Finance

Truss won the race to succeed Boris Johnson as leader of the ruling Conservative Party on Monday, following a drawn-out contest against former Finance Minister Rishi Sunak.
“With the current account deficit already at record levels, sterling requires large capital inflows supported by improving investor confidence and falling inflation expectations. However, the opposite is happening,” Deutsche Bank said in a note Monday.

A banners of Deutsche Bank is pictured in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, September 30, 2016.

Following the news that Liz Truss will become Britain’s new prime minister, Deutsche Bank says policy announcements in the coming weeks will be crucial if the U.K. is to avoid extreme macroeconomic events, particularly a balance of payments crisis.
Truss won the race to succeed Boris Johnson as leader of the ruling Conservative Party on Monday, following a drawn-out contest against former Finance Minister Rishi Sunak. Truss got 81,326 votes from Conservative Party members, while Sunak got 60,399.

Sterling was fractionally higher against the dollar on Monday afternoon, trading just below $1.15, but Deutsche Bank FX Strategist Shreyas Gopal warned that the risks of a “sterling crisis” should not be underestimated.
“With the current account deficit already at record levels, sterling requires large capital inflows supported by improving investor confidence and falling inflation expectations. However, the opposite is happening,” Deutsche Bank said in a note Monday.
“The U.K. is suffering from the highest inflation rate in the G10 and a weakening growth outlook. A large, unfunded and untargeted fiscal expansion accompanied by potential changes to the Bank of England’s mandate could lead to an even bigger rise in inflation expectations and — at the extreme — the emergence of fiscal dominance.”
Truss put the Bank of England and its Governor Andrew Bailey firmly in the crosshairs during her leadership campaign, blaming the central bank for allowing inflation to soar to 40-year highs, and is reportedly considering a review of the Bank’s mandate.

She has also suggested scrapping the Northern Ireland protocol, a key part of the post-Brexit withdrawal agreement between the U.K. and the European Union, a move likely to prompt retaliation from the bloc.

Gopal suggested that added uncertainty on trade policy would further muddy the macroeconomic picture and dent investor confidence.
“The risk premium on UK gilts is already rising, coincident with unusually large foreign outflows. If investor confidence erodes further, this dynamic could become a self-fulfilling balance of payments crisis whereby foreigners would refuse to fund the U.K. external deficit,” he said.
Deutsche Bank estimates that trade-weighted sterling — a measure of the pound’s value against selected currencies most important to international trade — would have to come down by a further 15% in order to return the U.K.’s deficit to its 10-year average.
“A balance of payments funding crisis may sound extreme, but it is not unprecedented: a combination of aggressive fiscal spending, severe energy shock, and a slide in sterling ultimately resulted in the U.K. having recourse to an IMF loan in the mid 1970s,” Gopal said.
“Today, the UK does retain some key lines of defense against a sudden stop, but we worry that the risks are rising nevertheless.”

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After a drawn-out contest, the country’s ruling Conservative Party on Monday picked Liz Truss to be its new leader and the U.K.’s new prime minister.

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The new prime minister of the U.K. will be announced Monday.
Foreign Secretary Liz Truss is the front-runner, while former Finance Minister Rishi Sunak is expected to come second.
180,000 Conservative Party members had the chance to vote for the new leader of their party and by default, the new prime minister.

Former Finance Minister Rishi Sunak or current Foreign Secretary Liz Truss will be announced as the U.K’s new prime minister later Monday.
Dan Kitwood / Staff / Stringer / Getty Images

LONDON — The next prime minister of the U.K. will be announced Monday following a grueling, and at times bitter, leadership contest within the ruling Conservative Party.
The announcement is expected at 12:30 p.m. London time and will be delivered by Graham Brady, the chair of the 1922 Committee, which is a group of Conservative Members of Parliament who aren’t government ministers.

The leadership election was triggered when current Prime Minister Boris Johnson announced he would be resigning on July 7. It came after a wave of ministers and backbenchers resigned, with many voicing a lack of confidence in their party leader.
Johnson has stayed on as caretaker PM while the party decided between the candidates.
He has not yet formally resigned from office, as he must first attend an audience with Queen Elizabeth II to officially inform her that he is stepping down.
Sunak or Truss?
The next prime minister will be either current Foreign Secretary Liz Truss or former Finance Minister Rishi Sunak, after the pair made it to the final stage of the eight-candidate leadership contest.
Truss has been a firm front-runner in the contest among Conservative Party members.

Truss and Sunak have come head-to-head at 12 campaign events over the last eight weeks to try to win over party members.
They have set out their views on the Bank of England’s mandate, tax cuts and the controversial plan to deport migrants to Rwanda, as well as the U.K.’s worsening cost-of-living crisis.
The result was chosen exclusively by members of the Conservative Party — that’s around 180,000 people by the most recent count who pay to be a member of the party, out of the 65 million people living in the U.K.
The vote was carried out as a postal ballot which closed on Sept. 2.
Next steps
Once the most popular candidate is announced, the formal process for appointing a prime minister begins.
It will include a trip to Balmoral Castle in Scotland for the official “kissing of hands” meeting with the queen, where the monarch asks for a new administration to be formed. 
This is a break from tradition, as her 15th prime minister will be the first to not be officially appointed at the queen’s London home, Buckingham Palace.

The 96-year-old reportedly started experiencing “episodic mobility issues,” as announced by Buckingham Palace on May 9, which may explain the choice for the new prime minister to travel to her rather than making the 500-mile journey to London herself.
A ‘giveaway budget’ from the new PM?
The cost-of-living crisis will likely be top of the agenda for whoever will be moving into 10 Downing Street, as U.K. energy bills are set to rise by 80% in October and investors warn inflation could top 22% next year.
The next prime minister will be offering support for energy costs, predicted Alan Custis, head of U.K. equities at Lazard Asset Management, on CNBC’s “Squawk Box Europe” last week.
“As a prime minister you want to create a honeymoon period,” Custis said, “and there could be a general election.”
“Whichever candidate gets in, there’s potential for a giveaway budget as soon as they get in,” he said. 

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The U.S. Public Company Accounting Oversight Board said its inspectors are set to arrive in Hong Kong in mid-September, shortly after which “all audit work papers requested by the PCAOB must be made available to them.”
What needs to happen next is a smooth on-ground inspection in China by the U.S., and adequate support from the Chinese authorities, analysts said.
However, there’s uncertainty around implementation, analysts said.

The U.S. and China have taken a significant first step toward keeping U.S.-listed Chinese stocks like Alibaba from being forced off U.S. stock exchanges.
Holger Gogolin | iStock | Getty Images

BEIJING — The U.S. and China recently took a significant first step toward keeping U.S.-listed Chinese stocks like Alibaba from being forced off U.S. stock exchanges.
What needs to happen next is a smooth on-ground inspection in China by the U.S. with adequate support from Chinese authorities, analysts said.

“Many implementation details probably can only be figured out by the auditing firms and the [Ministry of Finance] — together with [the China Securities Regulatory Commission] — through real-case auditing trials under this unprecedented agreement,” said Winston Ma, adjunct professor of law at New York University.
The U.S. Public Company Accounting Oversight Board said its inspectors are set to arrive in Hong Kong in mid-September, shortly after which “all audit work papers requested by the PCAOB must be made available to them.”
Audit work papers differ from the actual information on companies gathered by accounting firms.
The work papers record the audit procedure, tests, gathered information and conclusions about the review, according to the PCAOB website. It is not clear what level of highly sensitive information, if any, would be included in the work papers.

The ability of the U.S. to inspect those work papers for Chinese companies listed in the U.S. has been a years-long dispute. U.S. political and legal developments in the last two years have sped up the threat that the Chinese companies might need to delist from U.S. stock exchanges.

A turning point came in late August when the PCAOB and China Securities Regulatory Commission signed a cooperation agreement that laid the regulatory basis for allowing U.S. inspections of audit firms within China’s borders.
That’s according to statements from both government entities, which also said China’s Ministry of Finance signed the deal.
“I see this as a big ‘progress,’ meaning that both sides were willing to take steps to move this forward,” said Stephanie Tang, head of private equity for Greater China and partner at Hogan Lovells.
“The subject or the audience of this PCAOB investigation would be the audit firms,” she said, emphasizing she is not an accountant.

Need for more implementation clarity

China’s registered accounting firms are overseen by the the Ministry of Finance, making it the leader on the Chinese side of next steps, said Ming Liao, founding partner of Beijing-based Prospect Avenue Capital.
However, there’s uncertainty around implementation of the agreement as it only established a framework, analysts said.
“Our accounting firms still don’t know how to proceed,” said Peter Tsui, president of the Hong Kong-based Association of Chinese Internal Auditors. That’s according to a CNBC translation of his Mandarin-language remarks Thursday.
He said questions remain over what information the firms should share in order to remain compliant with Chinese regulation.
“Give [us] some guidelines,” Tsui said.
Tsui said the inspections should go smoothly if it’s just a matter of accountants on both sides, and there is no political interference on the U.S. side. He said the big four accounting firms — KPMG, PwC, Deloitte and EY — are members of the association.
China’s Ministry of Finance has yet to release a public statement on the audit cooperation agreement. The ministry did not immediately respond to a CNBC request for comment.
One development Prospect Avenue Capital’s Liao is watching is whether U.S. President Joe Biden and Chinese President Xi Jinping meet in-person this fall for the first time under the Biden administration. That could speed up a final agreement on the audit dispute, he said.
“In the end, resolving the audit work paper problem relies on political interaction between China and the U.S.,” Liao said in Chinese, according to a CNBC translation. “With trust, this problem can very easily be resolved.”

A decision by the year’s end

The PCAOB said it will make a determination in December on whether China was still obstructing access to audit information.
U.S. regulators will likely “start to know in October or November” what determination the PCAOB will make on whether U.S.-listed Chinese companies might be headed for delisting, Gary Gensler, chair of the U.S. Securities and Exchange Commission, told CNBC’s David Faber in late August.
Alibaba and many other U.S.-listed Chinese companies have started in the last few years to issue shares in Hong Kong — partly seen as a way to hedge against a potential delisting from U.S. stock exchanges. Since Chinese ride-hailing company Didi’s U.S. IPO in the summer of 2021, Beijing has also increased its scrutiny of Chinese companies wanting to list overseas.

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The combined political uncertainty has slowed the flow of Chinese IPOs in the U.S., especially of larger companies.
Since July 1, 2021, 16 Chinese companies have listed in the U.S., excluding special-purpose acquisition companies, according to Renaissance Capital. Back in 2020, 30 China-based companies had listed in the U.S., the firm said then.
By value, the five largest U.S. institutional holdings of U.S.-listed Chinese stocks are: Alibaba, JD.com, Pinduoduo, NetEase and Baidu. That’s according to Morgan Stanley research dated Aug. 26.

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Investor Toolkit

The Inflation Reduction Act, which President Biden signed into law Aug. 16, offers tax credits and rebates to consumers who buy clean vehicles and appliances or take other steps to reduce their carbon footprint.
Some consumers may qualify for more than $10,000 in financial incentives.
However, some benefits may not be available until 2023 or 2024. Here’s what to know.

Sebastian Rothe / Eyeem | Eyeem | Getty Images

Households may soon be able to claim thousands of dollars in tax breaks and rebates if they take steps to reduce their carbon footprint.
But eco-friendly consumers must wait until 2023 — perhaps even 2024 or later — to see many of those financial benefits.

The Inflation Reduction Act, which President Joe Biden signed into law on Aug. 16, represents the largest federal investment to fight climate change in U.S. history. Among other measures, the law offers financial incentives to consumers who buy high-efficiency appliances, purchase electric cars or install rooftop solar panels, for example.
Those incentives and various qualification requirements kick in according to different timelines. Here’s when consumers can expect to see them and how to decide when to make a purchase.

When to get tax breaks for new, used electric vehicles

Tomekbudujedomek | Moment | Getty Images

There are many moving pieces tied to incentives for new and used electric vehicles — and each may influence when a consumer chooses to buy.
Consumers who buy a new electric vehicle can get a tax credit worth up to $7,500. Used vehicles qualify for up to $4,000. Each credit comes with various requirements tied to the consumer and vehicle, such as household income and sales price.
Consumers may also be eligible for additional electric-vehicle incentives from state and local governments or utility providers, per rules already on the books.

The timing for used vehicles is relatively straightforward: Purchases qualify for the new federal tax break starting in 2023. This “credit for previously-owned clean vehicles” is available to the end of 2032. However, consumers in the market for a used vehicle may wish to wait until 2024 or later (more on that in a bit).
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Timing for new vehicles is more complex. There are three timeframes worth considering, each with their own benefits and drawbacks: purchases in 2022, 2023 and 2024 onward, according to Joel Levin, executive director of Plug In America.
There was a tax break for new electric vehicles already on the books — also worth up to $7,500. But the Inflation Reduction Act tweaked some rules that may limit who qualifies in the near term.
One rule took effect when Biden signed the law Aug. 16. It stipulates that final assembly of the new car must take place in North America.

Benefits and drawbacks of buying in 2022 or 2023

Maskot | Maskot | Getty Images

Two other rules take effect in 2023. One carries requirements for sourcing of the car battery’s critical minerals; the second requires a share of battery components be manufactured and assembled in North America. Consumers lose half the tax credit’s value — up to $3,750 — if one of those requirements isn’t met; they’d lose the full $7,500 for failing to meet both.
Additionally, consumers’ household income and a vehicle’s retail price must fall below certain thresholds starting in 2023 to qualify for a tax break.
Consumers who buy in 2022 can avoid those requirements; however, they would still be subject to the North American final-assembly rules that took effect in August. The IRS and U.S. Department of Energy have tips to help consumers determine which car models qualify.
Many new electric vehicles may not be immediately eligible for the tax break in 2023 as companies work to meet new manufacturing rules, according to experts.

“If you want an EV, go buy an EV, [but] to wait four months for the credit is risky,” Levin said. “There’s a lot of uncertainty what will be available Jan. 1.”
One potential upside to waiting until 2023 or later: Purchases of General Motors and Tesla car models would be eligible. They aren’t eligible in 2022 due to existing restrictions on the tax credit that will expire next year.
“If you’re looking at those two and are really concerned about getting a [tax] credit, you should wait,” Levin said. Of course, consumers would need to meet income and sales-price rules at that point.
Consumers who buy qualifying cars in 2022 or 2023 would only get the tax credit when they file their tax returns — and then only if they have a tax liability. That means consumers may wait several months to a year for their benefit, depending on purchase timing.
“If your tax liability is $5,000, you can use $5,000 of the credit — the other $2,500 goes poof,” Steven Schmoll, a director at KPMG, said of the new-vehicle credit.

A more ‘consumer-friendly’ EV rule in 2024

Maskot | Maskot | Getty Images

But, starting in 2024, a new mechanism would essentially turn the tax break into a point-of-sale discount on the price of new and used electric vehicles. Consumers wouldn’t have to wait to file their taxes to reap the financial benefit — the savings would be immediate.
“That’s really valuable, particularly for people who don’t have a lot of money in the bank,” Levin said. “It’s a ton more consumer-friendly.”
Here’s how the mechanism works: The Inflation Reduction Act lets a buyer transfer their tax credit to a car dealer. A dealer — which must register with the U.S. Department of the Treasury — would get an advance payment of the consumer’s tax credit from the federal government.
In theory, the dealer would then provide a dollar-for-dollar break on the car price, Levin said. He expects dealers to use the funds as a buyer’s down payment, which would reduce the upfront cash necessary to buy a car. Some negotiating may be involved on the consumer’s part, he added.
These transfers apply to new and used cars purchased starting Jan. 1, 2024.

When to get tax breaks for home efficiency upgrades

Artistgndphotography | E+ | Getty Images

There are two tax credits available to homeowners who make certain upgrades.
The “nonbusiness energy property credit” is a 30% tax credit, worth up to $1,200 a year. It helps defray the price of installing energy-efficient skylights, insulation and exterior doors and windows, for example. The annual cap is higher — $2,000 — for heat pumps, heat pump water heaters and biomass stoves and boilers.
The “residential clean energy credit” is also a 30% tax credit. It applies to installation of solar panels or other equipment that harness renewable energy like wind, geothermal and biomass fuel.
Each policy enhances and tweaks existing tax breaks set to expire soon, extending them for about a decade.

That’s really valuable, particularly for people who don’t have a lot of money in the bank.

Joel Levin
executive director of Plug In America

The tax credits cover project costs and apply in the year that project is finished. In legal terms, the project is completed when it is “placed in service.”
The enhanced residential clean energy credit is retroactive to the beginning of 2022. So, solar panel installations and other qualifying projects completed between Jan. 1, 2022 and the end of 2032 qualify for the 30% credit. Those finished in 2033 and 2034 qualify for lesser credits — 26% and 22%, respectively.
The enhanced nonbusiness energy property credit is available for projects finished after Jan. 1, 2023 and before the end of 2033. There are some exceptions — oil furnaces and hot water boilers with certain efficiency ratings only qualify before 2027, for example.

“If you complete and install a project in 2022, it’s not going to be eligible for the new incentive,” Ben Evans, federal legislative director at the U.S. Green Building Council, said of the nonbusiness energy property credit. “Look ahead and start planning projects, because it’ll take time to do some of them.”
Costs incurred in 2022 for a project completed in 2023 would still count toward the overall value of the homeowner’s tax break, according to Schmoll of KPMG.
One caveat: Since these are tax credits, consumers will only get the financial benefit when they file their annual tax returns.

When rebates for home upgrades will be available

Florian Roden / Eyeem | Eyeem | Getty Images

The Inflation Reduction Act also creates two rebate programs tied to clean energy and efficiency: one offering up to $8,000 and another up to $14,000.
Unlike some of the tax credits, these rebates are designed to be offered at the point of sale — meaning upfront savings for consumers.
One catch: They likely won’t be broadly available until the second half of 2023 or later, according to experts. That’s because the Energy Department must issue rules governing these programs; states, which will administer the rebate programs, must then apply for federal grants; after approval, they can start issuing rebates to consumers.

If your tax liability is $5,000, you can use $5,000 of the credit. The other $2,500 goes poof.

Steven Schmoll
director at KPMG

The law doesn’t set a required timeframe for this process.
Even according to the most optimistic timeline, those funds may not become available to consumers until summer 2023, according to Kara Saul-Rinaldi, president and CEO of AnnDyl Policy Group, an energy and environmental policy strategy firm
“Everything is going to depend on how quickly these guidelines can be written and put in place,” said Saul-Rinaldi, who helped design the rebate programs.
Some states may also decide not to apply for the grants — meaning rebates wouldn’t be available to homeowners in those states, Saul-Rinaldi added.
The HOMES rebate program offers up to $8,000 for consumers who cut their home energy via efficiency upgrades, such as insulation or HVAC installations. Overall savings depend on energy reduction and household income level.

Vitranc | E+ | Getty Images

The “high-efficiency electric home rebate program” offers up to $14,000. Households get rebates when they buy efficient electric appliances: up to $1,750 for a heat pump water heater; $8,000 for a heat pump for space heating or cooling; and $840 for an electric stove or an electric heat pump clothes dryer, for example. Non-appliance upgrades like electric wiring also qualify.
Rebates from the “high-efficiency” program are only available to lower-income households, defined as those earning less 150% of an area’s median income.
Steve Nadel, the executive director of the American Council for an Energy-Efficient Economy, expects most states to participate; they’re unlikely to pass up free money for residents from the federal government, he said.
Large states “who have their act together and have the staff” may be able to start offering the rebates as soon as early 2023, he said. More

People walk near a Kohl’s department store entranceway on June 07, 2022 in Doral, Florida.
Joe Raedle | Getty Images

Check out the companies making the biggest moves midday:
Kohl’s — Shares of the retailer jumped 5.64% after a Reuters report that private equity firm Oak Street Real Estate Capital has made an offer to acquire as much as $2 billion of Kohl’s property and have the retailer lease back its stores. Reuters cited people familiar with the matter.

Broadcom — Broadcom shares advanced 1.67% after the chipmaker reported quarterly earnings and revenue that exceeded analyst forecasts and issued stronger-than-expected revenue guidance for the current quarter. The company’s CEO, Hock Tan, also said it’s expecting strong demand to continue this quarter.
Lululemon — Shares of apparel company surged 6.7% after Lululemon’s earnings cruised past analyst estimates for the second quarter. The company reported $2.20 in adjusted earnings per share on $1.87 billion in revenue. Analysts surveyed by Refinitiv were expecting $1.87 in earnings per share and $1.77 billion of revenue. Comparable sales rose 23% year over year, and operating margin expanded to 21.5%.
Okta — Shares of the cybersecurity company rose 6.65%, recovering some of its steep losses from the previous day. Okta had cratered 33.7% Thursday after a slew of Wall Street downgrades, despite a top and bottom line beat in the recent quarter.
Salesforce — Shares of the enterprise software maker jumped earlier in the day but settled just 0.1% higher after Guggenheim upgraded the stock to neutral from sell. The Wall Street firm upped its rating after Salesforce sold off 20% since its initiation. Last week, Salesforce reported numbers that beat quarterly expectations but came up short on guidance for the current quarter and the full fiscal year.
PagerDuty — PagerDuty was down 2.45%, despite reporting better-than-expected quarterly earnings and strong guidance. The operations management software company posted a 7.1% increase in total paid customers compared to a year prior and a 37.5% jump in the number of customers providing annual recurring revenue exceeding $100,000.

Rocket Lab — Shares of Rocket Lab climbed during midday trading but only closed .95% higher after the company announced it successfully fired a reused Rutherford stage engine for the first time earlier this week. The engine is a liquid propellant rocket engine designed and manufactured by the space rocket company.
Beyond Meat — Beyond Meat shares dropped 4.68% after investment firm Baillie Gifford reported a 6.61% stake in the company. That’s down from the firm’s 13.38% stake on December 31, 2021.
Energy stocks – Oil prices rose on Friday, helping shares of energy companies higher. Among the winners was Halliburton, which jumped 3.7%. Devon Energy and ConocoPhillips both rose about 3%, while Exxon Mobile was up just under 2% and Occidental Petroleum rose 0.54%.
— CNBC’s Jesse Pound, Yun Li and Tanaya Macheel contributed to this report.

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The unemployment rate increased to 3.7% in August from 3.5% in the prior month, according to the Labor Department’s jobs report issued Friday.
That increase is largely attributable to the labor force growing by 786,000 people, which is an encouraging trend, according to economists.
A bigger labor supply is good for employers and may help reduce inflation. But it would be worrisome if the jobless rate continues to rise and the labor force doesn’t grow.

Catherine Mcqueen | Moment | Getty Images

Why the unemployment rate increased in August

The unemployment rate increased by 0.2 percentage point from 3.5% in July — a level that had tied with early 2020 as the best since 1969.
The movement upward in August was largely attributable to hundreds of thousands of people entering the labor force, economists said.

The government doesn’t count individuals as unemployed when they’re out of the labor force since they’re not actively looking for work. People left the labor force for various reasons during the pandemic, including illness, child care and other family responsibilities, and early retirement.
Now, there are more people looking for work and they’re officially counted as unemployed, which has had the effect of nudging up the jobless rate.
About 786,000 people came off the sidelines last month, which is a “huge” number, Pollak said.
The labor force participation rate — the share of people in the labor force relative to the U.S. population — grew by 0.3 percentage point to 62.4%; that’s a swift increase for a measure that generally moves by just 0.1 point, if at all, from month to month, Pollak said.
“There’s more willingness to work, more eagerness to find jobs and actively search for them,” Pollak said.

Why a larger labor pool is good for employers and the Fed

Against this backdrop, an increase in the unemployment rate isn’t worrying in the short term, economists said.
The job market is hot, characterized by steady job growth and ample openings, meaning workers aren’t likely to stay unemployed for long. It’s also good news for businesses that are having trouble hiring, since they have a bigger supply of workers to choose from.
“This means that more people are participating in the labor market, and while some of those individuals may not be employed yet, this is promising news for employers,” according to AnnElizabeth Konkel, a senior economist at job site Indeed.
Labor force participation still hasn’t fully recovered from its pandemic-era drop-off, though in August it tied for the highest level during the Covid-19 recovery.

“Prime age” labor force participation — for workers ages 25 to 54 — jumped to 82.8% in August, nearly back to its pre-pandemic level, according to Daniel Zhao, lead economist at Glassdoor, a career site. This metric was a “star” of the jobs report, he added. Looking at this figure over time helps control for some broad demographic trends like baby boomers entering their retirement years.
A larger labor pool is also a positive development for the Federal Reserve, which has been trying to reduce inflation: If employers can hire workers off the sidelines instead of poaching from other businesses by raising wages, it could help keep a lid on inflation, according to Zhao.
“The rising unemployment rate is a concern if it continues,” Zhao said. “But the strong labor force gains we saw underneath are a really encouraging sign.”
But the risk of long-term unemployment is low, given there are nearly two open jobs per unemployed worker, economists said.

It’s hard to know why people came off the sidelines

The Labor Department doesn’t pinpoint why people came off the sidelines in August. Survey data suggests finances may play a role in some workers’ decision, though.
About 59% of job seekers said they felt financial pressure to accept their first job offer in July, up from 51% the month prior, according to a recent ZipRecruiter survey. Those facing serious financial difficulties also rose substantially, to 16.6% from 12.3%.

The rising unemployment rate is a concern if it continues. But the strong labor force gains we saw underneath are a really encouraging sign.

Daniel Zhao
lead economist at Glassdoor

There’s a positive and negative aspect to the dynamic, Pollak said. On one hand, people may feel they need job income as their savings dwindle and inflation stresses household budgets, she said; on the other, it means workers see an opening in the labor market.
“When your chance at winning the lottery goes up, you’re more likely to play the game,” Pollak said. “People do jump in and give it a try when it’s easier to succeed.”

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Check out the companies making headlines before the bell:
Lululemon (LULU) – Lululemon rallied 9.5% in the premarket after reporting better-than-expected quarterly results and issuing an upbeat outlook. The athletic apparel and leisurewear maker said it continues to see strong sales momentum.

Broadcom (AVGO) – Broadcom rose 2% in premarket trading after quarterly earnings and revenue exceeded analyst forecasts. The chip maker also issued a stronger-than-expected revenue forecast for the current quarter. CEO Hock Tan said Broadcom expected strong demand across all its end markets to continue this quarter.
Starbucks (SBUX) – Starbucks named Laxman Narasimhan as its new chief executive officer. Narasimhan was most recently CEO of Lysol and Enfamil maker Reckitt Benckiser, and has served in executive positions at PepsiCo. Narasimhan will join Starbucks on October 1 as incoming CEO and take over for interim CEO Howard Schultz in April 2023.
Bed Bath & Beyond (BBBY) – The housewares retailer’s stock slid 5.5% in premarket trading, setting it up for a possible fourth straight negative session. Bed Bath & Beyond – popular among “meme stock” traders – unveiled a number of steps on Wednesday designed to shore up its finances.
PagerDuty (PD) – PagerDuty shares jumped 5.8% in premarket action following a better-than-expected quarterly report and strong guidance. The operations management software company saw a 7.1% increase in total paid customers compared with a year earlier and a 37.5% surge in the number of customers providing annual recurring revenue exceeding $100,000.
Shell (SHEL) – Shell CEO Ben van Beurden is preparing to step down next year, after nearly a decade in that job, according to two company sources who spoke to Reuters. The sources say the energy producer has identified four candidates to succeed van Beurden. Shell gained 1.4% in off-hours trading.

Beyond Meat (BYND) – Investment firm Baillie Gifford reported a 6.61% stake in the maker of plant-based meat alternatives as of August 31, compared with a 13.38% stake on December 31, 2021. Beyond Meat rose 1% in the premarket.
Rocket Lab USA (RKLB) – The space rocket company’s stock added 2.9% in premarket action after successfully test firing a reused Rutherford first stage engine for the first time. The Rutherford engine is a liquid propellant rocket engine designed and manufactured by Rocket Lab.

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