Ahead of today’s payroll report we saw more signs of the tight labor market and the rising wage situation from the NFIB. Next week they report the full April survey results but yesterday they published the labor market components. Plans to Hire was little changed at 21% from 22% in March but trying to find help is becoming more and more difficult. Positions Not Able to Fill rose another 2 pts to 44%, the highest on record dating back to 1973. In response, wage intentions are rising. Current comp plans rose 3 pts m/o/m to 31%, matching the highest since February 2020 and future comp plans were higher by 3 pts to 20%, the highest since January 2020. Higher wages are what is now needed apparently to entice more people to take these jobs.
To repeat what I said earlier in the week in response to Richmond Fed President Barkin saying on CNBC that he is focused on the employment to population ratio as his preferred metric on the road to ‘substantial progress’ on the labor market, I believe he is looking at the wrong thing, as are many of his colleagues. The best business can do is provide job openings and opportunities, but they can’t get people to fill the spots. And no amount of QE and long period of zero rates is going to get people to take a job if they don’t want it or don’t have the skills to fulfill it or can’t get schools to reopen so some parents can go back to work.
POSITIONS NOT ABLE TO FILL
CURRENT COMP PLANS
FUTURE COMP PLANS
The price of copper today is at an all time record high, not far now from $5 per pound. Copper is the most important industrial metal in a world that wants to go renewable and it is more than just a China play. For reference, it’s previous peak in February 2011 saw a Chinese economy that was $7.5 Trillion. Today it is almost double that at $14.3 Trillion. Years of disinvestment and now a flood of demand explains the record high. I don’t recall hearing about any copper SPAC’s over the past year but every single auto related EV SPAC is hugely reliant on procuring copper.
COPPER
We could hear about taper talk in Europe in June according to Governing Council member Martins Kazaks who said late yesterday that “If financial conditions remain favorable, in June we can decide to buy less. Flexibility is at the very core of PEPP.” These comments are helping to lift European bond yields but the euro is little changed vs the dollar.
The private sector weighted Caixin April services PMI in China rose 2 pts m/o/m to 56.3 and that was 2.1 pts better than expected. And, the outlook remained pretty positive. “Although easing from March’s recent record, optimism around the 12 month business outlook remained marked, partly driven by expectations that business conditions at home and abroad will continue to recover from the pandemic.” On inflation, Caixin said this: “Prices charged by services companies also rose in April, though to a lesser extent than that seen for input costs. A number of businesses mentioned raising their charges to help ease pressure on margins, while others indicated that stronger client demand had enable them to raise their prices.” Asian markets were mixed today but Chinese indices were lower by about a .5%.
Japan’s services PMI was revised up to 49.5 from 48.3 in March and that is the closest to 50 since January 2020. Markit said “The loosening of Covid restrictions at the end of March also led to a broad stabilization of incoming business as firms continued to adjust to operating under softer containment measures.” Hiring intentions also improved. While there has been some new selective restrictions of late in the Tokyo area, “businesses were optimistic that the Olympic Games and a successful vaccination program would stimulate a broad economic recovery.” As this number was just a revision there wasn’t much going on in Japanese markets overnight.
In Europe, there was nothing market moving in their data. German IP for March was as expected when including the February revision. It was weaker than forecasted in France and in line in Spain. Germany also reported its March trade data and exports rose twice the estimate m/o/m.