FirstFT: US labour market tensions ease

Major US employers from fast-food chains to arms manufacturers are reporting a dramatic improvement in hiring conditions despite official data showing unemployment at its lowest level for decades.

Senior executives across a host of S&P 500 companies gave optimistic updates on the labour market in recent quarterly earnings reports.

“Corporate commentary has been very notably different from previous quarters,” said Binky Chadha, chief global strategist at Deutsche Bank.

For many consumer-facing businesses such as Yum Brands, which owns fast-food chains KFC and Taco Bell, staffing shortages since the start of the coronavirus pandemic have not only driven up costs but hit sales as some restaurants struggled to maintain normal operating hours.

However, Yum chief executive David Gibbs said this month: “We’re seeing an increase in applications, stores [are] returning to their pre-Covid operating hours . . . we like the environment we’re in.”

The improvement has not been limited to lower-paying industries such as restaurants and hotels. Boeing chief executive David Calhoun, for example, told analysts that “we’ve had no trouble hiring people”, and said pressures through its supply chain had “really ease[d] up”.

In an encouraging sign for the tech industry, which has seen tens of thousands of jobs cut in past year, the chief executive of Hitachi said the US was a key hiring ground for the Japanese company.

Chief executive Keiji Kojima told the Financial Times that cost-cutting campaigns at Amazon, Meta, Alphabet, Microsoft and other US tech groups would help the industrial conglomerate as it goes on a multibillion-dollar recruitment spree to expand its digital services.

Five more stories in the news

1. Record-breaking global bond rally crumbles The record-breaking global bond market rally since the start of this year has fizzled out, as a run of better than expected economic data on both sides of the Atlantic has forced investors to face the possibility of more persistent inflation and ended expectations that interest rate rises are likely to ease.

• Tech stocks: A recent surge has some believing the downturn is over and the boom of the past decade is back. But the opposite case is more likely, writes Ruchir Sharma.

2. Thousands protest against cuts to Mexico’s electoral watchdog Tens of thousands of people turned out across Mexico yesterday to protest against cuts to the electoral agency’s budget, fearing the changes will put the country’s hard-fought democracy at risk. President Andrés Manuel López Obrador supports a package of laws passed by Congress last week and allege the electoral institute INE is corrupt and captured by conservatives.

3. US wary of Chinese drone shipments to support Russia in Ukraine Michael McCaul, the top Republican on the House foreign affairs committee, said yesterday China was considering sending 100 drones and other lethal weapons to Russia. The US has alleged that Beijing is already providing non-lethal assistance such as satellite imagery to help Russia target Ukrainian weapons, but believes China has been reluctant to increase its support to include lethal aid.

4. Killings and reprisals in the West Bank Israeli settlers set fire to cars and buildings in the occupied West Bank last night, after a Palestinian gunman killed two settlers in the territory. The violence came as Israeli and Palestinian officials met in Jordan in a pre-planned, US-backed effort to defuse a broader surge in violence.

5. Elon Musk axes more Twitter staff in weekend cull The social media platform’s new owner has ordered another bruising round of job cuts. Dozens of staff were let go late on Saturday evening across teams including product and business development. Among those hit were Esther Crawford, Twitter’s director of product management, who had been one of the few women at the top of the company under Musk.

The day ahead

Market outlook After recording their biggest weekly fall in more than two months on Friday, US equity markets are expected to open higher this morning. Futures contracts tracking the blue-chip S&P 500 rose 0.4 per cent on Monday, while the tech-heavy Nasdaq equivalents gained 0.5 per cent.

Economic data The US commerce department will release new data for durable goods spending, a key metric of domestic business health. Pending home sales will provide an update on the health of the housing market and the Dallas branch of the Federal Reserve will release its monthly survey for manufacturing activity in the state of Texas.

Monetary policy US Federal Reserve governor Philip Jefferson will deliver a virtual speech on inflation in the US. He recently discussed a report called “Managing Disinflations” co-authored by a group of academics, including Columbia University economist Frederic S Mishkin.

Company earnings Videoconferencing company Zoom Video Communications will report quarterly earnings for the first time since announcing it would cut 15 per cent of its staff. Occidental Petroleum, the best-performing stock in the S&P 500 last year, also reports earnings.

Brexit talks European Commission president Ursula von der Leyen will meet UK prime minister Rishi Sunak today to finalise the Brexit deal to revamp Northern Ireland’s trading regime.

Insurance regulation US insurance regulators will meet today to consider boosting capital charges on complex corporate loan instruments that some in the industry warn are creating excessive risk.

UN meeting The UN Human Rights Council starts its 52nd session with a high-level meeting in Geneva.

What else we’re reading

How much is Manchester United really worth? The club’s owners, the American Glazer family, have put Manchester United up for sale with a reported target price of $6bn-$7bn, including debt, that would shatter records for any sports club. But FT’s calculations suggest the football club is worth only around $1.6bn.

Battle of Asia hubs: how Singapore stacks up against Hong Kong Hong Kong has lost ground to regional rival Singapore, according to an FT analysis of real estate prices, air traffic and other indicators, underlining the challenge the Chinese territory faces as it reopens to the world after years of pandemic controls.

Opinion: The inherent flaws of corporate bond ETFs ETFs are supposed to be ultra-simple products — cheap, easy-to-use funds that invest in a broad range of shares, bonds or other assets, spreading risk for inexpert investors. But as with so much of modern finance, the reality is very different from the appearance, writes Patrick Jenkins.

The art of getting over an office faux pas There are two sorts of people in the world, writes Pilita Clark. Those who know how to recover from a faux pas at work and those who do not. In her latest column, the FT’s business columnist offers examples of both.

Take a break from the news

‘I do not see us having a problem getting to Mars,’ Tim Peake, the first British astronaut to undertake a spacewalk, tells Henry Mance in this week’s interview.