Economy

Job openings hit a record-high 11.55 million in March, according to the Labor Department’s JOLTS report.
Quits totaled 4.54 million, also a record and indicative that the labor market remains historically tight.
The gap between open jobs and available workers hit 5.6 million, another new high.

A “now hiring” sign is posted in the window of an ice cream shop in Los Angeles, California on January 28, 2022.
Frederic J. Brown | AFP | Getty Images

Employment openings exceeded the level of available workers by 5.6 million in March while a record number of people quit their jobs, the Labor Department reported Tuesday.
The level of job postings hit 11.55 million for the month, also a fresh record for data that goes back to December 2000, according to the Job Openings and Labor Turnover Survey. That was up 205,000 from February and representative of a jobs market still historically tight.

At the same time, quits totaled 4.54 million, an increase of 152,000 from the previous month as the so-called Great Resignation continued. The Covid pandemic era has seen opportunities for workers who feel confident enough to leave their current situations for better employment elsewhere.
The report adds to an inflationary picture that is expected to push the Federal Reserve into a series of aggressive rate hikes, starting with a half-percentage point move Wednesday.
A shortage of labor supply during the pandemic has caused a surge in wages, with average hourly earnings up 5.6% from a year ago in March. Still, that hasn’t kept up with inflation, which has run at an 8.5% pace over the same time period.
Supply failed to keep up with demand in March, with the level of new hires actually declining slightly to 6.74 million despite the increase in openings. Total separations rose to 6.32 million, a rise of nearly 4% from February.
Job openings in the pivotal leisure and hospitality industry declined by 45,000, a drop of 2.6% on a monthly basis, while hiring increased by 40,000. The sector is considered a key proxy for the economic recovery and has an unemployment rate of 5.9%, still a bit higher than its pre-pandemic level.

Tuesday’s release comes the same week as the key April nonfarm payrolls report. Economists surveyed by Dow Jones expect an increase of 400,000 jobs and a decline in the unemployment rate to 3.5%, which would match the pre-pandemic rate that was the lowest since December 1969.
Correction: Job openings in the pivotal leisure and hospitality industry declined by 45,000. An earlier version misstated the category.

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Eurozone unemployment has hit a fresh record low after the bloc’s labour market weathered the initial fallout from Russia’s invasion of Ukraine, emboldening unions to intensify their push for higher wages.The jobless rate across the 19 countries that share Europe’s single currency was 6.8 per cent in March, Eurostat said, down from an upwardly revised 6.9 per cent in February. Economists had expected it to fall even further to 6.7 per cent, according to a poll by Reuters.The continued improvement of Europe’s labour market has prompted unions to step up demands for higher wages to offset soaring energy and food prices, which lifted eurozone inflation to an all-time high of 7.5 per cent in April, squeezing household disposable incomes.“Let’s be clear, workers are not the cause of inflation, they are its victims,” said Esther Lynch, deputy general secretary of the European Trade Union Confederation. “Pay is at the top of our affiliates’ agenda as inflation is at its highest level for decades and it’s clear that the cost of living is on an upward trajectory.” Pay has not kept pace with prices. In the fourth quarter of last year, eurozone wages rose at an annual rate of 1.4 per cent, well below inflation of 4.6 per cent in the period. That caused real hourly wages to fall 3 per cent, the largest drop since comparable data began 14 years ago. Wage growth in the eurozone has also not kept pace with rates seen in the US and UK. During the May Day marches by tens of thousands of workers across Europe on Sunday, union leaders stressed their determination to secure higher pay for workers to offset the higher cost of living. The CGT, the leftwing French union, called for the country’s minimum wage to rise to €2,000 per month, up from €1,645. The minimum wage has been raised three times in the past year, adding up to a total increase of 5.9 per cent, but CGT leader Philippe Martinez told Le Parisien that increasing it further was the best way to address France’s “social malaise”.IG Metall, Germany’s biggest union, said last week it was considering making a demand for an 8.2 per cent increase in annual wages for 85,000 workers in the iron and steel sector. The proposal by union officials in the north-west and east of Germany — covering most of the country’s steel industry — is likely to be agreed at a national level next week, kicking off negotiations with employers in the sector, which has been buffeted by surging energy prices.“Our members rightly expect a significant increase in monthly wages in the face of sharply rising prices and high profits of steel companies,” said Birgit Dietze, a district manager at IG Metall.Unemployment in Germany fell 13,000 to 2.31mn in March, which was slightly less than expected but still took its jobless rate to 2.9 per cent, the lowest rate since Eurostat records started in 1991. The country’s employment agency said job vacancies increased by 10,000 to 852,000.Stefan Schneider, an economist at Deutsche Bank, said Germany’s labour market was “red hot” and the steelworkers’ pay demands were “a reminder that the risk of a price wage spiral in Germany is real and not just the product of inflation angst ingrained in the German DNA”.

Tuur Elzinga, chair of FNV, the biggest Dutch union, said companies in the Netherlands had more than doubled their dividends this year, compared with 2019, but “many kept a tight rein on their own employees”. He added: “This imbalance needs to be tackled.”The proportion of companies reporting labour shortages rose to a new record of 27.8 per cent last month, according to a European Commission survey published last week. EU companies’ employment expectations dipped slightly, but Jack Allen-Reynolds, at Capital Economics, said they still pointed to a 1.5 per cent rise in eurozone employment this year.“While there is no sign of wage growth picking up yet, a tight labour market and sky-high inflation are fertile ground for pay,” said Allen-Reynolds. “Even so, real incomes are likely to drop this year and consumption growth will be weak.” More

Inflationary pressures have begun to take their toll on British manufacturers, as Brexit, rising energy costs, supply chain disruption and the war in Ukraine continue to bite. A closely watched survey released on Tuesday showed that about 85 per cent of British manufacturers registered an increase in purchase prices, with a majority of businesses passing on these costs to consumers.Despite these challenges, the final reading of the British manufacturers’ purchasing manager’s index, compiled by S&P Global, rose to 55.8 in April, up from 55.2 in March. According to Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, the small rise in the headline index was attributable to a “rise in the output index, as a previous easing of supply chain disruption enabled firms to work through order backlogs”. Some involved in the sector have suggested that the positive headline figure risked obscuring the ongoing problems faced by British manufacturing.Rob Dobson, director at S&P Global, said there was only one other time in the survey’s history that more companies reported experiencing higher input costs, commenting that “the inflationary situation is getting increasingly fraught”. Dave Atkinson, SME and mid corporates head of manufacturing at Lloyds Bank, said: “Two months of war in Ukraine have shown just how reliant some UK manufacturers’ supply chains ultimately are on the country. “Deepening shortfalls in the supply of metals, minerals, wheat and sunflower oil risk adding further inflationary risks and stifling businesses’ productivity across the automotive, aerospace, cosmetics, and food and drink industries as inventories deplete.” The survey also revealed that UK manufacturers were increasingly coming to terms with obstacles associated with Brexit.“Specific to the UK, Brexit represents an additional headwind, notably via lost EU customers, increased paperwork, customs checks and border delays,” said Dobson. The multitude of price pressures on the sector mean that manufacturers are “the least upbeat about the outlook for growth in output over the next 12 months since December 2020, the last time lockdown measures were tightened substantially”, said Dickens. Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said it was difficult “to see where ongoing growth will come from in the coming months as new-order growth was the most sluggish in over a year” and that “the global economy will need to pull a rabbit out of the hat to give manufacturers the leg-up they need”.The possibility of additional disruption to trade from China’s lockdowns and the war in Ukraine meant there was a case for British manufacturers to continue to “minimise their exposure to the risk of materials shortages”, said Atkinson.“Of course, this pressure on supply chains does present an opportunity for growth for the agile to diversify and reshore supply closer to home.”  More

Government bond markets were volatile on Tuesday after Australia kicked off a busy week for central banks with a bigger-than-expected rate rise and traders prepared for the US Federal Reserve to tighten monetary policy aggressively.The yield on the 10-year US Treasury note, a benchmark for asset pricing and loan rates worldwide, softened to 2.96 per cent after hitting 3 per cent on Monday for the first time since 2018. Bond yields rise as their prices fall.Germany’s 10-year bond yield, which started the year below zero, exceeded 1 per cent for the first time in seven years in European morning trading before settling back down to 0.94 per cent. The UK equivalent crossed 2 per cent briefly before trimming some of its gains to trade at 1.96 per cent. The shake out in bond markets came after the Reserve Bank of Australia increased interest rates for the first time in more than a decade on Tuesday, citing the country’s “very resilient” economy and inflation that had “picked up more quickly, and to a higher level, than was expected”. An increase of 0.25 percentage points was larger than the 0.1 percentage points anticipated by markets.“There’s an element of many central banks trying to signal to the markets that they are on the job, that they recognise inflation is above target and that they will act,” said Ron Temple, co-head of multi-asset at Lazard. “But we may have reached peak anxiety about interest rates and inflation,” he added, referring to the two factors that can cause bond market sell-offs because they lower the real returns from the fixed income-paying securities. The Fed, the world’s most influential central bank, is expected to announce an extra-large rate rise of around half a percentage point on Wednesday, with markets pricing in similar half-point rises at the subsequent two meetings, after US consumer price inflation reached a 40-year high of 8.5 per cent in March. “We do not see much room for dovishness at the May meeting,” Standard Chartered strategist Steven Englander said regarding the Fed. “It took a while” for the Fed’s rate setters to “reach a consensus” on the need to tighten monetary conditions to try and quell demand, he added. “And we don’t see an incentive for that consensus to break.”The Bank of England is also expected to raise UK interest rates to their highest level since 2009 on Thursday. Last month, BoE governor Andrew Bailey said the rate-setting institution was walking a “very, very fine line” between tackling consumer price increases and avoiding recessionary risks from hiking borrowing costs too far.European and Wall Street equities drifted on Tuesday, although European banking stocks rose in anticipation of rate rises bolstering lenders’ profits. The regional Stoxx Europe 600 share index was 0.2 per cent higher by early afternoon in London, with its banking sub-index gaining 1.7 per cent. Futures markets implied Wall Street’s S&P 500 share index would trade flat as investors awaited more signals from the Fed about the path of monetary policy. Contracts tracking the technology-focused Nasdaq 100 were also steady. More

OSLO (Reuters) – Norway’s $1.2 trillion sovereign wealth fund is prepared for a rocky ride as it confronts the biggest geopolitical changes in three decades, its chief executive said on Tuesday.”We probably face the greatest changes for 30 years,” Nicolai Tangen told a Norwegian parliamentary hearing, adding the world’s largest sovereign wealth fund expects “growing frictions between superpowers and a reversal of globalisation”.Tangen said that the Norwegian fund, which invests all of its assets in foreign stocks, bonds, property and renewable energy projects, has “nowhere to hide” and must manage the risk that comes with exposure to global markets.”We have a rocky ride ahead,” he said, adding that inflation, already on the rise before the Ukraine conflict, has continued to increase, while interest rates are still very low and share prices remain high.Of all the risk factors, stagflation was “the worst”, Tangen said, adding it could potentially lead to a 40% fall in the fund and that it was a more likely scenario than six months ago.”We have a combination of high price rises and lower-than-before economic growth, inflation is going up and growth is on its way down,” Tangen later told Reuters. “It looks like we are potentially nearer a scenario of (stagflation) than we were earlier.”Founded in 1996, the fund invests revenue from Norway’s oil and gas sector and holds stakes in 9,300 companies globally, owning 1.3% of all listed stocks.Assets now correspond to $230,000 for every Norwegian, and the purpose of the fund is to share the proceeds of the country’s oil and gas revenues with future generations. RUSSIA AND RENEWABLESNorway ordered the fund to first freeze and then divest its Russian assets, worth some 27 billion crowns ($2.85 billion) and equivalent to 0.2% of its total value at the end of 2021, after Moscow began its “special military operation” in Ukraine.However, the fund has not yet begun selling, Tangen said, adding that he did not know when this would be possible as the Moscow market was not functioning well with traded volumes not large enough for its needs.It could not be sure who counterparties were, making it hard to avoid selling to individuals under international sanctions.Elsewhere, the fund took its first ever direct stake in a renewable energy project, a Dutch wind farm, in April last year, but has not done so since.Tangen said even though the fund has a mandate from parliament to invest up to 2% of its total value in renewables, it would take some time as competition was fierce and “good prospects (are) hard to find”. ($1 = 9.4587 Norwegian crowns) More

Remember Goldilocks? We are unlikely to be hearing much about that fairy tale character in the near future. For Jay Powell, the US Federal Reserve chair, the odds are that the American economy will either run too hot or too cold, or go from one to the other. Unlike in the 1990s, or indeed for most of the last generation, it would be rash to bet on a soft landing for the US economy. The era of easy money was also one of relatively easy central banking. That job is getting much tougher. Goldilocks has left the building. Some of the Fed’s woes are self-created. Its chief sin has been wishful thinking — a trait that was also shared by the markets. The Fed has not yet explained why it got inflation so wrong in the last year. For most of 2021, the Fed insisted higher inflation was “transitory” even as evidence accumulated that it was not. Then in November the Fed switched to admitting the problem was stickier than it thought. But it did not act as though it meant it. It took another four months to end its monthly injection of $40bn into a housing market that was already booming. Even after proclaiming a turn in the interest rate cycle, the Fed signalled the shift would be modest. Its first interest rate increase of 25 basis points came in March — months after inflation began to overshoot its 2 per cent target. Real monetary conditions have in fact got easier since then. Inflation has risen by more than the Fed funds rate, which makes America’s real interest rate even more negative than it was before. It is as though Powell, reappointed Fed chair, cannot bring himself to let go of Goldilocks’ hand. It is hard to blame him. For decades, the markets have thrived on the one-way bet that when conditions got rough the Fed would prop up asset prices with steep rate cuts and quantitative easing. It thus always made sense for investors to “buy on the dip”. Even when the Fed complained that it was the only game in town — in frustration with the fiscal gridlock that disabled Washington for most of the years after the financial crisis — it carried on playing. Not to have done so would have been far worse for everybody. But the super-rich have been the overwhelming beneficiaries, which has not been healthy for democracy. On the one occasion the Fed did try to alter the rules, it was quickly whipped into line. Ben Bernanke’s attempt to end quantitative easing in 2013 was shut down by the market’s “taper tantrum”. The pandemic returned the Fed to the 2008 mindset of “whatever it takes” — only this time with the fortunes of the non-rich explicitly in mind. A few months after Covid-19 struck, the Fed replaced its strict 2 per cent inflation target with far more fungible language. Almost everybody, not just the Fed, converted to the view that the US economy could be run far hotter than theory dictated for the sake of full employment. That stance has now sadly been discredited. Inflation, it turns out, is still a death eater of income gains. In addition to fast wage growth, China’s addiction to “zero Covid” lockdowns and the war in Ukraine are likely to sustain inflation across a broad range of products for months. Though the Fed can do nothing to ease global supply chain problems, the risk is that it will have to overcompensate for its failure to tackle inflation sooner. On Wednesday, Powell is likely to announce the first 50 basis-point increase in years. That is already priced in. But with headline inflation at 8.6 per cent, a doubling of the Fed funds rate to 1 per cent is hardly disinflationary. This underlines two growing threats to the Fed. The first is that it might be forced to induce a US recession with far higher interest rate increases than it now anticipates. The Fed’s last dot plot predicts a 1.9 per cent rate by the end of this year. Last week Deutsche Bank predicted the Fed would have to lift that rate to 5 or 6 per cent to tame inflation. For similar reasons, Morgan Stanley warned that the US was entering a bear market. Both views are a minority. But consensus forecasts, including the Fed’s, have been so badly off that it would be unwise to take the majority literally. The middle class wage renaissance may turn out to be fleeting. The second worry is about the harm to the Fed’s credibility. Powell did not acknowledge that inflation was non-transitory until after President Joe Biden reappointed him. Doubtless this was a coincidence. Either way, the institution that was until recently seen as Washington’s most effective may be forced to relearn the lessons of the 1970s and early 1980s — even if today’s woes are not as great. Credibility is bought at great expense over a period of years. Alas, it can also be risked with remarkable ease. [email protected] More

Boris Johnson has admitted the government “can do more” to help families struggling with rising bills, but warned that a big new support package risked driving up inflation and interest rates.The prime minister, speaking two days before a UK-wide round of local elections, said the government had to be “prudent” and that high levels of extra public spending could lead to “an inflationary spiral”.Tory strategists admit that the cost of living is by far the greatest issue for voters ahead of Thursday’s polls and claim the party is on course to lose hundreds of seats.Labour argue that this is expectation management and that actual Tory losses will be on a more modest scale, partly because Labour did well when most of the same council seats were contested in 2018.Johnson, speaking to ITV’s Good Morning Britain for the first time in almost five years, apologised again for breaking the law in the partygate affair. Asked in a robust interview whether he was honest, he replied: “Yes.”The prime minister again rejected calls from Labour and the Liberal Democrats for a windfall tax on North Sea oil and gas companies to help fund more support for low income households.He insisted the government was already doing a “huge amount” to help people with rising energy bills, but he repeated the warning of Rishi Sunak, chancellor, of the dangers of a big new injection of support.“If we have an inflationary spiral of the kind that could be triggered, you will see interest rates going up,” he said. Johnson added that would create “an even bigger problem” and feed through to higher mortgage costs.But he accepted that a £9bn package of support announced by Sunak in his Spring Statement six weeks ago was “not going to be enough immediately to cover everybody’s costs”. More support is expected in the autumn.Labour insists Johnson is out of touch with ordinary voters, and the prime minister was confronted in the interview with the experience of viewers facing severe hardship.Asked about a pensioner called Elsie who travelled on buses all day because she could not afford to heat her house, Johnson replied that as London mayor he introduced “the 24-hour Freedom bus pass”.Meanwhile, Sir Keir Starmer, Labour leader, refused to say whether the Durham Police had made contact again since Tory MPs last week urged the force to take a second look at claims he broke Covid rules last year.Starmer was asked on the BBC’s Radio 4 Today programme whether the force had made contact with either him or his office in recent days.Instead of answering the question, the Labour leader said the Durham Police had already come to the “clear conclusion” months ago that no rules had been broken.“We were working in the office, it was just before elections, we were busy, we paused for food, no party, no rules were broken, that is the long and the short of it,” he said.

Starmer is facing growing questions over an event in Durham in April last year at which he was photographed through a window drinking beer.At the time indoor socialising was banned. The Labour leader has said that he was working that day at Durham Miners Hall as part of a campaign visit and stopped for food before resuming his work.A Labour official said: “I would just refer you to Durham Police’s statement that they haven’t reopened the investigation so self-evidently they haven’t been in touch.”Starmer said that Labour had the “wind in our sails” ahead of Thursday’s local elections. “We are in a position where we are just ahead in the polls. That is remarkable in two years,” he said.Starmer repeated Labour’s case for a windfall tax on energy companies after BP announced soaring profits for the first quarter on Monday morning. He also supported the Conservative government’s decision to send another £300mn of military equipment to Ukraine. More

SYDNEY (Reuters) – Australia’s central bank on Tuesday raised its cash rate by a surprisingly large 25 basis points to 0.35%, the first hike in over a decade, and flagged more to come as it pulls down the curtain on massive pandemic stimulus.The news was a blow to Prime Minister Scott Morrison as he fights a tough election campaign that, going by opinion polls, could see him turfed out of office on May 21.Wrapping up its May policy meeting, the Reserve Bank of Australia (RBA) said it was the right time to begin withdrawing extraordinary monetary support as inflation had picked up significantly and the economy was near full employment.”The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time,” said RBA Governor Philip Lowe. “I expect that further increases in interest rates will be necessary over the months ahead.”The size of the move helped lift the local dollar up 1% to $0.7115 as a majority of analysts in a Reuters poll had expected a rise to only 0.25%. [AU/INT]The policy sea change came after consumer price inflation spiked to a 20-year peak of 5.1% in the first quarter, led by costs for petrol, housing, food and education.Core inflation jumped to 3.7% and above the RBA’s target band for the first time since 2010, a radical turnaround from recent years when it consistently undershot.The red-hot report led markets to narrow the odds on a hike in May, even though many analysts suspected the RBA would rather wait until after the election and to see if wages data due on May 18 would confirm a long-awaited pick up.In a media conference, Lowe insisted the election paid no part in the decision, which was apolitical.MARKETS SEE 0.75% BY JUNEFutures quickly priced for a move to 0.75% in June and a whole string of hikes to around 2.5% by the end of the year, and 3.5% by the middle of 2023.That would be the most aggressive RBA tightening cycle in modern history and a drag on consumer spending power given household debt is at all-time highs.Lowe said it was plausible rates would get to 2.5% over time, though the RBA Board had an open mind on how fast the tightening would be given global uncertainties.The market’s uber-hawkish outlook in part reflects the global rush to tightening, with markets wagering the Federal Reserve alone will hike by 150 basis points by the end of July.The RBA also announced it would let its more than A$350 billion ($249.03 billion) of government bond holdings expire at maturity, rather than actively sell them as some central banks are doing.Rising mortgage rates will only add to surging cost of living pressures that are a headache for the Liberal National coalition government as it campaigns heavily on economic management.An ANZ survey out on Tuesday showed consumer confidence nose-dived 6.0% last week, the sharpest drop since an Omicron wave swept through the eastern seaboard in January.”This is the lowest level for consumer confidence at the start of a tightening cycle since the inflation targeting regime began in the early 1990s,” noted ANZ’s head of Australian economics, David Plank.”This may see the RBA tighten more slowly than the market is pricing.”($1 = 1.4055 Australian dollars) More