U.S. JOLTS: Job Openings and Hires Rates Edge Higher
The total job openings rate nudged higher to 3.8% during June following a May decline to 3.7%. The record high of 3.9% had been reached in April. The private sector job openings rate also improved to 4.0% from 3.9%, but remained below the record high. These rates compared to 2.3% in the public sector which was higher than the 1.6% averaged in 2011. The 5.0% rate in professional & business services compared to 4.7% in leisure & hospitality. In education & health services the rate also averaged 4.7%. The factory sector’s 3.0% rate was accompanied by 3.0% in construction. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.
The total hires rate in June nudged higher m/m to 3.6%, but that was well below December’s 3.8%. The private sector rate held steady at 3.9%, but was down from 4.2% in February. The 6.6% rate in leisure & hospitality compared to 2.8% in education & health services. The hires rate of 4.9% in professional & business services was down from the December high of 5.9%. A 2.3% rate in manufacturing compared to 4.2% in construction The public sector hires rate has been little changed at 1.6% since early 2015. The hires rate is the number of hires during the month divided by employment.
The actual number of job openings rose 2.0% (8.8% y/y) following a 5.7% decline. An 8.2% y/y rise in private sector openings was led by a one-third y/y increase in manufacturing. That was followed by an 11.4% y/y increase in education & health services, but professional & business hiring declined 7.8% y/y. Retail trade job openings increased 10.3% y/y and leisure & hospitality rose 11.4% y/y. Government sector job openings strengthened 15.1% y/y following gains of 7.6% and 39.8% in 2015 and 2014.
The number of hires increased 1.7% (-0.3% y/y) to 5.131 million in June. That increase followed four consecutive months of decline. Hires grew 5.2% during all of last year and 8.2% in 2014. Private sector hiring declined 1.0% y/y versus peak 8.3% growth in 2014. Employment in professional & business services fell 4.9% y/y; retail employment was off 8.7% y/y and construction sector jobs declined 12.4% y/y. Offsetting these declines, jobs in leisure & hospitality increased 9.7% y/y; education & health services hiring improved 7.9% y/y and factory sector employment grew 5.6% y/y. The number of public sector jobs grew 3.6% y/y.
U.S. Home Affordability Declines to 2008 Low
The National Association of Realtors reported that the Composite Index of Home Affordability declined 3.8% during June to 153.3, the lowest level since November 2008. The index was 28.5% below its peak in January 2013. During the last ten years, there has been a 63% correlation between the affordability index level and the y/y change in existing single-family home sales.
Higher prices have reduced affordability. The median sales price of an existing home strengthened 4.0% to a record high of $249,800, up 5.0% y/y. The price rise was accompanied by an average mortgage rate of 3.84%, little changed m/m at the lowest level in nearly three years. Together, principal & interest payments rose to $936 or 16.3% of median income, the highest percentage since November 2008. That percentage compared to a low of 11.7% early in 2013.
When China’s Good News on Bad Loans Isn’t
SENTIMENT WATCH
Why is Rosenberg confused? The same reason every other experienced carbon-based trader should be confused: “I’m quite sure I have not seen such levels of confidence on one hand, and cognitive dissonance on the other, before in my entire professional life (and that spans 30 years).”
Rosie looks at the positioning in the “market” and admits that – quite simply – it makes zero sense: “Long bonds, short the Fed funds futures. Long equities but long bonds. Long gold but long equities. Long the dollar and long the precious metals.”
At the same time, if risk appetite is so acute, why then are these people long the U.S. market and the large caps and at the same time short the emerging market equity space (which is outperforming by the way) with a net short position of 13,319 futures and options contracts (highest in 15 months) and a net short position on the small caps (1,948 futures & options contracts on the Russell 2000 on the ICE)?
It is next to impossible to make sense out of this; I’m not even sure Graham or Dodd could if they were still alive.
UNINTENDED CONSEQUENCES
This is happening across the developed world:
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Parliament must probe company pensions crisis, says ex-minister Baroness Altmann says BoE’s new round of QE will push more schemes ‘over the edge’
Baroness Altmann [a pension expert] said the low interest rate environment and other Bank of England measures designed to stimulate the economy had already helped push up corporate pension deficits to almost £1tn.
This was because the Bank’s bond-buying programme, known as quantitative easing, was pushing down the yields on UK government bonds, which “defined benefit” pension schemes use to price their liabilities, and was thereby inflating their deficits.
Baroness Altmann warned that the Bank’s decision last week to cut interest rates to 0.25 per cent and launch a new £70bn round of asset purchases, would push more schemes “over the edge”. (…)
The Bank of England declined to comment on Baroness Altmann’s remarks. But in its inflation report published last week, it said that it “fully” recognised that a long period of low interest rates put savers in a ‘very difficult position’ which could result in bigger institutional savers moving to riskier assets. (…)
“I don’t see how it is reasonable to ask companies with pension schemes to fill a £1tn hole and put money into their businesses as well. It doesn’t add up.” (…)