Category: News

U.S. employers posted the most jobs in two decades in August, and hiring also reached a record high, fresh evidence that companies are desperate to staff up amid solid economic growth.

Job openings rose a slight 0.8 percent to 7.14 million, the highest on records dating back to December 2000, the Labor Department said Tuesday. That is also far more than the 6.2 million of people who were unemployed that month.

The number of available jobs has swamped the number of unemployed for five straight months. Hiring has been solid, which has pushed down the unemployment rate to a nearly five-decade low of 3.7 percent. Strong demand for workers when so few are out of work.

President Donald Trump celebrated the report on Twitter, tweeting: “Incredible number just out… Astonishing! It’s all working!” Trump added that the stock market was “up big” and referenced “Strong Profits.”

Yet so far, pay raises have been modest. Average hourly earnings rose 2.8 percent in September compared with a year earlier. That’s much higher than several years ago, but below the roughly 4 percent gain that is typical when unemployment is so low.

It’s a sharp turnaround from the Great Recession and its aftermath. In 2009, there were as many as six unemployed workers for each available job. Now, that number has fallen below one.

Employers hired roughly 5.8 million people in August, the report showed. That is also the most on record, but that increase partly reflects population growth. The percentage of the workforce that found jobs in August ticked up to 3.9 percent from 3.8 percent in July. That matched an 11-year high first reached in May.

Job openings rose in August in professional and business services, which include mostly higher-paying positions in engineering, accounting and architecture, as well as temporary help. Postings in that category have jumped 27 percent from a year ago.

Construction firms are also desperate for workers, posting 298,000 open jobs. That’s nearly 39 percent more than a year ago. Job openings also increased in finance and insurance and health care.

Openings fell in August from the previous month in manufacturing, retail, and slipped slightly in hotels and restaurants.
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Concerns about debt diplomacy on China’s expansive infrastructure megaproject — the Belt and Road — have become an increasing source of debate from Asia to Africa and the Middle East. In recent weeks, more than $30 billion in projects have been scrapped and other loans and investments are under review.

 

Public opposition is also testing the resolve of ruling authorities from Hanoi to Lusaka, the capital of Zambia, as concerns about Chinese investment build.

In late August, Malaysia’s newly elected Prime Minister Mahathir Mohamad canceled more than $20 billion in Belt and Road projects for railway and pipelines, and Pakistan lopped another $2 billion off plans for a railway following a decision late last year to cancel a $14 billion dam project, citing financial concerns. Nepal canceled its dam project last month and Sierra Leone announced last week that it was dropping an airport project over debt concerns.

 

In some countries such as Vietnam, it is just the idea of Chinese investment — against the backdrop of the Belt and Road — that has led to push back.

Following public protests, Vietnam recently decided to postpone plans for several special economic zones.

 

Several Belt and Road projects have seen setbacks in countries where debt concerns have coincided with political elections and a change of power — be it Pakistan, Malaysia or the Maldives, says economist Christopher Balding.

 

“The people in these countries are very worried about the level of debt that these countries are taking on in regard to China and I think that is very important to note,” Balding said. “It’s not just anti-China people that are driving this, but that there is a lot of concern on the ground in the countries about that.”

 

China says there are no political strings attached to its investments and loans. It also argues it is providing funding in places others will not. But Beijing’s takeover of a port in Sri Lanka last year and the sheer volume of Chinese investments along the Belt and Road project have done little to ease those concerns.

 

String of ports

 

Late last year, according to the New York Times, China agreed to forgive Sri Lanka’s debt in exchange for a 99-year lease of Hambanthota Port and 15,000 acres of surrounding land.

The government of Sri Lanka denies it divested land to a Chinese company, but the deal has convinced some that China is setting up debt traps to then take over the infrastructure that Chinese state-run companies build.

 

Hambanthota is one of 42 ports where China has participated in construction and operations, with more on the horizon.

In 2021, China will take over operation of one of Israel’s largest ports in Haifa. Beijing is also being eyed as a possible candidate for the development of Chabahar port in Iran, which is near the Iran-Pakistan border.

The port proposal remains in limbo, however, due to U.S. sanctions. And that’s not the only obstacle, according to David Kelly, research director at the Beijing-based group China Policy.

“It’s in the driest and most remote part of Iran,” Kelly said. “It looks like a real loser commercially, unless it handles a lot of oil.”

Analysts say the Middle East, with its oil money and deep pockets, is less at risk for debt traps.

 

However, the port that is most likely to follow in Sri Lanka’s footsteps is Djibouti, a strategically important country on the Horn of Africa, where China recently established its first overseas military base.

According to official figures, Djibouti’s debt is more than 88 percent of the GDP and China owns $1.4 billion of that. That kind of debt overhang could lead to the same type of concessionary agreements as in Sri Lanka, analysts note.

 

Debt traps

 

A report released earlier this year by Washington, D.C.-based Center for Global Development said 23 of the 68 countries where China is investing for Belt and Road projects are at high risk of debt distress. Another eight, including Djibouti, are vulnerable to debt distress linked to future projects.

 

China argues its investments are aimed at boosting trade and commerce and giving developing countries a leg up.

 

China Policy’s Kelly says places where the debt situation is more critical are countries such as land-locked and poverty-stricken Zambia. There, concerns are causing a very public push for the government to disclose the full burden of Chinese debt.

 

“The upset and upheaval in Zambia recently, where you’ve got African civil society coming out and making this case,” Kelly said, “That is always going to be more significant where you have the local people, making a local case.”

 

BRI indigestion

 

Oh Ei Sun, a senior fellow with the Singapore Institute of International Affairs, says cancellations and changes are what he calls Belt and Road indigestion.

Concerns about debt traps and debt diplomacy will not have an impact on China going forward, he says, but stops, starts and cancellations will continue.

 

Oh says China’s model of development — build infrastructure and the economy will grow — may have worked at home, but it doesn’t always fit along the Belt and Road.

 

“In many of these Belt and Road initiative countries, if you lay out the infrastructure, it doesn’t automatically mean that trade and investment will take place,” Oh said, “Some of these projects will have to be more attuned to the local requirements of particular countries.”
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The U.S. government’s budget deficit hit $779 billion in the fiscal year that ended Sept. 30, while spending increased and tax revenues remained nearly flat, the Treasury said Monday.

It was the biggest deficit since 2012, and $113 billion more than the figure a year ago. The 2018 deficit amounted to 3.9 percent of the country’s more than $18 trillion annual economy, up from 3.5 percent last year.

The government’s deficit spending boosted the country’s long-term debt figure to more than $21 trillion, forcing the government to pay an extra $65 billion last year in interest on money the government has had to borrow to run its programs.

In all, government spending rose by $127 billion last year, while tax collections increased by $14 billion.

The Treasury said the annual deficit rose partly because corporate tax collections dropped by $76 billion after Congress approved cuts in tax rates for both businesses and individuals that were supported by President Donald Trump.

Mick Mulvaney, the government’s budget director, said the country’s “booming economy will create increased government revenues — an important step toward long-term fiscal sustainability. But this fiscal picture is a blunt warning to Congress of the dire consequences of irresponsible and unnecessary spending.”
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Zimbabwe’s government says the country is emerging from a recent economic meltdown that saw shops run out of goods and motorists spend long hours in lines at gas stations. Economists say Zimbabwe’s crisis is not over, as people have no confidence in the currency or in President Emmerson Mnangagwa’s government.

For weeks now, there have been long and winding queues at most fuel stations in Zimbabwe, as the precious liquid has been in short supply. Lameck Mauriri is one of those now tired of the situation.

“We are really striving but things are tough to everyone,” said Mauriri. “I do not know how those in rural areas, how they are surviving, especially if in Harare it is like this. We are sleeping in fuel queues. There is not fuel, there is no bread, there is no drink. There is no everything. No cash, no jobs.”

For a decade, the country has been without an official currency and relied on U.S. dollars, the British pound and South African rand to conduct transactions. In the past three years, however, all three currencies have been hard to find, paralyzing the economy.

The introduction of bond notes — a currency Zimbabwe started printing two years ago to ease the situation — has not helped.

The bond notes were supposed to trade at par with the U.S. dollar; but, on the black market, a dollar now is now equal to close to three bond notes.

Prosper Chitambara, an economist of the Labor and Economic Development Research Institute of Zimbabwe says the bond notes are partly to blame for the price increases and shortages in the country.

“What is lacking in the economy, in the market is confidence. There is a distrust of the formal economic system,” said Chitambara. “The bond notes have definitely contributed a great deal to the current economic situation, a fallacy economic situation. What they have done is for example to increase money supply in the economy. And that money supply is not actually backed by significant productivity in the economy. That actually gives rise to general of inflationary pressures.”

He said the government’s recent introduction of a 2 percent tax on all electronic transactions pushed prices even higher and caused some shops to close.

Ndabaningi Nick Mangwana, Zimbabwe’s secretary in the Ministry of Information and Publicity, says the situation in the country is normal and there is no need for alarm.

“There is no shortage to oil itself, there is no challenge in terms of production of all these essential services,” said Mangwana. “That is why they are there if you go. There were a few people who panicked, closed a couple of shops, but those opened within hours. There was fake news and people panicked, but it is all under control.”

That is not exactly what seems to be the case on the ground. Some shops remain closed and prices continue rising. Long fuel lines remain the order of the day. 
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The United States still aims to cut Iran’s oil sales to zero and does not expect restored oil sanctions against Tehran to have a negative impact on a market that is well-supplied and balanced, a senior U.S. official said on Monday.

U.S. special envoy for Iran, Brian Hook, was talking to reporters after a visit to India, a major importer of Iranian oil, and talks with officials from France, Britain and Germany before the start of a new round of U.S. sanctions on Nov. 4.

The three European countries have been trying to save the 2015 nuclear deal between Tehran and multiple global powers since U.S. President Trump announced in May that the United States would withdraw from the pact.

In a conference call from Luxembourg, where Hook was meeting European officials, he said that Iran uses oil revenue to support and fund terrorist proxies throughout the Middle East and that the U.S. goal is for countries to cut Iranian oil imports to zero as quickly as possible.

“We are working with countries that are reducing their imports to ensure that this happens,” he said.

Hook declined to answer questions on possible waivers on sanctions for countries that are reducing their imports but said the U.S. is confident that energy markets will remain stable.

“We are seeing a well-supplied and balanced oil market right now. We should focus on these fundamentals and not be distracted by the emotional and unbalanced claims coming from Tehran.”

Iran, OPEC’s third-largest producer, has repeatedly said that its oil exports cannot be reduced to zero because of high demand in the market.

Washington, meanwhile, plans to continue coordinating with oil producers and maintain U.S. supply.

“Our crude oil production increased by 1.65 million barrels in August compared to one year ago and that is expected to continue rising by as much as 1 million barrels a day within the next year,” he said.

Hook also said that European efforts to create a special purpose vehicle for trade with Tehran would find no demand because more than 100 foreign firms have indicated that they would be leaving the country.
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More Americans are moving to smaller cities in search of a better quality of life.

They’re leaving places like Los Angeles, Chicago and New York for mid-sized cities such as Phoenix and Las Vegas, according to an analysis of data from the U.S. Census Bureau.

A huge draw for these second-tier cities is that the cost of housing consumes a much smaller chunk of people’s salaries. According to the U.S. Census Bureau, more than half of the people who move do so for housing-related reasons. They’re looking for a new or better home, cheaper housing, or to buy a home rather than rent.

It costs about $4,100 a month to rent a place in Manhattan. That’s almost two-thirds of New York City’s median household income of $83,500. Buying a home is even more out of reach. The average cost of a home in the area is $1.1 million.

More than half a million people left the New York boroughs of Manhattan, the Bronx, Brooklyn, and Queens over a five-year period between 2012 and 2017.

In Los Angeles, the metropolitan county with the largest outbound net domestic migration, rent costs about $2,100 a month — about 38 percent of average income. Houses cost around $630,000, almost 10 times the average annual salary of $66,000.

LA County lost about 381,000 people over a five-year period.

According to the report, the cost of living can be a lot less expensive in the Phoenix area, which welcomed more net domestic newcomers over the past five years — 221,000 people — than any other part of the country.

The average household income in Phoenix is about $63,000, rent is about $1,100 a month, and the median price of a house is $280,000 — that’s $350,000 less than in the LA metropolitan area.

In the Las Vegas area, the rent ($1,000) will only consume 21 percent of the average salary ($57,000) and purchasing a house would set a buyer back about $273,000.

 

The analysis found that housing is about two times cheaper in the top markets that attracted people than in the areas that are losing the most in terms of population.

Chicago appears to be an exception. People are leaving the Windy City to get away from high taxes. Property taxes are higher there than almost anywhere else in the United States.

It is not as though the places that are losing people are suffering due to the exodus. Eight of the 10 counties with the biggest net population losses are still growing overall because of births and immigration.
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