Economy

Job openings openings totaled 8.73 million for the month, a decline of 617,000, or 6.6%, the Labor Department reported Tuesday in its monthly JOLTS report.
That was the lowest total since March 2021 and brought the ratio of openings to available workers down to 1.3 to 1.

Job openings tumbled in October to their lowest in 2½ years, a sign the historically tight labor market could be loosening.
Employment openings totaled a seasonally adjusted 8.73 million for the month, a decline of 617,000, or 6.6%, the Labor Department reported Tuesday. The number was well below the 9.4 million estimate from Dow Jones and the lowest since March 2021.

The decline in vacancies brought the ratio of openings to available workers down to 1.3 to 1, a level that only a few months ago was around 2 to 1 and is nearly inline with the pre-pandemic level of 1.2 to 1.
Federal Reserve policymakers watch the report, known as the Job Openings and Labor Turnover Survey, closely for signs of labor slack. The Fed has boosted interest rates dramatically since March 2022 in an effort to slow the labor market and cool inflation, and is contemplating its next policy move.
While job openings fell dramatically, total hires only nudged lower while layoffs and separations were modestly higher.
Quits, which are seen as a measure of worker confidence in the ability to change jobs and find another one easily, also were little changed. The quits rate had peaked around 3% of total employment in late 2021 into early 2022, during what briefly was known as the Great Resignation as workers left their old jobs in search of positions that paid more and offered better working conditions; it since has declined to 2.3%.
“This data certainly solidifies the Fed’s decision to keep rates unchanged while looking for signs of a pivot in the upcoming meeting next week,” said Tuan Nguyen, U.S. economist at RSM. “Besides inflation, job opening data, serving as a proxy for labor demand and wage pressure, has been the Fed’s top priority in recent times.”

Declines in job openings were widespread by industry.
The biggest sector decline was education and health services (-238,000), followed by financial activities (-217,000), leisure and hospitality (-136,000), and retail (-102,000).
The JOLTS data comes just a few days ahead of the Labor Department’s nonfarm payrolls count for November. Economists expect that report to show an increase of 190,000, an uptick from October’s 150,000, according to Dow Jones.
Fed officials have been targeting the red-hot jobs market as a specific area of concern in their battle to take inflation down from what had been a four-decade high last year. Seeing a decline in job openings likely will be welcome news to policymakers as it could mean that less labor demand could help bring the jobs market back in line from what had been a huge mismatch with supply.
The Fed holds its two-day policy meeting next week, with markets largely expecting the Federal Open Market Committee to leave interest rates unchanged. Traders in the fed funds futures market are pricing in rate cuts to begin in March on anticipation that inflation data will continue to show progress and as the central bank tries to fend off a potential slowdown or recession ahead.
In other economic news Tuesday, the ISM services index for November registered a reading of 52.7%, representing the share of companies reporting expansion versus contraction. The reading was nearly a full percentage point higher than October and slightly above the Dow Jones forecast for 52.4%.
Gains in the survey came from inventory sentiment, inventories and new export orders. Employment nudged higher to 50.7% while prices edged lower to 58.3%. A reading above 50% represents growth.
Don’t miss these stories from CNBC PRO: More

The News:Job openings fell considerably in October, hitting the lowest level since March 2021, the Labor Department announced on Tuesday.There were 8.7 million job openings in October, down significantly from 9.3 million in September, according to the Job Openings and Labor Turnover Survey. That was lower than economists’ expectations of 9.3 million openings.The rate of layoffs was little changed, as was the rate of quitting, which generally reflects workers’ confidence in their ability to find new employment.Job openings declined significantly in October, the Labor Department said.Tony Cenicola/The New York TimesWhy It Matters: The state of the labor market affects interest rate policy.The labor market is closely watched by the Federal Reserve as it mulls its interest rate policy. A cooling labor market tends to fuel predictions that the Fed will not further increase rates, which have risen to a range of 5.25 to 5.5 percent from nearly zero in March 2022.The labor market has been surprisingly resilient since the Fed started its rate increases in a campaign to tame inflation. But as the job market shows signs of cooling, so has consumer spending. Many companies told investors that in the most recent quarter customers were pulling back and spending less on products and more on services and experiences. The Fed’s preferred inflation measure confirmed that consumer spending slowed in October.At the same time, investors are increasingly hopeful that the Fed is done raising rates. Jerome H. Powell, the chair of the Federal Reserve, recently suggested in a speech that the central bank would leave rates steady if data continued to point to a cooling economy. The 10-year U.S. Treasury yield fell on Tuesday, reaching its lowest point since September, as investors expected interest rates to fall in the future.A reduction in job opportunities discourages the Fed from raising rates or keeping them high too long because such a trend often foreshadows a recession. “With this evidence coming in that the labor market is cooling substantially, I think it’s raising the chances that the Fed is done with the rate hikes,” said Julia Pollak, chief economist at ZipRecruiter.Background: Unemployment and openings have reverted to earlier levels.Though the labor market is slowing, it remains a healthy landscape for workers. The unemployment rate ticked up in October, to nearly 4 percent, which is in line with prepandemic levels.Job openings reached a record of more than 12 million in March 2022 and have trended down since. The last time job openings hovered around nine million — where it is now — was in the spring of 2021.There are still ample opportunities for workers. The rate of hiring remained steady in October despite the decline in openings.One difference is that layoffs are lower than they were before the pandemic. That probably reflects companies’ decisions to reduce staffing by natural attrition rather than cuts.“This is perhaps the biggest sign that we still have a strong economy and labor market,” said Sonu Varghese, a strategist at Carson Group, a financial advisory firm.Though inflation has slowed significantly since the Fed started raising rates in March 2022, it remains above the central bank’s 2 percent target.The Fed’s preferred inflation measure fell to 3 percent in October from a year earlier. But without including food and fuel prices, which are volatile and less sensitive to the Fed’s policy actions, the rate was 3.5 percent.What’s next: The November jobs report comes on Friday.The November jobs report will be released on Friday by the Labor Department. Economists forecast that the unemployment rate will stay around 4 percent, with a gain of about 180,000 jobs.That report will be one of the last insights into the state of the labor market before the Fed’s next policy meeting on Dec. 12 and 13. More

Stay informed with free updatesSimply sign up to the More

Stay informed with free updatesSimply sign up to the More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The UK began the 20th century as Rome and the 21st as Italy. The latter comparison should not be taken very far: any fool can see that there are many differences between the UK and Italy. But one similarity cannot be ignored: productivity, which is the chief determinant of standards of living, is stagnant in both countries. This has been true in Italy since the late 20th century. It has been true in the UK since the financial crisis. The principal economic challenge for the UK is ending this stagnation. Without that, it will be impossible to solve its other social and political problems.An important new book, Ending Stagnation, from the Resolution Foundation, addresses this failure head on. But its attention is not just focused on ending stagnant productivity, vital though that is, but also on other weaknesses. Indeed, the charge sheet turns out to be depressingly long. Among the most striking conclusions from this long list of failures is how much Brexit was a costly diversion from the challenges the country must tackle if it is to remain a prosperous high-income democracy.Let us start with the stagnation. Between 2007 and 2021, UK output per hour rose by 7 per cent. Between 1993 and 2007, in contrast, it rose by 33 per cent. Median real hourly wages rose by 8 per cent between 2007 and 2021. Between 1993 and 2007, in contrast, they rose by 28 per cent. Again, according to the OECD, real gross domestic product per head in the UK rose 6 per cent between 2007 and 2022. This was better than in Italy, where GDP per head actually fell 2 per cent over this period. But between 1992 and 1997, real GDP per head rose by 46 per cent in the UK. The UK’s economic dynamism has evaporated.As a result, incomes have fallen well behind those in peer countries: by 2018, median household incomes were 48 per cent higher in Canada, 37 per cent higher in Australia and 20 per cent higher in Germany. Low-income households were some 27 per cent poorer than in France or Germany. (See charts.)Inequality surged in the 1980s and has remained high ever since. It is higher as a result than in any other large European country. The higher minimum wage has not changed this significantly, because wages do not translate directly into relative household incomes. What Resolution calls “the stubborn grip” of inequality retains its hold because the top of the income distribution has pulled away from the middle. It is also due to substantial benefit cuts, the fact that lower earners work shorter hours, and an enormous rise in housing costs for poorer households.This high inequality is not just among households. It is also among places. These regional inequalities, too, are longstanding. Thus, according to Resolution, “80 per cent of the income variation between areas we see today is explained by the differences back in 1997”. The gap between London and other cities is dramatic. The capital is 41 per cent more productive than Manchester. Paris, in contrast, is only 26 per cent more productive than Lyon.A standard defence of high inequality is that it creates incentives for innovation and growth. In the UK, this has been strikingly untrue. The resulting combination of low growth with high inequality is toxic. The young have never experienced the progress in pay that their parents did. Partly because of low interest rates and partly because of the failure to build, those born in the early 1980s were almost half as likely as their parents to own their own home at 30.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.An important proximate cause of these failures is low investment. In the 40 years to 2022, the UK’s fixed investment rate was the lowest among G7 member countries. In the average member of the OECD, public investment is also nearly 50 per cent higher than in the UK. This lack of investment, and so the shortages of beds and equipment, is one of the reasons why the NHS is always on the brink of collapse. Time spent commuting is also relatively high. As bad as the low level is the volatility of public investment, as spending is turned off and on in response to short-term fiscal exigencies.At least as important are the low levels of private investment. Expensing of investment spending, announced by Jeremy Hunt in his Autumn Statement, should help, provided this policy lasts. Given past chopping and changing of corporate taxation, that hardly seems likely. An important challenge is constraints on building just about anything, which affects both residential and commercial construction. But to invest more, it is necessary also to save more: the UK is an extremely low saving country relative to other high-income countries.Unfortunately, these difficulties are set to get worse. The combination of ageing, geopolitical tensions, Brexit, higher interest rates and the energy transition will raise pressures on the economy and public spending at a time when the tax burden is already at historically high levels and public debt is already close to 100 per cent of GDP. The Autumn Statement resorted to substantial chicanery to forecast a manageable medium-term fiscal position.So, what is to be done? In addressing this fundamental question, three points need to be borne in mind. First, these are strategic, not tactical, problems. The economy is not delivering the prosperity the great majority desires. As the country falls behind, unhappiness will grow. Second, Thatcherism did not, alas, cause an enduring revival of the UK economy. Indeed, the growth prior to 2007 was itself in part an illusion. This must be admitted, at last. Finally, strategic problems need strategic solutions. British governance does muddling through, instead. But that just will not work. I plan to discuss what must be done and how in a subsequent [email protected] Martin Wolf with myFT and on X More

The downgrade reflects growing evidence that authorities will have to provide more financial support for debt-laden local governments and state firms, posing broad risks to China’s fiscal, economic and institutional strength, Moody’s said in a statement.”The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector,” Moody’s said.China’s blue-chip stocks slumped to nearly five-year lows on Tuesday amid worries about the country’s growth, with talk of a possible cut by Moody’s denting sentiment during the session, while Hong Kong stocks extended losses.[.SS]China’s major state-owned banks, which had been seen supporting the yuan currency all day, stepped up U.S. dollar selling very forcefully after the Moody’s statement, one source with knowledge of the matter said. The yuan was little changed by late afternoon.[CNY/] The cost of insuring China’s sovereign debt against a default rose to its highest since mid-November. “Now the markets are more concerned with the property crisis and weak growth, rather than the immediate sovereign debt risk,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong. The move by Moody’s was the first change on its China view since it cut its rating by one notch to A1 in 2017, also citing expectations of slowing growth and rising debt.While Moody’s affirmed China’s A1 long-term local and foreign-currency issuer ratings on Tuesday — saying the economy still has a high shock-absorption capacity — it said it expects the country’s annual GDP growth to slow to 4.0% in 2024 and 2025, and to average 3.8% from 2026 to 2030.Moody’s outlook downgrade comes ahead of the annual agenda-setting Central Economic Work Conference, which is expected around mid-December, with government advisers calling for a steady growth target for 2024 and more stimulus.Analysts say the A1 rating is high enough in investment-grade territory that a downgrade is unlikely to trigger forced selling by global funds. The other two major rating agencies, Fitch and Standard & Poor’s, rate China A+, which is equivalent to Moody’s. Both have a stable outlook. China’s Finance Ministry said it was disappointed by Moody’s decision, adding that the economy will maintain its rebound and positive trend. It also said property and local government risks are controllable.”Moody’s concerns about China’s economic growth prospects, fiscal sustainability and other aspects are unnecessary,” the ministry said. STRUGGLING FOR TRACTION Most analysts believe China’s growth is on track to hit the government’s target of around 5% this year, but that compares with a COVID-weakened 2022 and activity is highly uneven. The economy has struggled to mount a strong post-pandemic recovery as the deepening crisis in the housing market, local government debt concerns, slowing global growth and geopolitical tensions have dented momentum.A flurry of policy support measures have proven only modestly beneficial, raising pressure on authorities to roll out more stimulus.Analysts widely agree that China’s growth is downshifting from breakneck expansion in the past few decades. Many believe Beijing needs to transform its economic model from an over-reliance on debt-fuelled investment to one driven more by consumer demand.Last week, China’s central bank head Pan Gongsheng pledged to keep monetary policy accommodative to support the economy, but also urged structural reforms to reduce a reliance on infrastructure and property for growth.DEEPER IN DEBTAfter years of over-investment, plummeting returns from land sales, and soaring costs to battle COVID, economists say debt-laden municipalities now represent a major risk to the economy.Local government debt reached 92 trillion yuan ($12.6 trillion), or 76% of China’s economic output in 2022, up from 62.2% in 2019, according to the latest data from the International Monetary Fund (IMF).In October, China unveiled a plan to issue 1 trillion yuan ($139.84 billion) in sovereign bonds by the end of the year to help kick-start activity, raising the 2023 budget deficit target to 3.8% of gross domestic product (GDP) from the original 3%.The central bank has also implemented modest interest rate cuts and pumped more cash into the economy in recent months.Nevertheless, foreign investors have been sour on China almost all year.Capital outflows from China rose sharply to $75 billion in September, the biggest monthly figure since 2016, according to Goldman Sachs.($1 = 7.1430 Chinese yuan renminbi) More

This article is an on-site version of our Chris Giles on Central Banks newsletter. Sign up here to get the newsletter sent straight to your inbox every TuesdayEurozone headline inflation fell much more than expected in November, to an annual rate of 2.4 per cent. In the US, lower core PCE (personal consumption expenditures) inflation in October prompted former inflation hawks, such as Jason Furman, to capitulate. Barack Obama’s former economic adviser said last week: “We’re almost at the soft landing.” The main piece today argues that the public are likely to be unimpressed with slower price rises, partly because they are clueless about the inflation process. What do you think? Email me: [email protected] CluelessOK, I accept that is an aggressive adjective about my fellow global citizens. But I hope this piece will convince you of the importance of public perceptions of inflation; the differences between economists and most people in the way they think about prices; and that these issues matter — almost as much as the data — for monetary policy. Many prominent US economists, especially Democrat-leaning ones, have recently had beef with fellow Americans over their economic gloom. Claudia Sahm complains that even Democrats are “being dismal” when the US economy has been growing strongly, real wages are rising, inequality is falling and inflation is way down. Paul Krugman and Arin Dube have made similar points recently. As my colleague John Burn-Murdoch has brilliantly noted, there is a partisan bias in the way Americans answer questions about economic conditions.But I don’t think that quite captures the way people think about inflation and why they’re still mad as hell. My evidence and the consequence is below. The shorter version is that if you tell people they should be happy about inflation coming down, the most likely response you get is the full Cher in Clueless: “Ugh, as if.” People overestimate inflationIt does not matter where you look, but people tend to think inflation has been higher than official statistics suggest. In the US, consumers generally perceive inflation to be between 0.75 to 1 percentage point higher than official estimates. The US data is a bit sketchy, however, and far better indications come from the European Commission’s consumer survey. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The ECB has monitored inflation perceptions since 2004 after it had a difficult time in the early years of the single currency. People were convinced that companies were using the switch to the euro to raise prices. They still think they are being diddled. The eurozone clearly has a problem of perceived high inflation with people across the bloc thinking prices are rising on average 4.9 percentage points more than the reality. They are wrong. Wrong and unhappy. People don’t think like economistsWhen you spend more than a few seconds thinking about it, economists are pretty weird in using one year as the basis of comparison for price changes. I’ve commented about this before. So, when people come along brandishing their PhDs and saying, “look, inflation is down to 2.4 per cent”, it is perfectly probable and reasonable that the public will reply, “You what? Prices are way higher than they were and it makes me really annoyed.” Notice I did not use a time period and nor do most people when thinking about how prices have changed. Who can remember exactly what prices were on December 5 2022? I recently wrote a column on why the time element spells trouble for both Joe Biden and Rishi Sunak in their elections next year. There are tipping points in public perceptionOne of the dangers of allowing inflation to take off is that the public’s general desire not to think about prices can change abruptly. The Bank for International Settlements talked in its 2022 annual report of a “high inflation world” where rapid price rises are normal, dominate daily life and are difficult to quell. Subsequent research by Oleg Korenok, David Munro and Jiayi Chen has attempted to quantify the tipping points at which people start paying attention for many countries. They find that when inflation rises, there are “attention thresholds” above which the internet goes red hot in many countries. It all suggests that the public finds inflation starting with a three highly problematic in most countries, but not Mexico.The public are ignorant know-it-allsDespite being objectively clueless, that’s not how people perceive their knowledge of inflation. A fascinating assessment of UK public understanding of economic data was undertaken before the pandemic by Johnny Runge and Nathan Hudson. It is a horror show. As the chart shows, even when warned they would be tested on their knowledge later, only 25 per cent of respondents in a survey and focus groups thought their knowledge of inflation was “weak” or “very weak”.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.While the participants had a good understanding that inflation measured the increase in prices, the authors found they could not explain why prices change, only a fifth thought that prices rising around 2 per cent a year was best for the economy, most had little idea how inflation was measured and thought companies could deceive statistical agencies with shrinkflation. “Only a few participants mentioned using interest rates to affect inflation,” the authors reported. Then again, this is a live debate in the economics world, too. The public prefer a recession to inflationDid I say the public hate inflation? I meant they really hate inflation. It’s old, but this study by Nobel laureate Bob Shiller examined how much people disliked prices rising and why. Posing detailed questions to respondents in the US, Germany and Brazil, he first found people didn’t really worry about recessions and prized low inflation. In the US, 75 per cent of his survey preferred a world with 9 per cent unemployment (12mn) and 2 per cent inflation to one with high inflation and low unemployment. Germans took the same view, with 72 per cent favouring the recessionary world, while the results in Brazil were closer, but still 54 per cent wanted to avoid high inflation. On deeper probing, Shiller found that people think inflation is something done to them by government or companies (they really believe in greedflation), but if their wages rise, they earned it all by themselves. These findings are in line with a recent Morning Consult survey that found 63 per cent of respondents would prefer to get better off by prices falling than their own incomes rising. So when President Joe Biden posted the following incoherent words on X, he might have known what he was doing, at least politically. Let me be clear to any corporation that hasn’t brought their prices back down even as inflation has come down: It’s time to stop the price gouging. Give American consumers a break.So what?The evidence suggests people overestimate inflation, do not think in neat annual chunks of time, worry when prices rise above quite low thresholds, overestimate their knowledge, want prices to come down but wages to stay high and blame others for a rising cost of living. Given all this, if I was a central banker, I’d want to be absolutely sure I’d got inflation licked before cutting interest rates. Leaving interest rates high for a long time is likely to lead to a policy mistake. But because central bankers do not want to err on the side of leaving inflation too high and the public would punish them for it, they are unlikely to rush down from Table Mountain. What I’ve been reading and watchingThe wind of change is blowing through the ECB. In an interview on Tuesday, executive board member, Isabel Schnabel, now says inflation is “on track”. She had previously been hawkish.There is something deeply ironic about the Polish central bank seeking protection from European institutions, but it shows how difficult central bank independence can become when it is politicised. After Fed hawk Christopher Waller signalled there might be room for interest rate cuts early last week, the boss, Jay Powell, pushed back. Traders believed Waller.The great and the good of the central banking world called for a new “humble approach” to central banking, acknowledging the difficulties of forecasting, forward guidance and prolonged interventions such as quantitative easing. It is an important report from the so-called G30. A chart that mattersLet’s look briefly at how quickly interest rate expectations in the US have changed. The difference between financial market expectations today and in the middle of October is now extreme.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Recommended newsletters for you Free lunch — Your guide to the global economic policy debate. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

WASHINGTON (Reuters) – The U.S. Supreme Court is set on Tuesday to consider a challenge to the legality of a tax targeting owners of foreign corporations that could undermine efforts at imposing a wealth tax on the very rich in a case that has already sparked controversy over a call for Justice Samuel Alito to recuse. The justices were due to hear arguments in an appeal by Charles and Kathleen Moore – a retired couple from Redmond, Washington couple – of a lower court’s decision rejecting their challenge to the tax on foreign company earnings, even though those profits had not been distributed. The one-time “mandatory repatriation tax” (MRT), which applied to taxpayers owning at least 10% of certain foreign corporations, was part of a 2017 Republican-backed tax bill signed into law by former President Donald Trump. At issue in the case is whether this levy on unrealized gains is allowed under the U.S. Constitution’s 16th Amendment, which enabled Congress to “collect taxes on incomes.” The Moores, backed by the Competitive Enterprise Institute and other conservative and business groups, contend that “income” means only those gains that are realized through payment to the taxpayer, not a mere increase in the value of property. A ruling favoring the Moores could strike at a wider array of tax code provisions including those related to other small business entities such as partnerships, limited liability companies and S-corporations, according to legal experts.Such a ruling also could frustrate policies favored by some Democrats, including Senator Elizabeth Warren, for a tax on the net worth – meaning all assets and not just income – of the super-rich.The Moores are seeking a refund of nearly $14,729 in additional taxes that the 2017 law required them to pay as minority shareholders in a company in Bangalore, India, called KisanKraft that supplies equipment to farmers. The case had made its way to the Supreme Court with relatively little public attention until it became enmeshed in the ongoing debate over the ethical conduct of the justices amid revelations about issues including undisclosed luxury travel funded by wealthy benefactors. Alito defended the court in articles in the Wall Street Journal’s opinion section. Alito, a member of the court’s 6-3 conservative majority, argued that Congress lacks power to regulate the top U.S. judicial body, even as Democrats pursued ethics legislation that would apply to it. Democratic senators urged Alito’s recusal from the case involving the Moores because one of their attorneys, David Rivkin Jr., co-authored the Wall Street Journal articles.Rivkin’s access to Alito and efforts to help the justice “air his personal grievances” cast doubt on his ability to fairly judge the case, according to the senators. Alito refused to recuse, saying that Rivkin’s role in the articles was “as a journalist, not an advocate.”Under pressure, the court last month unveiled a formal ethics code. The code has been criticized by Democrats and some legal scholars for lacking any enforcement mechanism. The Moores sued the U.S. government in 2019 challenging the mandatory repatriation tax. The San Francisco-based 9th U.S. Circuit Court of Appeals threw out the case, noting that under Supreme Court precedent the “realization of income is not a constitutional requirement.” More