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| UK jobless rate sticks at 4.9%, but pay squeeze may be looming – business live | UK jobless rate sticks at 4.9%, but pay squeeze may be looming – business live |
| (35 minutes later) | |
| 3.15pm BST | |
| 15:15 | |
| Philip Hammond’s comments are giving some support to the UK markets, according to Kathleen Brooks, research director at City Index: | |
| Hammond’s testimony to the Treasury Committee has, so far, helped to support the pound and UK stocks this afternoon, although they haven’t ignited a major wave of buying of UK assets either. The markets seem comfortable, rather than ecstatic, about his comments including confirmation that the Bank of England will remain independent, and that no conclusion has yet been reached on the exact Brexit deal that will be sought by the UK government. He admitted that there are different opinions in the cabinet over how to approach Brexit, however Hammond and May are reportedly close, so his view could suggest that May’s own view is less severe than she put across at her Party conference. | |
| Although the pound has fallen back from its intra-daily highs versus the dollar at 1.2332, Hammond’s comments seem to support the pound/dollar around the 1.23 level. We believe that, on balance, his comments that nothing is set in stone regarding Brexit, is more market-friendly than the “hard” Brexit rhetoric that has come from Number 10 in recent weeks. | |
| Although Hammond is not giving anything away at this stage of his testimony, it gives the markets a glimmer of hope that the UK may not target a “hard” brexit. His opening comments did mention that the current government will bring down net migration to the UK, however, he hasn’t linked this to throwing out access to the EU single market or customs union. This is significant, as it is a softer approach from what the market had perceived from PM Theresa May’s comments at the Tory Party conference at the start of this month. | |
| Hammond said the government will not pursue the policies outlined by former Chancellor George Osborne in April, which included a further cut to corporation tax, however this was to be expected. Regarding the economic impact from Brexit, the Chancellor said that he would examine the fiscal and economic impact of all Brexit options. From a “Remainer’s” perspective, this seems like a more sensible approach to leaving the European Union, compared to some of the extreme approaches that appeared to disregard the economic impact in favour of reducing immigration. | |
| Although Hammond is giving nothing away, his comments may sooth some economic concerns regarding the Brexit process. Overall, his comments so far seem to be supportive of the current recovery in the pound and FTSE 100. But whether or not these gains can be sustained, could depend on this evening’s final US Presidential debate. A win for Clinton could sew up the race for her, which could be a short-term positive for the buck, but may limit further sterling gains. | |
| 2.49pm BST | 2.49pm BST |
| 14:49 | 14:49 |
| Wall Street opens mixed | Wall Street opens mixed |
| Away from the UK, and US stock markets have struggled for direction in early trading, ahead of the final presidential debate later. | Away from the UK, and US stock markets have struggled for direction in early trading, ahead of the final presidential debate later. |
| The Dow Jones Industrial Average is currently up 24 points or 0.12% while the S&P 500 opened a couple of points higher. But Nasdaq dipped at the open after chip maker Intel issued a disappointing update. | The Dow Jones Industrial Average is currently up 24 points or 0.12% while the S&P 500 opened a couple of points higher. But Nasdaq dipped at the open after chip maker Intel issued a disappointing update. |
| Earlier US housing starts fell to a one and a half year low in September, down 9% to a seasonally adjusted annual rate of 1.05m units. Analysts had expected a rise form 1.15m to 1.18m units. | Earlier US housing starts fell to a one and a half year low in September, down 9% to a seasonally adjusted annual rate of 1.05m units. Analysts had expected a rise form 1.15m to 1.18m units. |
| 2.40pm BST | 2.40pm BST |
| 14:40 | 14:40 |
| On trade deals outside the EU, Hammond says it would not be appropriate to enter into substantive trade talks with a third country until Article 50 is triggered. | On trade deals outside the EU, Hammond says it would not be appropriate to enter into substantive trade talks with a third country until Article 50 is triggered. |
| 2.39pm BST | 2.39pm BST |
| 14:39 | 14:39 |
| On Brexit, Hammond is asked by chair Andrew Tyrie if we are leaving the customs union. | On Brexit, Hammond is asked by chair Andrew Tyrie if we are leaving the customs union. |
| Hammond says there are discussions taking place, and no conclusions have been reached on the precise arrangements. | Hammond says there are discussions taking place, and no conclusions have been reached on the precise arrangements. |
| But this will be a negotiation between two sovereign entities, he says we should not be constrained by existing structures. | But this will be a negotiation between two sovereign entities, he says we should not be constrained by existing structures. |
| In that case we must be leaving the customs union? | In that case we must be leaving the customs union? |
| We haven’t made an decision, repeats Hammond. | We haven’t made an decision, repeats Hammond. |
| 2.34pm BST | 2.34pm BST |
| 14:34 | 14:34 |
| Hammond is being quizzed on monetary policy, and says it is the responsibility of the Bank of England’s monetary policy committee and there are no plans to change this. | Hammond is being quizzed on monetary policy, and says it is the responsibility of the Bank of England’s monetary policy committee and there are no plans to change this. |
| This follows prime minister Theresa May’s comments at the Tory party conference which were taken as an attack on the Bank. | This follows prime minister Theresa May’s comments at the Tory party conference which were taken as an attack on the Bank. |
| 2.23pm BST | 2.23pm BST |
| 14:23 | 14:23 |
| As a reminder, chancellor Philip Hammond is about to give evidence to the Treasury select committee. | As a reminder, chancellor Philip Hammond is about to give evidence to the Treasury select committee. |
| My colleague Andrew Sparrow will be following events in detail in the politics live blog: | My colleague Andrew Sparrow will be following events in detail in the politics live blog: |
| And there is a live feed from Parliament TV here. | And there is a live feed from Parliament TV here. |
| 2.14pm BST | 2.14pm BST |
| 14:14 | 14:14 |
| Over in the markets, the pound continues to hold steady against both the dollar and the euro, as the latest data suggests the Bank of England is unlikely to cut interest rates in November: | Over in the markets, the pound continues to hold steady against both the dollar and the euro, as the latest data suggests the Bank of England is unlikely to cut interest rates in November: |
| Nice to see the UK Pound £ nudge both US $1.23 and Euro 1.12 this afternoon.... | Nice to see the UK Pound £ nudge both US $1.23 and Euro 1.12 this afternoon.... |
| 2.10pm BST | 2.10pm BST |
| 14:10 | 14:10 |
| We flagged up earlier (10.28am) that half the new jobs gained by women in the last year were part-time. | We flagged up earlier (10.28am) that half the new jobs gained by women in the last year were part-time. |
| Women also bore the brunt of layoffs in June-August; some 23,000 joined the unemployment total, pushing the female unemployment total up to 765,000. | Women also bore the brunt of layoffs in June-August; some 23,000 joined the unemployment total, pushing the female unemployment total up to 765,000. |
| And many of those in work are finding life tough, according to Carole Easton, Young Women’s Trust Chief Executive. | And many of those in work are finding life tough, according to Carole Easton, Young Women’s Trust Chief Executive. |
| She says: | She says: |
| “Today’s statistics show that the employment rate for young women has increased from 60.5 per cent to 62.4 per cent. While the small increase is welcome, those that do have jobs often find them insecure and low-paid. | “Today’s statistics show that the employment rate for young women has increased from 60.5 per cent to 62.4 per cent. While the small increase is welcome, those that do have jobs often find them insecure and low-paid. |
| “The Young Women’s Trust annual survey found that more than a quarter of young people in work are worried about not having enough paid hours and 39 per cent of young women struggle to make their cash last until the end of the month. More than one in five young people have been paid less than the minimum wage. Almost four in ten young people in work are worried about their job security. | “The Young Women’s Trust annual survey found that more than a quarter of young people in work are worried about not having enough paid hours and 39 per cent of young women struggle to make their cash last until the end of the month. More than one in five young people have been paid less than the minimum wage. Almost four in ten young people in work are worried about their job security. |
| “The majority of young people we spoke to told us they are worried about their future. This is why Young Women’s Trust is calling for a reduction in the use of zero hours contracts and for young people to be paid the National Living Wage.” | “The majority of young people we spoke to told us they are worried about their future. This is why Young Women’s Trust is calling for a reduction in the use of zero hours contracts and for young people to be paid the National Living Wage.” |
| 1.10pm BST | 1.10pm BST |
| 13:10 | 13:10 |
| Our economics editor Larry Elliott fears Britain is heading for its second wage squeeze in a decade: | Our economics editor Larry Elliott fears Britain is heading for its second wage squeeze in a decade: |
| During and after the recession of 2008-09, workers sacrificed pay in order to hold on to their jobs, even when sharply higher oil prices meant wages were not keeping pace with inflation. | During and after the recession of 2008-09, workers sacrificed pay in order to hold on to their jobs, even when sharply higher oil prices meant wages were not keeping pace with inflation. |
| Another squeeze on living standards is now in prospect courtesy of the recovery in the cost of crude and the fall in the value of the pound. | Another squeeze on living standards is now in prospect courtesy of the recovery in the cost of crude and the fall in the value of the pound. |
| Here’s Larry’s analysis on today’s labour market report. | Here’s Larry’s analysis on today’s labour market report. |
| 12.37pm BST | 12.37pm BST |
| 12:37 | 12:37 |
| Unemployment: the political reaction | Unemployment: the political reaction |
| Here’s the official government response, from employment Minister Damian Hinds: | Here’s the official government response, from employment Minister Damian Hinds: |
| “Once again it’s great news for Britain as the employment rate remains at a record high, with more than 31.8 million men and women in work. | “Once again it’s great news for Britain as the employment rate remains at a record high, with more than 31.8 million men and women in work. |
| But there’s more to do, particularly when it comes to supporting young people into employment. | But there’s more to do, particularly when it comes to supporting young people into employment. |
| We want to build a solid base for the future; that’s why today I have announced the rollout of our Jobcentre Plus Support for Schools scheme in England, which will give tens of thousands of young people help in taking their first steps into the world of work.” [ends] | We want to build a solid base for the future; that’s why today I have announced the rollout of our Jobcentre Plus Support for Schools scheme in England, which will give tens of thousands of young people help in taking their first steps into the world of work.” [ends] |
| This scheme will give 12-18 year olds advice on writing a CV and preparing for interviews. ITV has more details: | This scheme will give 12-18 year olds advice on writing a CV and preparing for interviews. ITV has more details: |
| Jobcentre staff to offer pupils ‘soft skill’ training | Jobcentre staff to offer pupils ‘soft skill’ training |
| The opposition Labour party, though, are concerned that the unemployment total rose by 10,000, and that wages may be squeezed. | The opposition Labour party, though, are concerned that the unemployment total rose by 10,000, and that wages may be squeezed. |
| Debbie Abrahams MP, Shadow Secretary of State for Work and Pensions, says: | Debbie Abrahams MP, Shadow Secretary of State for Work and Pensions, says: |
| “When taken with the wide regional and gender differences in employment rates, and inflation rising, there is a real risk to the living standards of British people under this failing Tory Government. | “When taken with the wide regional and gender differences in employment rates, and inflation rising, there is a real risk to the living standards of British people under this failing Tory Government. |
| 12.20pm BST | 12.20pm BST |
| 12:20 | 12:20 |
| Josh Hardie, deputy director general of the CBI, says that the UK labour market looks “resilient”, with the unemployment rate at an 11-year low of 4.9%. | Josh Hardie, deputy director general of the CBI, says that the UK labour market looks “resilient”, with the unemployment rate at an 11-year low of 4.9%. |
| He also agrees that wages aren’t growing fast enough, and wants Theresa May’s government to help. | He also agrees that wages aren’t growing fast enough, and wants Theresa May’s government to help. |
| “Pay growth is still lacklustre though, emphasising the need for new partnerships between business and the Government that brings a laser-like focus to improving productivity. | “Pay growth is still lacklustre though, emphasising the need for new partnerships between business and the Government that brings a laser-like focus to improving productivity. |
| This is the only route to sustainable, long-term improvements in pay growth.” | This is the only route to sustainable, long-term improvements in pay growth.” |
| 11.56am BST | 11.56am BST |
| 11:56 | 11:56 |
| Another handy chart from the Resolution Foundation: | Another handy chart from the Resolution Foundation: |
| UK maintains record employment but threat of fresh pay squeeze grows stronger - @MattWhittakerRF on @ONS stats today https://t.co/dZ3wSPjcet pic.twitter.com/YNfbpDpwjY | UK maintains record employment but threat of fresh pay squeeze grows stronger - @MattWhittakerRF on @ONS stats today https://t.co/dZ3wSPjcet pic.twitter.com/YNfbpDpwjY |
| 11.52am BST | 11.52am BST |
| 11:52 | 11:52 |
| Martin Beck, senior economic advisor to the EY ITEM Club, also fears a pay squeeze is looming: | Martin Beck, senior economic advisor to the EY ITEM Club, also fears a pay squeeze is looming: |
| Pay still appears to be unresponsive to what is a fairly tight labour market, meaning rising inflation will take its toll on living standards. | Pay still appears to be unresponsive to what is a fairly tight labour market, meaning rising inflation will take its toll on living standards. |
| 11.41am BST | 11.41am BST |
| 11:41 | 11:41 |
| While the unions worry about pay and inflation, small business leaders are fretting about how they’ll keep their firms growing in the current uncertain climate. | While the unions worry about pay and inflation, small business leaders are fretting about how they’ll keep their firms growing in the current uncertain climate. |
| Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), hopes that chancellor Philip Hammond will lend a hand in next month’s Autumn Statement: | Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), hopes that chancellor Philip Hammond will lend a hand in next month’s Autumn Statement: |
| “As more people enter the Labour market and look for work, it will be more important than ever for the Government to support small businesses to keep creating jobs. | “As more people enter the Labour market and look for work, it will be more important than ever for the Government to support small businesses to keep creating jobs. |
| “Small businesses are resilient but face significant challenges from faltering levels of confidence and higher costs from policy changes like the National Living Wage. As the Autumn Statement approaches, it is crucial the Government doesn’t place extra burdens on business, prioritises long-term investment, enterprise policy and innovation, and reaffirms the commitment to permanently increase business rate relief. | “Small businesses are resilient but face significant challenges from faltering levels of confidence and higher costs from policy changes like the National Living Wage. As the Autumn Statement approaches, it is crucial the Government doesn’t place extra burdens on business, prioritises long-term investment, enterprise policy and innovation, and reaffirms the commitment to permanently increase business rate relief. |
| 11.15am BST | 11.15am BST |
| 11:15 | 11:15 |
| Sam Hill of RBC Capital Markets also fears a wage squeeze next year, echoing the TUC’s concerns. | Sam Hill of RBC Capital Markets also fears a wage squeeze next year, echoing the TUC’s concerns. |
| He believes earnings are unlikely to keep pace with inflation, especially if the economy slows sharply: | He believes earnings are unlikely to keep pace with inflation, especially if the economy slows sharply: |
| Against the expectation of a material slowdown in economic growth in 2017, it seems unlikely that wage growth will break above the “two-point-something” range it has roughly resided in since early 2015. | Against the expectation of a material slowdown in economic growth in 2017, it seems unlikely that wage growth will break above the “two-point-something” range it has roughly resided in since early 2015. |
| After yesterday’s news of a faster-than-expected jump in CPI inflation to 1.0% y/y, and the high probability of further upward pricing pressure to come, the main theme of this week’s economic data is the emerging trend of a squeeze on living standards | After yesterday’s news of a faster-than-expected jump in CPI inflation to 1.0% y/y, and the high probability of further upward pricing pressure to come, the main theme of this week’s economic data is the emerging trend of a squeeze on living standards |
| One important theme for the UK economy in 2017 is likely to be the headwinds faced by the household sector in trying to maintain their recent robust rates of real-terms consumption growth. | One important theme for the UK economy in 2017 is likely to be the headwinds faced by the household sector in trying to maintain their recent robust rates of real-terms consumption growth. |
| 11.04am BST | 11.04am BST |
| 11:04 | 11:04 |
| Workers face pay squeeze unless wages rise | Workers face pay squeeze unless wages rise |
| The TUC are worried that workers are heading for a wage squeeze, if pay doesn’t pick up to match rising prices. | The TUC are worried that workers are heading for a wage squeeze, if pay doesn’t pick up to match rising prices. |
| Today’s figures show that average earnings grew by 2.3% in the June-to-August quarter (see here), but that doesn’t include the impact of inflation. | Today’s figures show that average earnings grew by 2.3% in the June-to-August quarter (see here), but that doesn’t include the impact of inflation. |
| In real terms, regular pay for employees in Great Britain increased by 1.7%, because inflation was 0.6% in August. | In real terms, regular pay for employees in Great Britain increased by 1.7%, because inflation was 0.6% in August. |
| This chart from the ONS shows how real wage growth peaked in summer 2015, but has fallen back since: | This chart from the ONS shows how real wage growth peaked in summer 2015, but has fallen back since: |
| We learned yesterday that inflation jumped to 1% in September, and many economists believe it will soon rise over 2%. | We learned yesterday that inflation jumped to 1% in September, and many economists believe it will soon rise over 2%. |
| TUC general secretary Frances O’Grady fears that pay packets are going to be eroded by the rising cost of living. | TUC general secretary Frances O’Grady fears that pay packets are going to be eroded by the rising cost of living. |
| Pay growth remains weak by historical standards, and inflation is getting higher. The worry is that families are heading towards another fall in living standards. | Pay growth remains weak by historical standards, and inflation is getting higher. The worry is that families are heading towards another fall in living standards. |
| “Working people must not be left to pay the price of Brexit through lower wages and higher inflation. The Chancellor must use the Autumn Statement to protect growth and create well-paid work by investing in the construction of roads, railways and homes. And he must protect the living standards of the lowest paid workers by increasing the minimum wage.” | “Working people must not be left to pay the price of Brexit through lower wages and higher inflation. The Chancellor must use the Autumn Statement to protect growth and create well-paid work by investing in the construction of roads, railways and homes. And he must protect the living standards of the lowest paid workers by increasing the minimum wage.” |
| Matt Whittaker, Chief Economist at the Resolution Foundation, also fears a pay squeeze: | Matt Whittaker, Chief Economist at the Resolution Foundation, also fears a pay squeeze: |
| “Today’s figures show that in contrast to the volatility for Sterling, the Brexit vote hasn’t had any immediate impact on the UK labour market, which remains strong and resilient on jobs but disappointing on productivity and pay. | “Today’s figures show that in contrast to the volatility for Sterling, the Brexit vote hasn’t had any immediate impact on the UK labour market, which remains strong and resilient on jobs but disappointing on productivity and pay. |
| “However, yesterday’s jump in inflation sounds a warning that unless we see significant step up in pay settlements soon we risk being on course for a fresh pay squeeze next year, having barely recovered from the last one.” | “However, yesterday’s jump in inflation sounds a warning that unless we see significant step up in pay settlements soon we risk being on course for a fresh pay squeeze next year, having barely recovered from the last one.” |
| This chart, from Resolution, shows how real wages were squeezed for several years after the financial crisis: | This chart, from Resolution, shows how real wages were squeezed for several years after the financial crisis: |
| [Confession: Real wages haven’t actually fallen, as my headline briefly claimed. Apologies for the confusion] | [Confession: Real wages haven’t actually fallen, as my headline briefly claimed. Apologies for the confusion] |
| Updated | Updated |
| at 11.27am BST | at 11.27am BST |
| 10.38am BST | 10.38am BST |
| 10:38 | 10:38 |
| David Cheetham, market analyst at XTB.com, points out that today’s data covers the period before the government announced it would trigger the process of leaving the EU in March 2017. | David Cheetham, market analyst at XTB.com, points out that today’s data covers the period before the government announced it would trigger the process of leaving the EU in March 2017. |
| Therefore recent issues surrounding a “hard” Brexit will not be fairly reflected and any optimism should be carefully checked, with the re-emergence of concerns in recent weeks due to the plummeting value of sterling occurring in a period after which this morning’s release focuses on. | Therefore recent issues surrounding a “hard” Brexit will not be fairly reflected and any optimism should be carefully checked, with the re-emergence of concerns in recent weeks due to the plummeting value of sterling occurring in a period after which this morning’s release focuses on. |
| Updated | Updated |
| at 10.42am BST | at 10.42am BST |