Tag Archives: Economy

Americans filing applications for unemployment benefits fall to lowest level since 1969

FILE PHOTO - People attend the Executive Branch Job Fair hosted by the Conservative Partnership Institute at the Dirksen Senate Office Building in Washington, U.S., June 15, 2018. REUTERS/Toya Sarno Jordan/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits fell to a more than 49-year low last week, pointing to sustained labor market strength despite slowing economic growth.

Other data on Thursday showed U.S.-based companies announced fewer layoffs in March, but job cuts for the first quarter were the highest since 2015. The economy is losing momentum as the stimulus from a $1.5 trillion tax cut package fades

Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 216,000 in the latest week. The Labor Department said only claims for California were estimated.

The claims data has shown no significant pickup in layoffs and there have been reports of companies reluctant to let go of workers amid a growing shortage of skilled labor. The scarcity of workers contributed to a recent slowdown in hiring.

Job growth has slowed from last year’s roughly 225,000 monthly average pace. The pace of increase, however, remains more than sufficient to keep up with growth in the working age population, holding down the unemployment rate.

U.S. Treasuries prices pared gains after the data, while the dollar was little changed against a basket of currencies.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 213,500 last week, the lowest level since early October 2018.

The claims data has no bearing on March’s employment report, which is scheduled for release on Friday. According to a Reuters survey of economists, nonfarm payrolls likely increased by 180,000 jobs last month after a meager 20,000 in February, which was seen as pay-back after robust gains in the prior two months.

The unemployment rate is forecast unchanged at 3.8 percent.

A separate report on Thursday from global outplacement consultancy Challenger, Gray & Christmas showed planned job cuts by U.S.-based employers dropped 21 percent to 60,587 in March.

However, layoffs in the first quarter jumped 10.3 percent to 190,410 from the last three months of 2018. That was the highest since the third quarter of 2015 and was partly blamed on “economic uncertainty and fears of an upcoming downturn.”

Retailers continued to lead job cuts, purging 46,061 positions in the first quarter. The automotive sector eliminated 8,838 jobs in March, leading to 15,887 layoffs by auto manufacturers and suppliers in the first quarter. Redundancies were also high in the energy and financial sectors.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Erdogan fights to hold Turkey’s cities in bitter election battle

An election banner of Turkish President Tayyip Erdogan, with the Byzantine-era monument of Hagia Sophia in the background, is pictured in Istanbul, Turkey, March 28, 2019. REUTERS/Murad Sezer

By Dominic Evans and Ali Kucukgocmen

ISTANBUL (Reuters) – Less than a year after Tayyip Erdogan celebrated election triumph with fireworks in Ankara, Turkey’s all-powerful leader faces the embarrassment of losing his capital in local polls marred by bitter campaign rhetoric and economic storm clouds.

Erdogan has ruled Turkey for 16 years with an ever-tightening grip and his June 2018 national election victory vastly expanded his presidential powers, alarming Western allies who fear Turkey is drifting deeper into authoritarianism.

But the 65-year-old president could be brought down to earth on Sunday when Turks vote in municipal elections which threaten to inflict the first defeat for his Islamist-rooted AK Party in Ankara or the country’s biggest city and business hub, Istanbul.

Erdogan has portrayed the vote as an existential choice for Turkey, blasting his domestic opponents as terrorist supporters and even invoking the New Zealand mosque killings as examples of the broader threats he says Turkey faces.

“It is a matter of survival against those who want to divide this country and tear it to pieces,” he told hundreds of cheering supporters at a rally earlier this month in central Istanbul’s Eyup Sultan district, next to a 19th-century mosque.

He has toured the country for weeks speaking up to eight times a day – a punishing routine which showcased the supreme campaigning skills that have made him the most popular and powerful leader since modern Turkey’s founder, Mustafa Kemal Ataturk.

It also highlighted, his critics say, Erdogan’s growing reliance on divisive rhetoric since a currency crisis in August ended years of strong economic growth which had helped deliver successive election wins for his AKP, attracting support from well beyond its conservative Muslim core.

A steep fall in the lira last Friday revived memories of last year’s meltdown, and provoked a flurry of stop-gap measures to halt a slump on the eve of voting which could erode support.

For many Turks, the vote is all about whether Erdogan can still deliver a decent standard of living.

“A crushing majority of people – including of course voters from the government party and its partners – think the economy is the number one problem in Turkey,” said political analyst Murat Yetkin.

Some polls give the main opposition Republican People’s Party (CHP) candidate in Ankara, Mansur Yavas, a lead over his AKP rival. In Istanbul, where the AKP is fielding former prime minister Binali Yildirim, the race appears close with the CHP.

Other cities may also be seized by the secularist opposition party.

REFERENDUM ON ERDOGAN

Analysts caution against reading too much into polling data – Erdogan won a first-round presidential victory last year, defying many expectations – and even if the AKP were to lose, it would not diminish the president’s official powers.

But those very powers that he assumed last year leave him increasingly exposed when things go wrong.

“The whole system has been so centralized around one individual that even a municipal election is a referendum on Erdogan himself,” said Wolfango Piccoli, co-president of Teneo political risk advisers.

Defeat in either city would bring to an end a quarter century of rule by Erdogan’s AKP and its Islamist predecessors, and deal a symbolic blow to a leader who launched his career in local politics and served as mayor of Istanbul in the 1990s.

For two months he has addressed rally after rally, repeating well-honed presentations that include campaign songs, gifts of tea to supporters and lists of AKP achievements from garbage clearing to home building and infrastructure mega-projects.

Overwhelmingly supportive media broadcast hours of live coverage. Campaign posters proclaim that Istanbul is “a love story” for the AKP, and municipal duties are a “labour of love”.

But Erdogan also promises his political opponents he will “bury them in the ballot boxes” just as Turkey’s armed forces have killed militants from the outlawed Kurdistan Workers Party (PKK), which he regularly links to the pro-Kurdish HDP party.

In the speech in Eyup Sultan he said CHP leader Kemal Kilicdaroglu, an election ally of the HDP, was “arm in arm” with a terrorist organization. “Who is behind him? Terrorists are behind him. Mr Kemal is walking together with them”.

The CHP and HDP deny any links to the PKK.

To his passionate supporters, Erdogan is speaking a self-evident truth. “I see, I hear, and I believe what I see and hear – not just what Reis (the chief) says,” Ismail Zeybek, a 40-year-old electrician, said at the rally.

Others say that by portraying the vote as a question of survival, the president is splitting his country. “What kind of relation could there be between local elections and existence? He is trying to win votes by polarizing,” said Mert Efe, a resident of Istanbul’s Besiktas district, a CHP stronghold.

When a lone gunman opened fire in two mosques in New Zealand a fortnight ago, Erdogan said if anyone tried to come to Turkey to do harm they would be sent back “in caskets” like Australian and New Zealand troops who fought Ottoman soldiers in Gallipoli a century ago.

He repeatedly showed extracts from the gunman’s manifesto, which he said threatened Turkey and Erdogan himself, as well as blurred footage from the shooting itself – even after New Zealand’s foreign minister flew to Turkey to ask him to stop.

“Looking at the rhetoric he is using, we have never seen this before on a municipal level. It’s unprecedented,” Piccoli said. “This concentration of power is running short of ideas, that is why he is pushing more and more this nationalist, religious agenda.”

In the final days of campaigning Erdogan also revived calls for Istanbul’s Hagia Sophia museum – the foremost cathedral in Christendom for 900 years and then one of Islam’s greatest mosques for 500 years until 1935 – to become a mosque again.

FOUR MORE YEARS?

After winning a 2017 referendum on his powerful executive presidency, and then last year’s hard-fought parliamentary and presidential elections, Erdogan could in theory enjoy the next four years free from electoral challenge.

A poor showing on Sunday, however, would strain his parliamentary alliance with the nationalist MHP party, raising the possibility that Erdogan could be back on the campaign trail sooner than the next scheduled national elections in 2023.

If the AKP suffers a “large-scale shock” involving the loss of both Ankara and Istanbul, or saw the share of the vote taken by the AKP/MHP alliance fall well below 50 percent, it would be a clear sign that Erdogan’s party is on the wane, said Sinan Ulgen, a former Turkish diplomat and analyst at Carnegie Europe.

“That would have consequences over time. It would make it more difficult to hold onto power through 2023, especially given that this perceived political weakness would be combined with the economic slowdown,” Ulgen said.

If the vote does not go the way Erdogan hopes, he will be faced with a more immediate decision on Sunday night.

Asked whether he plans to address supporters again as he did triumphantly from his AKP headquarters in Ankara last June, Erdogan said his balcony speech had become an election night tradition.

“We did this in every election. I think it would not be right if we didn’t do it at this election. But we have not sat down with colleagues to make this decision yet.”

(Additional reporting by Omer Berberoglu and Daren Butler; Editing by Pravin Char)

U.S. weekly jobless claims unexpectedly fall

FILE PHOTO: A man looks over employment opportunities at a jobs center in San Francisco, California, in this February 4, 2010 file photo. REUTERS/Robert Galbraith/Files

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting labor market conditions remained solid, despite slowing job growth.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 211,000 for the week ended March 23, the Labor Department said on Thursday. Data for the prior week was revised to show 5,000 fewer applications received than previously reported.

Economists polled by Reuters had forecast claims rising to 225,000 in the latest week. The Labor Department said no states were estimated. The government revised the claims data and the so-called seasonal factors from 2014 through 2018. It also updated the seasonal factor for 2019.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 217,250 last week.

Job growth has slowed after last year’s robust gain. The pace, however, remains more than enough to keep up with growth in the working age population. The unemployment rate is currently at 3.8 percent. The moderation in job growth also reflecting a shortage of workers and softening economic growth as the stimulus from a $1.5 trillion tax cut package fades.

Thursday’s claims report showed the number of people receiving benefits after an initial week of aid rose 13,000 to 1.76 million for the week ended March 16. The four-week moving average of the so-called continuing claims fell 4,250 to 1.75 million.

The continuing claims data covered the survey week for March’s unemployment rate. The four-week average of continuing claims rose slightly between the February and March survey periods, suggesting little change in the unemployment rate.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

The Federal Reserve is prodding Americans to buy more on credit

FILE PHOTO: A sign advertises homes for sale in a new housing development in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

By Jason Lange

WASHINGTON (Reuters) – The Federal Reserve’s decisive statement this week that interest rates are unlikely to rise this year sends a signal to U.S. households: keep buying stuff.

The Fed tries to guide the U.S. economy by controlling the interest rate banks charge one another for overnight loans. Moving this rate up lifts other rates in the economy, making it costlier for people to use their credit cards or to buy homes and cars. Higher rates also make companies rethink investments.

A solid majority of Fed policymakers on Wednesday said higher rates are unlikely this year, leading investors to bet the economy might slowing enough for the Fed to actually cut rates.

The following are some possible consequences for American households:

EASY CREDIT

The Fed’s signal on its interest rate outlook led key market rates to fall, including the yield on 10-year Treasury bonds. That is a sign that rates are also falling for loans used to buy houses and cars. Interest rates for credit cards may also drift lower. Mortgage rates have been falling since November when Fed policymakers made clear they would be patient about rate decisions.

SAVING DISCOURAGED

Lower rates also encourage spending by taking the shine off some common ways to save money. Low yields reduce the return on money in savings accounts as well as in funds made up of safe-haven government bonds. This poses a problem for retirees who depend more on their income from savings and who take a hit from lower rates on Treasury bonds. The Fed has argued that retirees benefit from actions taken to support the broader economy.

RETIREMENT BOOST

Rising stock prices comprise the flip side of lower bond yields. That boosts the value of private retirement accounts, such as 401(k)s, particularly those of young people whose accounts tend to be weighted toward stocks.

The benchmark S&P 500 stock index surged after the Fed’s decision, reflecting the view that cheaper borrowing costs would help company profits. It is possible that stock market gains could boost consumer spending because people sometimes loosen their purse strings after a rise in perceived wealth.

BUOYANT LABOR MARKET

The U.S. jobless rate is near its lowest level in 50 years although lately there have been signs of softening in the labor market. Hiring slowed sharply in February and the number of new jobless claims every week has also been ticking higher. The Fed’s action aims to keep the labor market solid. That could help encourage more people to rekindle job searches they had given up when the economy was still weak following the 2007-09 financial crisis.

 

(Reporting by Jason Lange, editing by G Crosse)

U.S. trade representative hopes U.S., China in final weeks of talks

FILE PHOTO - U.S. trade representative Robert Lighthizer, a member of the U.S. trade delegation to China, arrives at a hotel in Beijing, China February 12, 2019. REUTERS/Jason Lee

(Reuters) – U.S. Trade Representative Robert Lighthizer said on Tuesday he hopes the United States and China are in the final weeks of talks to secure a deal that will ease a trade war between the world’s two largest economies.

“Our hope is we are in the final weeks of having an agreement,” Lighthizer said at a Senate Finance Committee hearing, though he cautioned that issues remained.

“If those issues are not resolved in favor of the United States, we won’t have a deal.”

(Reporting by David Lawder and Humeyra Pamuk; Writing by Chris Prentice; Paul Simao)

U.S. inflation forecasts decline, supporting rate-hike holiday

A customer shops for Thanksgiving ham at a grocery store in Los Angeles, California U.S. November 21, 2017. REUTERS/Lucy Nicholson

NEW YORK (Reuters) – U.S. consumers expect prices to rise more slowly, according to the Federal Reserve Bank of New York, a decline in inflation expectations in February that likely reinforces policymakers’ reluctance to hike rates.

The survey of consumer expectations, published on Monday, is one of the Fed’s price gauges as it weighs the need for rate rises. It showed one- and three-year ahead inflation expectations were down 0.2 percentage points to 2.8 percent last month, with sharp declines in expected medical care expenses. Both the one- and three-year gauges had been roughly unchanged since April 2018.

Stable and low inflation is one of the main reasons that the U.S. central bank, having raised interest rates four times last year, is now taking a wait-and-see approach to any more tightening in 2019.

The Fed is also conducting a broad policy review that may result in the central bank welcoming inflation that is slightly and temporarily over its target. Some policymakers and analysts think the Fed now has far more ability to respond to upward spikes in prices rather than persistently low readings. That is because interest rate cuts lose their potency as those borrowing costs approach zero.

Fed officials last raised their target policy rate in December to 2.25 to 2.50 percent but signaled after that point that they would be “patient” before deciding future moves.

The New York Fed’s survey found that consumers expected tame inflation despite also forecasting their own wages would rise. Average one-year earnings growth expectations increased to 2.5 percent last month, from 2.4 percent the month before. Consumers also forecast a lower likelihood that unemployment will rise. Economists are debating whether rising wages and low unemployment figures still translate into higher inflation as orthodox economic theory assumes.

Consumers were also slightly more optimistic about the direction of U.S. stock prices and their ability to access credit to finance purchases.

The Internet-based survey taps a rotating panel of 1,300 households.

(Reporting by Trevor Hunnicutt; Editing by Chizu Nomiyama)

Credit reporting agencies face pressure from skeptical U.S. Congress

FILE PHOTO: The logo and trading information for Credit reporting company Equifax Inc. are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 26, 2017. REUTERS/Lucas Jackson

By Pete Schroeder

WASHINGTON (Reuters) – The nation’s major credit reporting agencies faced renewed scrutiny from Congress on Tuesday, as lawmakers consider legislation overhauling the industry.

Top executives from the three major credit reporting agencies – Equifax Inc, Experian Plc and TransUnion had to defend their business models before skeptical lawmakers who appeared eager to order changes to the sector following Equifax’s massive data breach, disclosed in 2017.

“Our nation’s consumer credit reporting system is broken,” said Representative Maxine Waters, chairwoman of the House Financial Services Committee. “I’m troubled to the point where I do think that we need to start thinking about how we reimagine it and rebuild it from the ground … We will be introducing legislation.”

Waters has a draft bill that would limit the reach of such credit reports, shorten the time adverse information remains on consumers’ records, and make it easier for consumers to dispute errors on their reports.

Several Democrats made clear they were dissatisfied with the current state of the country’s credit reporting, arguing consumers lack control over their own data.

The panel’s top Republican, Representative Patrick McHenry, agreed the industry was in need of a makeover. However, he emphasized a desire to see more companies compete with the three largest agencies.

“What I see here is an oligopoly,” he told executives. “I don’t see that vibrant competition which is needed for these agencies to actually help consumers.”

The massive data breach disclosed by Equifax in 2017, where a cyber attack exposed the personal data of roughly 148 million people, has driven calls from Washington for changes to the industry.

Legislation beefing up protections around consumer data is seen by analysts and lobbyists to be a rare area of common ground in the current Congress, where Democrats control the House and Republicans control the Senate.

Waters’ Senate counterpart, Banking Chairman Mike Crapo, has said legislation addressing the collection and protection of personal data is one of his top priorities this year. He is currently soliciting input on how consumers could retain more control over their personal information.

For their part, credit reporting agency executives told lawmakers they were working to address consumer concerns and bolster their cybersecurity to guard against future breaches.

“Consumers trust and expect that their credit reports contain the most accurate and complete data possible, and lenders rely on that information to help millions of consumers obtain the right loans at the right time,” said Equifax CEO Mark Begor in prepared testimony.

(Reporting by Pete Schroeder; Editing by Lisa Shumaker)

U.S. states sue Trump administration in showdown over border wall funds

A view shows a new section of the border fence in El Paso, Texas, U.S., as seen from Ciudad Juarez, Mexico February 15, 2019. REUTERS/Jose Luis Gonzalez

By Jeff Mason and Sarah N. Lynch

WASHINGTON (Reuters) – A coalition of 16 U.S. states led by California sued President Donald Trump and top members of his administration on Monday to block his decision to declare a national emergency to obtain funds for building a wall along the U.S.-Mexico border.

The lawsuit filed in U.S. District Court for the Northern District of California came after Trump invoked emergency powers on Friday to help build the wall that was his signature 2016 campaign promise.

Trump’s order would allow him to spend on the wall money that Congress appropriated for other purposes. Congress declined to fulfill his request for $5.7 billion to help build the wall this year..

“Today, on Presidents Day, we take President Trump to court to block his misuse of presidential power,” California Attorney General Xavier Becerra said in a statement.

“We’re suing President Trump to stop him from unilaterally robbing taxpayer funds lawfully set aside by Congress for the people of our states. For most of us, the office of the presidency is not a place for theater,” added Becerra, a Democrat.

The White House declined to comment on the filing.

In a budget deal passed by Congress to avert a second government shutdown, nearly $1.4 billion was allocated toward border fencing. Trump’s emergency order would give him an additional $6.7 billion beyond what lawmakers authorized.

Three Texas landowners and an environmental group filed the first lawsuit against Trump’s move on Friday, saying it violated the Constitution and would infringe on their property rights.

The legal challenges could slow Trump’s efforts to build the wall, which he says is needed to curb illegal immigration and drug trafficking. The lawsuits could end up at the conservative-leaning U.S. Supreme Court.

Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Virginia, and Michigan joined California in the lawsuit.

The states said Trump’s order would cause them to lose millions of dollars in federal funding for national guard units dealing with counter-drug activities and redirection of funds from authorized military construction projects would damage their economies.

In television interviews on Sunday and Monday, Becerra said the lawsuit would use Trump’s own words against him as evidence that there was no national emergency to declare.

Trump said on Friday he did not need to make the emergency declaration but wanted to speed the process of building the wall. That comment could undercut the government’s legal argument.

“By the president’s own admission, an emergency declaration is not necessary,” the states said in the lawsuit. “The federal government’s own data prove there is no national emergency at the southern border that warrants construction of a wall.”

(Reporting by Jeff Mason and Sarah N. Lynch; Editing by Clarence Fernandez)

Wary of shutdown, Trump inches toward support for funding deal

U.S. President Donald Trump listens next to Commerce Secretary Wilbur Ross during a Cabinet meeting at the White House in Washington, U.S., February 12, 2019. REUTERS/Carlos Barria

By Richard Cowan and Steve Holland

WASHINGTON (Reuters) – U.S. President Donald Trump on Wednesday edged toward backing a deal in Congress on government funding that would not meet his demand for $5.7 billion for a wall on the Mexican border but would avert a partial government shutdown.

Trump, widely blamed for a five-week shutdown that ended in January, said he did not want to see federal agencies close again because of fighting over funds for the wall, one of his signature campaign promises in the 2016 election.

The Republican president did not commit himself to backing the government funding agreement struck between Democratic and Republican lawmakers this week. But two sources and a Republican senator close to the White House said he would likely sign off on it.

“I don’t want to see a shutdown. A shutdown would be a terrible thing. I think a point was made with the last shutdown,” Trump told reporters. “People realized how bad the border is, how unsafe the border is, and I think a lot of good points were made.”

Trump said he would hold off on a decision until he sees actual legislation about the issue. Republican Senator Lindsey Graham said Trump was “inclined to take the deal and move on.”

Graham told reporters that Trump would then look elsewhere to find more money to build a wall along the U.S. southern border and was “very inclined” to declare a national emergency to secure the funds.

With a Friday night deadline looming before a shutdown, there is little time for the White House and the political parties in Congress to agree on funding.

Funding is due to expire for the Department of Homeland Security, the Justice Department and several other federal agencies.

LESS MONEY

The congressional agreement reached on Monday falls far short of giving Trump all the money he wants to help build the wall. Instead, congressional sources say, it includes $1.37 billion for new barriers – about the same as last year – along 55 miles (90 km) of the border.

Details of the legislation were still being written, but the full bill could be made public as early as Wednesday evening, according to lawmakers and congressional aides.

The accord must be passed by the House of Representatives, dominated by Democrats, and the Republican-controlled Senate, then signed by Trump by midnight on Friday to prevent a shutdown.

The measure’s fate in the House was far from certain given the risk that some conservatives and liberals will oppose the compromise for different reasons.

Like Trump, congressional Republicans have little appetite for a repeat of the 35-day partial shutdown in December and January – the longest in U.S. history – which closed about a quarter of federal agencies and left some 800,000 federal workers without pay.

“It’s time to get this done,” Senate Majority Leader Mitch McConnell said on the Senate floor on Wednesday, in reference to voting on the compromise.

Democrats in the House are aiming to schedule a vote on Thursday evening, Majority Leader Steny Hoyer, a Democrat, told reporters. If passed, it would then go to the Senate.

OTHER OPTIONS

A White House spokeswoman, Mercedes Schlapp, told CNN that lawyers were reviewing the administration’s options should Congress not provide Trump’s demanded money for the wall.

The Washington Post, citing a White House official, said Trump was likely to explore using his executive power to reallocate other federal funds for barrier projects along the southern border. CNN, citing the White House, also said Trump was weighing the use of an executive order, among other options.

Trump previously threatened to declare a “national emergency” if Congress did not provide money specifically for the wall – a move that would almost certainly draw opposition in Congress and in the courts.

“We think the president would be on very weak legal ground to proceed,” said Hoyer, the No. 2 Democrat in the House.

Speaking to sheriffs and police chiefs of major cities, Trump said later on Wednesday that he was determined to “fully and completely” secure the U.S. border, including providing more law enforcement, closing legal loopholes and finishing the border wall.

Trump has come in for criticism from the right for wavering on support for the wall, which the administration says will cut illegal immigration and drug smuggling.

“Trump talks a good game on the border wall, but it’s increasingly clear he’s afraid to fight for it,” right-wing commentator Ann Coulter tweeted on Tuesday.

Trump abandoned a planned compromise on funding for the wall in December after similar criticism.

(Reporting by Richard Cowan and Susan Cornwell; Additional reporting by Roberta Rampton, Amanda Becker, Susan Heavey and Lisa Lambert; Writing by Alistair Bell; Editing by Jonathan Oatis and Peter Cooney)

U.S. job openings hit record high; workers more scarce

Corporate recruiters (R) gesture and shake hands as they talk with job seekers at a Hire Our Heroes job fair targeting unemployed military veterans and sponsored by the Cable Show, a cable television industry trade show in Washington, June 11, 2013. REUTERS/Jonathan Ernst/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings surged to a record high in December, led by vacancies in the construction and accommodation and food services sectors, strengthening analysts’ views that the economy was running out of workers.

While the release of the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, on Tuesday underscored labor market strength, there are worries the shortage of workers could hurt an economic expansion that has lasted 9-1/2 years and is the second longest on record.

“The labor market continues to heat up,” said Chris Rupkey, chief economist at MUFG in New York. “But growth cannot continue for much longer if there is no one out there to work in the factories and shops and malls across America.”

Job openings, a measure of labor demand, increased by 169,000 to a seasonally adjusted 7.3 million in December, the highest reading since the series started in 2000. That lifted the job openings rate to 4.7 percent from 4.6 percent in November.

Construction vacancies increased by 88,000 jobs in December. There were an additional 84,000 jobs in the accommodation and food services sector. Job openings in the healthcare and social assistance sector rose by 79,000 in December.

Federal government vacancies, however, fell by 32,000 jobs and job openings in real estate, rental and leasing dropped 31,000 in December.

Hiring continued to lag job openings in December, rising to 5.9 million from 5.8 million in November. That further widened the gap between vacancies and hiring, which emerged in 2015, reflecting tightening labor market conditions. There were 1.2 job openings for every unemployed person in December.

ROBUST LABOR MARKET

Anecdotal evidence has been growing of companies experiencing difficulties finding workers. A survey of small businesses published on Tuesday found that almost a quarter of owners reported that difficulties finding qualified workers as their “single most important business problem” in January.

According to the survey from the National Federation of Independent Business, 35 percent of small business owners reported job openings they could not fill in January.

The labor market has enjoyed a record 100 straight months of job gains, with nonfarm payrolls increasing by 304,000 jobs in January, the most since February 2018. But as workers become more scarce, job growth is expected to slow to around 150,000 per month this year.

Economists believe the dearth of workers will drive up wage growth, even though the number of workers voluntarily quitting their jobs has remained steady.

“The diminishing availability of workers is expected to lead to more upward pressure on wages, bring more workers into the labor force and induce more companies to find ways to produce and service their customers with automated processes,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The JOLTS report showed the number of workers voluntarily quitting their jobs was little changed at 3.5 million in December, keeping the quits rate at 2.3 percent for a third straight month. The quits rate is viewed by policymakers and economists as a measure of job market confidence.

There were increases in the number of workers quitting their jobs in professional and business services and in the health care and social assistance sectors. But these were offset by declines in several industries and the government.

“With a labor market this tight, you may expect the quits rate to be going up or at a higher level already,” said Nick Bunker, an economist at Indeed Hiring Lab. “The big question is whether this a temporary lull, or if the quits rate has hit its high point.”

Layoffs fell in December, pushing the layoffs rate down to 1.1 percent from 1.2 percent in November.

(Reporting by Lucia Mutikani; Editing by Paul Simao)