Finance

The number of Americans “employed part-time for economic reasons” fell by 707,000 last month to 3.6 million, according to June jobs report issued Friday by the U.S. Department of Labor.
That’s the lowest level of so-called involuntary part-time workers since August 2001, according to the Federal Reserve Bank of St. Louis. The dynamic suggests workers have ample leverage in the current job seeker’s labor market.
These individuals work part-time involuntarily. They are forced to work part-time because their employer cut their hours or they can’t find a full-time gig, according to the Labor Department.

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The number of Americans who want to work full-time but are forced to work part-time jobs declined in June to its lowest in more than 20 years, according to federal data issued Friday, underscoring the strength of the labor market and the bargaining power of workers.
There were 3.6 million workers “employed part-time for economic reasons” in June, a decline of 707,000 from the prior month, according to the U.S. Department of Labor’s monthly jobs report.

That’s the lowest level since August 2001, according to historical data compiled by the Federal Reserve Bank of St. Louis.
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The Labor Department classifies individuals as “employed part-time for economic reasons” if they prefer full-time employment but are forced to work part-time because their employer cuts their hours or they can’t find a full-time gig.
“We have seen a pretty dramatic decrease, and I think that’s a very healthy sign for American workers,” said Daniel Zhao, a senior economist at career website Glassdoor.
Prior to the pandemic, the number of involuntary part-time workers dipped below 4 million just two other times in the last two decades — in July 2019 and March and April 2006, according to the Federal Reserve Bank of St. Louis.

Strong job market

That decrease comes on the heels of other federal labor data issued Wednesday showing employers’ demand for workers remains near all-time highs, which means the dynamic is tilted in employees’ favor.
Job openings and the rate of people quitting their jobs at the end of May were near peak levels set in March, and layoffs remained near all-time lows. Meanwhile, wages have grown at the fastest clip in decades as employers compete for talent.

“I think this is a case where employers recognize they can’t afford to just have a bunch of part-time workers, because they’re going to lose them to full-time opportunities,” Zhao said of the decline in involuntary part-timers.
“If given a choice, a lot of these part-time workers will go find better opportunities elsewhere,” he added. “So, naturally, employers are getting pressured to offer full-time hours to part-time workers.”

‘Major milestone’

The decrease in June also comes as the overall labor market remains a bright spot in the U.S. economy despite fears of a recession on the horizon, according to economists.
Businesses added 372,000 jobs last month, beating expectations and continuing a strong pandemic-era recovery.
If the current job-growth trajectory holds, the U.S. would fully recover the 22 million lost jobs during the pandemic era in August. The private sector fully recovered to its prepandemic baseline in June, which U.S. Secretary of Labor Marty Walsh hailed as a “major milestone” on Friday morning.

The unemployment rate also remained at 3.6% in June, unchanged for four straight months and just above its 3.5% rate in February 2020 — which, in turn, was the lowest jobless rate dating to 1969.
However, it’s unclear if and how long the strength will persist. The Federal Reserve is trying to cool the economy by raising borrowing costs for consumers and businesses, in a bid to tame stubbornly high inflation. Central bank policymakers predicted last month that the unemployment rate would increase slightly, to 3.7%, by the end of 2022 and to 4.1% in 2024.

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Check out the companies making headlines before the bell:
Levi Strauss (LEVI) – Levi Strauss rallied 3.9% in the premarket after reporting better-than-expected sales and profit for its latest quarter, helped by higher prices and strong demand for its denim offerings. Levi Strauss also raised its quarterly dividend by 20%.

GameStop (GME) – GameStop fell 5.6% in premarket trading after the video game retailer fired Chief Financial Officer Mike Recupero and told employees in an internal memo that it is cutting staff, as it tries to turn its business around.
Twitter (TWTR) – Twitter shares lost 4% in premarket action, following a Washington Post report that Elon Musk’s deal to buy Twitter may be in jeopardy. People familiar with the matter told the paper that Musk’s team doesn’t think Twitter’s figures on spam accounts are reliable, although officials defended their numbers in a call with reporters.
Upstart Holdings (UPST) – The lender’s stock plunged 16.3% in premarket trading after it said it would not meet already-reduced financial targets for its second quarter. Upstart points to a constrained lending marketplace as well as moves during the quarter to convert loans into cash.
Spirit Airlines (SAVE) – Spirit Airlines once again delayed a special shareholder meeting to vote on its planned merger with Frontier Group (ULCC), this time until July 15. The postponement comes as Spirit continues talks with both Frontier and rival suitor JetBlue (JBLU). Spirit jumped 3.2% in the premarket.
Occidental Petroleum (OXY) – Berkshire Hathaway (BRKb) bought another 12 million Occidental Petroleum shares, raising its stake in the energy producer to 18.7%. Occidental gained 2% in premarket action.

WD-40 (WDFC) – The lubricant maker reported a quarterly profit and sales that fell short of analyst forecasts, impacted by inflationary pressures and a number of global disruptions. Shares slumped 10.6% in the premarket.
Nu Skin Enterprises (NUS) – Shares of the health products company skid 4% in premarket trading after it gave lighter-than-expected guidance for the current quarter. Nu Skin cited several negative factors, including the Russia/Ukraine conflict, Covid-related factors in China and the general global economic downturn.
Kura Sushi (KRUS) – The Japanese restaurant chain operator’s stock surged 13% in the premarket after it reported an unexpected quarterly profit and raised its sales guidance for the full year.

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In a report published Friday, the ECB said the findings reaffirm the view that banks must sharpen their focus on climate risk.
“Euro area banks must urgently step up efforts to measure and manage climate risk, closing the current data gaps and adopting good practices that are already present in the sector,” Andrea Enria, chair of the ECB’s supervisory board, said in a statement.

Environmental protesters take to the streets during a demonstration by Fridays for Future in the financial district of Frankfurt, Germany, in August last year.
Bloomberg | Bloomberg | Getty Images

The results of the European Central Bank’s first climate risk stress test show that most euro zone banks do not sufficiently incorporate climate risk into their stress-testing frameworks and internal models.
In a report published Friday, the ECB said the findings reaffirm the view that banks must sharpen their focus on climate risk.

It comes at a time of severe heat and scarce rainfall in southern Europe, rising energy prices and the prospect of a halt to the region’s gas supplies from Russia in retaliation against sanctions imposed over the Kremlin’s onslaught in Ukraine.
To be sure, the world’s leading climate scientists have warned humanity has reached “now or never” territory to stave off the worst of what the climate crisis has in store.
“Euro area banks must urgently step up efforts to measure and manage climate risk, closing the current data gaps and adopting good practices that are already present in the sector,” Andrea Enria, chair of the ECB’s supervisory board, said in a statement.
A total of 104 banks participated in the test, which is the first of its kind, the ECB said, providing information over three modules, or categories. Those included their own climate stress-testing capabilities; their reliance on carbon-emitting sectors; and their performance under different scenarios over several time horizons.

The results of the first module found that roughly 60% of banks do not yet have a climate risk stress-testing framework.

Similarly, the ECB said most banks do not include climate risk in their credit risk models and just 20% consider climate risk as a variable when granting loans.
As for the reliance of banks on carbon-emitting sectors, the ECB said that on aggregate, almost two-thirds of banks’ income from non-financial corporate customers stems from greenhouse gas-intensive industries.
In many cases, the report found banks’ “financed emissions” come from a small number of large counterparties, which increases their exposure to emission-intensive sectors.
Within the third module, the results were limited to 41 directly supervised banks to ensure proportionality toward smaller banks. It required lenders to project losses in extreme weather events under different transition scenarios.
The results warned that credit and market losses could amount to around 70 billion euros ($70.6 billion) on aggregate this year for the 41 directly supervised banks.
The ECB noted, however, that this “significantly understates the actual climate-related risk” as it reflects only a fraction of the actual hazard. This was due, in part, to a scarcity of available data.
“This exercise is a crucial milestone on our path to make our financial system more resilient to climate risk,” said Frank Elderson, vice-chair of the ECB supervisory board. “We expect banks to take decisive action and develop robust climate stress-testing frameworks in the short to medium term.”

ECB President Christine Lagarde previously said the central bank was taking steps to incorporate climate change “into our monetary policy operations.”
Bloomberg | Bloomberg | Getty Images

The ECB said it collected both qualitative and quantitative information, with a view to assessing the sector’s climate risk preparedness and gathering best practices for dealing with climate-related risk.
The report concluded that most banks would need to work further on improving their stress test frameworks’ governance structure, data availability and modeling techniques.

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Exchange-traded funds track a basket of stocks that can be bought and sold as a single asset.
In five years, mainland China saw the number of ETFs more than quadruple to 645, while the number of stocks rose by a mere 53% to 4,615.
A regulatory change that took effect Monday opened that ETF market to overseas investors via Hong Kong — a program called the ETF Connect.

Hong Kong, a British colony from the 1840s to 1997, grew into an international finance center just off the coast of mainland China. A stock connect launched in 2014, followed by other systems linking Hong Kong’s market closer with the mainland’s.
Anthony Kwan | Bloomberg | Getty Images

BEIJING — China has joined the global craze over exchange-traded funds, the investment product that lets traders buy and sell a basket of stocks.
Better known as ETFs, the funds surged in popularity in the U.S. after the financial crisis, and built $3 trillion businesses like BlackRock’s iShares ETF brand.

In mainland China, ETFs have multiplied faster than the stock market. In five years, the number of ETFs more than quadrupled to 645, while the number of stocks rose by a mere 53% to 4,615.
That’s according to official data and a report from Hong Kong Exchanges and Clearing, which also stated the mainland ETF market has become a 1.4 trillion yuan ($209 billion) business, more than tripling in just five years.
A regulatory change that took effect Monday opened that ETF market to overseas investors via Hong Kong — a program called the ETF Connect.
Beijing-based ChinaAMC, which said it launched the first ETF on the mainland in 2004, rode the industry’s surge and operates 10 of the funds eligible for trading under the new cross-border trading program. Those include ETFs tracking indexes and themes like semiconductor development.

The ETF Connect leans heavily toward the mainland. Of the initial batch of eligible ETFs, 83 are listed on the mainland, versus just four in Hong Kong.

Goldman Sachs predicts $80 billion more in purchases of mainland assets versus those in Hong Kong over the next 10 years.
“Adding Northbound ETFs to one’s A-share portfolio could potentially expand the efficient frontier and improve the risk/reward,” Goldman Sachs analysts wrote in a report this week. “While the initial Southbound eligible universe looks narrow, the underlying constituents still offer mainland investors broad exposure to HK-listed Internet and Financial stocks.”
Chinese internet tech giants like Tencent and Alibaba have listings in Hong Kong but not the mainland. On the other hand, many China-focused companies are only listed on the mainland.
One of the things the ETF Connect can do is boost international investors’ understanding of mainland China ETFs and increase the products’ influence, Xu Meng, a ChinaAMC fund manager, said in a statement. Xu is also executive general manager of the firm’s quantitative investment department.
ChinaAMC claims that as of the end of 2021, it had more than 300 billion yuan in passively managed assets.

New links to mainland China

The same day the ETF Connect launched, Chinese regulators announced a new program — set to take effect in about six months — that would allow investment in financial derivatives on the mainland via Hong Kong.
A subsequent phase of the program is set to allow mainland investors to trade financial derivatives in Hong Kong.
Those moves to connect Hong Kong and mainland markets follow similar programs for stocks and bonds that began in 2014. Mainland China is home to the world’s second-largest stock market by value.

More ETFs to come

Other financial firms are coming to the ETF market — with a focus on greater China clients wanting to invest internationally through Hong Kong.
Wealth manager Hywin Holdings, based in Shanghai with a subsidiary in Hong Kong, launched last week a health care stock index with FactSet, a financial data and software company.
The 40-stock “FactSet Hywin Global Health Care Index” tracks shares of companies mostly listed in Europe or North America — such as AstraZeneca and Merck.
The plan is to commercialize that index with an ETF listed in Hong Kong.

Read more about China from CNBC Pro

“Hywin’s clients [more than 130,000 across Asia], increasingly, they find the world very fluid, very volatile. They want to capture opportunities but they are less sure these days about picking the stock and picking the timing,” said Nick Xiao, Hywin Holdings’ vice president and CEO of the firm’s overseas business, Hywin International.
After this first co-branded index, Xiao said he expects more collaboration with FactSet to create indexes and ETFs. He noted there are already eight ETFs listed in Hong Kong that track FactSet indexes.
Among institutional investors and money managers in Greater China, nearly 40% said they invested more than half of their assets under management in ETFs, far higher than the 19% share in the U.S., Brown Brothers Harriman found in an annual survey released in January.

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A trader walks on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, June 27, 2022.
Michael Nagle | Bloomberg | Getty Images

Stock futures slipped in overnight trading following a rally on Wall Street as investors await a key jobs report Friday.
Futures tied to the Dow Jones Industrial Average fell 37 points or 0.12% to 31,330.00. S&P 500 futures were down 0.17%, and Nasdaq 100 futures slumped 0.26%.

Shares of Levi Strauss gained more than 3% after the bell when the retailer reported quarterly earnings that exceeded expectations and boosted its dividend.
GameStop fell about 5% in after-hours trading when the company fired its chief financial officer and said it would lay off employees as part of a turnaround plan. The stock notched a 15% gain in the regular session, a day after the video game retailer announced that its board approved a 4-for-1 stock split.
The action in futures followed a winning session Thursday in which the S&P 500 posted a four-day positive streak, matching its longest of the year thus far, according to Bespoke Investment Group. The index is now down about 19% from its all-time high in January.
Energy stocks led gains during regular trading, as the price of oil reversed from a recent dip. Exxon Mobil climbed nearly 3.2%, while Occidental Petroleum added close to 4%. Chipmakers boosted the tech sector after strong earnings from Samsung.
“You just don’t see the capitulation just yet, I think there’s a little bit more that needs to happen between now and the July Fed meeting,” Mark Newton, head of technical strategy at Fundstrat, said on CNBC’s “Closing Bell: Overtime” on Thursday. He added that stocks could pull back as early as Friday’s session.

The June employment report due on Friday is expected to show another month of strong hiring as the labor market bucks any signs of an impending recession or economic slowdown. Economists expect that the U.S. economy added 250,000 jobs last month and that the unemployment rate will remain flat at 3.6%, according to Dow Jones.
In May, employers added 390,000 jobs, which was better than economists expected.
The S&P 500 is up about 2% during this holiday-shortened week, and it’s on pace for its second positive week in the last three.
The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite are up 0.92% and 4.4% this week, respectively. Both indexes are also on track for their second positive week in the last three.

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U.S. stocks rose on Thursday as Wall Street built on its modest winning streak ahead of a key jobs report.
The Dow Jones Industrial Average gained 346.87 points, or about 1.12%, to close at 31,384.55. The S&P 500 added 1.50% to 3,902.62, while the Nasdaq Composite gained 2.28% to 11,621.35.

The S&P 500 notched a four-day winning streak, matching its best stretch of the year, according to Bespoke Investment Group.

Energy stocks were among those leading the gains on Thursday, reversing some recent losses as oil prices rebounded. Exxon rose 3.2%, and Occidental Petroleum gained nearly 4%.
Freeport-McMoRan and Nucor rose 6.7% and 4.3%, respectively, as commodity stocks climbed.
Chipmakers boosted the tech sector after South Korea’s Samsung posted an 11% jump in profit and 21% surge in revenue for the latest period on strong sales of memory chips. Shares of AMD and Nvidia gained 5.2% and 4.8%, respectively. On Semiconductor jumped more than 9%.
The Nasdaq has also risen for four-straight sessions, while the Dow has been up in three of the past four.

“There’s not necessarily much conviction in this move, but it is nice to see that, in the absence of new negative news, that markets are bouncing off of short-term oversold levels,” said Angelo Kourkafas, investment strategist at Edward Jones.
Another notable mover was GameStop, which popped 15% after the video game retailer said a 4-for-1 stock split was approved by its board.
Solar stocks also outperformed, with Sunrun gaining more than 7%.
Even with the recent gains, the S&P 500 is still down about 19% from its all-time high in January.
“Bottoming is a process, so we’re working our way through that process,” said Jeff Buchbinder, equity strategist at LPL Financial. “We think, if the lows aren’t in, they’re close.”
On the economic front, initial jobless claims and continuing claims both ticked up slightly last week. The U.S. trade deficit for May came in slightly higher than expected at $85.5 billion but was still down month over month.
The Labor Department’s monthly jobs report is due out on Friday, and the employment data could warrant extra scrutiny as investors try to gauge the health of the U.S. economy.
“With anecdotes of Tech sector layoffs and hiring freezes, sub-50 readings in the EmploymentComponents of the most recent ISM Manufacturing and Services surveys, and rising unemployment claims (albeit from extremely low levels), Friday’s Jobs report will hold particular significance,” Credit Suisse chief U.S. equity strategist Jonathan Golub said in a note to clients.
Economists surveyed by Dow Jones expect a gain of 250,000 jobs for June, which would be a slowdown from the 390,000 added in May.
Lea la cobertura del mercado de hoy en español aquí.

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Shoppers wait for a GameStop store to open on at the Tysons Corner Center, in Tysons, Virginia, November 27, 2020.
Hannah McKay | Reuters

Check out the companies making headlines in midday trading.
GameStop — Shares of the video game retailer jumped 15.1% after the company said a 4-for-1 stock split was approved by its board. A stock split theoretically makes the stock more affordable for investors, but it doesn’t change the fundamentals of the company.

Virgin Galactic Holdings — The space tourism company climbed 12.1% after it announced a partnership with Boeing subsidiary Aurora Flight Sciences to build additional aircraft “motherships” to support its coming spacecraft fleet. Shares of Boeing rose 2.7%.
Bed Bath & Beyond — Shares of the home goods retailer jumped 21.7% following the disclosure of several insider purchases, including interim CEO Sue Gove’s purchase of 50,000 shares. Board members Harriet Edelman and Jeff Kirwan each bought 10,000 shares.
Energy stocks — Oil stocks were the leaders in the S&P 500 Thursday after prices jumped back over $100 after sliding alongside other commodities. APA Corp jumped gained 7.8%. Marathon Oil, Schlumberger and Diamondback Energy all rose more than 5%.
Chip stocks — Samsung gave chipmakers’ shares a boost after the company offered “better than feared” revenue guidance for the second quarter. On Semiconductor jumped 9.2%. Marvell rose 6.5%, while Advanced Micro Devices and Qualcomm gained more than 5%.
Otis Worldwide — The maker of elevators and escalators saw shares fall roughly 1.6% after JPMorgan downgraded them to neutral from overweight. The firm also cut its price target on the stock to $62 from $100, implying downside of about 13% from Wednesday’s close.

Helen of Troy — Shares dropped 8.9% after the consumer products company lowered its sales and EPS outlooks for fiscal year 2023, despite reporting an earnings beat for its most recent quarter.
SoFi — Shares of the fintech stock rose more than 6.1% after Mizuho reiterated the stock as a buy and said it can withstand a recession better than its peers.
 — CNBC’s Samantha Subin, Sarah Min and Yun Li contributed reporting.

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Inflation is pushing up costs for groceries, gasoline, rent and other areas of household budgets at a faster-than-usual pace.
The consumer price index jumped 8.6% in May relative to a year earlier, the largest increase since 1981.
Nikki Haley, former U.S. ambassador to the United Nations, thrust inflation calculations into the spotlight by exaggerating cost increases for a July Fourth cookout. Here’s how consumers can determine their personal inflation rate.

Skynesher | E+ | Getty Images

It’s likely no surprise to hear that prices have been rising across the U.S. economy, whether at the grocery store or the gas pump.
But just how much have your personal household costs increased, and how does that stack up against the average American’s?

Calculating your personal inflation rate can help answer these questions.
The consumer price index is a common inflation measure. Households paid 8.6% more money in May 2022 for a broad basket of goods and services relative to that same basket in May 2021 — the largest annual jump in more than 40 years.
More from Personal Finance:How much cash you need to ride out a recessionHow to adjust your housing budget amid rising mortgage ratesWhy experts say a higher federal minimum wage is long overdue
However, your basket is likely different. For one, purchases and consumption habits vary from household to household, based on factors such as income, age and geography, according to Brian Bethune, an economist and professor at Boston College.
This means your personal inflation rate likely diverges from the U.S. average, too.

There are a few ways to calculate your inflation rate. The pitfalls of such a calculation came into focus on Monday when Nikki Haley, former U.S. ambassador to the United Nations during the Trump administration, tweeted an incorrect estimate for a July Fourth cookout.

(Her tweet, which has since been deleted, pegged a barbecue as 67.2% more expensive relative to last year. By comparison, the American Farm Bureau Federation said costs had increased 17% — a much smaller rise, though still elevated. President Joe Biden cited that agriculture trade group in 2021 when the White House said costs for an Independence Day BBQ had decreased 16 cents relative to 2020.)

Calculating your personal inflation rate

Here’s the simplest way to get a rough estimate of your personal annual inflation rate, according to economists.

The first step is to determine how much of your spending falls into certain categories or buckets, such as food, energy, clothing, housing and entertainment.To do this, you’ll need to consult your bank and credit card statements for the past year to find exact spending amounts. The U.S. Bureau of Labor Statistics publishes a detailed list that can help you itemize your purchases by category.
Calculate your category “weights.” This weighting is basically the share of your spending devoted to specific buckets. (The consumer price index calls this weighting “relative importance.”)To do this, tally your total spending within categories. Divide each number by your aggregate annual spending to calculate the category weight.For example, let’s say my total household spending from May 2021 to May 2022 was $50,000. I spent $17,000 (or 34% of the total) on rent and $6,000 (or 12%) on groceries. Their category weights would be 0.34 and 0.12, respectively.
Reference the BLS table of detailed expenditure categories again. The “unadjusted percent change” column shows the average annual percent increase in price for each item.For example, rent payments increased 5.5% in the year through May. The price of food at home (groceries) rose 11.9% in the same period.
Multiply the category weights in step 2 by the annual percent change for those categories in step 3. Using the above example, you’d multiply 0.34 x 5.5 for the rent calculation. Multiply 0.12 x 11.9 for food. And so on for all other spending categories.
To determine your personal inflation rate, add up the category totals from step 4. (In the above example: 1.87 + 1.428 + etc.) This total is your annual inflation rate expressed as a percentage.
Compare your rate to the national average. For annual spending through this May, a percentage that’s lower than 8.6% means your costs haven’t increased as much as the average American.A higher number means your costs have risen more in the past year. Of course, households generally think in terms of dollars and cents, not percentages.

A more precise way to calculate your rate

Jamie Grill | Getty Images

The above calculation compares your household experience to the average American, based on the differences in goods and services, as well as the quantity, that each household buys. However, the formula leverages price averages for those goods and services — meaning it’s not a hyper-individualized calculation.
Consumers can do some additional calculations to get a more precise understanding of how their individual household spending has changed from year to year:  

Tally all expenses from your bank and credit card statements in the past 12 months, as well as for the prior 12-month period.
Subtract the totals and divide by the first year’s spending. For example, let’s say my spending was $50,000 from May 2021 to May 2022, and it was $45,000 from May 2020 to May 2021. Divide the difference ($5,000) by $45,000.
Multiply that number from step 2 by 100 to determine your personal annual inflation rate.

In the above example, I’d multiply 0.111 by 100. My personal annual inflation rate over that period would have been 11.1%.

Using cash, shopping sales can skew results

There are a few caveats. For one, you’re likely unable to account for any spending made in cash. It’s also likely you’ve sought out less-expensive alternatives where possible (substituting less-expensive foods, for instance), or maybe you’re driving less to save on gasoline.
This all means your calculation might not be 100% accurate, but it will be in the ballpark.

Further, costs aren’t rising in a vacuum. If you’re working, your income has likely increased, too. Average wages are up 6.1% in the past year, according to the Federal Reserve Bank of Atlanta. They haven’t kept pace with the average inflation rate, but more household income erodes some of the financial pain.
“If you have to shell out more dollars just to get the same items and your income isn’t keeping up with that, then your quality of life is deteriorating,” Alex Arnon, associate director of policy analysis for the Penn Wharton Budget Model, said of inflation’s impact.

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