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UK jobs market 'loses momentum' as real wage squeeze continues – business live UK jobs market 'loses momentum' as real wage squeeze continues – business live
(35 minutes later)
With wages lagging inflation, struggling families may be forced to hit their credit cards hard this Christmas.
Positive Money’s director Fran Boait hopes that Philip Hammond can help next week - especially as the Bank of England has raised the cost of borrowing:
“As real pay continues to fall, households are being forced to borrow ever-greater amounts to make ends meet. The economy is being kept afloat on the back of families’ credit cards, at increasingly high interest rates.
In the budget later this month, the Chancellor must act to boost investment and deliver a sustainable boost to incomes, before it’s too late. We’ve had a rates rise - now it’s time for a pay rise.”
The Resolution Foundation, the UK think tank, fears that Britain’s jobs market is losing momentum.The Resolution Foundation, the UK think tank, fears that Britain’s jobs market is losing momentum.
They are concerned by the drop in employment over the summer, as it could show the labour market is plateauing.They are concerned by the drop in employment over the summer, as it could show the labour market is plateauing.
The persistent failure of wages to rise when workers have been in shorter supply is another worry. They say:The persistent failure of wages to rise when workers have been in shorter supply is another worry. They say:
The biggest pay squeeze is taking place in other service sectors (-2.7%), public administration (-2.2%) and real estate (-1.9%), while pay growth is strongest in agriculture (+3.9%) and in support services (+0.8%).The biggest pay squeeze is taking place in other service sectors (-2.7%), public administration (-2.2%) and real estate (-1.9%), while pay growth is strongest in agriculture (+3.9%) and in support services (+0.8%).
Stephen Clarke, Resolution’s economic analyst, expects real wages to keep falling for the next few months. He says:Stephen Clarke, Resolution’s economic analyst, expects real wages to keep falling for the next few months. He says:
“After years of impressive growth, there are signs that the labour market may be losing momentum.“After years of impressive growth, there are signs that the labour market may be losing momentum.
“The still strong picture on employment still refuses to have any meaningful impact on wage growth, as Britain’s pay squeeze is getting deeper.“The still strong picture on employment still refuses to have any meaningful impact on wage growth, as Britain’s pay squeeze is getting deeper.
“Today’s welcome productivity figures offer a glimmer of hope on pay, though it’s too early to say whether it can grow into a meaningful recovery.”“Today’s welcome productivity figures offer a glimmer of hope on pay, though it’s too early to say whether it can grow into a meaningful recovery.”
Resolution have also produced some charts to explain the pay squeeze:Resolution have also produced some charts to explain the pay squeeze:
The continuing pay squeeze means that there has been little progress in returning to pre-crisis levels of pay this year. We’re still £16 down from 2008 peak. pic.twitter.com/1n9eaogRWVThe continuing pay squeeze means that there has been little progress in returning to pre-crisis levels of pay this year. We’re still £16 down from 2008 peak. pic.twitter.com/1n9eaogRWV
The pay squeeze is being felt across the economy. The public sector is being squeezed harder than the private sector, with only agriculture, admin, finance and the arts escaping pic.twitter.com/9YcjtG1G43The pay squeeze is being felt across the economy. The public sector is being squeezed harder than the private sector, with only agriculture, admin, finance and the arts escaping pic.twitter.com/9YcjtG1G43
In the short-run this pay squeeze is about higher inflation. However, in the long-run only productivity improvements can address sluggish nominal wage growth pic.twitter.com/vFtxRnwOpJIn the short-run this pay squeeze is about higher inflation. However, in the long-run only productivity improvements can address sluggish nominal wage growth pic.twitter.com/vFtxRnwOpJ
Amid the real wage gloom, there is an encouraging sign..... Britain’s economy appears to have become more productive.Amid the real wage gloom, there is an encouraging sign..... Britain’s economy appears to have become more productive.
The ONS estimates that productivity per hour grew by 0.9% in the third quarter of 2017.The ONS estimates that productivity per hour grew by 0.9% in the third quarter of 2017.
That’s the first increase since the end of 2016, and is the highest rate of growth since Quarter 2 2011.That’s the first increase since the end of 2016, and is the highest rate of growth since Quarter 2 2011.
This could be a crucial factor in getting wages up -- as bosses have been blaming weak productivity for the meagre pay increases doled out to their staff.This could be a crucial factor in getting wages up -- as bosses have been blaming weak productivity for the meagre pay increases doled out to their staff.
David Willett, Corporate Director at The Open University, says it’s an “extremely welcome surprise: David Willett, Corporate Director at The Open University, says it’s an ‘encouraging development’, adding:
“For too long the UK has been lagging behind, with a lack of higher skills limiting the agility and adaptability needed to drive organisations forward. Stagnant productivity is a significant barrier to growth at an uncertain time when we need to ensure the stability of our economy.“For too long the UK has been lagging behind, with a lack of higher skills limiting the agility and adaptability needed to drive organisations forward. Stagnant productivity is a significant barrier to growth at an uncertain time when we need to ensure the stability of our economy.
“Organisations now need to keep this up. With technology advancing at a rapid rate, and businesses looking to automate where they can, low-skilled jobs are increasingly under threat. It’s crucial that organisations invest in training their staff to build up essential technical and soft skills to future-proof them against changes in the political, economic and technological environment.”“Organisations now need to keep this up. With technology advancing at a rapid rate, and businesses looking to automate where they can, low-skilled jobs are increasingly under threat. It’s crucial that organisations invest in training their staff to build up essential technical and soft skills to future-proof them against changes in the political, economic and technological environment.”
There’s something for everyone in today’s jobs report.There’s something for everyone in today’s jobs report.
Britain’s minister for employment, Damian Hinds, has hailed the drop in UK unemployment:Britain’s minister for employment, Damian Hinds, has hailed the drop in UK unemployment:
“The strength of the economy is driving an increase in full-time, permanent jobs and a near-record number of people are now in work thanks to the Government’s welfare reforms.“The strength of the economy is driving an increase in full-time, permanent jobs and a near-record number of people are now in work thanks to the Government’s welfare reforms.
“When unemployment fell to 5% early last year, many people thought it couldn’t get much lower, and yet it now stands at 4.3%.”“When unemployment fell to 5% early last year, many people thought it couldn’t get much lower, and yet it now stands at 4.3%.”
Everyone should be given the opportunity to find work and enjoy the stability of a regular pay packet. We’ve cut income tax for 30 million people since 2010, meaning people keep more of their money each month.”Everyone should be given the opportunity to find work and enjoy the stability of a regular pay packet. We’ve cut income tax for 30 million people since 2010, meaning people keep more of their money each month.”
But the labour market looks quite different if you’re on the opposition front bench.But the labour market looks quite different if you’re on the opposition front bench.
Debbie Abrahams MP, Shadow Work and Pensions Secretary, points out that the cost of living squeeze hasn’t abated:Debbie Abrahams MP, Shadow Work and Pensions Secretary, points out that the cost of living squeeze hasn’t abated:
“Today’s stats are further evidence of Tory economic failure, only a week out from their next Budget.“Today’s stats are further evidence of Tory economic failure, only a week out from their next Budget.
“Both employment and real wages are falling while the price of household essentials balloons, leaving millions of people worse off than they were in 2010.“Both employment and real wages are falling while the price of household essentials balloons, leaving millions of people worse off than they were in 2010.
“Over seven million people live in poverty in working households.“Over seven million people live in poverty in working households.
“Labour will introduce a £10 an hour real Living Wage, scrap the public sector pay cap and reform the government’s failing Universal Credit programme.”“Labour will introduce a £10 an hour real Living Wage, scrap the public sector pay cap and reform the government’s failing Universal Credit programme.”
Britain is now suffering its second wage squeeze since the financial crisis, as this chart from the FT shows:Britain is now suffering its second wage squeeze since the financial crisis, as this chart from the FT shows:
In UK, in real terms, adjusted for inflation, wages dropped 0.4% (incl. bonuses), dropped 0.5% (excl. bonuses), chart @fastFT https://t.co/F3urfnRnEh pic.twitter.com/5Sr6Mp7LalIn UK, in real terms, adjusted for inflation, wages dropped 0.4% (incl. bonuses), dropped 0.5% (excl. bonuses), chart @fastFT https://t.co/F3urfnRnEh pic.twitter.com/5Sr6Mp7Lal
How can unemployment and employment both have fallen, I hear you cry.How can unemployment and employment both have fallen, I hear you cry.
The answer is that the number of adults classed as ‘economically inactive’ has gone up.The answer is that the number of adults classed as ‘economically inactive’ has gone up.
That means more people have simply dropped out of the labour market altogether.That means more people have simply dropped out of the labour market altogether.
Geraint Johnes, Research Director at the Work Foundation and Professor of Economics at Lancaster University Management School, explains:Geraint Johnes, Research Director at the Work Foundation and Professor of Economics at Lancaster University Management School, explains:
“The latest labour market statistics show unemployment continuing to fall – by some 59000 between the second and third quarters of this year. The unemployment rate now stands at 4.3%.“The latest labour market statistics show unemployment continuing to fall – by some 59000 between the second and third quarters of this year. The unemployment rate now stands at 4.3%.
The most recent fall, however, is due largely to a large increase in the number of people deemed economically inactive.The most recent fall, however, is due largely to a large increase in the number of people deemed economically inactive.
And here’s the key chart, showing how the number of economically inactive people in Britain rose by 151,000 in the last quarter.And here’s the key chart, showing how the number of economically inactive people in Britain rose by 151,000 in the last quarter.
That will include students, people stopping work to care for a family member, or just giving up the search for a job altogether.That will include students, people stopping work to care for a family member, or just giving up the search for a job altogether.
Big surge in economically inactive (working-age) also linked to jump in ‘students’ up 19% q/q and 22% y/y in Q3. Students highest level in over 4 years.Big surge in economically inactive (working-age) also linked to jump in ‘students’ up 19% q/q and 22% y/y in Q3. Students highest level in over 4 years.
Professor Johnes has also spotted that more people are only working part-time:Professor Johnes has also spotted that more people are only working part-time:
Meanwhile, part-time employment has risen, with an increase of 18000 part-time employees and 45000 part-time self-employed. Inasmuch as it continues a trend towards greater casualisation and insecurity in the labour market, this should be noted as a cause for concern. Overall the level of employment has fallen.Meanwhile, part-time employment has risen, with an increase of 18000 part-time employees and 45000 part-time self-employed. Inasmuch as it continues a trend towards greater casualisation and insecurity in the labour market, this should be noted as a cause for concern. Overall the level of employment has fallen.
Britain’s ongoing wage squeeze is a “huge body blow” to consumers as they try to make ends meet in the run-up to Christmas, says Maike Currie of Fidelity InternationalBritain’s ongoing wage squeeze is a “huge body blow” to consumers as they try to make ends meet in the run-up to Christmas, says Maike Currie of Fidelity International
She fears that real wage growth will remain “elusive” for some time:She fears that real wage growth will remain “elusive” for some time:
With a number of factors keeping a lid on our earnings - from people working flat out in the gig economy yet still struggling with paltry pay, more and more people in self-employment, falling unionisation, automation and technology substituting man for machine, this is unlikely to change any time soon.”With a number of factors keeping a lid on our earnings - from people working flat out in the gig economy yet still struggling with paltry pay, more and more people in self-employment, falling unionisation, automation and technology substituting man for machine, this is unlikely to change any time soon.”
Nick Macpherson, formerly the top civil servant at the Treasury, fears that the UK labour market is cooling....Nick Macpherson, formerly the top civil servant at the Treasury, fears that the UK labour market is cooling....
Small but perceptible signs UK laour market may be beginning to turn after very good run. Inactivity⬆Vacancies, employment and real wages⬇Small but perceptible signs UK laour market may be beginning to turn after very good run. Inactivity⬆Vacancies, employment and real wages⬇
Here are some charts showing the state of the UK labour market:Here are some charts showing the state of the UK labour market:
This chart from the Office for National Statistics shows how wage growth has struggled to get much above 2% this year.This chart from the Office for National Statistics shows how wage growth has struggled to get much above 2% this year.
And that means that real wages are falling, whether or not you include bonuses:And that means that real wages are falling, whether or not you include bonuses:
Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.2% both including and excluding bonuses, compared with a year earlier.Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.2% both including and excluding bonuses, compared with a year earlier.
Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) fell by 0.4% including bonuses, and fell by 0.5% excluding bonuses, compared with a year earlier.Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) fell by 0.4% including bonuses, and fell by 0.5% excluding bonuses, compared with a year earlier.
Jul-Sep 2017 was the sixth three-month period in a row where earnings including bonuses fell in real terms https://t.co/vYgJXaCR8u pic.twitter.com/gkSUfDgoCdJul-Sep 2017 was the sixth three-month period in a row where earnings including bonuses fell in real terms https://t.co/vYgJXaCR8u pic.twitter.com/gkSUfDgoCd
The pound has risen slightly, as City traders welcome the pick-up in wage growth in the last quarter.The pound has risen slightly, as City traders welcome the pick-up in wage growth in the last quarter.
Latest data in Britain:- Unemployment rate is 4.3%- Holds at lowest since 1975- Number in work falls by 14,000- First decline in 13 months- Wage growth just above 2%- Far below rate of inflation- Pound rises slightlyhttps://t.co/a9qPI1vM5r pic.twitter.com/a8WUPXISGSLatest data in Britain:- Unemployment rate is 4.3%- Holds at lowest since 1975- Number in work falls by 14,000- First decline in 13 months- Wage growth just above 2%- Far below rate of inflation- Pound rises slightlyhttps://t.co/a9qPI1vM5r pic.twitter.com/a8WUPXISGS
Breaking! The number of people in employment across the UK has fallen, for the first time in nearly a year.Breaking! The number of people in employment across the UK has fallen, for the first time in nearly a year.
There were 32.06 million people in work in July-September, which is a 14,000 drop on the previous quarter.There were 32.06 million people in work in July-September, which is a 14,000 drop on the previous quarter.
This is the first drop since August-October 2016, and the biggest decline since April-June 2015.This is the first drop since August-October 2016, and the biggest decline since April-June 2015.
The employment rate (the proportion of people aged from 16 to 64 who were in work) was 75.0%, down slightly compared with April to June 2017 but up from 74.4% for a year earlier, according to the Office for National Statistics.The employment rate (the proportion of people aged from 16 to 64 who were in work) was 75.0%, down slightly compared with April to June 2017 but up from 74.4% for a year earlier, according to the Office for National Statistics.
*U.K. 3Q EMPLOYMENT FALLS 14,000, FIRST DECLINE SINCE 2016*U.K. 3Q EMPLOYMENT FALLS 14,000, FIRST DECLINE SINCE 2016
Britain’s jobless rate remains at a 42-year low of just 4.3%.Britain’s jobless rate remains at a 42-year low of just 4.3%.
Unemployment fell by 59,000 between July and September to 1.42 million, the Office for National Statistics says. That’s 182,000 less than a year earlier.Unemployment fell by 59,000 between July and September to 1.42 million, the Office for National Statistics says. That’s 182,000 less than a year earlier.
Breaking! Britain’s wages squeeze continued to bite in the last quarter, according to the latest Labour Market report just released.Breaking! Britain’s wages squeeze continued to bite in the last quarter, according to the latest Labour Market report just released.
Basic pay rose by just 2.2% per year in July-September, meaning that wages continued to lag inflation.Basic pay rose by just 2.2% per year in July-September, meaning that wages continued to lag inflation.
Pay including bonuses also rose by 2.2%.Pay including bonuses also rose by 2.2%.
In contrast, inflation was 2.7% in August, rising to 3% in September and October.In contrast, inflation was 2.7% in August, rising to 3% in September and October.
More to follow...More to follow...
Britain has rediscovered its taste for Angel Delight!Britain has rediscovered its taste for Angel Delight!
Sales of the retro desert are up 30%, in a boost for Premier Foods.Sales of the retro desert are up 30%, in a boost for Premier Foods.
Angel Delight first hit the shelves in the late 60s, when UK cuisine was more basic....Angel Delight first hit the shelves in the late 60s, when UK cuisine was more basic....
Overnight, Japan has posted its seventh consecutive quarter of growth, the longest run in over a decade.Overnight, Japan has posted its seventh consecutive quarter of growth, the longest run in over a decade.
Japanese GDP rose by 0.3% during the July-September, with rising exports making up for weaker domestic demand.Japanese GDP rose by 0.3% during the July-September, with rising exports making up for weaker domestic demand.
This will be welcomed by Tokyo as it tries to put Japan’s ‘lost decades’ behind it, and achieve steady growth and inflation.This will be welcomed by Tokyo as it tries to put Japan’s ‘lost decades’ behind it, and achieve steady growth and inflation.
But it also means Japan will be one of the slower-growing G7 nations in the third quarter; Germany grew by 0.8%, America by 0.75%, France and Italy by 0.5%, and the UK by 0.4%. All eyes on Canada....But it also means Japan will be one of the slower-growing G7 nations in the third quarter; Germany grew by 0.8%, America by 0.75%, France and Italy by 0.5%, and the UK by 0.4%. All eyes on Canada....
On a nominal basis (not discounting for inflation), Japanese growth was 0.6%.On a nominal basis (not discounting for inflation), Japanese growth was 0.6%.
Another three months of nominal GDP growth in Japan, now up year-on-year for 18 successive quarters. But Abenomics doesn't work! 🤭💹🇯🇵 pic.twitter.com/KURes58B5pAnother three months of nominal GDP growth in Japan, now up year-on-year for 18 successive quarters. But Abenomics doesn't work! 🤭💹🇯🇵 pic.twitter.com/KURes58B5p
This chart, from manufacturing group EEF, shows how UK wages have fallen below inflation (the dotted line) this year:This chart, from manufacturing group EEF, shows how UK wages have fallen below inflation (the dotted line) this year:
Despite the sustained fall in the unemployment rate, wage squeeze is set to continue #ukeconomy #ukmfg https://t.co/guUjyCFSqS pic.twitter.com/3Sv2D0cKvADespite the sustained fall in the unemployment rate, wage squeeze is set to continue #ukeconomy #ukmfg https://t.co/guUjyCFSqS pic.twitter.com/3Sv2D0cKvA
Today’s jobs report will paint a picture of an economy suffering from subdued wage growth, but enjoying record low unemployment.Today’s jobs report will paint a picture of an economy suffering from subdued wage growth, but enjoying record low unemployment.
Lukman Otunuga, research analyst at FXTM, says the pound could suffer if the wage figures are particularly bad.Lukman Otunuga, research analyst at FXTM, says the pound could suffer if the wage figures are particularly bad.
He writes:He writes:
Although Britain’s unemployment rate is at a 42-year low, the buzzkill remains, that little sign of rising pay growth continues to weigh heavily on sentiment. If average earnings struggle to pick up, consumers are likely to continue feeling the squeeze, especially when considering how inflation remains at a five-and-a-half year high, at 3%.Although Britain’s unemployment rate is at a 42-year low, the buzzkill remains, that little sign of rising pay growth continues to weigh heavily on sentiment. If average earnings struggle to pick up, consumers are likely to continue feeling the squeeze, especially when considering how inflation remains at a five-and-a-half year high, at 3%.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britain’s real wage squeeze is set to deepen today, when we get new data showing how the UK labour market is performing.Britain’s real wage squeeze is set to deepen today, when we get new data showing how the UK labour market is performing.
Economists predict that basic pay (excluding bonuses) grew by around 2.2% per annum in the July-September quarter, up from 2.1% a month ago.Economists predict that basic pay (excluding bonuses) grew by around 2.2% per annum in the July-September quarter, up from 2.1% a month ago.
Any increase would be welcome, but this would still leave wages lagging behind inflation - which ran at a five-year high of 3% in September and October.Any increase would be welcome, but this would still leave wages lagging behind inflation - which ran at a five-year high of 3% in September and October.
Analysts at Royal Bank of Canada warn that UK wages will remain subdued for several months, but might then rise faster.Analysts at Royal Bank of Canada warn that UK wages will remain subdued for several months, but might then rise faster.
With the Bank of England’s Regional Agents’ survey indicating pay settlements could pick up next year to 2.5-3.5% next year, it could well be some way into 2018 before there is sufficient evidence from the labour market reports that pay growth is making a meaningful advance.With the Bank of England’s Regional Agents’ survey indicating pay settlements could pick up next year to 2.5-3.5% next year, it could well be some way into 2018 before there is sufficient evidence from the labour market reports that pay growth is making a meaningful advance.
Today’s report may also show Britain’s unemployment rate stuck at just 4.3%, the lowest in over four decades.Today’s report may also show Britain’s unemployment rate stuck at just 4.3%, the lowest in over four decades.
In theory, such a tight labour market ought to drive wages higher as bosses compete to recruit workers.In theory, such a tight labour market ought to drive wages higher as bosses compete to recruit workers.
Michael Hewson of CMC Markets explains:Michael Hewson of CMC Markets explains:
With unemployment at 42 year lows of 4.3%, it surely can only be a matter of time before wage pressure starts to manifest itself further.....With unemployment at 42 year lows of 4.3%, it surely can only be a matter of time before wage pressure starts to manifest itself further.....
We’ve already started to see increasing evidence that wages at the lower end of the income scale are rising at rates faster than inflation as the effects of increases in the minimum and living wage help pull up wages at the bottom of the pay scales.We’ve already started to see increasing evidence that wages at the lower end of the income scale are rising at rates faster than inflation as the effects of increases in the minimum and living wage help pull up wages at the bottom of the pay scales.
This should inevitably see a trickle up effect as earners higher up the income scale start to demand higher wages in a tightening labour market,.This should inevitably see a trickle up effect as earners higher up the income scale start to demand higher wages in a tightening labour market,.
European stock markets are expected to dip this morning ahead of the jobs report, which is released at 9.30am.European stock markets are expected to dip this morning ahead of the jobs report, which is released at 9.30am.
Softer open in prospect for European indices after losses on Wall Street and steep sell off across Asian Pacific markets. #Crudeoil continues to slide. #FTSE called 20 lowerSofter open in prospect for European indices after losses on Wall Street and steep sell off across Asian Pacific markets. #Crudeoil continues to slide. #FTSE called 20 lower
In the City, Premier Foods, communication firm TalkTalk and housebuilders Barratt and Crest Nicholson are all reporting results.In the City, Premier Foods, communication firm TalkTalk and housebuilders Barratt and Crest Nicholson are all reporting results.
Here’s the agendaHere’s the agenda
9.30am GMT: UK labour market report, including unemployment rate and earnings figures9.30am GMT: UK labour market report, including unemployment rate and earnings figures
10am GMT: Eurozone trade balance figures10am GMT: Eurozone trade balance figures
1pm GMT: Bank of England deputy governor Ben Broadbent gives a speech at the London School of Economics.1pm GMT: Bank of England deputy governor Ben Broadbent gives a speech at the London School of Economics.
1.30pm GMT: US inflation figures1.30pm GMT: US inflation figures
1.30pm GMT: US retail sales1.30pm GMT: US retail sales