Job openings in US increased in January to 5 million

Job openings climbed in January, pointing to sustained gains in the US labour market after the best year of hiring since 1999. 

PHOTO: REUTERS

10 Mar10:40 PM

[WASHINGTON] Job openings climbed in January, pointing to sustained gains in the US labour market after the best year of hiring since 1999.

The number of positions waiting to be filled in the US rose by 121,000 to 5 million in January from a revised 4.88 million the prior month, the Labor Department reported today in Washington. Hiring cooled, while the number of Americans quitting their jobs increased.

A steady rise in job listings is reinforcing signs of labor-market strength, as payroll advances have helped bring the unemployment rate down to its lowest level in almost seven years. At the same time, limited wage growth and lingering evidence of job-market slack have allowed Federal Reserve policy makers to be deliberate in considering their first interest-rate increase since 2006.

"We have very good momentum in the labour market," Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, said before the report. "There's still quite a bit of slack out there in the market, but we are absorbing that excess slack at a pretty fast pace."

The median forecast in a Bloomberg survey called for 5.05 million openings in January after a previously reported 5.03 million a month earlier.

The Job Openings and Labor Turnover Survey, or JOLTS, adds context to monthly payrolls figures by measuring dynamics such as resignations, help-wanted ads and the pace of hiring. Although it lags the Labour Department's other jobs data by a month, Fed Chair Janet Yellen follows the report as a measure of labor-market tightness and worker confidence.

Some 2.8 million people quit their jobs in January, up from 2.72 million a month earlier, Tuesday's report showed. The quits rate rose to a three-month high of 2 per cent in January from 1.9 per cent.

The hiring rate - the number of people who got new jobs divided by the number who worked or were paid - dropped to 3.5 per cent in January from 3.7 per cent a month earlier. Hires fell to 5 million from 5.24 million, according to Tuesday's figures.

The report follows figures last week that showed employers added 295,000 jobs in February, more than forecast, and the unemployment rate fell to 5.5 per cent for its lowest reading since May 2008. Payrolls have increased an average 267,000 so far this year after almost 260,000 a month in 2014, which was the strongest since 1999.

A brighter outlook for demand is keeping companies such as Cincinnati-based Kroger Co, the biggest US grocery-store chain, on pace to add to staffs.

"We continue to create jobs," Chief Executive Officer Rodney McMullen said on a March 5 earnings call. "Kroger customers are increasingly positive about the economy since late last year through the new year. They are feeling more comfortable with their discretionary spending, in part due to the low retail price of fuel."

Cheaper fuel is helping make up for sluggish wage growth. Average hourly earnings rose in the year to February at a 2 per cent pace, matching the average since the expansion started in June 2009.

Some measures of slack on Ms Yellen's labour-market dashboard still haven't returned to pre-recession strength. A gauge of underemployment, which includes those working part-time who would take a full-time position if one were available, improved in February to 11 per cent. That compares with 8.8 per cent in December 2007, when the last recession began.

The share of jobless who have been out of work for 27 weeks or longer is at 31.1 per cent, almost twice as high than at the start of the last downturn.

Reggie Rounds of St Louis is among those less upbeat employment outlook. The 57-year-old is a former Army food- service specialist and beer-delivery truck driver with a bachelor's degree in sociology. He returned to school in 2012 to earn certificates in green building technology.

Mr Rounds has been out of work since November, when funding for his job at Missourians Organizing for Reform and Empowerment, an organization advocating for low- and moderate- income people, ran out. He's been shoveling snow and picking up other odd jobs to make ends meet.

"Bills are due and there's not much money to pay them with," Mr Rounds said in a phone interview. He said he feels "kind of lost" since his training has over-qualified him for jobs, while others are demanding "previous experience" that he's yet to attain.

About 1.8 people are vying for every opening, matching the ratio at the time the last recession began in December 2007, according to Tuesday's report.

The figures also showed that dismissals, which exclude retirements and people who quit voluntarily, fell to 1.67 million from 1.73 million in December.

In the year that ended in January, employers added a net 3.1 million jobs, representing 59.1 million hires and 56 million separations.

BLOOMBERG

      

Oil prices drop as dollar gains further

Oil prices dropped on Tuesday as dealers weighed a strengthening dollar and geopolitical tensions that are undermining production in the crude-rich Middle East, analysts said. 

PHOTO: AFP

10 Mar10:01 PM

[LONDON] Oil prices dropped on Tuesday as dealers weighed a strengthening dollar and geopolitical tensions that are undermining production in the crude-rich Middle East, analysts said.

US benchmark West Texas Intermediate for delivery in April fell 35 cents to US$49.65 a barrel.

Brent North Sea crude for April shed 78 cents to US$57.75 a barrel.

The euro tumbled on Tuesday towards a 12-year dollar low, hit by eurozone stimulus, growing US rate hike speculation and Greek debt concerns, dealers said.

In morning London deals, the European single currency sank to US$1.0735 - the lowest level since mid-April 2003. The region's stock markets also fell.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand and pushing prices lower.

Intensified fighting in Libya between rival militias and the emergence there of the Islamic State group supported higher crude prices.

Fighting in the north African state, a member of the Opec oil-producing cartel, has seen output slashed some tenfold, from a high of almost 1.5 million to 150,000 barrels a day, according to analysts.

Iraq, another Opec member, is also battling jihadists who spearheaded a sweeping offensive in June that overran large areas north and west of Baghdad.

Singapore's United Overseas Bank said oil remained under pressure as a stronger US dollar was "offsetting geopolitical tensions and the threat of output cuts in Libya and Iraq".

AFP

      

Global deflation threats seen hidden in ECB's bond-buying effort

Mario Draghi's inflation bomb could prove to be a dud. That's because the weakness in the euro resulting from the European Central Bank's 1.1 trillion euro (S$1.64 trillion) quantitative-easing program risks being more than offset globally by the deflationary impact of a stronger dollar. 

PHOTO: AFP

10 Mar7:04 PM

[LONDON] Mario Draghi's inflation bomb could prove to be a dud.

That's because the weakness in the euro resulting from the European Central Bank's 1.1 trillion euro (S$1.64 trillion) quantitative-easing program risks being more than offset globally by the deflationary impact of a stronger dollar.

Making that case as the euro trades around its lowest in 11 years against the greenback is David Woo, head of global rates and currencies at Bank of America Merrill Lynch in New York. He's telling clients that pressure from a rising dollar threatens to rattle emerging markets, undermine US stocks and curb commodities prices.

Here's how: First, the higher the dollar goes the more likely investors will flee developing nations; that will make their borrowings in the US currency more expensive, damaging their already-shaky outlook for growth.

As Mr Woo notes, the Turkish lira and Mexican peso have both reached or traded near all-time lows against the dollar in the past few days and Brazil's real is at its weakest since 2004.

China, which manages the value of its yuan against a basket of other currencies, may be forced to devalue to keep its products cheap in the international marketplace.

Next, because commodities are priced in dollars, the higher the greenback goes the more downward pressure will be applied to oil prices. Bank of America already says the likelihood is greater that crude falls rather than rises.

Finally, Mr Woo estimates the dollar's rise is starting to undermine profits at home. US companies in the Standard & Poor's 500 Index get 40 per cent of their earnings from overseas and the index has fallen in 19 out of 27 trading days this year in which the greenback gained.

"The obvious implication is that investors are becoming concerned about the ability of the US economy to cope with the strengthening dollar," Mr Woo said in a report to clients on Monday. "The decline of euro/dollar below 1.10 may be less benign than it may appear at first."

BLOOMBERG

EU nears deal on 315b euro plan to tackle drop in investment

EU finance ministers agreed the details of a 315 billion euro (S$470 billion) investment plan on Tuesday to help revive the European economy without piling up more debt, and now aim to get the first projects going by the end of the year. 

PHOTO: AFP

10 Mar7:26 PM

[BRUSSELS] EU finance ministers agreed the details of a 315 billion euro (S$470 billion) investment plan on Tuesday to help revive the European economy without piling up more debt, and now aim to get the first projects going by the end of the year.

EU lawmakers must now approve the fund.

"The plan is the answer we need to confront the main handicap of the European economy: the lack of investment," said Pierre Moscovici, the EU economics commissioner, adding that investment had fallen by 15 to 20 percent since 2008.

The four-year plan fleshes out a call by European Commission President Jean-Claude Juncker to back riskier projects from airports to railways and to confront the fall in investment since the financial crisis.

Setting up the European Fund for Strategic Investments (EFSI) has been sensitive, with EU governments fearful of not having their projects chosen from a list of almost 2,000 projects worth 1.3 trillion euros that countries put forward.

Some EU lawmakers are wary of favouritism towards western European countries over poorer, eastern European members.

Another problem has been that the Commission wanted countries to stump up money for the fund, insisting that it would not be included in debt and deficit calculations.

That idea flopped because countries had no guarantee that their projects would be chosen. Instead, countries such as France, Spain and Germany said they would help fund projects in their country via national development banks, and Italy on Tuesday promised to contribute 8 billion euros to the Italian projects chosen, via its national promotional bank.

There are also doubts whether the plan will attract enough private money, however. Mr Juncker's goal is to have 315 billion euros of largely private new investment by providing 21 billion euros in capital and first-loss guarantees from the EU budget and the European Investment Bank.

Under the plan agreed by ministers, the plan will run for four years but will be reviewed after three years to see if it is working.

A steering board made up by the European Commission and the European Investment Bank will oversee the fund, while an eight-member investment committee will choose the projects.

The list submitted in December, which officials stress is not definitive, includes plans for housing regeneration in the Netherlands, a new port in Ireland and a 4.5 billion euro fast rail connection between Estonia, Latvia, Lithuania and Poland.

Other ideas involve refuelling stations for hydrogen fuel cell vehicles in Germany, expanding broadband networks in Spain and making public buildings in France more energy-efficient.

REUTERS

 

Dollar at 12-year peak vs euro, emerging markets spooked

The dollar hit multi-year highs against the euro and yen and emerging markets were under mounting pressure on Tuesday, as the prospect of the first rise in US interest rates in almost a decade stoked global volatility.

PHOTO: REUTERS

10 Mar8:20 PM

[LONDON] The dollar hit multi-year highs against the euro and yen and emerging markets were under mounting pressure on Tuesday, as the prospect of the first rise in US interest rates in almost a decade stoked global volatility.

The skittish mood spread from Asia into Europe where stocks fell a second day despite the European Central Bank's new bond buying campaign continuing to push down the euro and the bloc's already record-low borrowing costs.

Driving up the dollar was speculation that the Federal Reserve will start lifting interest rates from mid-year after another stellar set jobs data on Friday and a subsequent chorus of hawkish Fed policymaker comments.

The euro's rapid melt lower was compounded by worries about Greece as euro zone finance ministers prepared to meet in Brussels, a day after the head of the group, Jeroen Dijsselbloem, had urged Athens to "stop wasting time" and start reforms.

Selling in the euro had gathered pace again in Europe as a break below a major layer of chart support at US$1.0762 to US$1.0735 left bears eyeing US$1.07 the figure and some mulling parity. Britain's pound was also piling on the pressure. It topped 1.40 euros for the first time since late 2007.

The dollar had broken higher on the yen in Asia to reach 122.02, territory not visited since July 2007. "It is all about the Fed now," said Aurelija Augulyte senior FX strategist at Nordea in Helsinki.

"The ECB (bond buying) bias has now been fully digested, but what the market is now trying to do is price in earlier Fed rate hikes." The prospect of rising US yields threatened to draw funds away from emerging markets, causing strains from Brazil to Turkey. The Brazilian real led the rout, having fallen for the sixth straight session.

The pressure then spread through Asia and Africa with the South Korean won hitting its lowest since late August 2013, the Singapore dollar since 2010 and South Africa's rand in 13 years.

Eastern Europe was also heavily in the red. Selling accelerated for Poland's zloty, the Czech crown, Romania's leu and Hungary's forint while MSCI's main emerging market stock index fell for its eighth day running.

"At times like these it is really the currency moves, nobody really cares about the carry anymore," said Jeffries emerging markets strategist Richard Segal.

The volatility in currencies overshadowed data from China that showed consumer prices rose 1.4 per cent in February compared with the same month last year, although much of the increase was due to seasonal volatility in food prices.

Producer prices continued to slide, underscoring deepening weakness in the economy and intensifying pressure on Beijing policymakers to find new ways to support growth.

Shanghai shares eased 0.5 per cent, though that only unwound a little of Monday's gains. Japan's Nikkei also fell 0.7 per cent as the normal uplift of the weaker yen failed to materialise.

Wall Street was expected to fall again when trading resumes with job vacancy data and retail sales figures expected to support signs of a strengthening of the US economy.

Most commodities continued to struggle with the strength of the US dollar. Gold hit a three-month low around US$1,160 an ounce while copper futures shed almost 2 per cent.

Oil buckled in Europe after a valiant fight overnight. Brent crude fell 70 cents to a two-week low of US$57.86 a barrel, while US crude dropped back below US$50 a barrel to US$49.60.

Analysts said there was a risk of further falls particularly in Brent. Traders are still holding 'long' positions and the fundamental picture remains soft with little sign of any meaningful drop in production.

Libya is expected to up its exports to more than 2 million barrels of crude from two of its ports this week after disruptions due to fighting involving Islamic militants.

At the same time, global refinery maintenance is about to peak, which once it falls will bring more oil back online.

REUTERS

 

Singapore still world's most expensive city, says EIU

PUBLISHED ON MAR 3, 2015 11:13 AM

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Singapore's Marina Bay area and financial district. Singapore is the world's most expensive city for the second year running, according to the Economist Intelligence Unit (EIU). -- ST PHOTO: KUA CHEE SIONG

BY ANN WILLIAMS

SINGAPORE - Singapore is the world's most expensive city for the second year running, according to the Economist Intelligence Unit (EIU).

There is one caveat, however.

The EIU notes that Zurich and Geneva would actually top Singapore at current exchange rates if its Worldwide Cost of Living Survey took into account the recent jump in the value of the Swiss franc after Switzerland unpegged its currency from the euro.

As such, the top five most expensive cities in the world remain unchanged from a year earlier and include, in descending order, Paris, Oslo, Zurich and Sydney.

-- GRAPHIC: THE ECONOMIST INTELLIGENCE UNIT

The EIU's bi-annual survey, released on Tuesday, comprises 133 cities worldwide and uses New York as a base. It compares the cost of more than 160 services and products including food, clothing and utility bills.

The information gathered for the survey is designed to be used online as a way to calculate the cost of relocating and living for expatriates and business travellers.

Here's how Singapore compares to New York:

- 11 per cent more expensive for basic groceries.

- Over 50 per cent more expensive for clothes. Together with Seoul, the most expensive place in the world to shop for clothes.

- Three times more expensive for transport - after factoring in the effect of Certificate of Entitlement system on car prices.

The EIU said it was "very rare" to have an unchanged top five in their survey, especially taking into account that tumbling oil prices, deflation and currency movements have affected the cost of living in several cities.

Tokyo, for example, has fallen to 11th place this year as the yen weakened against the US dollar and deflation continued to impact the economy. The Japanese capital topped the list in 2013 but was replaced by Singapore in 2014.

A plunging currency sent Venezuela's capital, Caracas, sliding 124 places in the ranking, from the sixth most expensive city last year, to one of the cheapest this year.

Some of India's cities stand out as the least expensive in the world, with Bangalore, Mumbai and Chennai included in the five cheapest.

The EIU said low wages and price subsidies on some staples had contributed to Indian cities' place in the survey.

ann@sph.com.sg

 

China lawmakers' pollution battle adds to growth challenges

China's Lunar New Year celebrations typically feature visits to relatives. For provincial Governor Du Jiahao, day two of the biggest holiday on the calendar found him doing something altogether different. 

PHOTO: REUTERS

10 Mar1:27 PM

[BEIJING] China's Lunar New Year celebrations typically feature visits to relatives. For provincial Governor Du Jiahao, day two of the biggest holiday on the calendar found him doing something altogether different.

The chief of central Hunan province went on a two-hour bicycle ride along the Xiang River, checking its water quality.

"It wasn't just for show," Mr Du, who said work to clean up the river is in its third year, shared last week on the sidelines of a gathering of lawmakers in Beijing. "I asked somebody who was fishing, 'Can you really catch any fish here?' He said, 'If I can't catch fish, why am I still standing here?' This is a piece of data from a plain civilian."

The good fortune of the Xiang River fisherman isn't shared by hundreds of millions of other Chinese exposed to air and water pollution that's becoming the focus of this year's annual legislative gathering. Premier Li Keqiang said pollution is a blight on people's lives and would be fought with "all our might" while provincial officials are touting their efforts.

"Legislators are emphasizing it further," said Jim O'Neill, the former chairman of Goldman Sachs Asset Management. "It is a few years now since the government started to make environmental protection a major priority, and given the evidence that's on the ground, the actual quality of the environment may have deteriorated further."

ADDITIONAL STRAINS

Measures to rein in pollution add to strains on an economy that is already contending with a weakening property market, overcapacity, and a crackdown on corruption.

Mr Li last week announced a target for this year's expansion of about 7 per cent, the lowest goal in more than 15 years, and stressed a "new normal" requiring structural adjustments to deliver "quality, efficient and sustainable development."

"If the development model doesn't change, China will stagnate," said Derek Scissors, a scholar at the American Enterprise Institute in Washington who focuses on Asia economies.

"To be valuable, the new normal must signify this new development model. Otherwise, it's just a slogan trying to cover for a weaker economy."

The fallout from three decades of rampant economic growth cost China close to 10 per cent of gross domestic product annually in the past decade, according to estimates from the Rand Corporation.

UNDER THE DOME

' The debate over the environment intensified before the legislative gathering when a documentary film Under The Dome, which criticises the government's handling of the environment, was released.

Viewed by more than 100 million people, it vanished from major Chinese websites March 6.

Some government officials had openly praised the film, with environment minister Chen Jining comparing it to Silent Spring, Rachel Carson's 1962 take on the environmental damage wrought by the US chemical industry that spurred a nationwide ban on the use of DDT in agriculture.

Thick smog regularly blankets China's cities, forcing many residents of metropolises such as Beijing and Shanghai to wear masks to try to protect against the toxins.

Ninety per cent of the 161 cities whose air quality was monitored in 2014 failed to meet official standards, according to a report by China's National Bureau of Statistics last week. About half of China's rivers have dried up since 1990 and those that remain are mostly contaminated.

'GROWING CONCERN'

"The government has to do something," said Chen Wenbin, a delegate from Fujian province on China's east coast.

"There is growing concern. Government cabinets have been under a lot of pressure to tackle it."

China will this year cut energy intensity by 3.1 per cent and target a range of pollutants, Li told legislators last week.

"The officials are as determined to clean the air as you and me because they breathe the same air and so do their children," said Tao Dong, chief regional economist for Asia excluding Japan at Credit Suisse Group AG in Hong Kong. "It's absolutely crucial to get the act together."

The main economic drag will likely begin a year from now and continue through about five years, because the government can't shut polluters like coal-burning power stations until alternatives are built, he said.

In contrast to former years, where faster economic growth was a badge of honor for provincial governors, officials this time around are boasting of their environmental activism.

Chen Guoying, head of Hebei's environmental protection department, pledged to win the war even if the province has to sacrifice economic growth in the short term. Hebei cut coal consumption by 15 million tons, closed 141 mines and stopped work to improve 478 mines last year, Chen said Monday.

ENVIRONMENTAL WINNERS

The prospect of new pollution laws prompted companies SPC Environmental Protection Tech Co and Beijing SDL Technology Co to rise to record highs last week after the "Under the Dome" documentary sparked renewed attention to the issue.

In the industrial city of Tangshan in Hebei province, two hours drive east of Beijing, the need to reduce emissions is causing the closure of plants, said party secretary Jiao Yanlong.

"Even though it hurts the bones and the muscles, and the cost is tremendous, the city has to do it," he said.

BLOOMBERG

      

China forex chief says to launch China international payment system this year

China will launch its international payment system this year, said Yi Gang, head of China's State Administration of Foreign Exchange (SAFE). "We plan to launch it this year," Mr Yi told Reuters on Tuesday. 

PHOTO: AFP

10 Mar12:35 PM

[HONG KONG] China will launch its international payment system this year, said Yi Gang, head of China's State Administration of Foreign Exchange (SAFE). "We plan to launch it this year," Mr Yi told Reuters on Tuesday.

Reuters exclusively reported on Monday that China aimed to launch the so-called CIPS system as early as September or October.

CIPS, which would be a worldwide payments superhighway for the yuan, will replace a patchwork of existing networks that make processing renminbi payments a more cumbersome process.

REUTERS