UK jobless rate falls to new 43-year-low, but pay growth weakens

Tuesday’s official figures also showed the sharpest annual decline in the number of EU workers in Britain since 1997. (Reuters)
Updated 14 August 2018

UK jobless rate falls to new 43-year-low, but pay growth weakens

  • The figures painted a largely familiar picture of a tight labor market — including a record number of job vacancies — failing to translate into strong wage growth
  • Total annual wage growth slowed to a nine-month low of 2.4 percent, below forecasts for it to hold at 2.5 percent

LONDON: Britain’s unemployment rate fell to its lowest in over 43 years in the three months to June and fewer workers made do with insecure jobs, but there was little upside for most as pay growth slowed to its weakest in nine months.
Tuesday’s official figures also showed the sharpest annual decline in the number of EU workers in Britain since 1997, continuing a trend seen since the 2016’s vote to leave the EU, and a pick-up in annual productivity growth.
Despite some positive elements, the figures painted a largely familiar picture of a tight labor market — including a record number of job vacancies — failing to translate into strong wage growth.
Britain’s economy warmed up a little in the second quarter from its winter slowdown of early 2018, official data showed last week, but there was no sign of an end to its lackluster performance in the run-up to next March’s Brexit.
“This will not be what the Bank of England will have wanted to see, as one of the justifications for (its) decision to hike rates earlier this month was that it was expecting wage growth to start lifting off.
This hasn’t happened yet,” said Emma-Lou Montgomery, an associate director at Fidelity International.
The BoE raised interest rates on Aug. 2 for only the second time since the financial crisis.
Tuesday’s data showed productivity grew at its fastest annual rate since late 2016 and the number of people whose main job was an insecure zero-hours contract fell by the most since 2000, the Office for National Statistics said.
The unemployment rate fell to 4.0 percent in the April-June period, the Office for National Statistics said.
That was the lowest since the three months to February 1975 and beat economists’ forecasts in a Reuters poll for it to hold steady at a previous low of 4.2 percent.
The drop came despite a smaller-than-expected number of jobs created over the three-month period, 42,000 — less than half the average forecast by economists in a Reuters poll.
Sterling briefly rose above $1.28 against a broadly weaker dollar, as Tuesday’s data helped a struggling pound move away from 13-month lows plumbed last week.
Total annual wage growth slowed to a nine-month low of 2.4 percent, below forecasts for it to hold at 2.5 percent.
The ONS said changes to the timing of annual bonus payments was partly responsible.
Excluding bonuses, pay growth fell to 2.7 percent, well below the 4 percent rate typical before the financial crisis a decade ago.
Output per hour worked grew by 1.5 percent year-on-year in the April-June period, the biggest increase since late 2016 after a 0.9 percent rise in the first quarter of 2018.
With less than eight months until Britain is due to leave the European Union, the ONS data showed an acceleration of EU nationals leaving Britain’s workforce.
In the second quarter there were 2.35 million EU nationals working in Britain, down 86,000 on a year ago, the largest fall since records began.
“Shortages are already hampering firms’ ability to compete and create jobs, so it’s vital that the UK pursues an open and controlled post-Brexit immigration policy,” Matthew Percival, head of employment at the Confederation of British Industry, said.
The number of nationals from the eight East European countries that joined the EU in 2004 fell by 117,000, an 11.7 percent drop on the year. That was partly offset by a 54,000 increase in Romanians and Bulgarians.
The number of workers employed on often-precarious zero-hours contracts fell to 780,000, or 2.4 percent of the workforce, the lowest since 2015.


Oil steady as virus fears counter positive factory data

Updated 04 August 2020

Oil steady as virus fears counter positive factory data

  • Fears over rising COVID-19 cases weigh on market; euro zone manufacturing activity expands modestly

LONDON: Oil prices steadied on Monday as rising COVID-19 cases around the globe and oversupply worries fueled by the prospect of OPEC and its allies winding back output cuts were offset by positive industry data in Europe and Asia.

Brent crude rose 5 cents, or 0.1 percent, to $43.57 a barrel by while US West Texas Intermediate crude gained 6 cents, or 0.1 percent, to $40.33.

Over the past month, Brent has been trading in a range between $41 and almost $45.

“Oil continues to trade in an incredibly rangebound manner,” said Warren Patterson, ING’s head of commodities strategy.

“Speculators appear to be getting more nervous about the demand recovery, with the path much more gradual than market expectations coming into the second half of the year.”

Coronavirus cases have continued to climb in the United States and have reached almost 18 million globally, with more countries imposing new restrictions or extending existing curbs in an effort to control the pandemic. While fuel demand recovers slowly in the face of the resurgence of the virus, investors are also worried about oversupply as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, prepare to ease oil supply cuts from August.

“Concerns appear to be developing that a rise in OPEC+ production will coincide with uneven recovery in oil demand due to localized setbacks following secondary waves of COVID outbreaks,” said Harry Tchilinguirian, head of commodity research at BNP Paribas.

OPEC+ members have been cutting output since May by 9.7 million barrels per day (bpd). From this month cuts will officially taper to 7.7 million bpd until December.

Russian oil and gas condensate output increased to 9.8 million bpd over Aug. 1-2, from 9.37 million bpd in July, a source familiar with data said on Monday.

Oil prices fell earlier in the session but found some support after a survey showed manufacturing activity across the eurozone expanded last month for the first time since early 2019. 

Positive manufacturing data in Asia also helped to support oil prices.

A Reuters poll on Friday indicated that oil is set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoys demand, though a second COVID-19 wave could slow the pace of a recovery.