Finance

Workers quit their jobs in record numbers in 2021 and 2022 as ample job opportunities and higher pay lured them elsewhere.
That Covid pandemic-era trend came to be known as the “great resignation.”
The “quits rate” has steadily declined since peaking last year. In April 2023, it fell to its pre-pandemic average in 2019, according to the U.S. Bureau of Labor Statistics’ JOLTS report.

Djelics | E+ | Getty Images

During the past year, the rate at which Americans quit their jobs has steadily declined from a record high back to pre-pandemic levels — seeming to spell the end of the labor market trend that came to be known as the “great resignation,” labor economists said.
The “quits rate” fell to 2.4% in April, down from 2.5% the month prior and from a 3% peak in April 2022, the U.S. Bureau of Labor Statistics reported Wednesday in the Job Openings and Labor Turnover Survey.

This rate is the share of monthly quits (i.e., voluntary departures by workers) relative to total employment. It’s now roughly on par with the monthly pre-pandemic average between 2.3% and 2.4% in 2019.
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“I think the great resignation as we know it is over,” said Daniel Zhao, lead economist at career site Glassdoor.
“We are much closer to the labor market we had in 2019, which was hot but not overheating,” he added.

Workers enjoyed historic leverage amid Covid

Most workers who quit their jobs do so for new employment elsewhere. Quits, therefore, serve as a proxy for workers’ willingness or confidence in their ability to leave a job.

Quits started to surge in early 2021 as Covid-19 vaccines rolled out to the masses and the U.S. economy started to reopen.
Business’ demand for workers outstripped the supply of people looking for a job, giving workers an unprecedented amount of power in the labor market. Employers raised wages at the fastest pace in decades to compete for scarce talent.

Higher pay and ample employment opportunities drove Americans to leave their jobs in record numbers. This so-called great resignation was largely about finding a better gig rather than not wanting a job, economists said.
About 50.5 million people quit in 2022, besting the prior record set in 2021.
“The pandemic gave workers more leverage than they’d ever had,” said Julia Pollak, chief economist at ZipRecruiter.
The dynamic has changed, however. The U.S. labor market has gradually cooled, staffing shortages have become less of an issue and workers appear more nervous about the job outlook, Pollak said.

We are much closer to the labor market we had in 2019, which was hot but not overheating.

Daniel Zhao
lead economist at Glassdoor

In short, the labor market is returning to normal, and the balance of power has shifted, she said.
While workers are unlikely to be “handed jobs on a platter” anymore, conditions remain favorable for them, Pollak added.  
“There’s good normal and bad normal,” she said. “We’re still very much in the ‘good normal’ world.”

Conditions are still favorable for job seekers

It’s unclear if the labor market will cool further from here. The Federal Reserve forecasts a mild recession later this year, for example. That outcome is not assured, of course.
In fact, certain metrics in the BLS’ JOLTS report suggest the job market became somewhat more favorable for workers in April. Job openings — a proxy for employer demand for workers — increased to 10.1 million after three consecutive months of declines, for example.
While quits and job openings told different labor market stories in April, quits are generally a less volatile and more reliable indicator, economists said.

“Looking at the hard economic data, things are still fairly strong” for job seekers, Zhao said.
Due to economic uncertainty, however, it’s “more important than ever” for workers to do their research before accepting a job, he added.
That might mean researching the financial stability of the company to which they’re applying and whether the company has had recent layoffs, Zhao said. It may also mean reaching out to company employees in their job network to gauge sentiment and confidence, he added.
The Federal Trade Commission last week issued an alert warning consumers to beware of fake job advertisements posted by scammers. They repurpose outdated ads from real employers and trick applicants into sending them money, the FTC said. More

An exterior view of the Advance Auto Parts store at the Sunbury Plaza, Sunbury, Pennsylvania.
Paul Weaver | SOPA Images | Lightrocket | Getty Images

Check out the companies making headlines in premarket trading.
SoFi — The financial services platform added nearly 7%. A deal to raise the U.S. debt ceiling on track for a vote on Wednesday would resume student loan payments.

Carvana — Shares fell nearly 4% in premarket trading. Carvana stock has been on fire so far this year with a 189% gain from the start of 2023.
Anheuser-Busch — The beer giant declined 1.7%. Lower sales volume across the company’s portfolio of products underpinned the decline, with Bud Light leading the charge with a 25.7% fall for the week ending May 20, according to Evercore.
Hewlett Packard Enterprise — Hewlett Packard Enterprise fell nearly 8% on the back of mixed quarterly numbers. The company earned an adjusted 52 cents per share, beating a Refinitiv forecast of 48 cents per share. However, revenue of $6.97 billion was below a consensus estimate of $7.31 billion.
Twilio — Shares gained 3.6% after a report that Legion Partners is looking to make changes to the automated communications company’s board, as well as divestitures.
Ambarella — The chip stock shed 18% after Ambarella shared disappointing guidance for the second quarter. Ambarella expects second-quarter revenue between $60 million and $64 million. Analysts expected guidance around $66.9 million, according to StreetAccount.

Advance Auto Parts — The car parts retailer plummeted more than 25% after a wide earnings miss. The company reported an adjusted 72 cents per share against a Refinitiv consensus forecast of $2.57 per share. Advance Auto Parts also slashed its quarterly dividend.
C3.AI — The artificial intelligence stock declined 5.8% ahead of of quarterly results on Wednesday. Analysts polled by FactSet forecast an adjusted quarterly profit of 3 cents per share.
American Airlines – Shares of the air carrier rose about 2% premarket after the company raised expectations for the second quarter. American increased its earnings per share expectation from between $1.20 and $1.40 to between $1.45 and $1.65. It also increased its margin expectations, to between 12.5% and 14.5% from between 11% and 13%.
— CNBC’s Samantha Subin, Fred Imbert and Tanaya Macheel contributed reporting More

In its May Financial Stability Review published on Wednesday, the European Central Bank said the euro area’s stability outlook remained fragile in the aftermath of recent turmoil in the banking sector, which saw the failure of several U.S. regional banks and the emergency takeover of Credit Suisse by UBS.
The ECB report noted that the potential for “disorderly adjustments” in financial markets had spiked against a backdrop of tighter financial conditions and lower market liquidity.

Christine Lagarde (R), President of the European Central Bank (ECB), and Vicepresident Luis de Guindos (L)
Thomas Lohnes | Getty Images News | Getty Images

Financial markets could face a sharp downturn in the event of any further shocks to the global economy, European Central Bank Vice-President Luis de Guindos told CNBC on Wednesday.
Earlier on Wednesday, the ECB published its May Financial Stability Review, saying that the euro area’s stability outlook remained fragile in the aftermath of recent turmoil in the banking sector, which saw the failure of several U.S. regional banks and the emergency takeover of Credit Suisse by UBS.

Although it determined that bank resilience in a higher interest rate environment was not a concern in the euro area, with fundamentals remaining solid and regulatory intervention proving effective, the ECB said it is “possible that these events could lead to a reassessment of the profitability and liquidity outlooks for euro area banks.”
Global stock markets made a robust start to 2023, given falling energy prices, China’s reopening and the surprising resilience of the euro zone economy — driving equity valuations back above historical averages, the ECB highlighted.
This reversed abruptly in late February and March as a hawkish tone from central banks and unexpected stress in the banking sector roiled investors around the world. De Guindos said current market positioning rendered stocks vulnerable to any further macro surprises.
“There is the possibility of a correction in markets, and the reason is that valuations are high, are elevated, and if you look at, for instance, risk premia, they are quite compressed, so just in case that we have bad news with respect to the macroeconomic outlook, that could give rise to a correction of markets,” de Guindos said.

The ECB report noted that the potential for “disorderly adjustments” in financial markets had spiked against a backdrop of tighter financial conditions and lower market liquidity. The banking sector turmoil of March led to a widening of credit risk premia in the euro area, the central bank said.

“By contrast, the fact that equity risk premia remain compressed in absolute and relative terms, especially in the United States, raises concerns over potential overvaluation. Equities may thus be more vulnerable to a disorderly price correction in the event of a further deterioration in the economic outlook,” the report said.
“As such, risk sentiment remains fragile and is highly sensitive to surprises as regards the outlook for inflation, growth and monetary policy in mature economies.”
This could take the form of more persistent inflationary pressures, forcing central banks into “more significant” policy tightening than the markets have currently priced in.

There are also risks to the banking system from any fragility in non-bank financial institutions, de Guindos highlighted.
“We indicate that interlinkages are relevant and are important, so that you cannot immunize what happens in the banking industry from the non-banking industry.”
The ECB report said that, although the non-bank financial sector remains resilient for now, exposures to credit risk remain high, opening it to “the risk of material losses should corporate sector fundamentals deteriorate substantially.”
“In addition, non-banks’ exposure to property markets has increased markedly in recent years, rendering institutions vulnerable to ongoing property price corrections,” it said.
“Strong links with banks, as an important source of funding for instance, could also give rise to additional vulnerabilities in the banking sector via liquidity and credit risk spillovers.” More

Monzo reported net operating income of £214.5 million ($266.1 million) in the year ending February 2023, almost doubling its results year-over-year.
One of the most prominent U.K. digital banks, Monzo managed to reach profitability in the first two months of the year.
The bump in revenues was driven by a spike in lending activity, with net interest income increasing 382% to £164.2 million.

A Mastercard debit card from U.K. digital bank Monzo.

Monzo on Wednesday said it hit profitability for the first time this year, in a major milestone for one of the U.K.’s most prominent digital banks.
In its annual report for the year ending February 2023, Monzo reported net operating income of £214.5 million ($266.1 million), almost doubling year-over-year from £114 million.

Losses at the bank nevertheless came in at a substantial £116.3 million — though this was slightly lower than the £119 million net loss Monzo reported in 2022.
Still, the company managed to reach profitability in the first two months of the year.
In its annual report, Chief Financial Officer James Davies said Monzo is “now a business with diverse and stabilising revenue from a large, and growing, personal and business customer base.”
“Profitability was always a choice as we balance continuing to invest in growth with profitability,” Monzo’s CEO, TS Anil, told CNBC in an interview. “We could have chosen to be profitable a few quarters ago.”
Monzo is not the first digital bank to hit profitability. Starling Bank reached that milestone for the first time in 2021. Fellow fintech Allica Bank reached monthly profitability last year.

Monzo’s move into the black was largely thanks to a substantial increase in income from newer revenue lines, such as lending and subscriptions. Paid accounts now total 350,000.
Monzo declined to share a figure on how much of a profit it is making currently. The firm said it is on track to reach full-year profitability by the end of 2024.

Lending growth

Monzo’s strong revenue performance was driven by a bumper year for its lending business. This came against a backdrop of pain for U.K. consumers, who’re grappling with a harsh cost-of-living crisis as inflation soars.
Total lending volume reached £759.7 million, almost tripling year-on-year, while net interest income spiked by 382% to £164.2 million.  That was as usage of overdrafts, unsecured personal loans, and the Monzo Flex buy now, pay later service grew sharply.
Yet credit losses also surged dramatically, as the bank set aside a mountain of funds to deal with a sharp climb in anticipated defaults. Credit losses swelled to £101.2 million, a more than sevenfold increase from £14 million in 2022. 
It comes as consumers are increasingly turning to unsecured credit, such as credit cards and personal loans, to offset the impact of the rising cost of living. Research from consulting firm PwC indicates U.K. household debt exceeded £2 trillion for the first time in January.
Monzo’s boss disputed that the cost-of-living crisis had contributed to its revenue performance.
“The cost-of-living crisis was painful for everyone, but it really underscored the ways in which the Monzo product is incredibly powerful,” Anil told CNBC. 
He added the growing cost of living impacted how people used Monzo products, with usage of its savings pots and budgeting tools rising.
Meanwhile, Monzo said it continues to work with the Financial Conduct Authority regulator over an ongoing inquiry into the company’s alleged breaches of anti-money laundering laws.
“We expect it to take time to resolve,” Monzo said. “This could have a negative impact on our financial position, but we won’t know when or what the outcome will be for some time.”

UK ‘not holding us back’

The fintech sector has experienced increasing scrutiny since it grew in prominence after the 2020 Covid outbreak.
Major digital banks, from Revolut to N26, are receiving heightened attention from regulators. Revolut is reportedly set to have its application for a banking license rejected by the Bank of England, according to the Telegraph.
A number of tech bosses have expressed doubts about the U.K.’s bid to become a global tech power on the back of notable setbacks, including Cambridge-based chip design firm Arm’s decision to list in New York rather than London.
Revolut CEO Nik Storonsky earlier this month said his firm had encountered “extreme bureaucracy” in its experience applying for a banking license in the U.K. and said he would never list in the country. Monzo co-founder Tom Blomfield, meanwhile, left London for San Francisco, citing a “much more accepting” environment for tech founders.
“From our perspective, this is a country where we got licensed, this is our home market; we’ve clearly learned this is where we can build a business of scale,” Monzo’s Anil said. “It’s not holding us back, I don’t think of it like that at all.”
Monzo now has 7.4 million customers in the U.K., making it the seventh-largest bank in the U.K. by client numbers. Total customer deposits now stand at £6 billion. More

“You’re not going to fix these things if you are just sitting across the Pacific yelling at each other, so I’m hoping we have real engagement,” Dimon said, according to Reuters.
In November 2021, Dimon expressed “regret” over remarks that JPMorgan would last longer than China’s ruling party.

JPMorgan Chase and Company President and CEO Jamie Dimon testifies before a Senate Banking, Housing, and Urban Affairs hearing on “Annual Oversight of the Nation’s Largest Banks”, on Capitol Hill in Washington, U.S., September 22, 2022. 
Evelyn Hockstein | Reuters

JPMorgan Chase & Co CEO Jamie Dimon on Wednesday called for “real engagement” between policymakers in Washington and Beijing, as Sino-U.S. relations continue to fray.
Speaking at the JPMorgan Global China Summit in Shanghai — in his first visit to China since his 2021 apology for joking that JPMorgan would outlast the Chinese Communist Party — Dimon said that security and trade disputes between the world’s two largest economies over are “resolvable.”

“You’re not going to fix these things if you are just sitting across the Pacific yelling at each other, so I’m hoping we have real engagement,” Dimon said, according to Reuters.
He advocated for a “de-risking” of the economic ties between the East and West rather than for a full-scale decoupling, as the Wall Street giant seeks to boost its presence in China.
In November 2021, Dimon expressed “regret” over remarks that JPMorgan would outlast China’s ruling party, seeking to limit damage to the bank’s growth ambitions in the country. The comments that invoked Beijing’s ire came shortly after JPMorgan won regulatory approval to become the first foreign company to establish full ownership of a securities brokerage in China.
Top U.S. and Chinese commerce officials met last week for “candid and substantive discussions” surrounding bilateral trade and commercial relations, in the first cabinet-level exchange between Washington and Beijing in months.
National security concerns also underpin a souring of relations between the two superpowers. The U.S. on Tuesday accused a Chinese fighter jet of engaging in an “unnecessarily aggressive maneuver” while intercepting a U.S. military reconnaissance aircraft in international airspace over the South China Sea. More

Fewer than 6% of U.S. flights to and from mainland China that existed in 2019 have resumed, according to a Nomura report.
In contrast, flights between mainland China and Egypt, Saudi Arabia and Italy are nearly back to pre-pandemic frequency or more, the report showed, citing data as of May 22 from VariFlight.
This past weekend, an Air China flight between Beijing and New York marked the first direct passenger on the route by a Chinese carrier in months.

BEIJING — Fewer than 6% of U.S. flights to and from mainland China that existed in 2019 have resumed, according to a Nomura report.
In contrast, flights between mainland China and Egypt, Saudi Arabia and Italy are nearly back to pre-pandemic frequency or more, the report showed, citing data as of May 22 from Variflight.

“We think geopolitical factors in China’s outbound tourism revival … are clearly at play here,” Nomura’s Chief China Economist Ting Lu and a team said in the report Monday.
In March, China brokered the restoration of diplomatic ties between Middle East rivals Saudi Arabia and Iran. Beijing has refused to condemn Russia’s unprovoked invasion of Ukraine, while calling for peace talks.

Tensions between the U.S. and China have meanwhile simmered. China’s ambassador to the U.S. assumed office last week after a gap of about six months with no one in the position.
This past weekend, an Air China flight between Beijing and New York marked the first direct passenger on the route by a Chinese carrier in months. It was one of the four new weekly flights between the two countries by Chinese airlines that the U.S. Department of Transportation approved in May.
Previously, the only regular direct flights by Chinese carriers between mainland China and New York since the pandemic were from Shanghai and Guangzhou. The cross-border non-stop flights also cover Los Angeles.

Flights of Air China are parked on the tarmac of Beijing Capital International Airport in Beijing, China, March 28, 2016.
Kim Kyung Hoon | Reuters

In March, Delta announced it resumed direct flights between the U.S. and China — from Shanghai to Seattle and Detroit.
Overall, mainland China’s international flights remains below 40% of 2019 levels, the Nomura report said.
The analysts expect that level to pick up to 70% by the end of the year as international flights recover around the summer holiday season.

Read more about China from CNBC Pro More

Data for May show China’s massive property sector is still struggling to turn around, despite signs of recovery earlier this year.
New home sales for the week ended May 28 grew by 11.8% from a year ago, a sharp slowdown from 24.8% growth a week earlier, pointed out Nomura’s chief China economist Ting Lu in a report.
In the secondary-home market, business activity “has been cooling since April, with a fall in the number of listed-for-sale homes, lower asking prices and fewer transactions,” Fitch Ratings said.

Construction on a real estate development project gets underway near the Bund in Shanghai, China, on May 25, 2023.
Future Publishing | Future Publishing | Getty Images

BEIJING — New data show China’s massive property sector is still struggling to turn around, despite signs of recovery earlier this year.
“In a reversal from April, prices accelerated in the housing market but sales slowed,” the U.S.-based China Beige Book said in its report for May, released Tuesday. That’s based on the research firm’s survey of 1,085 businesses conducted from May 18 to 25.

“In commercial property, both pricing and transactions weakened sharply,” the report said. “Poor results in construction and reduced fiscal activity sent copper producers’ May earnings and production into contraction.”
Beijing has eased its pressure on real estate developers in the last year, following a crackdown on their debt levels in August 2020. The property sector and related industries have accounted for more than a quarter of China’s economy, according to Moody’s estimates.
New home sales for the week ended May 28 grew by 11.8% from a year ago, a sharp slowdown from 24.8% growth a week earlier, pointed out Nomura’s chief China economist Ting Lu in a report Monday. That’s based on seven-day moving average data from Wind Information.
Both weeks’ sales volume was lower than during the same period in 2019, prior to the pandemic, the report said.

Most of the sales decline stemmed from China’s largest cities, the report said. Those so-called tier-1 cities have been a bright spot since people tend to move to urban centers for jobs.

Investors pull back

Investors in Chinese property developers are also getting more skeptical about the market.
The Markit iBoxx index for China high-yield real estate bonds is back down to near where it was trading in November, when Beijing announced support for the sector through a “16-point plan.”

While that plan “has been instrumental to setting a floor to this crisis,” the initiatives are only aimed at supporting developers’ debts at a project level, S&P Global Ratings analysts said in a May 22 report.
That means there’s still uncertainty about whether developers can repay investors for bonds at a holding company level, the ratings agency said. They’re looking at whether the developers can generate enough cash from property sales.
In April, the analysts pointed out that national property sales fell to 900 billion yuan ($126.87 billion), below last year’s monthly average of 1.1 trillion yuan.
For all of 2023, S&P expects China developer sales to fall by about 3% to 5% — slightly better than the previously forecast 5% to 8% drop.
This year’s forecasts are based on expectations that sales in larger cities grow by about 3%, while sales in smaller cities don’t drop by more than 10%, the report said.

Secondary market stumbles

In the secondary-home market, business activity “has been cooling since April, with a fall in the number of listed-for-sale homes, lower asking prices and fewer transactions,” Fitch Ratings said in a release Monday.
“This slowdown follows a strong rebound in 1Q23, suggesting homebuyer confidence remains fragile amid an uncertain economic outlook and weak employment prospect[s].”
New homes in China are typically sold before developers finish building the apartments.
“Secondary-home market sentiment can be viewed generally as a barometer of the property sector, as pricing and supply are not subject to regulators’ intervention – unlike the new-home market,” the Fitch analysts said.
Secondary home sales also greatly influence prices for new homes, the analysts said, estimating more than half of homes sold in China’s largest cities fall into the secondary-home market.

Read more about China from CNBC Pro

The weak performance in May comes amid elevated market hopes for a recovery.
A quarterly survey by the People’s Bank of China had found an uptick in locals’ interest to buy a home in coming months — and greater expectations for higher property prices.
The real estate market is still in a “period of adjustment,” Liu Lijie, market analyst at Beike Research Institute, said in written commentary Tuesday translated by CNBC.
Government policy needs to improve market expectations for a real estate recovery, Liu said, noting that additional measures can be taken even in large cities to boost home buying. More

Visitors at the Nvidia stand at the 2022 Apsara Conference in Hangzhou, China, Nov 3, 2022.
Nvidia Stock Soar | Future Publishing | Getty Images

Check out the companies making headlines in midday trading.
Nvidia — Shares of the chipmaker and artificial intelligence beneficiary popped 3%, building on its recent gains on the heels of a blowout quarter. The moves pushed Nvidia’s market value briefly above $1 trillion. Other chipmakers with AI ties also gained. Broadcom pared earlier gains to close 1.2% lower.

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7 hours ago

Tesla — Shares gained 4.1% following a Reuters report a private jet used by CEO Elon Musk arrived in China, his first visit in three years. Musk is expected to meet with senior Chinese officials and visit Tesla’s Shanghai plant, Reuters said.
Ford — Shares of the legacy automaker gained 4.1% after Jefferies upgraded the F-150 pickup truck maker to a buy from a hold, citing improved confidence in Ford’s plan and management after an investor event.
Coinbase — Shares of the crypto services business rose more than 7.5% following an upgrade by Atlantic Equities, which called the company the “best expression of crypto.” The analyst kept his price target on the stock, still implying it could rally 23% from Friday’s close.
Paramount Global — The CBS TV parent rose more than 6.4%, extending a gain of nearly 6% from Friday. Wolfe Research upgraded the media stock to peer perform from underperform Tuesday following news last week Paramount’s majority shareholder National Amusements announced a $125 million preferred equity investment from BDT Capital Partners. Wolfe said the odds of Paramount selling off assets are rising while the stock is depressed and positioning is short.
ChargePoint — Shares rose nearly 14.1%. Bank of America upgraded the electric vehicle charging station stock to buy, calling it a best-in-class play in the EV landscape.

Devon Energy, Diamondback, Chevron, ExxonMobil — Energy stocks were under pressure Tuesday as prices for oil and natural gas slid. Shares of Devon Energy dropped 2.3%, while Diamondback Energy fell more than 1%. Oil giants Chevron and Exxon were each down nearly 1%.
C3.ai — Shares of C3.ai soared 33.4% Tuesday as AI-focused companies got a lift. Other companies connected to AI gained, with UiPath last up 6.1%. C3.ai reports results Wednesday.
Iovance Biotherapeutics — Shares of Iovance Biotherapeutics popped more than 17% after the U.S. Food and Drug Administration accepted its license application for an advanced skin cancer treatment.
— CNBC’s Tanaya Macheel, Yun Li, Michelle Fox, Alexander Harring and Jesse Pound contributed reporting. More