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| UK government urged to end public sector pay squeeze after real wages fall – business live | |
| (35 minutes later) | |
| 1.38pm BST | |
| 13:38 | |
| US inflation falls unexpectedly..... | |
| Newsflash: America’s inflation rate has fallen!, surprising the markets and sending the dollar sliding. | |
| Consumer prices across the US dropped by 0.1% during May, having risen by 0.2% in April. | |
| And that dragged the annual inflation rate down to 1.9%, down from 2.2% a month ago. | |
| US 'Consumer Pice Index' falls short of expectations in May; core rate also soft . . . #USD #CPI #FED pic.twitter.com/8irQ5fnPpX | |
| Core inflation, which strips out the prices of volatile elements like gasoline and food, only rose by 1.7% - the weakest rise since May 2015. | |
| This gives America’s central bankers something to think about, as they gather for today’s meeting. | |
| It probably won’t stop the Federal Reserve raising interest rates in under six hours time, but it might make them more cautious about the next rise.... | |
| Dollar sinks after US CPI miss pic.twitter.com/alJZ2vvjvr | |
| Updated | |
| at 1.40pm BST | |
| 1.17pm BST | |
| 13:17 | |
| Our economics editor, Larry Elliott, says Britain’s wage squeeze since the financial crisis struck is “staggeringly” bad. | |
| He writes: | |
| Cast your mind back to March 2008. The financial markets have been in turmoil since the previous summer and in the previous month the Labour government has been forced to nationalise the troubled bank Northern Rock. Few realised it at the time but the economy had peaked. A deep and brutal recession was about to begin. In that month, the average basic weekly wage, excluding bonuses, was £473. | |
| The recession officially came to an end by late 2009 and after a couple of years of weak and patchy growth, the worst seemed to be over. Activity picked up, unemployment started to come down. Yet more than nine years after the slump of 2008 began, wages – the yardstick by which most people judge whether the economy is doing well or not – have not recovered. In fact, according to the Office for National Statistics, they have gone backwards. The average basic weekly wage, adjusted for movements in prices, now stands at £458. | |
| More here: | |
| 12.12pm BST | 12.12pm BST |
| 12:12 | 12:12 |
| Eurozone industrial production rises | Eurozone industrial production rises |
| Over in Europe and eurozone industrial production rose by 0.5% month on month in April, with March’s figure revised up from a 0.1% fall to a 0.2% increase. Edoardo Campanella, economist at UniCredit Research, said: | Over in Europe and eurozone industrial production rose by 0.5% month on month in April, with March’s figure revised up from a 0.1% fall to a 0.2% increase. Edoardo Campanella, economist at UniCredit Research, said: |
| The eurozone enters the second quarter on a good footing. Industrial production accelerated in April, expanding by 0.5% month on month from 0.2% in the previous month. The industrial production increase was broad-based across its main components (with durable capital goods being the only exception), but not across the largest economies. Germany led the way, while France and Italy recorded slight declines. However, part of the weakness is due to some technical factors related to both the Easter break and a bridge-day effect in Italy that weighed on the number of working days and, thus, on factory activity. This might explain why today’s figure, albeit good, seems disappointing when compared to the exceptionally strong manufacturing PMI reading that in April hit a six-year high. | The eurozone enters the second quarter on a good footing. Industrial production accelerated in April, expanding by 0.5% month on month from 0.2% in the previous month. The industrial production increase was broad-based across its main components (with durable capital goods being the only exception), but not across the largest economies. Germany led the way, while France and Italy recorded slight declines. However, part of the weakness is due to some technical factors related to both the Easter break and a bridge-day effect in Italy that weighed on the number of working days and, thus, on factory activity. This might explain why today’s figure, albeit good, seems disappointing when compared to the exceptionally strong manufacturing PMI reading that in April hit a six-year high. |
| Since the most recent surveys continue to point to a rather solid growth in manufacturing activity in the eurozone, it is fair to expect that May’s hard data from the industrial sector will finally reflect this acceleration in output activity. | Since the most recent surveys continue to point to a rather solid growth in manufacturing activity in the eurozone, it is fair to expect that May’s hard data from the industrial sector will finally reflect this acceleration in output activity. |
| ING Bank economist Bert Colijn pointed out that much of the growth was due to improvements in energy production, which had underperformed in the first quarter due to a mild winter: | ING Bank economist Bert Colijn pointed out that much of the growth was due to improvements in energy production, which had underperformed in the first quarter due to a mild winter: |
| Growth in production of goods dropped in April though and capital goods production even declined. While the monthly data for production is volatile, this does show that industry continues to struggle on its way up. | Growth in production of goods dropped in April though and capital goods production even declined. While the monthly data for production is volatile, this does show that industry continues to struggle on its way up. |
| The outlook for industry does remain bright though as businesses have been indicating that backlogs of work are increasing as new orders are coming in at a faster pace. This will likely translate into accelerating growth over the course of Q2. Still, while backlogs of work have been increasing, this does not mean that Eurozone industry is overheating. Capacity utilisation has been improving over 2016 and is getting closer to peaks seen in previous expansions, but businesses are also still indicating that a lack of demand is limiting production far more than a lack of labour, funding or equipment. | The outlook for industry does remain bright though as businesses have been indicating that backlogs of work are increasing as new orders are coming in at a faster pace. This will likely translate into accelerating growth over the course of Q2. Still, while backlogs of work have been increasing, this does not mean that Eurozone industry is overheating. Capacity utilisation has been improving over 2016 and is getting closer to peaks seen in previous expansions, but businesses are also still indicating that a lack of demand is limiting production far more than a lack of labour, funding or equipment. |
| Meanwhile eurozone employment grew by 0.4% quarter on quarter and 1.5% year on year in the first quarter. In all, statistics office Eurostat said 154.8m people were employed in the eurozone in the first quarter, the highest number on record. | Meanwhile eurozone employment grew by 0.4% quarter on quarter and 1.5% year on year in the first quarter. In all, statistics office Eurostat said 154.8m people were employed in the eurozone in the first quarter, the highest number on record. |
| Updated | Updated |
| at 12.41pm BST | at 12.41pm BST |
| 12.02pm BST | 12.02pm BST |
| 12:02 | 12:02 |
| Here are the Liberal Democrats on the fall in real wages. The party’s leader Tim Farron joined the calls for an end to the freeze on public sector pay rises: | Here are the Liberal Democrats on the fall in real wages. The party’s leader Tim Farron joined the calls for an end to the freeze on public sector pay rises: |
| For a government that used to bang on about the Just About Managing, they are doing diddly squat to help them. This represents the biggest fall in real wages since August 2014. | For a government that used to bang on about the Just About Managing, they are doing diddly squat to help them. This represents the biggest fall in real wages since August 2014. |
| Staff are working more hours, for less pay and with higher levels of stress. More people are living pay cheque to pay cheque and having to struggle at the end of every month to get by. | Staff are working more hours, for less pay and with higher levels of stress. More people are living pay cheque to pay cheque and having to struggle at the end of every month to get by. |
| Britain needs a pay rise and it is time the government delivered it, especially for the public sector. | Britain needs a pay rise and it is time the government delivered it, especially for the public sector. |
| Our nurses, care workers, teachers and soldiers have bared the brunt of the economic crisis and seen their pay capped and wages squeezed. Enough is enough. We need to raise the wages of our public sector workers. | Our nurses, care workers, teachers and soldiers have bared the brunt of the economic crisis and seen their pay capped and wages squeezed. Enough is enough. We need to raise the wages of our public sector workers. |
| 11.56am BST | 11.56am BST |
| 11:56 | 11:56 |
| If you’re just tuning in, here’s our news story on today’s unemployment report: | If you’re just tuning in, here’s our news story on today’s unemployment report: |
| 11.56am BST | 11.56am BST |
| 11:56 | 11:56 |
| The pound has now dropped into the red, as the City shows its disappointment with Britain’s poor wage growth. | The pound has now dropped into the red, as the City shows its disappointment with Britain’s poor wage growth. |
| Sterling is now down 0.2% today at $1.2725. | Sterling is now down 0.2% today at $1.2725. |
| 11.31am BST | 11.31am BST |
| 11:31 | 11:31 |
| Joseph Rowntree: Families are in a precarious position | Joseph Rowntree: Families are in a precarious position |
| The wage squeeze is a “headache” for Britain’s government (on top of everything else) says the Joseph Rowntree Foundation. | The wage squeeze is a “headache” for Britain’s government (on top of everything else) says the Joseph Rowntree Foundation. |
| Helen Barnard, JRF’s head of analysis, says the labour market has now reached a tipping point which can’t simply be ignored by Westminster. | Helen Barnard, JRF’s head of analysis, says the labour market has now reached a tipping point which can’t simply be ignored by Westminster. |
| “It’s encouraging to see that employment levels continue to rise and unemployment has fallen again. But the troubling news for the government is the continued squeeze on wages for those are in work. This is the first time that there has been a year-on-year decrease in real total pay since 2014. | “It’s encouraging to see that employment levels continue to rise and unemployment has fallen again. But the troubling news for the government is the continued squeeze on wages for those are in work. This is the first time that there has been a year-on-year decrease in real total pay since 2014. |
| “We have reached a tipping point where rising costs are outstripping earnings, leaving millions of just managing families in a precarious position. The election campaign paid precious little attention to the squeezed living standards of low income households and their prospects of finding secure, well-paid work. | “We have reached a tipping point where rising costs are outstripping earnings, leaving millions of just managing families in a precarious position. The election campaign paid precious little attention to the squeezed living standards of low income households and their prospects of finding secure, well-paid work. |
| “It means the new government must act to ease the strain by lifting the damaging freeze on tax credits, and prioritising plans to drive up pay and productivity across the country.” | “It means the new government must act to ease the strain by lifting the damaging freeze on tax credits, and prioritising plans to drive up pay and productivity across the country.” |
| 11.30am BST | 11.30am BST |
| 11:30 | 11:30 |
| UNISON, the union, says today’s report shows how much stress the public sector is facing, as it also calls for the 1% pay cap to be ditched. | UNISON, the union, says today’s report shows how much stress the public sector is facing, as it also calls for the 1% pay cap to be ditched. |
| General secretary Dave Prentis warns: | General secretary Dave Prentis warns: |
| “Demand for public services continues to rise, but these figures confirm that the workforce is still being cut. | “Demand for public services continues to rise, but these figures confirm that the workforce is still being cut. |
| “Services are being starved of funds and staff shortages mean nurses, paramedics, teaching assistants and council employees are having to work even harder, but for less money. | “Services are being starved of funds and staff shortages mean nurses, paramedics, teaching assistants and council employees are having to work even harder, but for less money. |
| “Public sector workers have not had a proper pay rise since 2011. It is no wonder they feel so undervalued. The public sector pay cap must go.” | “Public sector workers have not had a proper pay rise since 2011. It is no wonder they feel so undervalued. The public sector pay cap must go.” |
| 11.06am BST | 11.06am BST |
| 11:06 | 11:06 |
| Unemployment: The political reaction | Unemployment: The political reaction |
| The governent’s Secretary of State for Work & Pensions, David Gauke, is encouraged that employment remains at record levels. | The governent’s Secretary of State for Work & Pensions, David Gauke, is encouraged that employment remains at record levels. |
| He says: | He says: |
| “This government wants to give everyone the opportunity to succeed, regardless of where they live or their background. | “This government wants to give everyone the opportunity to succeed, regardless of where they live or their background. |
| “This is yet another strong set of record-breaking figures with employment up and unemployment down, fuelled by full-time opportunities. | “This is yet another strong set of record-breaking figures with employment up and unemployment down, fuelled by full-time opportunities. |
| “This is good news for families as we continue to build a stronger, fairer Britain.” | “This is good news for families as we continue to build a stronger, fairer Britain.” |
| But opposition parties are alarmed by the fall in real wages. | But opposition parties are alarmed by the fall in real wages. |
| Debbie Abrahams MP, Labour’s Shadow Work and Pensions Secretary, says: | Debbie Abrahams MP, Labour’s Shadow Work and Pensions Secretary, says: |
| “We welcome the overall increase in employment, but are deeply concerned that millions remain in low paid, insecure work. | “We welcome the overall increase in employment, but are deeply concerned that millions remain in low paid, insecure work. |
| “The Government has also failed to close the employment gap faced by women, disabled people and BAME groups, who have too often borne the brunt of austerity cuts. | “The Government has also failed to close the employment gap faced by women, disabled people and BAME groups, who have too often borne the brunt of austerity cuts. |
| “With the cost of basic essentials rising by 2.9 per cent, while wages stagnate, too many of Britain’s families are struggling to get by while Theresa May focuses on holding her unstable coalition of chaos together. | “With the cost of basic essentials rising by 2.9 per cent, while wages stagnate, too many of Britain’s families are struggling to get by while Theresa May focuses on holding her unstable coalition of chaos together. |
| “Only a Labour government will ensure working people’s living standards are protected with a real Living Wage of £10 per hour, and an immediate end to austerity spending cuts. | “Only a Labour government will ensure working people’s living standards are protected with a real Living Wage of £10 per hour, and an immediate end to austerity spending cuts. |
| “The Prime Minister must stand aside and let a Labour government build an economy that works for the many, not the few.” | “The Prime Minister must stand aside and let a Labour government build an economy that works for the many, not the few.” |
| 10.54am BST | 10.54am BST |
| 10:54 | 10:54 |
| PWC: Public sector pay cap will come into doubt | PWC: Public sector pay cap will come into doubt |
| John Hawksworth, chief economist at PwC, suggests the government may have to bow to pressure and end its 1% cap on public sector pay rises, as the TUC and others demand. | John Hawksworth, chief economist at PwC, suggests the government may have to bow to pressure and end its 1% cap on public sector pay rises, as the TUC and others demand. |
| With inflation likely to be heading above 3% later this year, the squeeze on real pay growth is now getting serious and is likely to dampen real consumer spending growth for some time to come. The cost of Brexit to people’s living standards due to the fall in the pound is becoming ever more apparent. | With inflation likely to be heading above 3% later this year, the squeeze on real pay growth is now getting serious and is likely to dampen real consumer spending growth for some time to come. The cost of Brexit to people’s living standards due to the fall in the pound is becoming ever more apparent. |
| “The squeeze is even more severe in the public sector, where pay is only rising at around 1%. The sustainability of this pay policy for nurses, doctors, teachers and other key public service workers will come increasingly into doubt as inflation rises to 3% and above later this year.” | “The squeeze is even more severe in the public sector, where pay is only rising at around 1%. The sustainability of this pay policy for nurses, doctors, teachers and other key public service workers will come increasingly into doubt as inflation rises to 3% and above later this year.” |
| Today’s report also shows how the public sector has shrunk since the financial crisis. | Today’s report also shows how the public sector has shrunk since the financial crisis. |
| Just 17.0% of all people in work were employed in the public sector, which is the lowest proportion since comparable records began in 1999. | Just 17.0% of all people in work were employed in the public sector, which is the lowest proportion since comparable records began in 1999. |
| There are now 5.42 million people employed in the public sector, down 20,000 in the last year, and the lowest since June 1999. | There are now 5.42 million people employed in the public sector, down 20,000 in the last year, and the lowest since June 1999. |