American Suburbia Is Shrinking For The First Time Ever

The population of rural and small-town America contracted over the past two years for the first time on record as young people left to search out work in the cities and birth rates fell, according to official data.

An analysis of US Census Bureau data by the Department of Agriculture found that although population growth in America’s rural heartland has risen and fallen for decades with changes in the US economy, the pace of decline accelerated in the years 2010-2012. And for the first time, the so-called “natural increase” in population – total births minus deaths – was insufficient to offset the loss from those migrating away.

The net loss of population represents a natural increase of 135,000 offset by a larger loss from out-migration of 179,000, a drop of 0.9 per cent.

Moreover, so-called exurban areas, which have grown rapidly for decades as cities sprawled, also declined in population for the first time during the 2010-12 period. The rate of decline was marginal, but considerable in the context of the years 2004-06 when exurbs added roughly 500,000 to their population.

The few rural areas experiencing population growth include those regions where new energy sources have been uncovered such as North Dakota, which is now in the midst of a new oil boom.

The population shift is concentrated most heavily in the mid-western states that form America’s bread basket as well as in parts of the old industrial north east. It may have profound implications for the economic outlook as well as for the political character of those parts of the country.

The trend is one of a number that are helping Democrats in presidential elections, as the party appeals more to urban voters. As they are more concentrated, they are also easier to organise and get out to vote.

The decline of rural areas also in some respects parallels the broader changes in the electorate, in which white voters are declining relative to the growing minority population, especially Hispanics, resulting in new pushes on issues like immigration reform.

It is not clear that the population decline is permanent, the USDA said. Nevertheless, much of rural America – 15 per cent of the US population spread across 72 per cent of its land area – faces population decline.

John Cromartie, a geographer with the USDA’s Resource and Rural Economics Division, said that the exodus of younger rural residents had left many rural areas with a population that is “ageing in place”.

Losing people in their 20s and 30s, the prime childbearing years, meant many rural regions were seeing their birth rates decline significantly. Those people who did move to rural areas tended to be older adults past their childbearing years.

Mr Cromartie said that although further analysis of the latest data was required, earlier studies suggested that rural America was ageing more quickly than the rest of the nation. A 2009 analysis of data for the first half of the decade showed, for example, that those aged 65 and over accounted for 15 per cent of the rural population but 12 per cent of population nationally.

Additional reporting by Richard McGregor in Washington

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South Africa's Currency Is Getting Worked Again

Thanks to Katie Martin for pointing this out... South Africa's currency is getting clobbered again.

Here's a chart of the dollar vs. the rand (USDZAR) which shows it shooting up since this weekend, easily surpassing the highest levels of late last week (levels that themselves were seen as alarming).

This follows a big selloff in emerging market bonds yesterday, and a much bigger theme for the year, which is the weakness across various emerging markets, and emerging market asset classes.

The culprits for the weakness: Weakening commodity prices, slowing demand from China, and a rising rates in the US, which is reversing flows that had come from the US in search of higher yields.

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EL-ERIAN: The Market 'Sucking Sounds' Are Getting Louder As Four Forces Come Together

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As commentators focus on this early morning’s price action, including some notable gapping dynamics, investors are well advised to keep an eye on underlying market liquidity. The “sucking sounds” of prior days are getting louder as four factors come together. And while not a "Lehman Moment," investors should be careful as such nasty market technicals can feed onto themselves.

Dislocated liquidity conditions -- as in wider and more volatile bid-offer spreads, considerably less intermediation appetite among dealers, etc. -- are cascading down from the most levered market segments. The direct and immediate causes are:

Greater market volatility forcing more formulaic and VAR-based accounts to reduce positions in an accelerated fashionCrossover investors trying to get back to their “home asset classes,” and finding it hard to do so in an orderly fashionAn outflow of funds from mutual funds and other accounts; and, of course,Reduced willingness among dealers to make markets and, in the process, resisting to hold much inventory

In essence, the liquidity underpinnings of markets can no longer support the overall positioning of investors overly comforted by the prolonged and repeated interventions of hyper active central banks using experimental policies. 

Determining whether this is just a temporary blip or what economists call a “multiple equilibrium” (i.e., rather than mean revert, an unpleasant outcome increases the probability of a subsequent worse outcome) is essentially a call on two main issues: the health of the underlying fundamentals relative to market pricing, and the availability of balance sheets to step in with stabilizing liquidity.

Given current indicators, this periodic phase of dislocation in market liquidity -- and they do occur occasionally -- is likely to continue in the immediate period ahead. 

In the process, look for some attractive pockets of value to emerge.

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To embed this post, copy the code below and paste into your website or blog. Dr. Mohamed Abdulla El-Erian is the CEO and co-CIO of PIMCO, the world’s largest bond investor with over US$1 trillion of assets under management as of 2010. El-Erian previously worked as the investment manager of Harvard... More »

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More US Employers Are Planning On Hiring Workers Than At Any Time Since The Financial Crisis

NEW YORK (Reuters) - More employers in the United States plan to hire workers next quarter than in any period since the fourth quarter of 2008, according to a survey by Manpower Group, the global employment services giant.

Manpower's quarterly survey released Tuesday found most employers around the globe were uncertain about hiring more workers in the July through September period given tepid consumer demand. There were certain bright spots, however, with employers in the United States and some parts of Europe feeling cautiously optimistic.

"If you look at it from a global perspective, the overall feeling is that there are definitely challenges," said Manpower's CEO Jeff Joerres. But he said employers are more optimistic than in past months about global economic prospects.

Manpower, which surveyed 42 economies, found that employers in 31 countries and territories planned to hire next quarter. Hiring intentions strengthened in 17 economies, including Spain, Greece and the United States, compared to the previous quarter.

Hiring intentions remained unchanged in four economies and weakened in 21, including France, China and India.

The United States added 175,000 jobs last month after adding only 149,000 in April, the Labor Department said on Friday. The unemployment rate rose a tenth of a point to 7.6 percent.

The United States' net employment outlook ticked forward one point from the previous quarter to a seasonally adjusted plus-12, the report said. The outlook measures the difference between those adding jobs and those cutting jobs. Manpower's index is a directional indicator rather than a predictor of the size of job gains.

For the second consecutive quarter, employers in all 50 states, Washington, D.C. and Puerto Rico have reported positive hiring plans, Manpower said.

Joerres said U.S. companies still have concerns about what will happen next in areas like Europe or China, about healthcare costs and general uncertainty.

"In the past, that would shock the system," he said. "Today, we're used to shocks."

More than one in four employers in the U.S. construction sector have said they will hire in the quarter beginning in July, the strongest outlook since before the global recession. This is a positive sign for the housing market, Joerres said.

In Europe, hiring has stalled with growing uncertainties among employers, the report said. But Joerres said the region has had some positive indicators, including in Greece, which has seen its still-negative hiring outlook improve for four consecutive quarters.

"We're not saying Europe is out of the woods," Joerres said. "It's that Europe is still moving and driving towards an overall solution rather than falling off the cliff, and that's positive for the rest of the world."

'LESS EMERGING AND MORE MATURE'

Hiring outlooks weakened in most of the Asia Pacific region, most significantly in India, which reported the weakest expectations since joining Manpower's survey eight years ago.

While none of the Indian employers surveyed by Manpower said they intended to reduce their workforce this quarter, the hiring expectations dropped 6 points from the previous quarter and 28 points from a year earlier to a plus-18. Joerres said the decline is partly due to the slowdown of India's business process outsourcing industry, which has matured.

"The Indias and Chinas of the world are in some ways less emerging and more mature, and are feeling some of the illnesses of a mature economy," Joerres said.

Sixty-one percent of Indian employers have also struggled to find suitable employees, telling Manpower that recent graduates of India's business and engineering schools often lack necessary hard and soft skills.

The talent shortage has been an issue worldwide, with a lack of skilled trades workers topping the list. Thirty-five percent of employers reported difficulties in filling positions due to a talent shortage, the highest proportion since 2007.

Employers in the United States and Germany, however, reported a smaller talent shortage this year than last year, with the lowest percentages reported in both countries since 2010.

Thirty-nine percent of U.S. employers reported difficulties in filling positions, 10 percentage points less than last year, and 35 percent of German employers, 7 percentage points less.

(Reporting by Madeline Will; Editing by Chizu Nomiyama)

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Markets Turning Ugly: Yen Soars, Italy Tanks, Emerging Markets Get Hammered Again

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The day started off somewhat quietly, if negative in tone, for global markets.

But things have gotten worse no matter where you look.

The yen is strengthening violently, as dollar-yen falls below 97.

This yen strengthening comes in the aftermath of a BOJ decision to remain on course, and not do anything new.

That lead to a 1.5% decline in the Nikkei during normal trading, but since then futures have weakened further.

Meanwhile, the emerging market rout continues apace, as markets in Thailand, Indonesia, and the Philippines got smashed.

By the same token, we've seen ugliness in South African and Australian currencies today.

In the wake of all this, other markets are taking it on the chin.

Italy is now down 1.9%. Not helping matters is growing concern over a German constitutional court case on the validity of the OMT, the ECB's unused plan to back up government sovereign debt. Germany itself is now down about 1.2%.

Meanwhile, US futures are at their lows of the morning.

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Mining Stocks Are Diving In London

London shares opened lower on Tuesday, as mining stocks tumbled further amid worries about the Chinese economy, the world's second largest.

The benchmark FTSE 100 index fell 42.14 points or 0.66 percent to 6,358.31 points at 8:40 am.

On Saturday, Beijing reported a sharp slowdown in exports in May from April, while imports unexpectedly dropped owing to weakness in the domestic economy and sluggish demand overseas.

Official data meanwhile showed Chinese industrial production, which measures output at the country's factories and mines, rose at a slower pace than during the previous month while fixed asset investment also came in below expectations.

"The FTSE continues to drag, weighed down by mining stocks after weekend Chinese data came in below forecasts signalling weak demand in raw materials," said Lee Mumford, a sales trader at Spreadex.

Fresnillo fell the most in early trade, dropping 2.95 percent to 1,085 pence, while Evraz shed 2.89 percent to 121 pence. AngloAmerican fell 2.57 percent to 1,385 pence and Glencore Xstrata eased 2.35 percent to 306.90 pence.

The only non-mining stock in the leading decliners was SABMiller, down 2.41 percent to 3,143 pence. The brewer has big operations in South Africa, where the rand has been weakening sharply, devaluing revenues in sterling terms.

The few FTSE gainers included aircraft engine maker Rolls-Royce, up 1.18 percent to 1,195 pence, and microchip specialist Arm Holdings, up 1.15 percent at 879 pence.

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