the u.s. reached a seven-year high in august,

topping a trillion dollars. >> the domestic economy has been improving. the labor market has been improving. we've been seeing a drop in the unemployment rate. consumer confidence is stronger. the challenge we face is that there's weakness abroad and we're importing that weakness. >> reporter: the september jobs report will be a key benchmark for the federal reserve when it meets to take still another look at interest rate policy at the end of the month. for "nightly business report" i'm hampton pearson in washington. >> mark zandy whom you just heard from in that report joins us. he's chief economist at moody's analytics. and last month he basically nailed the government's jobs report number. mark, way to go, buddy. let's talk a little bit about the thesis of hampton's report, that the labor market may be peaking based on some of the numbers we've seen just in the past few days. do you buy that thesis or not? >> no, tyler, i do not. i think the labor market is very

strong. i think the economy's creating roughly 200,000 jobs per month. it's been doing that very consistently over the last two, almost three years now. i see no sign of slowing. not at all. just to give you a statistic, the number of job openings rose to 5.7 million in the number of july pf up 2 million from two years ago. that's the highest on record. that's a pretty good leading indicator. i don't see any weakening at all in the labor market, not in the near future. >> then what do these layoffs bit likes of hewlett-packard, whole foods the other day, caterpillar, chesapeake, what do they tell you if not something about the labor market about the overall economy? because it's a broad swath of industries. >> yeah, you know, so they're just anecdotes. you mentioned the unemployment insurance claims. that's the real number. that's the people who have lost their jobs. they go down to their unemployment insurance office and say hey, look, i'm

unemployed, can you help me out and you get a check. that is a true measure of layoffs in our economy, and they are very, very low. anything under 300,000 per week is about as good as it gets and suggests that layoffs remain very, very -- yeah, sure, there are some companies that they've got their own idiosyncratic problems or restructuring. the energy sector of course is grappling with the collapse in oil prices. so it's weak there. some manufacturers are having some trouble with the strong dollar and weak global economy. so they're changing things around. but you know, if you look at the economy broadly, it's very strong. lots of jobs. layoffs are very low. i wouldn't read too much into it. >> more idiosyncratic than systemic. let's turn then to the september jobs report. what are you looking for there? terms of overall numbers, pockets of strength, pockets of weakness, and how the fed will interpret it? >> you know, another 200,000 job month. that was consistent with the adp number, the number we put together each month based on the payroll records of lots of

companies. so i think that's a pretty good number for tomorrow. when you actually see the unemployment rate dip again, it was at 5.1. i wouldn't be surprised if we hit 5.0. and that's a pretty important threshold. that means the economy is closing in on full employment pretty quickly. now, there are two key soft spots in the economy. one, as i mentioned, energy. the energy industry is really struggling with $50 oil. since people are changing their expectations about future oil prices they're marking them down. we're seeing more layoffs. and i suspect that will continue into next year. the other is manufacturing that's related to exports. very, very weak. fortunately, that's being offset by the other good news we got today, which you referred to. that's the boom in vehicle sales, which is lifting vehicle manufacturing. but the export side of manufacturing is weak. those are the two key weak sectors. everything else is -- every other sector of the economy is adding to payrolls in a very strong way. >> and on that upbeat note we leave it. mark zandy, thanks very much.

mark is with moody's analytics. >> and as the economy continues to strengthen there is one industry that can't fill jobs fast enough. morgan brennan explains why the transportation sector is experiencing a shortage of much-needed workers. >> reporter: the transportation and logistics sector is facing an unprecedented labor shortage. just as companies ramp up hiring for the holidays. that's according to a new study by cap gemini consulting penske and penn state. experts say one of the biggest pain points is in warehousing. an industry featuring the labor crunch across the board. but particularly in recruiting temporary workers. >> the a of work that needs to be done is going up and that's really made worse by the fact that there's a shortage of labor. it might be the unemployment rate that has changed as that's gone down, either unemployment or participation rate. it could be some wage stagnation where people are willing to leave jobs for other lines of work that have increased wages.

>> reporter: he visit two-day dozen warehouses in the last four months. he says forklift drivers, supervisors with management skills and temporary workers that can pick and assemble packages are in in short supply. rinds kruting firm poll logistics says starting warehouse wages which have been stagnant for years have in some markets increased by $1.50 to $3 an hour. companies are also making schedules more flexible to better compete with uber and other share economy start-ups that target the same workforce. it's all expected to translate into higher operating costs. >> this year businesses are going to be stuck holding the costs because a lot of the promotions have already been set. going into next year, if there's major rebudgeting done, i think a lot of that is going to have to be passed on to consumers. >> reporter: ups plans to hire 95,000 workers for peak holiday season. while fedex is recruiting more than 55,000. both delivery companies say it's too soon to tell whether this could be a headwind for their

busiest quarter. but they like the rest of the industry are watching the situation carefully. and of course it all adds to a massive shortage already plaguing the overall sector. truck drivers. the american trucking association's estimate as many as 40,000 drivers are needed immediately just to handle current demand. that issue has helped fuel a series of multibillion-dollar deals, including ups's recent acquisition of coyote logistics and xpo logistics pending purchase of conway. for "nightly business report" i'm morgan brennan. >> well, the federal reserve of course is paying close attention to the labor market, and according to one official, an october interest hike is still possible. the president of the richmond fed, jeffrey lacquer, told the "wall street journal" that the central bank will have more information by its next meeting, end of this month, and that policy makers may be convinced that the economy is strong enough to absorb a hike in rates. meantime, construction spending climbed in august to

its highest level since 2008. up .7% to more than $1 trillion. and that is the ninth consecutive monthly increase, according to the commerce department. but one investment firm sees construction spending advancing at a slower pace than last quarter, and that prompted barclays to lower its third quarter gdp tracking forecast to 1.5%, down from more than 2% last week. >> it was a modest start to the fourth quarter for the markets, one day ahead of the jobs report stocks were mixed. but they ended well off their lows, and you can say that again. the dow jones industrial average lost 12 points to 16,272. it had been down as much as 211. the nasdaq rose nearly seven points. and the s&p 500 gained three. so after a lousy third quarter, is this the month when stocks find a bottom? bob pisani lists the five things that are needed to stabilize the market. >> reporter: you've heard this many times. october is traditionally the month where stocks bottom.

there's some truth to this. since world war ii more than a dozen bear markets have ended in october. now, that's the good news. the bad news is these are not normal times. so just because we're going into a seasonally strong time of the year, it doesn't automatically mean we're going to rally. what do we need for a bottom? there's four or five key elements. first we need stability in china. we don't even need more stimulus. we just need a more stable economy over there. secondly, oil has to stabilize. oil's become a proxy for global growth. so stocks and oil often trade in tandem. third, we need clarity from the fed on interest rates. it's time to make a choice. rate hike or no rate hike. of course we need a stable dollar. and finally, continued job growth. and more importantly, wage growth. now, this is a pretty broad wish list. but we don't necessarily need all of these things to happen for stocks toned the year higher. but we need a few of them. right now we're seeing job growth and there's modest stability in the dollar in oil. but both of them still have a tentative feel to them. bottom line, we still don't have

enough conditions to say that august 24th bottom was the real bottom. for "nightly business report" i'm bob pisani at the new york stock exchange. still ahead, what republican presidential front-runner donald trump told our john harwood about his plan for taxes and to grow the economy. now to the race for the white house. taxes will likely be a big issue for american voters. almost always are. john harwood recently interviewed republican presidential candidate jeb bush about his plans for the economy. now he talks to republican front-runner donald trump about

his proposal to overhaul the tax system. >> jeb told me the other day that trump's strategy is to say things over and over loudly. >> you're loud and you repeat something over and over again. you think that that turns it into truth. >> what do you say about that? >> well, i hadn't heard his statement. i think he's a very nice person. he's doing very poorly. he maybe will do better. he's going to spend a lot of money. >> did you see what jeb said about your tax plan? >> i did not. >> he said i'm very flattered, it looks like mine. he suggested you you copied his and just lowered the rates a little bit. he said but he should have tried a little fiscal responsibility. >> i didn't do that at all. certainly the last person i'd want to copy is jeb. i think that our economy will grow of much faster with my plan. >> you talked about cutting expensive hammers and things in the budget. but if you don't touch medicare, medicaid, social security, and increase the military, there aren't enough expensive hammers to cut. >> so a big part of my plan is to take all of these different government agencies which are totally out of control and to

cut costs. coupled with a very large tax decrease. and by the way, it's not for the rich, although the rich will benefit especially if the economy takes off. they might be better off. including me. >> huge benefits to the rich in your plan. >> benefits. we're getting rid of carried interest. we're getting rid of certain things that make it too easy for people -- >> you're cutting the top rate almost 40%. >> if my plan takes off even though we're getting rid of carried interest because it's always been unfair-u know it and everybody else. >> it's tiny. carried interest is tiny. >> but it's psychologically very important. so what happens is this. my plan is best for the middle income, for the middle class, which has been decimated in this country. they built this country. they have been lost with our politicians for the last 25 years. and i think my biggest impact is to the middle-income people. i think we're going to give them great incentive and i think it's going to be a great plan. >> watch more of john's interview with mr. trump. go to our website, nbr.com. the epa unveiled new rules

on smog-causing emissions. but the tighter regulations fall short of what public health advocates and environmentalists had urged. the new standard tightens the current standard on emissions on things like smoke stacks and tail pipes that have been linked to asthma and respiratory illness ppz business groups say the new rules lin crease costs and could jeopardize jobs. dunkin' brands has its worst day ever. and that, folks, is where we begin tonight's market focus. as the dunkin' donuts parent provided a disappointing sales growth outlook and said it will close 100 of its stores, the company citing volatile commodity prices and a spike in egg prices. the stock slid more than 12% to $43 a share. nordstrom announces a dividend and buyback news. the chain will pay a special cash dividend of $4.85 a share on october 27th and add a billion dollars to its repurchase plan. shares at nordstrom initially rose after the close during the regular session the stock, though, was off a fraction to

71.43. shares of the biotech company illumina slipped in today's session. the company's competitor peck bio came out with a faster cheaper version of one of its systems. the firm was also downgraded at lirink swan because of uncertainty of fits future products. shares there fell by 10 1/2% to 157.21. performance food group making its market debut in today's session. the firm, which says it is the third largest food distributor by revenue in the country, offered 14.5 million shares at 19 bucks apiece. the company's ceo explains what's been driving business forward. >> the consumer's doing better. employment's getting better. what's particularly good for us is the two-income family. that's when eating out kind of goes from being discretionary to being a necessity. so we have a great outlook right now. >> shares rose 1% to $19.20. experian announcing that one

of its business units has been hacked, which has impacted t-mobile. the breach occurred on a server that contained data on behalf of t-mobile, since it's one of experian's clients. the data stolen includes personal information for about 15 million people. shares of t-mobile fell in initial after-hours trading. during regular trading the stock was up a fraction to 40.13. the spice maker mccormick posting mixed results with earnings coming in below con senseus. the company's results were hurt by currency impact. it expects annual earnings to be at the low end of estimates. the stock was off more than 4% to $78.68. california, the largest state economy in the united states by far. eighth largest in the world if it stood alone as a nation. and there are some new reports out on the health of this state's finances. jane wells has our report tonight from los angeles. california has once again opened her golden gates. the state hit hardest by the recession has roared back. but as tech is booming, the

stock markets have been busting and a slew of economic forecasts suggests the california economy may not quite go hollywood the next few years. here are two things to watch. first, tax revenues in the nation's largest economy could take a hit because california still depends heavily on the capital gains taxes of its wealthiest residents. >> so the stock market and other asset prices are critically important. >> reporter: a full 10% of california's income tax revenues are from capital gains, which may have turned to losses with the markets this year. one forecast suggests california's recent budget surplus could be wiped out. >> we saw a bit of a hiccup a couple of weeks ago when people's attention picked up. but so far so good. we are very much aware of what's going on in the market and very much aware of how much that can affect our revenues. >> reporter: still, palmer says state law now mandates a rainy day fund to help hedge the market. the second issue, even though california is predicted to cannot adding jobs over the next

few years and unemployment will continue to fall, good luck buying a house. we have an affordability drought. the median price for a home in san francisco is now over $1.2 million. it's close to a half million in l.a. and forecasters say it's only going to get worse. more people are renting and spending more of their income on rent. >> well, we've seen in terms of the construction statistics that there's been a greater increase in construction of multifamily dwellings as opposed to individual dwellings. and that's a trend that we've seen for a number of months. >> reporter: finally, aside from the economic forecast, there's the weather forecast, which is brighter. by that i mean wetter. rain could ease the drought. and california's crops will grow, just as its economy will grow. though housing costs and market losses could bring storm clouds nobody wants. for "nightly business report" jane wells, los angeles. and coming up, why small business owners have a lot to lose if they don't upgrade their payment system. ♪

small businesses borrowed less in august than in the prior month. that is the second month of declines according to an index put together by paynet. despite the decline, the level is still higher than a year ago. reuters says the index has historically tracked ahead of u.s. gdp by two to five months. retailers are now required to have payment systems in place that accept the new chip-based debit and credit cards. as we've been reporting, those more secure cards go into effect today, and there's a big risk for retailers. especially smaller ones. if they don't comply. kate rogers explains.

>> reporter: small business owner debbie ball is ready for a major change in debit and credit card systems nationwide to accept env, or chip cards that kicks in today. this meant upgrading her terminal to accept cards that contain a microchip intended to reduce fraud. but it also means that merchants, not card issuers, assume responsibility for fraud if they opt not to make that change. ball owns the candy lady store in albuquerque, new mexico and makes specialty edibles including those used in movies and on tv. she upgraded her terminal earlier this year and found the process not only simple but cheap. >> they gave me a very sweet deal, particularly since i like to own my own machines. so i ended up with all the sxreebts a rebate from amex paying about $39. >> reporter: major credit card companies like visa say it will take time until emv reaches critical mass but that adoption among small businesses like

ball's has accounted for about 50% of the chip card on chip-enabled machine transactions that it's seen in the past year. however, jasmine strategy and research says the top reason small companies aren't upgrading is cost because they believe an upgrade will be expensive. >> reporter: but with offerings from square to costco, two traditional terminal providers like heartland, the change can be as little as $40. and it's well worth it as the cost of data breaches has increased significantly for small companies in recent years. in 2014 cyber fraud, which is one part of overall card fraud, cost small companies an average of $20,000 in damages, up from 8,600 in 2013, according to the national small business association. >> any kind of fraud like that, especially for small businesses, if we lose $1,000, that's a lot of money. that could be our rent. and if you're working on a small margin, you can't afford losses like that. >> reporter: and thanks to the shift to more secure cards, hopefully small businesses won't

have to. for "nightly business report" i'm kate rogers. >> and to read more about how accepting new chip-enabled cards is affecting small businesses head to our website, nbr.com. and that'll do it for us tonight. i'm sue herera. thanks for joining us. >> and thanks from me as well. i'm tyler mathisen. have a great evening, everybody, and we will hope to see you right back here tomorrow night. ♪ week road trip

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