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US labor market cooling gradually as job openings, resignations fall

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US labor market cooling gradually as job openings, resignations fall
© Reuters. People line up outside a newly reopened career center for in-person appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira Karaoud TPX IMAGES OF THE DAY

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings fell marginally in January, while the number of workers quitting their jobs dropped to a three-year low, indicating that labor market conditions were gradually easing.

The decline in resignations, which pushed the quits rate to

the lowest level in 3-1/2 years, over time bodes well for slower wage inflation and overall price pressures in the economy.

There were 1.45 jobs for every unemployed person in January up from 1.42 in December, indicating the labor market remains strong. This is well above the average of 1.2 during the year before the COVID-19 pandemic.

The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department was published on Wednesday as Federal Reserve Chair Jerome Powell presented the U.S. central bank’s semiannual Monetary Policy Report to lawmakers.

Powell said the Fed expected to start cutting interest rates this year, but cautioned “the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured.”

“The JOLTS data signal that the jobs market is slowly settling down, consistent with wage, and thus inflation, pressures cooling without a worrisome slowdown in net job creation and overall economic activity,” said Sarah House, a senior economist a Wells Fargo in Charlotte, North Carolina.

“The gradual, rather than marked, softening in the labor market will likely keep the Fed comfortable in waiting a little while longer before beginning to cut rates.”

Job openings, a measure of labor demand, slipped 26,000 to 8.863 million on the last day of January, the Labor Department’s Bureau of Labor Statistics said.

Economists polled by Reuters had forecast 8.9 million job openings in January. Job openings peaked at a record 12.182 million in March 2022. January’s report incorporated annual revisions to the data as well as updates to seasonal adjustment factors, the model used by the government to strip out seasonal fluctuations from the data.

Job openings rose in nondurable goods manufacturing, with 82,000 more positions reported. There were also increases in unfilled jobs in financial activities, professional and business services as well as leisure and hospitality industries. But government job openings dropped 105,000.

Government hiring has significantly contributed to payrolls growth in recent months, which had raised worries among some economists that job gains were too concentrated in a handful of sectors. The decline in job openings was concentrated in state and local governments.

In the private sector, private educational services had 41,000 fewer job openings. Vacancies also declined in the retail as well as transportation, warehousing and utilities sectors.

Job openings dropped in the South, West and Midwest, but increased in the Northeast with the decrease concentrated among medium-sized and large businesses. Small businesses with one to 49 employees had a large number of vacancies.

The job openings rate was unchanged at 5.3%. Hiring decreased 100,000 to 5.687 million. There were notable declines in transportation, warehousing and utilities, healthcare and social assistance as well as state and local education sectors.

The hires rate dipped to 3.6% from 3.7% in December. The labor market is gradually slowing following 525 basis points worth of rate hikes from the Fed since March 2022.

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices rose.

LOW LAYOFFS

The number of workers resigning from their jobs, presumably in search of greener pastures, dropped 54,000 to 3.385 million, the lowest level since January 2021.

A surge in resignations during and after the pandemic was one of the factors behind robust wage growth.

But as more workers stay put, inflation is cooling, with the ADP National Employment report separately showing on Wednesday that wages for workers staying in their jobs increased 5.1% in the 12 months through February.

That was the smallest annual gain since August 2021 and followed a 5.3% rise in January.

Fewer workers quit their jobs in the retail sector. There were also significant decreases in quits in healthcare and social assistance as well as professional and business services. But more accommodation and food services workers resigned.

The quits rate, viewed as a measure of labor market confidence, dropped to 2.1%, the lowest since August 2020 and down from 2.2%.

Job cuts were low despite high-profile layoffs at the start of the year. Layoffs dropped 35,000 to 1.572 million in January, keeping the layoffs rate at 1.0% for a third straight month.

The Labor Department is expected to report on Friday that nonfarm payrolls increased by 200,000 jobs in February, according to a Reuters survey. The economy added 353,000 positions in January.

Job growth has cooled from the brisk pace in 2022, but payroll gains are well above the roughly 100,000 jobs needed per month to keep up with growth in the working-age population.

The unemployment rate is forecast unchanged at 3.7% and annual wage growth slowing to 4.4% from 4.5% in January.

“The data are pointing to some rebalancing in supply and demand in the labor market,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.

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Palantir, Anduril join forces with tech groups to bid for Pentagon contracts, FT reports

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(Reuters) – Data analytics firm Palantir Technologies (NASDAQ:) and defense tech company Anduril Industries are in talks with about a dozen competitors to form a consortium that will jointly bid for U.S. government work, the Financial Times reported on Sunday.

The consortium, which could announce agreements with other tech groups as early as January, is expected to include SpaceX, OpenAI, autonomous shipbuilder Saronic and artificial intelligence data group Scale AI, the newspaper said, citing several people with knowledge of the matter.

“We are working together to provide a new generation of defence contractors,” a person involved in developing the group told the newspaper.

The consortium will bring together the heft of some of Silicon Valley’s most valuable companies and will leverage their products to provide a more efficient way of supplying the U.S. government with cutting-edge defence and weapons capabilities, the newspaper added.

Palantir, Anduril, OpenAI, Scale AI and Saronic did not immediately respond to a Reuters request for comment. SpaceX could not be immediately reached for a comment.

Reuters reported earlier this month that President-elect Donald Trump’s planned U.S. government efficiency drive involving Elon Musk could lead to more joint projects between big defense contractors and smaller tech firms in areas such as artificial intelligence, drones and uncrewed submarines.

Musk, who was named as a co-leader of a government efficiency initiative in the incoming government, has indicated that Pentagon spending and priorities will be a target of the efficiency push, spreading anxiety at defense heavyweights such as Boeing (NYSE:) , Northrop Grumman (NYSE:) , Lockheed Martin (NYSE:) and General Dynamics (NYSE:) .

Musk and many small defense tech firms have been aligned in criticizing legacy defense programs like Lockheed Martin’s F-35 fighter jet while calling for mass production of cheaper AI-powered drones, missiles and submarines.

Such views have given major defense contractors more incentive to partner with emerging defense technology players in these areas.

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Weakened Iran could pursue nuclear weapon, White House’s Sullivan says

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By Simon Lewis (JO:)

(Reuters) -The Biden administration is concerned that a weakened Iran could build a nuclear weapon, White House National Security Adviser Jake Sullivan said on Sunday, adding that he was briefing President-elect Donald Trump’s team on the risk.

Iran has suffered setbacks to its regional influence after Israel’s assaults on its allies, Palestinian Hamas and Lebanon’s Hezbollah, followed by the fall of Iran-aligned Syrian President Bashar al-Assad.

Israeli strikes on Iranian facilities, including missile factories and air defenses, have reduced Tehran’s conventional military capabilities, Sullivan told CNN.

“It’s no wonder there are voices (in Iran) saying, ‘Hey, maybe we need to go for a nuclear weapon right now … Maybe we have to revisit our nuclear doctrine’,” Sullivan said.

Iran says its nuclear program is peaceful, but it has expanded uranium enrichment since Trump, in his 2017-2021 presidential term, pulled out of a deal between Tehran and world powers that put restrictions on Iran’s nuclear activity in exchange for sanctions relief.

Sullivan said that there was a risk that Iran might abandon its promise not to build nuclear weapons.

“It’s a risk we are trying to be vigilant about now. It’s a risk that I’m personally briefing the incoming team on,” Sullivan said, adding that he had also consulted with U.S. ally Israel.

Trump, who takes office on Jan. 20, could return to his hardline Iran policy by stepping up sanctions on Iran’s oil industry.

© Reuters. FILE PHOTO: Iranian flag flies in front of the UN office building, housing IAEA headquarters, in Vienna, Austria, May 24, 2021. REUTERS/Lisi Niesner/File Photo

Sullivan said Trump would have an opportunity to pursue diplomacy with Tehran, given Iran’s “weakened state.”

“Maybe he can come around this time, with the situation Iran finds itself in, and actually deliver a nuclear deal that curbs Iran’s nuclear ambitions for the long term,” he said.

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Ukraine says Russian general deliberately targeted Reuters staff in August missile strike

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(Reuters) -Ukraine’s security service has named a Russian general it suspects of ordering a missile strike on a hotel in eastern Ukraine in August and said he acted “with the motive of deliberately killing employees of” Reuters.

The Security Service of Ukraine (SBU) said in a statement on Friday that Colonel General Alexei Kim, a deputy chief of Russia’s General Staff, approved the strike that killed Reuters safety adviser Ryan Evans and wounded two of the agency’s journalists on Aug. 24.

In a statement posted on Telegram messenger the SBU said it was notifying Kim in absentia that he was an official suspect in its investigation into the strike on the Sapphire Hotel in Kramatorsk, a step in Ukrainian criminal proceedings that can later lead to charges.

In a separate, 15-page notice of suspicion, in which the SBU set out findings from its investigation, the agency said that the decision to fire the missile was made “with the motive of deliberately killing employees of the international news agency Reuters who were engaged in journalistic activities in Ukraine”.

The document, which was published on the website of the General Prosecutor’s Office on Friday, said that Kim had received intelligence that Reuters staff were staying in Kramatorsk. It added that Kim would have been “fully aware that the individuals were civilians and not participating in the armed conflict”.

The Russian defence ministry did not respond to a request for comment on the SBU’s findings and has not replied to previous questions about the attack. The Kremlin also did not respond to a request for comment. Kim did not reply to messages sent by Reuters to his mobile telephone seeking comment about the SBU’s statement and whether the strike deliberately targeted Reuters staff.

The SBU did not provide evidence to support its claims, nor say why Russia targeted Reuters. In response to questions from the news agency, the security agency declined to provide further details, saying its criminal investigation was still under way and it was therefore not able to disclose such information.

Reuters has not independently confirmed any of the SBU’s claims.

Reuters said on Friday: “We note the news today from the Ukrainian security services regarding the missile attack on August 24, 2024, on the Sapphire Hotel in Kramatorsk, a civilian target more than 20 km from Russian-occupied territory.”

“The strike had devastating consequences, killing our safety adviser, Ryan Evans, and injuring members of our editorial team. We continue to seek more information about the attack. It is critically important for journalists to be able to report freely and safely,” the statement said.

Reuters declined to comment further on the allegation that its staff were deliberately targeted.

The SBU statement said Kim had been named a suspect under two articles of the Ukrainian criminal code: waging an aggressive war and violating the laws and customs of war.

“It was Kim who signed the directive and gave the combat order to fire on the hotel, where only civilians were staying,” it said.

Evans, a 38-year-old former British soldier who had worked as a safety adviser for Reuters since 2022, was killed instantly in the strike.

The SBU statement gave some details about how the strike had occurred, according to its investigation.

“To carry out the attack, the Russian colonel general involved one of his subordinate missile forces units,” the Ukrainian agency said, adding that the strike was carried out with an Iskander-M ballistic missile.

The SBU did not identify the specific unit.

© Reuters. FILE PHOTO: Reuters safety advisor Ryan Evans holds a cat during a news assignment, as Russia's attack on Ukraine continues, during intense shelling in Kramatorsk, Ukraine, December 26, 2022. REUTERS/Clodagh Kilcoyne/File Photo

Ivan Lyubysh-Kirdey, a videographer for the news agency who was in a room across the corridor, was seriously wounded. Kyiv-based text correspondent Dan Peleschuk was also injured.

The remaining three members of the Reuters team escaped with minor cuts and scratches.

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