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North American Edition
3rd May 2024
 
THE HOT STORY
Number of Americans applying for jobless claims remains historically low
The number of Americans filing new claims for unemployment benefits held steady at a low level in the seven days to April 27th, the Labor Department reported Thursday, pointing to a still fairly tight labor market that should continue to underpin the economy in the second quarter. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 208,000, below the 212,000 predicted by economists polled by Reuters. The four-week average of claims, which softens some of the weekly volatility, fell by 3,500 to 210,000, while the total number of claimants, reported with a one week lag, totaled 1.77m. The Labor Department also reported that U.S. productivity rose by an annual 0.3% rate in the first quarter, down from a revised 3.5% gain in the prior three-month period and below the 0.5% expected among economists surveyed by Bloomberg. Unit labor costs, or what a business pays employees to produce one unit of output after taking into account changes in productivity, climbed at a 4.7% annual rate. "Productivity growth wasn't strong enough to significantly mitigate the rise in wages last quarter," said Nationwide Financial Markets Economist Oren Klachkin. "The strong rise in unit labor costs is another in a string of recent data points indicating that inflation pressures remain relatively high."
STRATEGY
Peloton CEO steps down amid fresh round of layoffs
Peloton has announced the departure of chief executive Barry McCarthy, along with a restructuring that will see around 15% of its global workforce, or 400 employees, lose their jobs. The company plans to continue to close retail showrooms and make changes to its international sales plan, with the aim of reducing annual run-rate expenses by more than $200m by the end of fiscal 2025. Mr McCarthy, meanwhile, will be replaced on an interim basis by chair Karen Boone and director Chris Bruzzo. “This restructuring will position Peloton for sustained, positive free cash flow, while enabling the company to continue to invest in software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business," the company said. The announcements came as Peloton announced third-quarter results. Sales in the three months to March 31st fell 4% to $718m, and it reported a net loss of $167.3m, or 45 cents per share, compared with a loss of $275.9m a year earlier.
Wall Street Journal cuts staff in Hong Kong as it shifts focus to Singapore
The Wall Street Journal is cutting staff at its Hong Kong bureau and shifting its focus to Singapore. The newspaper is creating a new business, finance, and economics group in Singapore, and the move comes as numerous international companies have left Hong Kong due to the national security law and pandemic curbs. China's economic slowdown has also affected the work of analysts and financiers in Hong Kong. The city's media environment has deteriorated, with independent news outlets closing and international media shifting positions to other cities. Hong Kong now ranks 135th out of 180 countries in terms of media freedom.
Chicago law firm Mayer Brown to split off Hong Kong operation amid U.S.-China tensions
Chicago-based law firm Mayer Brown is preparing to split off its Hong Kong operation amid U.S. and China geopolitical tensions. Mayer Brown's Hong Kong office will become an independent entity. The breakup comes at a time when companies increasingly need to navigate conflict between the world's two largest economies. The Hong Kong operation was formerly Johnson Stokes & Master, which was established locally in the 19th century. Geopolitical tensions aside, international law firms also face financial hurdles. Law firms have been reducing office space in prime locations, partly due to the dearth of mergers and acquisitions and initial public offerings.
HIRING
Job openings remain plentiful at small U.S. firms
The latest employment survey from the National Federation of Independent Business reveals that job openings are still plentiful at small U.S. firms. The survey found that 40% of small business owners reported job openings they could not fill, with 34% seeking skilled workers and 18% seeking unskilled labor. Despite the tight labor market, small firms say they are planning to create new jobs in the next three months. However, the challenge of finding qualified workers has led to small business owners raising pay, and labor cost, as well as labor quality, are among the top concerns for business owners. 
LEGAL
Chipotle settles lawsuit over sexual harassment
Chipotle Mexican Grill has been ordered to pay $50,000 to settle a lawsuit alleging sexual harassment at a location in Prattville, Alabama. The U.S. Equal Employment Opportunity Commission (EEOC) sued Chipotle in May 2022 after investigating a cashier's complaints. The EEOC stated that the female cashier experienced daily harassment, including unwanted sexual advances and comments. Chipotle failed to address the complaints against the manager or take steps to stop the harassment. The company is not admitting wrongdoing but is settling to avoid further litigation. Chipotle must pay the former cashier within 30 days and revise its policy to ban sexual harassment. The lawsuit details the manager's repeated sexual advances and comments towards the cashier, causing her distress and affecting her self-esteem. The manager was fired in December 2020.
Second Boeing whistleblower found dead
Joshua Dean, a 45-year-old former quality auditor for Boeing supplier Spirit AeroSystems, has died suddenly after suffering from a fast spreading infection. Spirit AeroSystems builds the bulk of the 737 Max for Boeing. Dean claimed to have found a serious manufacturing issue with the Max in October 2022, but said nothing was done by management after he flagged the issues. He is the second Boeing whistleblower to be found dead this year. John Barnett was found in a car park following a suspected suicide in March. He had been giving evidence in a lawsuit against the U.S. planemaker at the time of his death. Attorneys for Mr Dean said aviation companies should encourage and incentivize workers who raise concerns over quality and safety issues.
CORPORATE
Teen apparel retailer rue21 files for Chapter 11 bankruptcy protection
Teen apparel retailer rue21 has filed for Chapter 11 bankruptcy protection for the third time. The company plans to shut down its 540 stores and sell its intellectual property. Despite attempts to sell the business, rue21 was unable to find a buyer willing to pay more than the value of liquidating its inventory. Gordon Brothers has been hired to assist with the store closing sales. The Pennsylvania-based retailer, which focuses on affordable fashion for teens and young adults, previously filed for bankruptcy in 2003 and 2017. rue21 has approximately 4,900 employees and $194.4m in debt. The company has struggled after emerging from its previous bankruptcy, facing challenges from the shift to online shopping accelerated by the COVID-19 pandemic.
TECHNOLOGY
AI takes on CPA exam in landmark experiment
In a groundbreaking experiment, researchers have tested the capabilities of artificial intelligence (AI) by subjecting top AI models to the Certified Public Accountant (CPA) exam. The study, titled "Can LLMs Pass the CPA Exam? Evaluating Large Language Model Performance on the Certified Public Accountant test," provides a comprehensive assessment of AI's potential in the accounting profession. The research team evaluated the performance of AI models such as Google Gemini, ChatGPT-4, Claude, Mixtral, and Llama-2b on multiple-choice questions from the Becker CPA exam preparation suite. While some AI models showed promise, human accountants are not likely to be replaced as AI struggles with complex, open-ended questions. ChatGPT-4 excelled in financial reporting and regulation, while Claude Opus performed well in auditing. Llama-2b underperformed, indicating the need for further development. Lead author Will Zacher emphasizes that AI tools may handle routine accounting tasks, but skilled human accountants are still necessary for interpretation and strategic guidance. The AI models were tested on all sections of the CPA exam, with a passing score of 75% as the criterion for success.
INTERNATIONAL
Queensland parliament passes historic legislation decriminalizing sex work
Queensland parliament has passed historic legislation decriminalizing sex work in the Australian state, after decades of campaigning. However, advocates are concerned the hard-won reform could be overturned if the Liberal National Party (LNP) opposition wins government in October. The attorney general, Yvette D'Ath, who sponsored the bill, stated that "discrimination and stigma" were common in the industry. The new law regulates sex work the same way as all other businesses, imposing planning and workplace health and safety rules. The Queensland Council of Unions general secretary, Jacqueline King, warned that the LNP would face opposition from the united union movement and the sex work industry if it campaigns to criminalize the industry again. The legislation also establishes anti-discrimination protections for sex workers, providing an avenue for redress and sending a message that discrimination against sex workers is not acceptable.
London employers are letting more staff work entirely from home
Over a fifth of white-collar jobs in London are now fully remote, as employers in the U.K. capital embrace working from home to attract staff seeking higher pay without the high living costs. A survey by recruiter Hays found that the proportion of remote jobs in London has risen from 18% to 22%, making it equal to the east of England as the U.K. region with the highest number of fully remote jobs. Lorraine Twist, a finance director at Hays, says remote contracts are attractive to candidates who can enjoy a London salary without the commute and high property prices. The survey also revealed that the proportion of London staff working entirely in the office has decreased, while hybrid jobs have also declined. The findings suggest that parts of the U.K. labor market remain tight as firms compete for talent.
OTHER
Teenage girls' popularity linked to lack of sleep
Scientists have found that popular teenage girls are more likely to experience insomnia symptoms and sleep less than their peers, according to a study published in the journal Frontiers in Sleep. The study, which investigated a sample of over 1,300 Swedish teenagers aged 14 to 18, found that popular girls reported shorter sleep duration and more difficulties falling asleep and staying asleep. Interestingly, the negative impact on sleep was observed both before and after the advent of smartphones. The researchers suggest that the gender disparities in sleep patterns might be related to the types of friendships girls and boys tend to have at that age. These findings add to the growing body of evidence that school schedules are not accommodating teenagers' sleep needs. "Teenagers are arguably the most sleep deprived population throughout the lifespan," said Serena Bauducco, a sleep researcher at Örebro University. The study highlights the importance of adequate sleep for teenage girls' mental health and school performance.
 


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