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A New Record for Job Openings Deepens Mystery Over Lack of Hiring The number of job openings available at the end of July climbed to a new record of 5.9 million, yet the number of people actually being hired into those jobs was unchanged from June.
The number of job openings available at the end of July climbed to a new record of 5.9 million. Yet the number of people actually being hired into one of those jobs was 5.2 million for the second month in a row.
The number of unemployed workers per job opening has fallen to 1.3, the lowest since 2001. What would normally sound like good news—abundant jobs—is tempered by the fact that people simply aren’t being hired into the positions at rates like in the past. About 300,000 fewer people are being hired each month compared with the pace reached in February. (…)
More people are being hired each month than leaving a job. That means the net number of jobs is increasing. But the pace of hiring and the pace of voluntary job-quitting are both lower than prerecession levels, a sign of a lack of vibrancy in the labor market. Because job-hopping is a key way that many Americans get raises, an increase in voluntary job-quitting tends to coincide with faster wage growth. (…)
Many theories have been offered to explain the gap between job openings and actual hiring. It could be workers lack the skills for available jobs or that employers have become too picky, or that available workers and available jobs are in different geographies.
All JOLT charts here.
(…) The retailers, logistics companies and package-delivery companies, among others, say they expect to step up recruiting, start hiring earlier than usual and pay more for the extra help they need for the peak shopping season. (…)
XPO, which employs about 24,000 year-round warehouse workers, said it expects wages to be up by as much as 4% to 8% this year for the seasonal workers it needs for jobs ranging from driving forklifts to packing products for shipment. The company expects to hire 5,000 to 6,000 such workers, up from 4,000 last year.
United Parcel Service Inc., where seasonal wages start at $10.50 an hour, says it is preparing to pay more, if necessary. (…)
In many markets, wages are expected to increase between about $1.50 and $3 an hour from the typical nonseasonal hourly rate of $10 to $12 during the fourth quarter to attract seasonal workers, according to ProLogistix, one of the largest logistics-staffing companies in the U.S. Most companies will have to pay the workers they have at least $1 an hour more just to retain them, said Brian Devine, senior vice president at ProLogistix.
Much of the competition stems from the growing number of fulfillment centers, facilities that process and fill online orders. They tend to be concentrated around places like Louisville, Ky., and Memphis, Tenn., where UPS and FedEx, respectively, have some of their biggest package-sorting hubs. (…)
Fed’s Beige Book Shows Rising Wages, but Muted Inflation Pressure A tight labor market and rising wages aren’t generating substantial inflation pressure, a Federal Reserve report said, muddying the economic outlook for Fed officials ahead of their September policy meeting.
Overall, the economy continued to expand at a modest pace in July and August, and respondents said they expected growth to continue at a “moderate†pace in the coming months, according to the central bank’s beige book, a review of regional economic conditions. The survey collected anecdotal information on economic activity from early July through Aug. 29, from 12 district banks.
Most districts cited tight labor markets and moderate growth in hiring, consistent with steady payroll gains reported by the Labor Department in the past two months. Upward pressure on wages continued to build, especially for workers with specialized skill sets such as engineers and certain construction workers. But the pickup in wages didn’t translate into significant inflation pressure, the report said. Price increases were described as “slight overall.†(…)
Wage pressures accelerated for highly skilled workers and were “fairly modest†for most workers, the beige book said, and price inflation was “modest.†(…)
Most districts reported a slight rise in manufacturing activity. The sector had appeared to stabilize for much of the spring and summer, although a report last week from the Institute for Supply Management signaled the factory sector contracted in August.
Housing activity, another mainstay of the economic expansion, continued to grow, but the report noted a limited supply of homes was weighing on the pace of sales in some districts. Commercial real estate activity also continued to expand.
The report said sales of nonfinancial services accelerated over the time period covered, with growing demand at restaurants, for health care and for staffing services. (…)
It appears that the Beige Book does not poll the same people as Markit and the ISM. Both had manufacturing and services surveys which showed a marked deceleration in August.
OECD Signals Little Impact From Brexit Vote The outlook for the global economy hasn’t changed as a result of the U.K.’s vote to leave the EU, according to leading indicators released by the Organization for Economic Cooperation and Development.
“Although there remains uncertainty about the nature of the agreement the U.K. will eventually conclude with the EU, the volatility in data that emerged in the weeks immediately following the referendum appears to have reduced,†the OECD said.
Indeed, improved prospects for a number of large economies suggest the global outlook has brightened over recent months, easing worries that a sharp slowdown is under way at a time when policy makers appear to be low on ammunition with which to boost activity.
The OECD’s leading indicators, based on information available for July, now point to steady growth in most developed economies, including the U.S. But in contrast to the earlier months of 2016, they also point to pickups in a number of large developing economies, including China, Brazil and Russia. (…)
ECB trims growth forecasts for 2017/18
Growth forecasts (per cent):
New (old)
- 2016 1.7 (1.6)
- 2017 1.6 (1.7)
- 2018 1.6 (1.7)
Inflation forecasts (per cent):
New (old)
- 2016 0.2 (0.2)
- 2017 1.2 (1.3)
- 2018 1.6 (1.6)
Robert Brusca: German IP Drops and Sets a Negative Trend
German IP dropped in July falling by 1.5%. The drop more than offsets a 1.1% gain in June and makes it two declines in the last three months.
IP is falling on a consistent basis and it is nearly accelerating its drop from 12-Mo to 6-Mo to 3-Mo. While the drop is not accelerating for total IP it is accelerating for each of consumer goods, capital good and intermediate goods. Construction has been strong enough to keep these sectors from dictating the overall IP trend. Most disturbing is that the way lower is being led by capital goods output declines instead of being resisted by that key sector. Has global excess capacity finally come home to roost and to kill off the vaunted German capital goods sector? (…)
But Markit is not as pessimistic:
The industrial production data follow weaker-than-expected factory orders figures, adding to signs that the eurozone’s largest economy may be set for a growth slowdown.
The decline means that industrial production would have to expand by more than 1% in August and September for the sector to eke out any growth over the third quarter as a whole.
A robust rebound is in fact a strong possibility, as it is likely that the weakness in the official measure for industry was at least in part linked to calendar factors. Note that August had 23 working days, an additional two days compared to July. Calendar-caused volatility in the data is not unusual. In July 2014 (23 working days) for example, industrial production rose 1.1% before falling 2.5% in August (21 working days) and then rising 1.8% in September (22 working days).
Encouragement can also be sought from business survey data such as the PMI, which have been signalling steady, although unspectacular growth in recent quarters. Germany’s Composite PMI (which measures the combined output of the manufacturing and service sectors) is still consistent with overall economic growth, despite falling to a 15-month low in August. The index was dragged down by a struggling service sector and adds to worries that GDP growth will fail to accelerate from the moderate 0.4% pace seen in the second quarter.
The sharp slowdown in the service sector contrasts with further solid growth at manufacturers, which points to ongoing growth of German industry in the third quarter. The survey data are often less volatile than official production figures and provide a good indication of the underlying health of German manufacturing.
Moreover, data from VDA industry association showed that domestic registrations of new cars in Germany increased 8% on a year ago in August, following a 4% decline in July. This is stronger than the trend observed for 2016 so far (6%), and suggests that the German car market remains in good shape despite orders being restrained by factors such as the Volkswagen (VW) scandal and Brexit uncertainty.
The latest ISI survey suggests some green shoots for Europe. (The Daily Shot)
Chinese Exports Slow Their Decline
Exports slid 2.8% last month over year-earlier levels, following a decline of 4.4% in July, the General Administration of Customs said Thursday. (…) Imports in August increased by 1.5% from a year earlier, reversing a 12.5% slump in July. The rise, which beat forecasts, was largely a reflection of higher prices for raw materials with little sign that domestic demand, consumption or investment have picked up. (…)
Export comparisons were helped somewhat by the calendar as last month saw two more working days than August 2015. The yuan also depreciated by around 7% year on year in July against a basket of currencies, which made Chinese exporters more competitive when signing August contracts, Mr. Ding said.
China’s customs agency said exports should improve by the fourth quarter, citing improved confidence, rising orders and declining costs seen in a recent online survey it conducted. (…)
But from the FT:
More importantly, the latest trade data show healthy growth in commodity import volumes which adds to the recent positive signs on domestic demand, including better-than-expected PMI readings. (…)
In addition to automobiles and auto parts, imports of semiconductor products also increased significantly in August. This may have been supported by preparations for the launch of the iPhone 7 in September.
Imports of iron ore and oil also improved significantly, which suggests domestic investment improved as well in August, helped by post-flood reconstruction. (…)
Tens of Thousands of Jobs Go as China’s Biggest Banks Cut Costs
China’s four biggest banks reported that staff numbers fell by the most in at least six years in the first half, highlighting the possibility that employment has peaked at the firms that are the world’s biggest providers of banking jobs.
A decline of 1.5 percent from the end of last year left 1.62 million workers at Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd., earnings filings showed. Agricultural Bank, the No. 1 bank employer, saw its number of employees slip below half a million.
While a fall in the first half is not unusual, the 25,000-job decline is the biggest since at least 2010 and analysts at firms including BOC International Holdings Ltd. and DBS Vickers Hong Kong Ltd. say changes to how banking is done will limit prospects for increases. (…)
Besides a reduced number of workers, the first-half data also pointed to pressure on pay. The big four banks’ combined staff compensation costs — including salaries, bonuses, allowances and post-employment benefits — fell 2.6 percent from a year earlier. At the mid-sized China Minsheng Banking Corp., the decline was 22 percent.
Flat revenue and rising pressure on asset quality means “banks have been pushing even harder in cost optimization,†Wei Hou, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a note.
