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Markets shake off losses, as UK wage growth accelerates – business live Markets shake off losses, as UK wage growth accelerates – business live
(35 minutes later)
Britain is getting a new £50 note, but the big question is who should be on it?
Speculation is bubbling away today about which famous Brit should appear on the back of the note, which will be made out of flexible plastic polymer [the Queen has a monopoly on the front].
Ladbrokes have issued odds, putting former Labour PM Clement Attlee and Crimean war heroine Mary Seacole as joint favourites:
Who else should we add to the betting?Bank of England say: "UK characters who are widely admired and who have made an important contribution to our society and culture. We also avoid fictional characters, or people who are still living". pic.twitter.com/Fcjslqpthg
Noor Inayat Khan is another strong candidate. She served in Britain’s Special Operations Executive as a wireless operator in occupied France in the second world war, before being captured, shackled for months, and later killed at Dachau concentration camp.
As the Mirror reported back in August:
She had become the first female radio operator to infiltrate occupied Paris, posthumously awarded the Croix de Guerre and the George Cross.
But Noor’s story has been largely overlooked, becoming a footnote in history.
It wasn’t until 2012 that a memorial bust of Noor went up in London’s Gordon Square – not only the first statue to an Indian woman in Britain, but the first to any Muslim.
She was one of only three women in Winston Churchill’s secret army, the Special Operations Executive (SOE), to be awarded the George Cross, and the other two – Violette Szabo and Odette Hallowes – have had films made about their lives.
A petition has been set up to promote Inayat Khan’s case, and it’s got Conservative MP Tom Tugendhat’s backing too:
The new £50 could have anyone on it, I’m backing Noor Inayat Khan. She volunteered for SOE, served bravely as an agent in occupied Europe, was eventually captured and murdered. A Muslim, a woman, a hero of WW2. This would celebrate her courage and all SOE https://t.co/AyRA0DmzlD
Writer Emily Poole has some other good suggestions for the Bank of England to consider:
Emmeline Pankhurst, Ada Lovelace, Beatrix Potter, Helen Sharman, Mary Seacole, Audrey Hepburn, Millicent Fawcett
Those results from Goldman Sachs and Morgan Stanley are giving the markets a much-needed boost.
Wall Street is now expected to open higher, with the Dow Jones industrial average called 150 points or 0.6% higher.
Europe is already catching a bid, with almost all the main indices pushing higher. The only laggard is Britain’s FTSE 100, which is being pulled down by the stronger pound.
Also just in: one of Goldman Sachs key trading divisions has just suffered a chunky drop in takings.Also just in: one of Goldman Sachs key trading divisions has just suffered a chunky drop in takings.
Net revenues at Goldman’s Fixed Income, Currency and Commodities (FICC) operation shrank by 10% year-on-year to $1.31bn in the last quarter, its latest financial results show.Net revenues at Goldman’s Fixed Income, Currency and Commodities (FICC) operation shrank by 10% year-on-year to $1.31bn in the last quarter, its latest financial results show.
Goldman pins the blame on “an environment characterised by low client activity amid low levels of volatility.”Goldman pins the blame on “an environment characterised by low client activity amid low levels of volatility.”
Investment banking did better, with net revenues rising by 10% year-on-year to $1.98bn.Investment banking did better, with net revenues rising by 10% year-on-year to $1.98bn.
So overall, profits beat forecasts. David Solomon, Goldman’s new CEO (and a career investment banker) says:So overall, profits beat forecasts. David Solomon, Goldman’s new CEO (and a career investment banker) says:
“We delivered solid results in the third quarter driven by contributions from across our diversified client franchise. Year-to-date earnings per share is the highest in our history and year-to-date return on equity is the highest in nine years, notwithstanding our continued investment in growth opportunities.“We delivered solid results in the third quarter driven by contributions from across our diversified client franchise. Year-to-date earnings per share is the highest in our history and year-to-date return on equity is the highest in nine years, notwithstanding our continued investment in growth opportunities.
We remain well positioned to continue delivering for our clients and shareholders.”We remain well positioned to continue delivering for our clients and shareholders.”
Here’s some early reaction:Here’s some early reaction:
Goldman Sachs made a banker its CEO, instead of a trader, and its first earnings report investment banking beats and trading disappoints. Transition complete.Goldman Sachs made a banker its CEO, instead of a trader, and its first earnings report investment banking beats and trading disappoints. Transition complete.
A bad quarter for Goldman's FICC business to disappoint expectations as new CEO David Solomon -- an investment banker by background -- takes the reins...$GS #commoditieshttps://t.co/s2atuxl9W3 pic.twitter.com/2rAtPGREOOA bad quarter for Goldman's FICC business to disappoint expectations as new CEO David Solomon -- an investment banker by background -- takes the reins...$GS #commoditieshttps://t.co/s2atuxl9W3 pic.twitter.com/2rAtPGREOO
Just in: Profits at Wall Street bank Morgan Stanley have jumped by 19%.Just in: Profits at Wall Street bank Morgan Stanley have jumped by 19%.
MS posted earnings of $2.11bn in the last quarter, or $1.17 per share. That’s up from 93 cents per share last year, and up from forecasts of $1.01 per share.MS posted earnings of $2.11bn in the last quarter, or $1.17 per share. That’s up from 93 cents per share last year, and up from forecasts of $1.01 per share.
The company’s equity trading desk, bond traders, and investment banking division all posted higher-than-expected earnings, despite market jitteriness.The company’s equity trading desk, bond traders, and investment banking division all posted higher-than-expected earnings, despite market jitteriness.
Chief executive James Gorman says:Chief executive James Gorman says:
“We produced strong results across the franchise. Despite the seasonal summer slowdown in the third quarter, we reported solid revenue and earnings growth.”“We produced strong results across the franchise. Despite the seasonal summer slowdown in the third quarter, we reported solid revenue and earnings growth.”
Here’s some early reaction:Here’s some early reaction:
Morgan Stanley's dealmakers are on a roll: The bank reports the sole rise in investment banking fees across Wall Street so far, traders also beat expectations. Shares are up in early trading. $MSMorgan Stanley's dealmakers are on a roll: The bank reports the sole rise in investment banking fees across Wall Street so far, traders also beat expectations. Shares are up in early trading. $MS
Morgan Stanley beats earnings in a now-predictable, even boring, way: everything sorta worked. Wealth mgmt hits record revenues, trading & investment banking hold up. https://t.co/9ex6PJNWuJ $MSMorgan Stanley beats earnings in a now-predictable, even boring, way: everything sorta worked. Wealth mgmt hits record revenues, trading & investment banking hold up. https://t.co/9ex6PJNWuJ $MS
Sterling has jumped by half a cent this morning, following today’s unexpectedly strong wage growth.Sterling has jumped by half a cent this morning, following today’s unexpectedly strong wage growth.
This has pushed the pound up to $1.321, recovering last week’s Brexit-induced losses.This has pushed the pound up to $1.321, recovering last week’s Brexit-induced losses.
Neil Birrell, chief investment officer at Premier Asset Management, explains why:Neil Birrell, chief investment officer at Premier Asset Management, explains why:
“Wages in the UK are growing at a rate not seen since January 2009. Average earnings, excluding bonuses, rose 3.1% in the three months to August. Unsurprisingly unemployment stayed at its low of 4%. It’s interesting that productivity, however, remains less robust and any pick up could lead to some concerns about inflation.“Wages in the UK are growing at a rate not seen since January 2009. Average earnings, excluding bonuses, rose 3.1% in the three months to August. Unsurprisingly unemployment stayed at its low of 4%. It’s interesting that productivity, however, remains less robust and any pick up could lead to some concerns about inflation.
“This is all a continuation of the current trend, but it does reinforce the fact that there are bright spots in the UK economy. It’s unlikely that interest rate expectations will change as a result of the data, particularly with the overhang of Brexit. Markets are unlikely to be significantly impacted by this, given broader concerns, but sterling will gain some support.”“This is all a continuation of the current trend, but it does reinforce the fact that there are bright spots in the UK economy. It’s unlikely that interest rate expectations will change as a result of the data, particularly with the overhang of Brexit. Markets are unlikely to be significantly impacted by this, given broader concerns, but sterling will gain some support.”
Faster earnings growth might encourage the Bank of England to raise interest rates sooner, to prevent inflation being pushed up. Higher interest rates make it more profitable to hold sterling, thus the pound goes up.Faster earnings growth might encourage the Bank of England to raise interest rates sooner, to prevent inflation being pushed up. Higher interest rates make it more profitable to hold sterling, thus the pound goes up.
However, it’s hard to see the BoE tightening policy quickly, at least until Brexit is resolved:However, it’s hard to see the BoE tightening policy quickly, at least until Brexit is resolved:
#UK wage growth has really motored along over the summer as firms increasingly encounter skill shortages. That'll keep the #BoE on a tightening track - but #Brexit 'no deal' uncertainty makes a rate hike v unlikely before March 2019 pic.twitter.com/7OMj2IpO0c#UK wage growth has really motored along over the summer as firms increasingly encounter skill shortages. That'll keep the #BoE on a tightening track - but #Brexit 'no deal' uncertainty makes a rate hike v unlikely before March 2019 pic.twitter.com/7OMj2IpO0c
Fastest growth in pay since 2009 much reason for cheer, given lost decade for household incomes but real pay still rising half as fast as pre-crisis normFastest growth in pay since 2009 much reason for cheer, given lost decade for household incomes but real pay still rising half as fast as pre-crisis norm
While the jump in nominal pay growth to 3.1% is encouraging, what really matters is real pay -- how much workers take home after adjusting for inflation.While the jump in nominal pay growth to 3.1% is encouraging, what really matters is real pay -- how much workers take home after adjusting for inflation.
And on that measure, earnings are rising at the fastest since 2016. Good news, but less dramatic than the headline number.And on that measure, earnings are rising at the fastest since 2016. Good news, but less dramatic than the headline number.
Also, one month’s pay rise doesn’t make up for 10 years of weak earnings growth. British workers are still earning less than before the 2008 financial crisis, once you adjust for inflation.Also, one month’s pay rise doesn’t make up for 10 years of weak earnings growth. British workers are still earning less than before the 2008 financial crisis, once you adjust for inflation.
The Resolution Foundation have the details:The Resolution Foundation have the details:
The latest @ONS labour market stats are in - and the figures show that nominal wage growth rose to 3.1% in the 3 months leading up to August 2018. It's good news: this is the fastest that nominal wages have been rising in a decade pic.twitter.com/Oj28KglOYkThe latest @ONS labour market stats are in - and the figures show that nominal wage growth rose to 3.1% in the 3 months leading up to August 2018. It's good news: this is the fastest that nominal wages have been rising in a decade pic.twitter.com/Oj28KglOYk
This uptick in nominal wage growth has brought real weekly growth to 0.7%. This is the fastest pace since 2016 - but, it's worth remembering, still well below the norm of the pre-crisis years pic.twitter.com/LB3mTkRWGJThis uptick in nominal wage growth has brought real weekly growth to 0.7%. This is the fastest pace since 2016 - but, it's worth remembering, still well below the norm of the pre-crisis years pic.twitter.com/LB3mTkRWGJ
For months, real estate, construction and finance have been among the sectors with the strongest pay growth. But, in recent data, workers in hospitality, retail and education are also experiencing much-improved real pay growth (as the chart below shows) pic.twitter.com/kv8DpiQlcIFor months, real estate, construction and finance have been among the sectors with the strongest pay growth. But, in recent data, workers in hospitality, retail and education are also experiencing much-improved real pay growth (as the chart below shows) pic.twitter.com/kv8DpiQlcI
Overall? Despite welcome real wage growth, real-terms pay still remains £12 below its pre-crisis peak. Earnings recovery has a long way to go. You can read more on low pay in Britain in our October 2018 research publication, Count the pennies: https://t.co/WQsnI4PK9e pic.twitter.com/rWa2XJJ0AcOverall? Despite welcome real wage growth, real-terms pay still remains £12 below its pre-crisis peak. Earnings recovery has a long way to go. You can read more on low pay in Britain in our October 2018 research publication, Count the pennies: https://t.co/WQsnI4PK9e pic.twitter.com/rWa2XJJ0Ac
Pawel Adrjan, chief economist at jobs site Indeed.com, reports that the number of job vacancies is still rising.Pawel Adrjan, chief economist at jobs site Indeed.com, reports that the number of job vacancies is still rising.
That suggests firms need to keep paying workers more, to attract them.That suggests firms need to keep paying workers more, to attract them.
One thing to note about the drop in #employment reported by @ONS today: it does not spell disaster for the labour market. Vacancies remain high while pay growth accelerates. The economy could be pivoting from job growth to pay growth - a welcome sign for workers #ONS #jobs #wages pic.twitter.com/QCuGDIrSyMOne thing to note about the drop in #employment reported by @ONS today: it does not spell disaster for the labour market. Vacancies remain high while pay growth accelerates. The economy could be pivoting from job growth to pay growth - a welcome sign for workers #ONS #jobs #wages pic.twitter.com/QCuGDIrSyM
@ONS reports vacancies to August but data from @IndeedUK gives real-time insight into online job postings by employers. Postings continued to rise in Sep and early Oct. Whether this translates into sustained growth in pay is something to watch in next month's labour market data@ONS reports vacancies to August but data from @IndeedUK gives real-time insight into online job postings by employers. Postings continued to rise in Sep and early Oct. Whether this translates into sustained growth in pay is something to watch in next month's labour market data
The pick-up in wage growth to 3.1% per annum with unemployment holding at 4% are extremely good news, say Costas Milas and Mike Ellington of the University of Liverpool.The pick-up in wage growth to 3.1% per annum with unemployment holding at 4% are extremely good news, say Costas Milas and Mike Ellington of the University of Liverpool.
They believe it shows Britain’s economy is growing faster than official data suggest:They believe it shows Britain’s economy is growing faster than official data suggest:
Notice that the pickup in wage growth has not put upward pressure on the unemployment rate. This is consistent with our view that the UK economy can afford paying higher wages because it is growing better than currently thought. Indeed, our latest LSE blog suggests that since the EU Referendum vote the UK economy has over-performed by 0.5% per annum based on monthly GDP evidence compared to what the traditional quarterly GDP data suggests.Notice that the pickup in wage growth has not put upward pressure on the unemployment rate. This is consistent with our view that the UK economy can afford paying higher wages because it is growing better than currently thought. Indeed, our latest LSE blog suggests that since the EU Referendum vote the UK economy has over-performed by 0.5% per annum based on monthly GDP evidence compared to what the traditional quarterly GDP data suggests.
Consequently, we are taking the view that the ONS will revise upwards its quarterly GDP growth sooner than later. This could happen as early as the 9th of November when the ONS will report its first GDP estimate for 2018 Q3.Consequently, we are taking the view that the ONS will revise upwards its quarterly GDP growth sooner than later. This could happen as early as the 9th of November when the ONS will report its first GDP estimate for 2018 Q3.
Alok Sharma, minister of state for employment, has welcomed the jump in pay growth, saying:Alok Sharma, minister of state for employment, has welcomed the jump in pay growth, saying:
“I am particularly encouraged that wages continue to be on the up, outpacing inflation for the seventh month in a row and regular pay is up 3.1% on the year.“I am particularly encouraged that wages continue to be on the up, outpacing inflation for the seventh month in a row and regular pay is up 3.1% on the year.
“And with unemployment at its lowest since the 1970s, since 2010 there are more people with the security of a job, more people with a regular salary, and more people able to support their families - and that is thanks to action this Government has taken to build an economy that works for everyone.”“And with unemployment at its lowest since the 1970s, since 2010 there are more people with the security of a job, more people with a regular salary, and more people able to support their families - and that is thanks to action this Government has taken to build an economy that works for everyone.”
#Employment figures just out from @ONS - unemployment continues to be at a 43 year low, youth unemployment at a record low and halved since 2010 and #wages continue to outpace inflation for 7th month in a row. @Conservatives policies working and supporting people into work#Employment figures just out from @ONS - unemployment continues to be at a 43 year low, youth unemployment at a record low and halved since 2010 and #wages continue to outpace inflation for 7th month in a row. @Conservatives policies working and supporting people into work
Mike Jakeman, senior economist at PwC, agrees that workers have the upper hand in pay negotiations:Mike Jakeman, senior economist at PwC, agrees that workers have the upper hand in pay negotiations:
Employers are having to offer better financial packages to workers to retain their staff. Employees remain in short supply: unemployment remained at the very low level of 4%, as low as it has been since the mid-1970s.Employers are having to offer better financial packages to workers to retain their staff. Employees remain in short supply: unemployment remained at the very low level of 4%, as low as it has been since the mid-1970s.
It is still a little too soon to be sure that worker scarcity will continue to drive wage growth upwards over a longer period, but initial signs are encouraging.It is still a little too soon to be sure that worker scarcity will continue to drive wage growth upwards over a longer period, but initial signs are encouraging.
The British Chambers of Commerce has struck a cautious note, warning that pay rises depend on rising productivity:The British Chambers of Commerce has struck a cautious note, warning that pay rises depend on rising productivity:
As the latest @ONS labour market figures are released, @Suren_Thiru says that meaningful wage growth is being stifled by underlying issues in the market - including sluggish productivity, underemployment and high upfront costs https://t.co/MRnmQIQCjI pic.twitter.com/an7EDSNtY3As the latest @ONS labour market figures are released, @Suren_Thiru says that meaningful wage growth is being stifled by underlying issues in the market - including sluggish productivity, underemployment and high upfront costs https://t.co/MRnmQIQCjI pic.twitter.com/an7EDSNtY3
Dr. Howard Archer, chief economic advisor for EY ITEM Club, believes UK earnings are back on an “upward track”.Dr. Howard Archer, chief economic advisor for EY ITEM Club, believes UK earnings are back on an “upward track”.
However, he’s concerned that the number of people in work has dipped -- perhaps a sign that Brexit is hitting the jobs market.However, he’s concerned that the number of people in work has dipped -- perhaps a sign that Brexit is hitting the jobs market.
Here’s his take:Here’s his take:
The labour market showed signs of losing momentum as employment fell 5,000 in the three months to August. Nevertheless, unemployment dropped by 47,000 as the inactivity rate rose. This kept the unemployment rate down at a 43-year low of 4.0%.The labour market showed signs of losing momentum as employment fell 5,000 in the three months to August. Nevertheless, unemployment dropped by 47,000 as the inactivity rate rose. This kept the unemployment rate down at a 43-year low of 4.0%.
Employment fell marginally despite the economy picking up over the summer. GDP was up 0.7% on a three-month/three-month basis in AugustEmployment fell marginally despite the economy picking up over the summer. GDP was up 0.7% on a three-month/three-month basis in August
The loss of momentum in the labour market may well be at least partly caused by employers finding it harder to find suitable candidates – in some cases significantly influenced by fewer workers coming from the EU. There is certainly evidence of this in a number of surveys (including from the Bank of England’s regional agents and the purchasing managers). Indeed, it is notable that despite reduced employment growth, the number of vacancies was an elevated 832,000 in the three months to AugustThe loss of momentum in the labour market may well be at least partly caused by employers finding it harder to find suitable candidates – in some cases significantly influenced by fewer workers coming from the EU. There is certainly evidence of this in a number of surveys (including from the Bank of England’s regional agents and the purchasing managers). Indeed, it is notable that despite reduced employment growth, the number of vacancies was an elevated 832,000 in the three months to August
Pay growth is looking perkier, buoying hopes that jobs market tightness may finally be feeding through to a pick-up in payPay growth is looking perkier, buoying hopes that jobs market tightness may finally be feeding through to a pick-up in pay
Regular earnings growth climbed to 3.1% in the three months to August, the best for nearly a decade. It held up relatively well at 3.1% in August after spiking to 3.2% in July. Growth in private sector regular pay was stable at 3.3% in August itself. Total earnings growth rose to 2.7% in the 3 months to AugustRegular earnings growth climbed to 3.1% in the three months to August, the best for nearly a decade. It held up relatively well at 3.1% in August after spiking to 3.2% in July. Growth in private sector regular pay was stable at 3.3% in August itself. Total earnings growth rose to 2.7% in the 3 months to August
Geraint Johnes, professor of economics at Lancaster University Management School, has crunched through today’s data.Geraint Johnes, professor of economics at Lancaster University Management School, has crunched through today’s data.
He encouraged that real pay (nominal pay minus inflation) is growing, and has also spotted that more people are getting full-time jobs.He encouraged that real pay (nominal pay minus inflation) is growing, and has also spotted that more people are getting full-time jobs.
“The latest labour market statistics provide mixed news. Employment has fallen slightly in the latest 3 month period, but unemployment has also fallen – by some 47000 and the unemployment rate now stands at 4.0%. The numbers of economically inactive people rose by some 103000.“The latest labour market statistics provide mixed news. Employment has fallen slightly in the latest 3 month period, but unemployment has also fallen – by some 47000 and the unemployment rate now stands at 4.0%. The numbers of economically inactive people rose by some 103000.
Large falls in employment are recorded amongst part-time employees (55000) and full-time self-employed workers (35000). At the same time, the number of full-time employees rose by some 87000. Taken together, these statistics reflect the continuing restoration of normality to the labour market, with more workers now employed in secure full-time jobs, and fewer in less secure part-time jobs and self-employment.Large falls in employment are recorded amongst part-time employees (55000) and full-time self-employed workers (35000). At the same time, the number of full-time employees rose by some 87000. Taken together, these statistics reflect the continuing restoration of normality to the labour market, with more workers now employed in secure full-time jobs, and fewer in less secure part-time jobs and self-employment.
“Total pay (on the preferred 3 month measure) rose by some 2.7% in August, while regular pay (again on the preferred 3 month measure) rose by 3.1%. This is the first increase of more than 3% in this indicator in ten years. With CPI inflation [including housing costs] at 2.4% in August, these data indicate some long overdue growth in real pay.”“Total pay (on the preferred 3 month measure) rose by some 2.7% in August, while regular pay (again on the preferred 3 month measure) rose by 3.1%. This is the first increase of more than 3% in this indicator in ten years. With CPI inflation [including housing costs] at 2.4% in August, these data indicate some long overdue growth in real pay.”
Although wages are up, Britain’s employment rate has dropped a little. That may show that the jobs boom is fading, after a strong run.Although wages are up, Britain’s employment rate has dropped a little. That may show that the jobs boom is fading, after a strong run.
In June-August, there were 32.39 million people in work. That’s 289,000 more than a year ago, but around 5,000 fewer than in March to May 2018.In June-August, there were 32.39 million people in work. That’s 289,000 more than a year ago, but around 5,000 fewer than in March to May 2018.
The number of people classed as unemployment dropped again, though.The number of people classed as unemployment dropped again, though.
The Office for National Statistics explains:The Office for National Statistics explains:
The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 75.5%, lower than for March to May 2018 (75.7%) but higher than for a year earlier (75.1%).The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 75.5%, lower than for March to May 2018 (75.7%) but higher than for a year earlier (75.1%).
There were 1.36 million unemployed people (people not in work but seeking and available to work), 47,000 fewer than for March to May 2018 and 79,000 fewer than for a year earlier.There were 1.36 million unemployed people (people not in work but seeking and available to work), 47,000 fewer than for March to May 2018 and 79,000 fewer than for a year earlier.