This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2018/may/15/german-growth-slows-trade-uk-unemployment-wage-growth-business-live
The article has changed 16 times. There is an RSS feed of changes available.
| Version 14 | Version 15 |
|---|---|
| UK real wages rise, but drop in EU workers could hurt NHS – as it happened | UK real wages rise, but drop in EU workers could hurt NHS – as it happened |
| (7 months later) | |
| Markets were struggling for direction for most of the day, with the exception of Wall Street which moved sharply lower on renewed worries about the US/China trade talks, a rising dollar and falling bond yields. | Markets were struggling for direction for most of the day, with the exception of Wall Street which moved sharply lower on renewed worries about the US/China trade talks, a rising dollar and falling bond yields. |
| Several European markets suffered from a spate of profit taking, while the volatility of Brent crude - surging to new three and a half year highs, falling back then moving up once more - did little to help the FTSE 100. The closing scores showed: | Several European markets suffered from a spate of profit taking, while the volatility of Brent crude - surging to new three and a half year highs, falling back then moving up once more - did little to help the FTSE 100. The closing scores showed: |
| The FTSE 100 finished up just 12 points or 0.16% at 7722.98 | The FTSE 100 finished up just 12 points or 0.16% at 7722.98 |
| Germany’s Dax dipped 0.06% to 12,970.04 | Germany’s Dax dipped 0.06% to 12,970.04 |
| France’s Cac closed up 0.23% at 5553.16 | France’s Cac closed up 0.23% at 5553.16 |
| Italy’s FTSE MIB edged up 0.31% to 24,297.17 | Italy’s FTSE MIB edged up 0.31% to 24,297.17 |
| Spain’s Ibex ended down 0.49% at 10,207.6 | Spain’s Ibex ended down 0.49% at 10,207.6 |
| In Greece, the Athens market fell 2.04% to 799.37 | In Greece, the Athens market fell 2.04% to 799.37 |
| On Wall Street the Dow Jones Industrial Average is currently down 210 points or 0.84%. | On Wall Street the Dow Jones Industrial Average is currently down 210 points or 0.84%. |
| As for Brent crude, it is up 0.63% at $78.72 a barrel, having earlier touched $79.47. | As for Brent crude, it is up 0.63% at $78.72 a barrel, having earlier touched $79.47. |
| On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow. | On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow. |
| On Wall Street, the Dow Jones Industrial Average is now down 246 points. David Madden, market analyst at CMC Markets UK, said: | On Wall Street, the Dow Jones Industrial Average is now down 246 points. David Madden, market analyst at CMC Markets UK, said: |
| Equity benchmarks are in the red as traders become more hawkish. The jump in US government bond yields is prompting traders to switch out of stocks and into bonds. US indices have reached multi-week highs recently on optimism about the US and China coming to a trade deal, and today investors are banking their profits. | Equity benchmarks are in the red as traders become more hawkish. The jump in US government bond yields is prompting traders to switch out of stocks and into bonds. US indices have reached multi-week highs recently on optimism about the US and China coming to a trade deal, and today investors are banking their profits. |
| With Wall Street down as the dollar rises, the FTSE 100 is not benefiting as much as might be expected from the weak pound. The UK’s leading index is up just 0.3%, perhaps because of the dip in the oil price. Connor Campbell, financial analyst at Spreadex, said: | With Wall Street down as the dollar rises, the FTSE 100 is not benefiting as much as might be expected from the weak pound. The UK’s leading index is up just 0.3%, perhaps because of the dip in the oil price. Connor Campbell, financial analyst at Spreadex, said: |
| A dominant dollar helped lead to a seriously down in the dumps Dow Jones this Tuesday, while the FTSE lost its lunchtime momentum. | A dominant dollar helped lead to a seriously down in the dumps Dow Jones this Tuesday, while the FTSE lost its lunchtime momentum. |
| Though not quite as strong as analysts’ were expecting, the latest US retail sales figures were solid enough to give the dollar a hefty hawkish boost. The greenback was propelled 0.7% higher against the pound, with cable nearing sub-$1.348 2018 lows, while against the euro it was up 0.8%, forcing the single currency under $1.185. | Though not quite as strong as analysts’ were expecting, the latest US retail sales figures were solid enough to give the dollar a hefty hawkish boost. The greenback was propelled 0.7% higher against the pound, with cable nearing sub-$1.348 2018 lows, while against the euro it was up 0.8%, forcing the single currency under $1.185. |
| This, combined with the USA’s ambassador to China Terry Branstad stating that the two countries were still ‘very far apart’ on the issue of trade, caused the Dow Jones to have an absolutely miserable time of it after the bell. The index plunged nearly 200 points as the session got underway, trudging back towards 24700 having almost grazed a 2 month high of 25000 on Monday. | This, combined with the USA’s ambassador to China Terry Branstad stating that the two countries were still ‘very far apart’ on the issue of trade, caused the Dow Jones to have an absolutely miserable time of it after the bell. The index plunged nearly 200 points as the session got underway, trudging back towards 24700 having almost grazed a 2 month high of 25000 on Monday. |
| Normally the sight of a cable-collapse would be like catnip for the FTSE. And yes, the UK index did manage to climb 25 or so points as the day went on. However, that the FTSE can perhaps feel aggrieved that it couldn’t wring more juice from sterling’s slide. | Normally the sight of a cable-collapse would be like catnip for the FTSE. And yes, the UK index did manage to climb 25 or so points as the day went on. However, that the FTSE can perhaps feel aggrieved that it couldn’t wring more juice from sterling’s slide. |
| Beyond the bearishness plaguing the Dow Jones, the fact Brent Crude has pulled back from its $79 per barrel is potentially responsible for the index not fully taking flight; but even then, BP and Shell are still up around 1.5% apiece, showing investors are still willing to drink down the oil colossi even if the black stuff is off its 3 and a half year peak. Investors may simply have slight reservations about sending the FTSE much higher than it currently is, given that it the index didn’t last long at its 7800-teasing peak back in mid-January. | Beyond the bearishness plaguing the Dow Jones, the fact Brent Crude has pulled back from its $79 per barrel is potentially responsible for the index not fully taking flight; but even then, BP and Shell are still up around 1.5% apiece, showing investors are still willing to drink down the oil colossi even if the black stuff is off its 3 and a half year peak. Investors may simply have slight reservations about sending the FTSE much higher than it currently is, given that it the index didn’t last long at its 7800-teasing peak back in mid-January. |
| The strengthening dollar after the retail sales figures has taken some of the shine off the oil price, with Brent crude now in negative territory for the day, down 0.17% at $78.10 a barrel. | The strengthening dollar after the retail sales figures has taken some of the shine off the oil price, with Brent crude now in negative territory for the day, down 0.17% at $78.10 a barrel. |
| At its peak during the day, Brent hit $79.47, which analysts saying $80 or even $100 could be on the horizon. | At its peak during the day, Brent hit $79.47, which analysts saying $80 or even $100 could be on the horizon. |
| Back with the UK employment figures and the fall in EU workers, and the Press Association has more details: | Back with the UK employment figures and the fall in EU workers, and the Press Association has more details: |
| Labour market data released by the Office for National Statistics showed the fall [in the number of EU nationals] was driven by a steep drop in the number of workers from the eight eastern European countries that joined the EU in 2004. | Labour market data released by the Office for National Statistics showed the fall [in the number of EU nationals] was driven by a steep drop in the number of workers from the eight eastern European countries that joined the EU in 2004. |
| In the latest period, there were an estimated 917,000 nationals of the so-called EUA8 countries - Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia - in work in the UK. | In the latest period, there were an estimated 917,000 nationals of the so-called EUA8 countries - Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia - in work in the UK. |
| This was down by 91,000 compared to January-March in 2017, the largest annual decrease since comparable records started in 1997. | This was down by 91,000 compared to January-March in 2017, the largest annual decrease since comparable records started in 1997. |
| Jonathan Portes, professor of Economics at King’s College London, said: “Today’s labour market statistics show a year-on-year fall in the number of European nationals working here, for the first time since the aftermath of the recession. | Jonathan Portes, professor of Economics at King’s College London, said: “Today’s labour market statistics show a year-on-year fall in the number of European nationals working here, for the first time since the aftermath of the recession. |
| “A combination of factors - a slowing economy here combined with recovery on the continent, but also the political and psychological impact of the Brexit vote - have made the UK a significantly less attractive place to live and work.” | “A combination of factors - a slowing economy here combined with recovery on the continent, but also the political and psychological impact of the Brexit vote - have made the UK a significantly less attractive place to live and work.” |
| Lord Green of Deddington, chairman of Migration Watch UK, pointed to figures for EU-born workers, which he said were 155,000 higher than in the same quarter before the referendum. He said: “These new labour force figures dispose of any claim of a Brexodus.” | Lord Green of Deddington, chairman of Migration Watch UK, pointed to figures for EU-born workers, which he said were 155,000 higher than in the same quarter before the referendum. He said: “These new labour force figures dispose of any claim of a Brexodus.” |
| Madeleine Sumption, director of the Migration Observatory at the University of Oxford, said: “The employment rate of A8 migrants in the UK is close to record highs, at more than 85%. Despite that, the number of A8 migrants working in the UK has declined. | Madeleine Sumption, director of the Migration Observatory at the University of Oxford, said: “The employment rate of A8 migrants in the UK is close to record highs, at more than 85%. Despite that, the number of A8 migrants working in the UK has declined. |
| “These figures are consistent with the possibility that there has been net emigration of A8 citizens but don’t show it conclusively - we’ll need a few more months of data to see whether this is a short-term blip or a real trend. | “These figures are consistent with the possibility that there has been net emigration of A8 citizens but don’t show it conclusively - we’ll need a few more months of data to see whether this is a short-term blip or a real trend. |
| “We do know from other migration figures that over the last couple of years, net migration from A8 countries has fallen proportionally more than it has from the other parts of the EU....” | “We do know from other migration figures that over the last couple of years, net migration from A8 countries has fallen proportionally more than it has from the other parts of the EU....” |
| The year-on-year dip in EUA8 workers was not mirrored across other groups of member states. There were 355,000 Romanians and Bulgarians employed in the UK between January and March, up from an estimated 297,000 in the first three months of last year. | The year-on-year dip in EUA8 workers was not mirrored across other groups of member states. There were 355,000 Romanians and Bulgarians employed in the UK between January and March, up from an estimated 297,000 in the first three months of last year. |
| It is the second highest figure recorded since restrictions on citizens of the two countries working in Britain were lifted in January 2014. | It is the second highest figure recorded since restrictions on citizens of the two countries working in Britain were lifted in January 2014. |
| The number of nationals of 14 long-term EU member states including Germany, Italy, Spain and France also showed a slight increase - but remained at just over one million. | The number of nationals of 14 long-term EU member states including Germany, Italy, Spain and France also showed a slight increase - but remained at just over one million. |
| Donald Trump’s surprise move to support Chinese group ZTE over the weekend prompted hopes of progress in trade talks between the US and China. But ahead of new meetings in Washington, US ambassador to China Terry Branstad has said the two sides were still “very far apart,” prompting an opening fall on US stock markets. | Donald Trump’s surprise move to support Chinese group ZTE over the weekend prompted hopes of progress in trade talks between the US and China. But ahead of new meetings in Washington, US ambassador to China Terry Branstad has said the two sides were still “very far apart,” prompting an opening fall on US stock markets. |
| So despite the reasonable US retail sales figures, the Dow Jones Industrial Average is currently down 151 points or 0.59% while the S&P 500 opened 0.42% lower and the Nasdaq Composite down 0.67%. | So despite the reasonable US retail sales figures, the Dow Jones Industrial Average is currently down 151 points or 0.59% while the S&P 500 opened 0.42% lower and the Nasdaq Composite down 0.67%. |
| The retail sales figures have lifted expectations of a series of US rate rises this year, and helped push the dollar higher. Sterling has slipped to a new low for the year of $1.3457, down 0.7%. | The retail sales figures have lifted expectations of a series of US rate rises this year, and helped push the dollar higher. Sterling has slipped to a new low for the year of $1.3457, down 0.7%. |
| A US spending boom could be getting underway, says Nordsea’s chief analyst: | A US spending boom could be getting underway, says Nordsea’s chief analyst: |
| 🇺🇸 U.S. consumers are going shopping with their tax savings Apr retail sales data suggest the spending boom is starting to materialize after a winter of sluggish spending pic.twitter.com/AFphvl6Yk3 | 🇺🇸 U.S. consumers are going shopping with their tax savings Apr retail sales data suggest the spending boom is starting to materialize after a winter of sluggish spending pic.twitter.com/AFphvl6Yk3 |
| US retail sales edged up in April with signs of wage growth and the recent tax cuts helping to offset some of the pressure on consumer spending from higher petrol prices. | US retail sales edged up in April with signs of wage growth and the recent tax cuts helping to offset some of the pressure on consumer spending from higher petrol prices. |
| Sales grew by 0.3% last month, in line with expectations, but the March figure was revised up to show a 0.8% surge compared to the initial estimate of a 0.6% rise. | Sales grew by 0.3% last month, in line with expectations, but the March figure was revised up to show a 0.8% surge compared to the initial estimate of a 0.6% rise. |
| Core retail sales, excluding cars, petrol, building materials and food services, climbed by 0.4% in April. Year on year, sales rose 4.7%. | Core retail sales, excluding cars, petrol, building materials and food services, climbed by 0.4% in April. Year on year, sales rose 4.7%. |
| Economist James Knightley at ING Bank said: | Economist James Knightley at ING Bank said: |
| US retail sales have been heavily distorted over the past 6-9 month, but we are finally getting some “cleaner” data that suggests households are in good spirits and are spending in the new season. | US retail sales have been heavily distorted over the past 6-9 month, but we are finally getting some “cleaner” data that suggests households are in good spirits and are spending in the new season. |
| US retail sales rose 0.3%MoM in April, which was in line with expectations, but there were some nice upward revisions to March’s data from 0.6% growth to 0.8% growth. Importantly, the “control” group, which excludes very volatile items such as food, autos, building materials and gasoline and supposedly better matches consumer spending within GDP, was up 0.4% after a 0.5% gain in March. February was revised up a tenth of a percentage point too. | US retail sales rose 0.3%MoM in April, which was in line with expectations, but there were some nice upward revisions to March’s data from 0.6% growth to 0.8% growth. Importantly, the “control” group, which excludes very volatile items such as food, autos, building materials and gasoline and supposedly better matches consumer spending within GDP, was up 0.4% after a 0.5% gain in March. February was revised up a tenth of a percentage point too. |
| Retail sales have been difficult to interpret for much of the past year. In particular, Hurricanes Harvey and Irma caused extensive damage that triggered a wave of spending as households replaced lost items in Sep-Nov 2017. In fact retail sales soared a cumulative 3.5% during the period only to fall back in Dec, Jan and Feb (although Feb has now been revised up to being flat). | Retail sales have been difficult to interpret for much of the past year. In particular, Hurricanes Harvey and Irma caused extensive damage that triggered a wave of spending as households replaced lost items in Sep-Nov 2017. In fact retail sales soared a cumulative 3.5% during the period only to fall back in Dec, Jan and Feb (although Feb has now been revised up to being flat). |
| Now that these distortions are out the way we expect upcoming data to show households continuing to spend strongly. Employment is rising, wages are growing and tax cuts means there is more cash in people’s pockets. With consumer confidence at strong levels, consumer spending growth is a key factor behind our above consensus 3% GDP growth forecast for the US this year. In turn, this leads us to look for a further three Federal Reserve rate rises in 2018. | Now that these distortions are out the way we expect upcoming data to show households continuing to spend strongly. Employment is rising, wages are growing and tax cuts means there is more cash in people’s pockets. With consumer confidence at strong levels, consumer spending growth is a key factor behind our above consensus 3% GDP growth forecast for the US this year. In turn, this leads us to look for a further three Federal Reserve rate rises in 2018. |
| Over in the financial markets, the oil price has hit a new three and a half-year high. | Over in the financial markets, the oil price has hit a new three and a half-year high. |
| Brent crude is changing hands at $79.30 per barrel, the highest since late 2014. | Brent crude is changing hands at $79.30 per barrel, the highest since late 2014. |
| Prices have been rising since America pulled out of the Iran nuclear deal last week - a move likely to take some Iranian oil production off the market. | Prices have been rising since America pulled out of the Iran nuclear deal last week - a move likely to take some Iranian oil production off the market. |
| Crude prices have jumped by 75% since June 2017, which has led to higher transport costs and petrol price at the pumps. That in turn pushed up inflation, and is one reason why real wages in the UK had been shrinking (although not any more) | Crude prices have jumped by 75% since June 2017, which has led to higher transport costs and petrol price at the pumps. That in turn pushed up inflation, and is one reason why real wages in the UK had been shrinking (although not any more) |
| The drop in the number of EU workers in Britain could also be a warning sign for UK firms. | The drop in the number of EU workers in Britain could also be a warning sign for UK firms. |
| The UK labour market certainly looks tight, with inactivity and employment both at record highs - and employers facing 806,000 vacancies in the last quarter. | The UK labour market certainly looks tight, with inactivity and employment both at record highs - and employers facing 806,000 vacancies in the last quarter. |
| Gerwyn Davies of CIPD, the professional body for HR and people development, says bosses may find it harder to recruit staff: | Gerwyn Davies of CIPD, the professional body for HR and people development, says bosses may find it harder to recruit staff: |
| “Employers need to be better prepared for a changing and tighter labour market. Labour supply looks set to fall further in the coming months, partly due to an abrupt plateauing in the number of EU citizens in employment in the UK, as this morning’s figures show. | “Employers need to be better prepared for a changing and tighter labour market. Labour supply looks set to fall further in the coming months, partly due to an abrupt plateauing in the number of EU citizens in employment in the UK, as this morning’s figures show. |
| Greater investment in skills is needed to offset recruitment difficulties and increase productivity growth alongside more workforce planning activity.” | Greater investment in skills is needed to offset recruitment difficulties and increase productivity growth alongside more workforce planning activity.” |
| Britain’s hospitals and social services could be hurt by the 28,000 decline in EU workers in Britain over the last 12 months. | Britain’s hospitals and social services could be hurt by the 28,000 decline in EU workers in Britain over the last 12 months. |
| So warns Dr Heather Rolfe of The National Institute Of Economic and Social Research. | So warns Dr Heather Rolfe of The National Institute Of Economic and Social Research. |
| She explains: | She explains: |
| This represents a reduction in arrivals and increase in departures of EU citizens, which employers explain by uncertain futures and hostility. The reverse trend is shown by non-EU nationals in employment who increased in number by 20,000. This may be explained in part by employers making more use of the visa system when faced with skills shortages.... | This represents a reduction in arrivals and increase in departures of EU citizens, which employers explain by uncertain futures and hostility. The reverse trend is shown by non-EU nationals in employment who increased in number by 20,000. This may be explained in part by employers making more use of the visa system when faced with skills shortages.... |
| “These trends, in particular the fall in EU nationals working in the UK, are likely to affect the UK’s economic performance and also services, with the NHS and social care under particular pressure”. | “These trends, in particular the fall in EU nationals working in the UK, are likely to affect the UK’s economic performance and also services, with the NHS and social care under particular pressure”. |
| According to FullFact, EU immigrants make up about 5% of English NHS staff, and 10% of all doctors. | According to FullFact, EU immigrants make up about 5% of English NHS staff, and 10% of all doctors. |
| The Resolution Foundation have sent over some useful charts, showing the state of the labour market: | The Resolution Foundation have sent over some useful charts, showing the state of the labour market: |
| Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, sums up the picture: | Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, sums up the picture: |
| “Britain started 2018 as it has spent much of the last decade, with more impressive jobs growth but little prospect of recovering from its disastrous record on pay. | “Britain started 2018 as it has spent much of the last decade, with more impressive jobs growth but little prospect of recovering from its disastrous record on pay. |
| “Employment has hit a record high, driven by male employment breaking the 80 per cent barrier for the first time in nearly three decades. | “Employment has hit a record high, driven by male employment breaking the 80 per cent barrier for the first time in nearly three decades. |
| “While the return to pay growth is very welcome it remains anemic and wages are still over £700 a year lower than they were a decade ago. The stark fall in productivity in recent months suggests that a strong pay recovery remain some way off.” | “While the return to pay growth is very welcome it remains anemic and wages are still over £700 a year lower than they were a decade ago. The stark fall in productivity in recent months suggests that a strong pay recovery remain some way off.” |
| Britain’s finance minister has welcomed the news that wages are outpacing inflation. | Britain’s finance minister has welcomed the news that wages are outpacing inflation. |
| Chancellor of the Exchequer, Philip Hammond said: | Chancellor of the Exchequer, Philip Hammond said: |
| “Growth in real wages means that people are starting to feel the benefit of more money in their pockets; another turning point as we build a stronger, fairer economy. | “Growth in real wages means that people are starting to feel the benefit of more money in their pockets; another turning point as we build a stronger, fairer economy. |
| “We can be proud of our record on jobs. The unemployment rate is at its lowest in over 40 years and with our National Living Wage we are making sure that the lowest-paid feel the benefit with an extra £2,000 a year. | “We can be proud of our record on jobs. The unemployment rate is at its lowest in over 40 years and with our National Living Wage we are making sure that the lowest-paid feel the benefit with an extra £2,000 a year. |
| “Now the focus has to be on ensuring that wages keep rising faster than inflation, so that living standards increase.” | “Now the focus has to be on ensuring that wages keep rising faster than inflation, so that living standards increase.” |
| I suspect that final sentence could be a coded warning about Brexit. | I suspect that final sentence could be a coded warning about Brexit. |
| Hammond will attend a crunch meeting of the government’s Brexit sub committee this afternoon to discuss customs arrangements, where there’s no sign of agreement. | Hammond will attend a crunch meeting of the government’s Brexit sub committee this afternoon to discuss customs arrangements, where there’s no sign of agreement. |
| Theresa May’s ministers are split over two options -- a customs partnership, where the UK would collect tariffs on behalf of the EU, or a “max fac” model, which would use technology to police the border. | Theresa May’s ministers are split over two options -- a customs partnership, where the UK would collect tariffs on behalf of the EU, or a “max fac” model, which would use technology to police the border. |
| My colleague Andy Sparrow will be tracking all the action in his Politics Live blog: | My colleague Andy Sparrow will be tracking all the action in his Politics Live blog: |
| Brexit: May accused of subverting devolution as MSPs prepare to refuse consent to EU withdrawal bill - Politics live |