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UK wage growth at six-year high, Carney talks interest rates - as it happened | UK wage growth at six-year high, Carney talks interest rates - as it happened |
(4 months later) | |
6.03pm BST | |
18:03 | |
Helena Smith | Helena Smith |
Over in Greece bankers are saying that the quick formation of a new government will almost certainly lead to the relaxation of debilitating capital controls. Helena Smith reports from Athens: | Over in Greece bankers are saying that the quick formation of a new government will almost certainly lead to the relaxation of debilitating capital controls. Helena Smith reports from Athens: |
Since the imposition of capital controls at the end of June, business activity has been brought almost to a grinding halt. Unable to pay suppliers, small and medium sized companies have been hardest hit with exports and imports not only severely curtailed but further exacerbating the country’s economic tailspin. Bank figures show that cash-starved smaller companies have often been forced to make more frequent imports at higher prices – the only way of circumventing the demand of suppliers overseas for large sums up front for merchandise | Since the imposition of capital controls at the end of June, business activity has been brought almost to a grinding halt. Unable to pay suppliers, small and medium sized companies have been hardest hit with exports and imports not only severely curtailed but further exacerbating the country’s economic tailspin. Bank figures show that cash-starved smaller companies have often been forced to make more frequent imports at higher prices – the only way of circumventing the demand of suppliers overseas for large sums up front for merchandise |
But bankers are now saying restrictions are likely to be further relaxed – bank transactions abroad were relaxed earlier this month - if Greece moves fast to regain the trust it lost with its European partners (during fraught negotiations over its latest bailout) by forming a reform-minded government after Sunday’s elections. Six months of wrangling with creditors saw a bank run of around €40bn. | But bankers are now saying restrictions are likely to be further relaxed – bank transactions abroad were relaxed earlier this month - if Greece moves fast to regain the trust it lost with its European partners (during fraught negotiations over its latest bailout) by forming a reform-minded government after Sunday’s elections. Six months of wrangling with creditors saw a bank run of around €40bn. |
“Once banks are recapitalized and deposits flow back, that will lessen dependence on the European Central Bank and make further lifting of the controls easier,’ said one banker. Withdrawals from ATMs – now controlled at €420 a week – may be among the restrictions to be lifted. | “Once banks are recapitalized and deposits flow back, that will lessen dependence on the European Central Bank and make further lifting of the controls easier,’ said one banker. Withdrawals from ATMs – now controlled at €420 a week – may be among the restrictions to be lifted. |
But insiders cautioned against speculation that the controls would be entirely removed. “A lot will rest on the type of government that is put in place but even if it is ultimately a government of technocrats, restrictions will be with us for some time yet,” said the banker speaking on condition of anonymity. “Our big fear, central to the controls right now, is the outflow of deposits. Everyone worries that if we lift them altogether people will rush to take whatever they have out with everything that means for a system that is already fragile.” | But insiders cautioned against speculation that the controls would be entirely removed. “A lot will rest on the type of government that is put in place but even if it is ultimately a government of technocrats, restrictions will be with us for some time yet,” said the banker speaking on condition of anonymity. “Our big fear, central to the controls right now, is the outflow of deposits. Everyone worries that if we lift them altogether people will rush to take whatever they have out with everything that means for a system that is already fragile.” |
On that note it’s time to close up for the evening. Thanks for all your comments, and we’ll be back tomorrow. | On that note it’s time to close up for the evening. Thanks for all your comments, and we’ll be back tomorrow. |
Updated | |
at 6.06pm BST | |
5.25pm BST | |
17:25 | |
Grexit "never for real" - ECB vice president | Grexit "never for real" - ECB vice president |
The prospect of a Greek exit from the euro was “never for real”, according to Vítor Constâncio, vice-president of the European Central Bank in an interview this week with Thomson Reuters. Here is the relevant passage. Constâncio said: | The prospect of a Greek exit from the euro was “never for real”, according to Vítor Constâncio, vice-president of the European Central Bank in an interview this week with Thomson Reuters. Here is the relevant passage. Constâncio said: |
We have growth again. We need to strengthen the confidence in peripheral countries. That has to be achieved by deepening integration. The Greek turmoil raised doubts. These doubts have to be now closed by additional institutional reforms. | We have growth again. We need to strengthen the confidence in peripheral countries. That has to be achieved by deepening integration. The Greek turmoil raised doubts. These doubts have to be now closed by additional institutional reforms. |
Q. What doubts were raised about the euro? | Q. What doubts were raised about the euro? |
It raised doubts for the markets that countries like Greece could cope with the challenges of monetary union. There was never any doubt among the majority of member countries. We maintain that the euro is irreversible. Legally, no country can be expelled. The actual prospect of that happening was never for real. | It raised doubts for the markets that countries like Greece could cope with the challenges of monetary union. There was never any doubt among the majority of member countries. We maintain that the euro is irreversible. Legally, no country can be expelled. The actual prospect of that happening was never for real. |
One #ECB, two words Coeure (June): #Grexit "can unfortunately no longer be ruled out" Constancio (September): #Grexit "was never for real" | One #ECB, two words Coeure (June): #Grexit "can unfortunately no longer be ruled out" Constancio (September): #Grexit "was never for real" |
Updated | |
at 5.26pm BST | |
4.57pm BST | |
16:57 | |
European markets jump ahead of Fed meeting | European markets jump ahead of Fed meeting |
Despite the continuing uncertainty about whether or not the Federal Reserve will raise rates on Thursday, investors were in fairly buoyant mood. The betting seems to be coming down on the side of no move - just about. Meanwhile news of a possible merger between drinks groups SABMiller and Anheuser-Busch InBev saw both companies share prices soar and give a lift to stock markets, notably the FTSE 100. Energy companies were also in demand as crude prices moved higher after an unexpected fall in weekly US inventory data. The final scores showed: | Despite the continuing uncertainty about whether or not the Federal Reserve will raise rates on Thursday, investors were in fairly buoyant mood. The betting seems to be coming down on the side of no move - just about. Meanwhile news of a possible merger between drinks groups SABMiller and Anheuser-Busch InBev saw both companies share prices soar and give a lift to stock markets, notably the FTSE 100. Energy companies were also in demand as crude prices moved higher after an unexpected fall in weekly US inventory data. The final scores showed: |
On Wall Street, the Dow Jones Industrial Average is currently 92 points or 0.56% higher. | On Wall Street, the Dow Jones Industrial Average is currently 92 points or 0.56% higher. |
4.50pm BST | |
16:50 | |
Thursday’s Federal Reserve decision on interest rates is still too close to call, according to the latest Reuters poll. But the pendulum has swung slightly in favour of the central bank keeping borrowing costs on hold: | Thursday’s Federal Reserve decision on interest rates is still too close to call, according to the latest Reuters poll. But the pendulum has swung slightly in favour of the central bank keeping borrowing costs on hold: |
45 of 80 economists now calling no Fed move vs slight majority last wk for a hike. Nobody switched to predict a rise https://t.co/9KTGVjgbrX | 45 of 80 economists now calling no Fed move vs slight majority last wk for a hike. Nobody switched to predict a rise https://t.co/9KTGVjgbrX |
4.28pm BST | |
16:28 | |
Oil surges after US stocks data | Oil surges after US stocks data |
Oil prices are surging after an unexpected fall in US crude stocks last week. | Oil prices are surging after an unexpected fall in US crude stocks last week. |
Crude inventories fell by 2.1m barrels, according to the Energy Information Administration, compared to expectations of a rise of 1.2m barrels. | Crude inventories fell by 2.1m barrels, according to the Energy Information Administration, compared to expectations of a rise of 1.2m barrels. |
The news has sent Brent crude nearly 5% higher to $50.10 a barrel, with West Texas also on the rise: | The news has sent Brent crude nearly 5% higher to $50.10 a barrel, with West Texas also on the rise: |
Oil now surging 6% http://t.co/U3FGscb0V7 pic.twitter.com/j1b0vi0HCy | Oil now surging 6% http://t.co/U3FGscb0V7 pic.twitter.com/j1b0vi0HCy |
3.48pm BST | |
15:48 | |
Bank governor Mark Carney said that if wage growth moves about 3% and unit labour costs rise, then a decision on a rate hike comes into sharper relief. (A reminder that average pay rose by 2.9% in the three months to July.) | Bank governor Mark Carney said that if wage growth moves about 3% and unit labour costs rise, then a decision on a rate hike comes into sharper relief. (A reminder that average pay rose by 2.9% in the three months to July.) |
If #UK economy grows above trend, has rising core inflation and wages above 3% then the decision on rates comes into sharper relief | If #UK economy grows above trend, has rising core inflation and wages above 3% then the decision on rates comes into sharper relief |
#BOE Mark Carney says the "best collective judgement" of the rate-setting committee is that rates will rise in Q2, April to June next year | #BOE Mark Carney says the "best collective judgement" of the rate-setting committee is that rates will rise in Q2, April to June next year |
Updated | |
at 3.49pm BST | |
3.45pm BST | |
15:45 | |
MPC member Ian McCafferty, who voted for a rate rise last time round: | MPC member Ian McCafferty, who voted for a rate rise last time round: |
@bankofengland McCafferty says UK manufacturing might be struggling but is only 10% of economy, so not a guide to it's health | @bankofengland McCafferty says UK manufacturing might be struggling but is only 10% of economy, so not a guide to it's health |
3.30pm BST | |
15:30 | |
More from the UK Treasury select committee quizzing Bank of England governor Mark Carney and members of the rate-setting monetary policy committee (Ian McCafferty, Kristin Forbes, and Martin Weale): | More from the UK Treasury select committee quizzing Bank of England governor Mark Carney and members of the rate-setting monetary policy committee (Ian McCafferty, Kristin Forbes, and Martin Weale): |
@bankofengland Carney says UK growing above trend and will continue to over next few years. @OECD says 2.3% growth next year. Above trend? | @bankofengland Carney says UK growing above trend and will continue to over next few years. @OECD says 2.3% growth next year. Above trend? |
@bankofengland Mark Carney sounds like recent China trip took its toll. Maybe a little bit of a cold and #sinus trouble | @bankofengland Mark Carney sounds like recent China trip took its toll. Maybe a little bit of a cold and #sinus trouble |
BoE’s McCafferty: Could See Faster Pickup Than Expected In Wage Growth $GBPUSD | BoE’s McCafferty: Could See Faster Pickup Than Expected In Wage Growth $GBPUSD |
BoE's McCafferty Is Concerned That Inflation Could 'Outpace' Projection $GBPUSD | BoE's McCafferty Is Concerned That Inflation Could 'Outpace' Projection $GBPUSD |
BoE’s McCafferty Says Deflation Risks Are ‘Now Very Low’ $GBPUSD | BoE’s McCafferty Says Deflation Risks Are ‘Now Very Low’ $GBPUSD |
Meanwhile the Bank has released reports to the committee from Mark Carney and Kirstin Forbes. | Meanwhile the Bank has released reports to the committee from Mark Carney and Kirstin Forbes. |
3.15pm BST | |
15:15 | |
Wall Street opens higher | Wall Street opens higher |
Ahead of the all important Federal Reserve decision on interest rates, US markets have joined in the global rally, adding to Tuesday’s gains. | Ahead of the all important Federal Reserve decision on interest rates, US markets have joined in the global rally, adding to Tuesday’s gains. |
In early trading the Dow Jones Industrial Average is up 29 points or 0.18%. Elsewhere the FTSE 100 is 1.32% higher - helped by the news of a possible merger between drinks groups SABMiller and Anheuser-Busch InBev - while Germany’s Dax is up 0.11%. | In early trading the Dow Jones Industrial Average is up 29 points or 0.18%. Elsewhere the FTSE 100 is 1.32% higher - helped by the news of a possible merger between drinks groups SABMiller and Anheuser-Busch InBev - while Germany’s Dax is up 0.11%. |
2.59pm BST | |
14:59 | |
The other MPC member at the Treasury Select Committee, Kristin Forbes, is also worried about volatility: | The other MPC member at the Treasury Select Committee, Kristin Forbes, is also worried about volatility: |
@bankofengland Kristin Forbes says recent financial volatility played a part in her decision to vote against a rate rise | @bankofengland Kristin Forbes says recent financial volatility played a part in her decision to vote against a rate rise |
2.55pm BST | |
14:55 | |
UK rate rise timing clearer at turn of year - Carney | UK rate rise timing clearer at turn of year - Carney |
Bank of England governor Mark Carney is up before the Treasury Select committee to discuss the latest inflation report. | Bank of England governor Mark Carney is up before the Treasury Select committee to discuss the latest inflation report. |
On interest rates he said there was “a wide distribution of possible outcomes around any expected path for bank rate.” | On interest rates he said there was “a wide distribution of possible outcomes around any expected path for bank rate.” |
He said the timing of a rate rise would be in sharper focus at the turn of the year. | He said the timing of a rate rise would be in sharper focus at the turn of the year. |
One uncertainty of course has been the recent worries about the outlook for China’s economy. He said there was “downside risk” but not enough to adjust the Bank’s forecasts at the moment. | One uncertainty of course has been the recent worries about the outlook for China’s economy. He said there was “downside risk” but not enough to adjust the Bank’s forecasts at the moment. |
Monetary Policy Committee member Ian McCafferty said he had moved from believing rates should remain on hold to believing they should rise because he was worried about the prospect for the inflation outlook, notwithstanding any international risks. | Monetary Policy Committee member Ian McCafferty said he had moved from believing rates should remain on hold to believing they should rise because he was worried about the prospect for the inflation outlook, notwithstanding any international risks. |
But former hawk (although he criticised the term) Martin Weale said it was not appropriate for a rise because of the Chinese slowdown, further recent falls in oil and raw material prices and weak UK productivity. | But former hawk (although he criticised the term) Martin Weale said it was not appropriate for a rise because of the Chinese slowdown, further recent falls in oil and raw material prices and weak UK productivity. |
2.34pm BST | |
14:34 | |
The US inflation data is likely to add to the chances of the Federal Reserve keeping interest rates on hold on Thursday, said Har Bandholz, chief US economist at UniCredit Research. He said: | The US inflation data is likely to add to the chances of the Federal Reserve keeping interest rates on hold on Thursday, said Har Bandholz, chief US economist at UniCredit Research. He said: |
Now that the last important economic data releases ahead of tomorrow’s FOMC decision is out, we know as much as before: | Now that the last important economic data releases ahead of tomorrow’s FOMC decision is out, we know as much as before: |
The main growth engine of the US economy, the consumer, has been doing well – at least until before the financial market volatility began (we are confident that this improvement has continued and will continue, but the data for this period still has to be released). | The main growth engine of the US economy, the consumer, has been doing well – at least until before the financial market volatility began (we are confident that this improvement has continued and will continue, but the data for this period still has to be released). |
The manufacturing sector, on the other hand, still suffers from global headwinds, the stronger US dollar, and – in the short-term –, from an inventory correction. Finally, inflation rates are currently held back by transitory factors. While the core CPI still stands at a relatively solid 1.8% year on year, it has lost some momentum since June, mostly due to the renewed decline in energy prices. | The manufacturing sector, on the other hand, still suffers from global headwinds, the stronger US dollar, and – in the short-term –, from an inventory correction. Finally, inflation rates are currently held back by transitory factors. While the core CPI still stands at a relatively solid 1.8% year on year, it has lost some momentum since June, mostly due to the renewed decline in energy prices. |
Moreover, the Fed prefers to look at the Personal Consumption Expenditures deflator excluding food & energy, which has slowed in July to 1.2% year on year, the lowest since early 2011. | Moreover, the Fed prefers to look at the Personal Consumption Expenditures deflator excluding food & energy, which has slowed in July to 1.2% year on year, the lowest since early 2011. |
We had pointed out before that this number is artificially biased downward by low health care costs, but FOMC members still seem to see it as their benchmark measure. Low inflation, in combination with the fact that the risk averse Fed would like to get a better sense about how the latest global developments – read: the slowdown in China, the related stock market sell-off and the renewed decline in oil prices – affect the outlook for growth and inflation, most likely mean that the FOMC will leave rates unchanged at this week’s meeting. | We had pointed out before that this number is artificially biased downward by low health care costs, but FOMC members still seem to see it as their benchmark measure. Low inflation, in combination with the fact that the risk averse Fed would like to get a better sense about how the latest global developments – read: the slowdown in China, the related stock market sell-off and the renewed decline in oil prices – affect the outlook for growth and inflation, most likely mean that the FOMC will leave rates unchanged at this week’s meeting. |
2.02pm BST | |
14:02 | |
The August US inflation figure will probably not change the Federal Reserve’s decision on interest rates, said Rob Carnell of ING Bank. He expects no change from the central bank although admits a small hike could be on the cards: | The August US inflation figure will probably not change the Federal Reserve’s decision on interest rates, said Rob Carnell of ING Bank. He expects no change from the central bank although admits a small hike could be on the cards: |
US August CPI was the last significant piece of data standing between the Federal Open Market Committee and its rate decision on Thursday, and it came in almost bang on expectations, with the only marginal deviation from expectations being the core inflation rate, which was unchanged at 1.8% year on year - though from an expected 0.1% month on month gain, so almost certainly just a rounding effect. | US August CPI was the last significant piece of data standing between the Federal Open Market Committee and its rate decision on Thursday, and it came in almost bang on expectations, with the only marginal deviation from expectations being the core inflation rate, which was unchanged at 1.8% year on year - though from an expected 0.1% month on month gain, so almost certainly just a rounding effect. |
Headline inflation was unchanged at 0.2% year on year, dragged down by a 2.0% month on month decline in energy prices – not surprisingly. | Headline inflation was unchanged at 0.2% year on year, dragged down by a 2.0% month on month decline in energy prices – not surprisingly. |
his result doesn’t even give a directional boost to the hawks, which might have been the case if energy had dragged just a little less. That said, this was never likely to be a decisive piece of data, and the FOMC members will probably go into this meeting already with a good idea of what they want to do. Recent data will have played a minor role in that conclusion. Our base case remains no hike with a strong hint for October, but a small (less than 25 basis point hike) still looks like a strong call to us. | his result doesn’t even give a directional boost to the hawks, which might have been the case if energy had dragged just a little less. That said, this was never likely to be a decisive piece of data, and the FOMC members will probably go into this meeting already with a good idea of what they want to do. Recent data will have played a minor role in that conclusion. Our base case remains no hike with a strong hint for October, but a small (less than 25 basis point hike) still looks like a strong call to us. |
1.52pm BST | |
13:52 | |
Followers of the eurozone debt crisis should check out this story from Athens, on the worrying rise of Greece’s extremist Golden Dawn party, ahead of Sunday’s elections: | Followers of the eurozone debt crisis should check out this story from Athens, on the worrying rise of Greece’s extremist Golden Dawn party, ahead of Sunday’s elections: |
Related: Greek election 2015: Golden Dawn exploits atmosphere of austerity-driven despair | Related: Greek election 2015: Golden Dawn exploits atmosphere of austerity-driven despair |
1.41pm BST | |
13:41 | |
US consumer prices fall | US consumer prices fall |
The US monthly inflation rate has turned negative, giving the Federal Reserve another reason to hold off raising interest rates tomorrow. | The US monthly inflation rate has turned negative, giving the Federal Reserve another reason to hold off raising interest rates tomorrow. |
Consumer prices unexpectedly fell by 0.1% month-on-month in August, mainly due to cheaper gasoline prices. This left the annual Consumer Prices index unchanged at 0.2%. | Consumer prices unexpectedly fell by 0.1% month-on-month in August, mainly due to cheaper gasoline prices. This left the annual Consumer Prices index unchanged at 0.2%. |
This is the first drop in the monthly inflation rate since January, defying expectations of a small rise in prices. | This is the first drop in the monthly inflation rate since January, defying expectations of a small rise in prices. |
Ooops! Consumer Prices in U.S. Drop in August on Plunging Energy Costs http://t.co/Okx9UhWJId pic.twitter.com/pk34kWkx9d | Ooops! Consumer Prices in U.S. Drop in August on Plunging Energy Costs http://t.co/Okx9UhWJId pic.twitter.com/pk34kWkx9d |
In response, the yield on American government debt has dropped a little, suggesting the Fed is less likely to hike tomorrow. | In response, the yield on American government debt has dropped a little, suggesting the Fed is less likely to hike tomorrow. |
2-year yield drops back below 0.8000 after CPI. On balance, tame print doesn't put any pressure on the Fed to hike. | 2-year yield drops back below 0.8000 after CPI. On balance, tame print doesn't put any pressure on the Fed to hike. |
1.29pm BST | |
13:29 | |
Sterling is continuing to strengthen, as today’s wage growth figures fuels predictions the the Bank of England could raise interest rates sooner than expected. | Sterling is continuing to strengthen, as today’s wage growth figures fuels predictions the the Bank of England could raise interest rates sooner than expected. |
The pound has now gained a whole cent against the US dollar to $1.5445. It’s also up 1% against the euro to a six-day high of €1.3744, meaning one euro is worth 72.66p. | The pound has now gained a whole cent against the US dollar to $1.5445. It’s also up 1% against the euro to a six-day high of €1.3744, meaning one euro is worth 72.66p. |
1.27pm BST | |
13:27 | |
On a different note, a survey from City firm M&G Investments has found little appetite among European citizens for any more government bailouts. | On a different note, a survey from City firm M&G Investments has found little appetite among European citizens for any more government bailouts. |
M&G reports that Spain is the only country where a majority of people back the concept (Spain being one country that could have been dragged into the eurozone debt crisis) | M&G reports that Spain is the only country where a majority of people back the concept (Spain being one country that could have been dragged into the eurozone debt crisis) |
Given the mess suffered by Greeks since 2010, it’s perhaps not surprising. But it could make it harder for Europe to grow and drive down unemployment, as M&G’s Jim Leaviss explains: | Given the mess suffered by Greeks since 2010, it’s perhaps not surprising. But it could make it harder for Europe to grow and drive down unemployment, as M&G’s Jim Leaviss explains: |
To become an Optimum Currency Region, the Eurozone needs fiscal transfers between areas doing well, and areas where the economy is weak. The survey data confirm that the majority of the public do not support such transfers. This is perhaps no surprise – we blogged a couple of years ago that some German states are vehemently against fiscal transfers even within Germany itself, let alone to other EU members. | To become an Optimum Currency Region, the Eurozone needs fiscal transfers between areas doing well, and areas where the economy is weak. The survey data confirm that the majority of the public do not support such transfers. This is perhaps no surprise – we blogged a couple of years ago that some German states are vehemently against fiscal transfers even within Germany itself, let alone to other EU members. |
The lack of public support does not mean that there can be no bailouts – we’ve already had sovereign bailout programmes within the EU. But it does mean that they lack democratic support and perhaps also that political parties that reflect the anti-bailout views of voters are likely to do well in the future. It also means that the agents for future bailouts are likely to remain institutions one step removed from the democratic process, such as the ECB and the IMF. | The lack of public support does not mean that there can be no bailouts – we’ve already had sovereign bailout programmes within the EU. But it does mean that they lack democratic support and perhaps also that political parties that reflect the anti-bailout views of voters are likely to do well in the future. It also means that the agents for future bailouts are likely to remain institutions one step removed from the democratic process, such as the ECB and the IMF. |
And whilst we can look at these results and tell ourselves that they are an indication that the European project is flawed and broken, we should ask ourselves how Californians would vote if they had a choice about fiscal transfers to Detroit, or if the UK’s Home Counties were asked if they wanted to continue redistributing tax revenues to former industrial areas elsewhere in the country..... | And whilst we can look at these results and tell ourselves that they are an indication that the European project is flawed and broken, we should ask ourselves how Californians would vote if they had a choice about fiscal transfers to Detroit, or if the UK’s Home Counties were asked if they wanted to continue redistributing tax revenues to former industrial areas elsewhere in the country..... |
More here: | More here: |
New M&G YouGov survey: there’s very low support in Europe for sovereign bailouts | New M&G YouGov survey: there’s very low support in Europe for sovereign bailouts |
12.54pm BST | |
12:54 | |
Full story: UK wages rising at quickest rate in six years | Full story: UK wages rising at quickest rate in six years |
The rise in annual wage growth to 2.9% in the last quarter suggests the cost of living crisis is finally easing (although not for everyone, of course). | The rise in annual wage growth to 2.9% in the last quarter suggests the cost of living crisis is finally easing (although not for everyone, of course). |
My colleague Heather Stewart reports: | My colleague Heather Stewart reports: |
Pay for Britain’s workers is rising at the fastest pace for more than six years, even before George Osborne’s national living wage is implemented, in a sign that living standards are continuing to rise. | Pay for Britain’s workers is rising at the fastest pace for more than six years, even before George Osborne’s national living wage is implemented, in a sign that living standards are continuing to rise. |
Official figures showed that average pay across the economy increased by 2.9%, when comparing May to July with the same period a year earlier. The growth rate was the same once bonuses were taken into account. | Official figures showed that average pay across the economy increased by 2.9%, when comparing May to July with the same period a year earlier. The growth rate was the same once bonuses were taken into account. |
The Office for National Statistics said that was the fastest pace of wage growth since the three months to January 2009 – and with inflation running at 0.1% in July, that suggests the long-running squeeze on living standards has come to an end. | The Office for National Statistics said that was the fastest pace of wage growth since the three months to January 2009 – and with inflation running at 0.1% in July, that suggests the long-running squeeze on living standards has come to an end. |
City analysts said the pay data suggested consumer demand, a key driver of economic growth, would be underpinned by the rise in real wages. | City analysts said the pay data suggested consumer demand, a key driver of economic growth, would be underpinned by the rise in real wages. |
Howard Archer, of consultancy IHS Global Insight, said: “July’s marked strengthening in earnings growth coupled with consumer price inflation dipping to 0.0% in August is very good news for consumers’ purchasing power.” | Howard Archer, of consultancy IHS Global Insight, said: “July’s marked strengthening in earnings growth coupled with consumer price inflation dipping to 0.0% in August is very good news for consumers’ purchasing power.” |
Osborne said the figures were an indicator his economic plan was working. “It is welcome news that pay packets are rising and jobs are being created,” he said. “With wages up 2.9% over the year and inflation low, working people have received the fastest real terms rise in over a decade.” | Osborne said the figures were an indicator his economic plan was working. “It is welcome news that pay packets are rising and jobs are being created,” he said. “With wages up 2.9% over the year and inflation low, working people have received the fastest real terms rise in over a decade.” |
Here’s Heather’s full story: | Here’s Heather’s full story: |
Related: UK wages rising at quickest rate in six years | Related: UK wages rising at quickest rate in six years |
Updated | |
at 2.01pm BST | |
12.18pm BST | |
12:18 | |
Young people "risk falling behind" in labour market | Young people "risk falling behind" in labour market |
Britain’s youth unemployment rate is too high, and falling too slowly, warns Lindsay Owen, Deputy Director of Policy at The Prince’s Trust. | Britain’s youth unemployment rate is too high, and falling too slowly, warns Lindsay Owen, Deputy Director of Policy at The Prince’s Trust. |
She says: | She says: |
“While overall unemployment continues to fall steadily, there is a real danger that young people could be left behind. Whereas overall unemployment has fallen by 8 per cent over the past 12 months, youth unemployment has only fallen by 1 per cent, barely shifting for a year. | “While overall unemployment continues to fall steadily, there is a real danger that young people could be left behind. Whereas overall unemployment has fallen by 8 per cent over the past 12 months, youth unemployment has only fallen by 1 per cent, barely shifting for a year. |
“Such a sustained period of stalling clearly shows there is an ongoing and pressing need for us to help young people develop the skills and confidence they need to move into work and have the best possible chance of building a successful future.” | “Such a sustained period of stalling clearly shows there is an ongoing and pressing need for us to help young people develop the skills and confidence they need to move into work and have the best possible chance of building a successful future.” |
And here’s some context: | And here’s some context: |
For May to July 2015, for people aged from 16 to 24, there were: | For May to July 2015, for people aged from 16 to 24, there were: |
11.53am BST | |
11:53 | |
Young people continue to get the rough end of the labour market, although the situation is slowly improving. | Young people continue to get the rough end of the labour market, although the situation is slowly improving. |
The youth unemployment rate (for 16 to 24 year olds) was 15.6% in the three months to July, almost three times the overall rate. | The youth unemployment rate (for 16 to 24 year olds) was 15.6% in the three months to July, almost three times the overall rate. |
It is also: | It is also: |
11.41am BST | |
11:41 | |
Labour: No room for complacency | Labour: No room for complacency |
Owen Smith MP, Labour’s Shadow Work and Pensions Secretary, is concerned that unemployment rose by 10,000 in the last quarter: | Owen Smith MP, Labour’s Shadow Work and Pensions Secretary, is concerned that unemployment rose by 10,000 in the last quarter: |
Here’s his response: | Here’s his response: |
“It’s welcome news that workers’ pay packets are increasing after years of stagnating. However, this is now the third consecutive increase in unemployment and Ministers mustn’t become complacent about overall joblessness. | “It’s welcome news that workers’ pay packets are increasing after years of stagnating. However, this is now the third consecutive increase in unemployment and Ministers mustn’t become complacent about overall joblessness. |
“With such low levels of productivity persisting in the workforce and high levels of youth unemployment, the Government must do more to bring about an increase in the number of secure jobs in the British economy. | “With such low levels of productivity persisting in the workforce and high levels of youth unemployment, the Government must do more to bring about an increase in the number of secure jobs in the British economy. |
“Rather than stripping workers of their employment rights and taking thousands of pounds a year out of the pockets of millions of working families across the UK, the Government should be backing British workers to bring confidence and optimism back into our workforce.” | “Rather than stripping workers of their employment rights and taking thousands of pounds a year out of the pockets of millions of working families across the UK, the Government should be backing British workers to bring confidence and optimism back into our workforce.” |
Updated | |
at 11.43am BST | |
11.28am BST | |
11:28 | |
Another reason for caution. The number of women classed as unemployed spiked by 23,000 in the three months to July. | Another reason for caution. The number of women classed as unemployed spiked by 23,000 in the three months to July. |
The number of unemployed men fell by 13,000, though, meaning the unemployment total rose by 10,000. | The number of unemployed men fell by 13,000, though, meaning the unemployment total rose by 10,000. |
#Breaking Unemployment rose by 10,000 between May and July to 1.82 million, official figures showed today | #Breaking Unemployment rose by 10,000 between May and July to 1.82 million, official figures showed today |
That’s compared to the February-April quarter. | That’s compared to the February-April quarter. |
Updated | |
at 11.43am BST | |
11.10am BST | |
11:10 | |
Today’s labour market report isn’t all good news, especially for those already employed in the public sector or looking for work. | Today’s labour market report isn’t all good news, especially for those already employed in the public sector or looking for work. |
Dr John Philpott, director of The Jobs Economist, explains: | Dr John Philpott, director of The Jobs Economist, explains: |
“It’s now fairly clear that the UK labour market recovery changed tack in the first half of the year. The previous and prolonged ‘jobs-rich/pay-poor’ trend appears, at least for now, to have gone into reverse, with the headline unemployment rate static at 5.5% since the spring while the rate of pay growth has risen to 2.9%. | “It’s now fairly clear that the UK labour market recovery changed tack in the first half of the year. The previous and prolonged ‘jobs-rich/pay-poor’ trend appears, at least for now, to have gone into reverse, with the headline unemployment rate static at 5.5% since the spring while the rate of pay growth has risen to 2.9%. |
The good news is that this provides further evidence that the much needed improvement in labour productivity may at last be underway. However, while this will be welcomed by employers, wage earners and economic pundits, the news is not so good for jobseekers because it now looks as though it will take a little longer than previously expected for unemployment to fall back to the pre-recession rate. | The good news is that this provides further evidence that the much needed improvement in labour productivity may at last be underway. However, while this will be welcomed by employers, wage earners and economic pundits, the news is not so good for jobseekers because it now looks as though it will take a little longer than previously expected for unemployment to fall back to the pre-recession rate. |
“Public sector workers will also be feeling less than chipper. Their pay is rising at a rate of 1.3%, almost three times slower than the average rate of pay growth in the private sector, while the first half of the year saw an underlying fall (adjusting for statistical reclassification effects) of 22,000 in the number of people employed in the public sector.” | “Public sector workers will also be feeling less than chipper. Their pay is rising at a rate of 1.3%, almost three times slower than the average rate of pay growth in the private sector, while the first half of the year saw an underlying fall (adjusting for statistical reclassification effects) of 22,000 in the number of people employed in the public sector.” |
And this graph shows how the public sector workforce has shrunk on David Cameron’s watch: | And this graph shows how the public sector workforce has shrunk on David Cameron’s watch: |
11.06am BST | |
11:06 | |
This chart explains why S&P have downgraded Japan: | This chart explains why S&P have downgraded Japan: |
S&P: #Japan govt's strategy to revive econ growth & end deflation appears unlikely to reverse fiscal deterioration. pic.twitter.com/G6qAlggfoD | S&P: #Japan govt's strategy to revive econ growth & end deflation appears unlikely to reverse fiscal deterioration. pic.twitter.com/G6qAlggfoD |
It shows that country’s national debt is expected to keep rising until the 2020s, to 250% of GDP. | It shows that country’s national debt is expected to keep rising until the 2020s, to 250% of GDP. |