UK wage growth unexpectedly slows even as job creation booms

Total earnings, including bonuses, rose at a slower 2.5 percent in the three months to April from 2.6 percent in the three months to March, the Office for National Statistics said. (Reuters)
Updated 13 June 2018

UK wage growth unexpectedly slows even as job creation booms

LONDON: British workers’ wages rose more slowly in the three months to April despite another surge in job creation, leaving the Bank of England still waiting for clear signs that the economy is ready for higher interest rates.
In a second reading in a row to show a loss of momentum in pay, total earnings, including bonuses, rose by an annual 2.5 percent, the Office for National Statistics said, down from growth of 2.6 percent in the three months to March.
Economists polled by Reuters had mostly forecast growth of 2.6 percent, matching the pace of the three months to March.
Central banks in many rich countries have been stumped by the failure of wages to follow their typical pre-crisis pattern of rising quickly as unemployment falls.
Excluding bonuses, growth in earnings fell for the first time in more than a year, rising by 2.8 percent year-on-year against expectations for growth to hold at 2.9 percent in the Reuters poll.
But the number of people in work rose by a larger than forecast 146,000, pushing up sterling briefly.
“It’s a really strong set of employment figures,” Andrew Wishart, an economist at Capital Economics, said. “It looks like that’s set to continue.”
The BoE expects wages to pick up speed gradually over the next three years, a big reason why it says it is likely to raise borrowing costs gradually over the period.
But last month it said it wanted to be sure the economy had recovered from its near-stagnation in an unusually icy early 2018, before pushing ahead with only its second rate hike since before the global financial crisis.
On Monday, data showed British factories had a weak April.
Tuesday’s data showed that in the month of April alone — when employers often give staff their annual pay rise — regular pay was up by 2.5 percent, its weakest increase since November.
However, the unemployment rate held at 4.2 percent in the three months to April, its lowest since 1975, as expected in the Reuters poll.
Households — whose spending is the main driver of Britain’s economy — struggled last year from the double whammy of slow wage growth and a jump in inflation, due in large part to the fall in the value of the pound after the 2016 Brexit vote.
With unemployment so low, employers have generally been raising pay for staff more quickly, albeit still more slowly than increases of about 4 percent a year that were typical before the global financial crisis.
Data due on Wednesday is expected to show British consumer price inflation edged back up to 2.5 percent in May, but remains well below a five-year peak of 3.1 percent set in November.
The BoE said in May that it expected pay growth of 2.75 percent a year by the end of 2018, rising to 3.5 percent by the end of 2020.


White House says Trump regrets not raising tariffs higher

US President Donald Trump arrives at the G7 summit in Biarritz, France, on Sunday. Trump had been trying to use the conference to rally global leaders to do more to stimulate their economies, as fears rise of a potential slowdown in the US ahead of his reelection. (AP)
Updated 26 August 2019

White House says Trump regrets not raising tariffs higher

  • President’s comments appear at first to mark a rare moment of self-reflection by the US leader

TOKYO: President Donald Trump said Sunday that he had second thoughts about escalating the trade war with China, but the White House later reversed that message saying the president was misinterpreted and that his only regret in hiking tariffs is that he didn’t raise them higher. Trump faced a tense reception from world leaders meeting amid mounting anxiety of a global economic slowdown at the Group of Seven summit in France. During a breakfast meeting with British Prime Minister Boris Johnson, Trump suggested he had qualms about the spiraling conflict. “Yeah. For sure,” Trump told reporters when asked if he has second thoughts about escalating the dispute, adding he has “second thoughts about everything.”
But hours later, White House press secretary Stephanie Grisham issued a statement saying Trump’s comments about US tariffs on China were “greatly misinterpreted.”
She said Trump only responded “in the affirmative — because he regrets not raising the tariffs higher.” The comments appeared at first to mark a rare moment of self-reflection by the famously hard-nosed leader. But the later reversal fit a pattern for Trump in recoiling from statements he believes suggest weakness.

HIGHLIGHTS

• President Donald Trump faced a tense reception from world leaders meeting amid mounting anxiety of a global economic slowdown at the Group of Seven summit in France.

• White House said comments about US tariffs on China were ‘greatly misinterpreted.’

Trump had been trying to use the conference to rally global leaders to do more to stimulate their economies, as fears rise of a potential slowdown in the US ahead of his reelection. Trump’s counterparts, including Johnson, are trying to convince him to back off his trade wars with China and other countries, which they see as contributing to the economic weakening.

US-Japan agreement
Trump and Japan’s Prime Minister Shinzo Abe announced on Sunday a deal in principle on a major bilateral trade deal.
“It’s a very big transaction,” Trump said after talks with Abe on the sidelines of the G7 summit.
“Billions and billions of dollars,” he said. “It involves agriculture, it involves e-commerce. It involves many things. We’ve agreed in principle.”

Amazon fires
Also on Sunday, French President Emmanuel Macron said that world leaders at the G7 summit have agreed to help the countries affected by the huge wildfires ravaging the Amazon rainforest as soon as possible.
“We are all agreed on helping those countries which have been hit by the fires as fast as possible,” he told journalists.