Job Openings Near Two-Year Low as Layoffs Jump Construction, leisure and hospitality and healthcare cuts drive March increase in layoffs
Layoffs rose to a seasonally adjusted 1.8 million in March from the prior month, up from a revised 1.6 million in February, the Labor Department said Tuesday. The increase was led by job losses in construction, leisure and hospitality and healthcare industries—sectors that have driven job growth in recent months as tech, finance and other white-collar industries cooled.
Employers also reported a seasonally adjusted 9.6 million job openings in March, the Labor Department said Tuesday, a decrease from a revised 10 million openings in February. (…)
Data: Department of Labor; Chart: Axios Visuals
The decline in job openings has been steep since December; -1.6M or -14.6%. However, job postings on Indeed have stabilized in April (through April 28).
April PMI surveys indicated continued resilience in labor demand:
- “the rate of job creation accelerated at the start of the second quarter of the year. Growth in private sector employment numbers was the quickest since last July as goods producers and service providers showed some success in efforts to expand capacity. Nonetheless, backlogs of work increased for the second month running as companies mentioned further struggles finding suitable candidates and retaining staff amid rising wage costs.”
- [April marked] “the fastest rise in employment at service providers since July 2022” as “new business grew for the second successive month in April, as the rate of expansion accelerated to the fastest since May 2022.”
- “Manufacturers expanded workforce numbers at the fastest pace in seven months in an effort to broaden capacity [given the] return of new order growth following six successive months of contraction.”
While we’re at it, here’s what purchasing managers were saying about costs and price increases:
- “Meanwhile, [manufacturers’] input costs and output charges increased at steeper rates during April. Higher supplier prices reportedly drove inflation as firms passed through greater operating expenses to customers. The rate of cost inflation quickened to the sharpest in three months, while the pace of increase in selling prices also accelerated above the series average.”
- “[Service providers’] selling prices increased at a sharper pace, as firms responded to higher cost burdens by passing these through to customers where possible amid more accommodative demand conditions. The rate of inflation accelerated for the third month running and was the quickest since last August.”
Recall that for service providers, the main costs are labor and energy. Given the decline in energy costs in recent quarters, their “higher cost burdens” must be labor.
One and done?
- Employees Are Bullish on Pay Raises, Companies Not So Much Workers are anticipating bigger increases than last year while companies are pulling back on earlier projections.
Businesses are still handing out substantial pay increases, though less than what they projected last fall, according to a new survey of nearly 1,000 major employers by benefits-advisory firm Mercer.
On average, employers are giving annual merit raises of 3.8% and total compensation increases of 4.1% in 2023—still the highest-reported raises in the survey since the 2008 financial crisis.
The companies also said they were being more cautious in doling out off-cycle raises and bonuses this year, a departure from 2022 and 2021, when employers were scrambling to address labor shortages and keep talent. Additional levels of approval are now required for raises at some companies, while others are limiting unbudgeted raises to a smaller number of employees, said Lauren Mason, senior principal in Mercer’s career practice. (…)
Increases in employee base pay rose an average 3.4% between October and March, down from 4.7% in between January and September of last year, according to Mercer.
Meanwhile, a majority of U.S. employees say they are confident they’ll get a pay raise this year and, on average, expect one of 6.7%, according to a recent survey of 2,000 workers by the research arm of payroll provider ADP. Last year, workers received an average 6.5% increase, ADP data show. (…)
The employment cost index was up around 5% YoY and sequentially in Q1.
The Atlanta Fed wage growth tracker reached +6.4% in March, +5.9% for job stayers. These are 3-m moving averages.
Mission not accomplished just yet…
Tenants in New York City’s 1 million rent-stabilized apartments could potentially face increases of 4% to 7% for two-year leases as a key panel offered preliminary support for price hikes.
The city’s Rent Guidelines Board also endorsed 2% to 5% increases on one-year leases at a meeting Tuesday. If rent hikes in those ranges are approved at a final vote in June, it would be the second year in a row of more substantial increases.
More than 2 million New Yorkers live in stabilized units and may face higher costs when renewing their leases starting Oct. 1. The increases for rent-stabilized apartments would compare with a nearly 13% rise in the median rent on new leases for market-rate Manhattan apartments tracked by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. (…)
During former Mayor Bill de Blasio’s tenure, the board approved small rent hikes of less than 3% and also froze rents multiple times. Last year, under the Adams administration, the panel increased rents 3.25% on one-year leases and 5% on two-year leases. (…)
The board typically votes on the proposed rent guidelines each June. An earlier report from the panel’s staff detailed how rents would have to rise 5.3% to 8.25% for one-year leases and 6.6% to 15.75% on two-year leases to keep net operating income constant for the apartments based on various formulas. (…)
Owners’ expenses have increased 8.1% through March 2023 from a year earlier, according to the board’s analysis. Higher taxes, driven by rising assessments, as well as gains in fuel and insurance costs contributed to the increase in expenses. That’s pressured the margins for landlords, with net operating income — revenue that remains after operating costs are paid — falling 9.1% from 2020 to 2021 citywide for buildings with rent-stabilized apartments. (…)
Vehicles Sales at 15.91 million SAAR in April; Up 11.4% YoY
Wards Auto estimates sales of 15.91 million SAAR in April 2023 (Seasonally Adjusted Annual Rate), up 7.4% from the March sales rate, and up 11.4% from April 2022. (…)
Regional Bank Stocks Close at Lowest Since 2020 Shares of a number of midsize lenders fell sharply Tuesday following the collapse of First Republic Bank, a sign that investors are still worried about the industry’s health.
Banks that took a hit following the March collapse of Silicon Valley Bank fell the most. Los Angeles-based PacWest dropped 28%, while Phoenix-based Western Alliance fell 15%. Metropolitan Bank, based in New York, declined 20%.
A broader index of regional-bank stocks fell more than 5% to its lowest close since 2020. Citizens, Truist and U.S. Bank each shed about 7%. The biggest banks also fell but the declines were less severe. Bank of America and Wells Fargo slid a respective 3% and 4%, while JPMorgan was down nearly 2%.
Stocks were broadly lower, with the three major indexes each losing about 1%. (…)
Many banks reported modest declines in deposits and lowered their profit forecasts, saying they would have to pay higher interest on savings accounts and certificates of deposits to keep customers around.
“The failures created an inflection point for the industry,” Huntington Bank Chief Executive Steve Steinour told The Wall Street Journal.
The KBW Regional Banking Index has lost 8% this week to hit its lowest since 2020.
(…) “I’d prefer to do what’s called the hawkish pause, not raise but signal that we are in a tightening stance, because I actually think the banking situation may well be more serious than we currently understand,” Kaplan, whose career has also included time as a senior executive at Goldman Sachs Group Inc., said in a Bloomberg Television interview.
Kaplan went on to say that bank equities have been marked down solely because of their over-investment in US Treasuries, while the credit phase, which is “normally more serious,” is yet to unfold. (…)\
“It is more important to be able to sustain the current rate for an extended period of time, longer than the market thinks, than to get another 25-50 basis points and risk having to cut again. I think that will be very troubling,” said Kaplan, who left the Fed in 2021 after disclosures about his trading activity that drew criticism for potential conflicts of interest.
To combat inflation, the US need fiscal restraints and actions outside the authority of the Federal Reserve, “so I will pause here,” he added.
Toronto home sales jump 27 per cent in April, home prices spike Number of new listings was up 6.5 per cent after adjusting for seasonal influences, but is still well below the 10-year average
The weak stuff getting weaker
Russell looks to be falling below the lower part of the huge range. Note we have not closed this low since October last year. (The Market Ear)
Refinitiv
Druckenmiller Warns US Debt Crisis Worse Than He Imagined
(…) “honestly, all this focus on the debt ceiling instead of the future fiscal issue is like sitting on the beach at Santa Monica worrying about whether a 30-foot wave will damage the pier when you know there’s a 200-foot tsunami just 10 miles out.” (…)
The big issue is entitlements such as Social Security, Medicare and Medicaid, which without cuts today will have to be slashed in the future, he said. (…)
Spending on seniors will reach 100% of federal tax revenues by 2040 based on Congressional Budget Office estimates, he said, including interest expense. What’s more, the current $31 trillion US debt load doesn’t account for future entitlement payments. Accounting for the present value of that burden, the debt load is more like $200 trillion, he estimated. (…)
BTW: “The federal government missed out on locking in low long-term rates in recent years, causing interest payments to surge.” (The Daily Shot)
Copper Mine Flashes Warning of ‘Huge Crisis’ for World Supply
(…) “There’s no way we can supply the amount of copper in the next 10 years to drive the energy transition and carbon zero. It’s not going to happen,” adds Kirwin, now an independent consulting geologist. “There’s just not enough copper deposits being found or developed.”
Analysts at Wood Mackenzie estimate a greener world will be short about six million tons of copper by next decade, meaning 12 new Oyu Tolgois need to come online within that period.
But they aren’t — there are simply not enough new mines, much less enough large ones. The result is a gap: BloombergNEF estimates appetite for refined copper will grow by 53% by 2040, but mine supply will climb only 16%. (…)
Building mines, as opposed to buying them, is still too painful a headache. Prices are not shiny enough to cover rising costs, and risks abound. Take Oyu Tolgoi, where construction has involved adding a 200km labyrinth of concrete tunnels to the open pit, but also roads, an airport, power transmission and water infrastructure. Never mind Mongolia’s largest canteen, for 20,000 or so workers — and, Mongolia hopes, an eventual power plant. (…)
“Oyu Tolgoi is now 20 years old, and it’s just getting started,” he said. “It doesn’t matter whether the copper price is $3 a pound or $30 a pound, you can’t speed up the process materially.” (…)
“Mines are getting older, mines are getting deeper, and mines are getting lower grade,” said David Radclyffe, managing director at Global Mining Research. “Then you’ve had the added complications of the need to conform with the shift in terms of environmental requirements. And political risk on top of that.” (…)
“The uncertainty out of both Chile and now ongoing in Peru, that’s just added an extra level of complexity that the market never expected, and that hasn’t really been resolved.” (…)