“A modest bidding war has broken out among the retailers who hire from the bottom of the labor pool, buoyed in part by improving sales…Turnover in the retail sector has been steadily rising and now stands at 5 percent a month. At this rate, if Walmart’s workforce were to hold to the national average, over a full year it would be losing 60 percent of its sales staff.” Meanwhile, “employers added 295,000 jobs in [February] (alt), up from an average gain of 266,000 over the previous 12 months and comfortably above Wall Street expectations…The rate of unemployment fell from 5.7 per cent to 5.5 per cent…Pay growth was muted, however, with average hourly earnings rising by 3 cents, leaving earnings up 2 per cent on the year…The [participation rate] was little changed at 62.8 per cent.” The dollar is trading higher on the news; EUR/USD exchange rate is now 1.08. Meanwhile, “since December, 22 major foreign currencies have declined an average of 4.5 percent against the [$US]. A cheaper currency makes exports less expensive and thus more attractive to foreign buyers. A devalued currency also drives up import prices, which discourage domestic consumers from purchasing foreign goods…Call it currency manipulation or domestic economic policy…almost every country in the world want their money to be cheaper.” Keyword: almost. “The renminbi has weakened against the dollar by about 4 per cent since October, a meaningful change in a semi-fixed exchange rate regime…This has been driven mainly by a reversal in private sector capital flows, which have traditionally been in large surplus but are now in deficit…The capital outflow has also tightened the domestic money markets, a very unwelcome development for the People’s Bank of China given the powerful contractionary forces that have taken hold in the domestic economy…Although the renminbi has fallen against the dollar, the semi-fixed band has resulted in China’s overall effective exchange rate rising by 11 per cent since early 2014…China is finding it increasingly difficult to remain tied to the dollar bloc at a time when the US Federal Reserve is tightening monetary policy and the dollar is rising…Other countries may complain about ‘currency wars’, but a gradual renminbi adjustment would be far safer for the world economy than a failed attempt to maintain a fixed rate that has outlived its usefulness.” Meanwhile, here are some insane statistics about China: 1) There are more internet users in China than there are people in the United States and Europe combined, 2) Chinese construction firms broke ground last year on enough homes for the entire population of Australia, 3) They also built or at least worked on 143k miles of road, which is longer than five times the circumference of the earth.
USA: Grain Of Salt
Despite the positive jobs report this morning, there have actually been quite a few negative economic data points from the United States recently.