The UK unemployment rate has fallen to just 6.6% <- new readers start here
But average earnings only grow by 0.7% -- well behind the inflation rate
TUC: Cost of living crisis continues
David Cameron hails jump in employment total.
Delayed bonuses in 2013 partly responsible for wage growth slide
1.51pm BST
Bad news -- it appears that UK productivity may actually have fallen, even while the economy was creating more jobs
Today's report (online here) shows that the total number of hours worked in February-April rose by 1.5%, compared to the previous quarter.
Total hours worked in the quarter to April up 1.5%, NIESR estimate GDP growth at 1.1% in same period. Bad news for productivity if so.
1.22pm BST
Here's a reminder of the key points in today's unemployment data:
1.16pm BST
Just noticed that the Office for National Statistics has produced a short video outlining today's Labour Market survey:
12.37pm BST
Looking for a round-up of expert reaction to today's unemployment data? Look no further:
12.36pm BST
Over in Greece, employees who lost their jobs at the state TV station a year ago have just held a protest in Athens.
"The new government station is nothing like the old one."
12.28pm BST
Starbucks has now responded to EC's probe into its tax affairs (along with Apple and Fiat, as explained earlier).
The coffee chain said:
"We will cooperate with the Commission's state aid investigation of the Netherlands.
We comply with all relevant tax rules, laws, and OECD guidelines in the 64 countries in which we operate.
12.23pm BST
Huge cheers from Conservative benches as PM mentions unemployment figures #PMQs
He didn't mention falling real wages, though
12.19pm BST
In Parliament, David Cameron has declared that the UK has reached an "important milestone", with two million more people in work in the private sector since the last election.
12.09pm BST
The Resolution Foundation has also produced a chart, showing how self-employment levels grew steadily through the crisis, while the number of employees has picked up more recently:
The volatility of earnings figures, rising and falling at different points this year, only underlines the imperfect nature of what we know about average pay. Distorted by the bonus picture in 2013, and missing the growing pool of 4.5 million self-employed workers, the best we can say about these latest figures is that 2014 has yet to live up to its promise of being the year of the pay rise.
The positive picture on employment with a strong rise in the number of both employees and the self-employed should eventually help to push up average wages. But theres no sign of it happening yet.
12.06pm BST
Back to this morning's UK jobs data, and this Bloomberg chart shows how total wage growth has subsided steadily since the financial crisis:
11.54am BST
A big story has been breaking in Brussels this morning, where the European Commission has opened investigations into tax deals involving Apple in Ireland, Starbucks in the Netherlands, and Fiat Finance and Trade in Luxembourg.
The probe will investigate whether the three companies' corporation tax arrangements violate European state aid laws.
In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes.
Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way."
Short @AlmuniaJoaquin: we've gone after nat'l tax schemes in past, so that means we have legal authority to do it. #Apple #Starbucks
Is @AlmuniaJoaquin going after @Google on tax advantages, too? "This is the beginning of our work, not the end," he says.
11.30am BST
Here's our news story on today's unemployment data:
11.29am BST
Martin Beck, senior economic advisor to the EY ITEM Club, is also struck that wage packets aren't benefitting from the recovery in the labour market:
The stark contrast between a robust jobs market, but meagre wages growth continues.
Despite the three months to March seeing the largest gain in employment since records began in 1971, there is no sign of a slowdown in jobs growth in todays data."
11.13am BST
The Unite union has welcomed the fall in unemployment, but is worried by the rise in self-employment (up by 337,000 to 4.54 million in the last year)
Unite general secretary Len McCluskey isn't holding back, saying:
Precarious self-employment is soaring, while the continuing wage siege feeds a fall in living standards not seen since the Victorian era leaving the finances of ordinary families on a knife edge.
11.08am BST
The FT's Sarah O'Connor wonders whether the weak wage growth shows that the UK labour market has been changed by the financial crisis.
Given plummeting unemployment, the question for the UK labour market has to be: has something structural happened to wages?
Ouch! The April regular UK pay numbers at 0.4% year on year growth were the weakest I can see in that series (Jan 2001) #notgood #GBP
10.48am BST
And here's David Cameron, tweeting the good news that thousands more people are joining the labour force each day.
Today we reached a major milestone in our #LongTermEconomicPlan: 2 million new private sector jobs since 2010. More security for people.
A record rise in employment for last 3 months. 5500 more people in work each day. All with the security of a pay packet and brighter future.
10.47am BST
Rachel Reeves MP, Labour's Shadow Work and Pensions Secretary, says:
"While this fall in overall unemployment is welcome, working people are over £1,600 a year worse off than when David Cameron came to office and pay has fallen behind inflation.
"Thousands of people who work hard are struggling to make ends meet because of the government's failure to tackle the cost-of-living crisis and make work pay. Thats led to a staggering 60% increase in the number of working people claiming housing benefit because they can't afford their rent, costing taxpayers an estimated £4.8 billion.
10.40am BST
Wage inflation fall exacerbated by comparison with last yr (end of 50p tax; bumper pay). But trend still v weak. Pay crisis not over yet...
10.39am BST
Today's weak earnings figures show that Britain's cost of living crisis isn't over, claims TUC General Secretary Frances OGrady.
She's worried that families will face more pain if the Bank of England were to start tightening monetary policy by raising borrowing costs:
Pay packets have nosedived since the government prematurely declared an end to Britains cost of living crisis last month.
Its great that more people are joining the workforce but hugely worrying that workers are still not getting the decent pay rises they need to get by.
Excluding bonuses, wages rose just 0.4% in year to April (single month figs). Lowest annual rate on record! pic.twitter.com/FZfFMTzYmI
10.33am BST
Rob Wood of Berenberg Bank reckons pay growth will rise over the next few months as the distortion caused by the cut in income tax from 50% to 45% in April 2013 fades away.
As Wood puts it:
Pay was shifted from early 2013 to April to take advantage of the cut in the higher rate of income tax.
As a result, finance pay fell 6.1% yoy in April, construction was down 4.6% yoy while manufacturing and wholesaling slowed sharply.
10.27am BST
This chart confirms that average UK pay packets failed to keep pace with inflation (yellow), whether you include bonuses (dark blue) or not (light blue).
Changes in the UK labour market over the past year - in one handy chart pic.twitter.com/NnJsInSwae
10.15am BST
Jeremy Cook, chief economist at the currency company, World First, is concerned to see that wage growth has slumped, even as employment increased strongly:
That means interest rates won't rise for another year, Cook suggests:
Wage growth has fallen to 0.7%, vs 1.2% expected, and this is still a major cause for concern. As a result I am still expecting the Bank of England to hold policy right through into the second quarter of 2015, mainly courtesy of the lack of real wage increases.
10.13am BST
ITV's Joel Hills points out that the UK state sector workforce has shrunk since April 2013, while the private sector has swelled:
Number of people employed in public sector (5.4m) has fallen by 280,000 in last year. Number employed in private sector up 1m to 25.1m.
10.08am BST
Ian Stewart, chief economist at Deloitte, reckons the weak wage growth in the last quarter is good news for the Bank of England (!).
He says:
A powerful labour market recovery is delivering remarkable job growth and rapid falls in unemployment. Self-employment is booming and full time employment is also growing at the fastest rate in nine years.
The good news for the Bank of England is that this broad-based jobs recovery shows few signs of generating inflationary wage pressures.
9.58am BST
Today's report confirms another trend -- the recent steady fall in unemployment has partly been driven by a big rise in self-employed workers.
The ONS explains that since February-April 2013:
9.56am BST
You can read today's labour market report yourself, here.
9.53am BST
Here's Press Association's early take on the news that Britain's jobless rate has fallen to its lowest rate since 2009, while wage growth slowed sharply.
9.48am BST
UK #unemployment rate down to 6.6%, lowest in 5+ years. Charted here against Eurozone and US data pic.twitter.com/HtADev81r6
2.16 million people are unemployed in UK. Down 347,000 on a year ago but around 500,000 higher than before financial crisis began.
Due to the tax dodging (50%) bonus payments of last year average UK wages were 1.7% lower in April than in April 2013. #GBP
woooah really sharp slowdown in average UK weekly earnings. Now at +0.7% from +1.9%. Lowest since March last yr
9.46am BST
Today's jobs data shows that average earnings actually *fell* by 1.7% in April alone.
That's why total pay growth in February-April fell to just 0.7%, from 1.9% in January-March.
9.34am BST
BREAKING: Britain's jobless rate has hit a new five-year low, but real wages are shrinking.
The UK jobless rate has fallen to just 6.6% in the three months to April, which is the lowest since early 2009. That's down from 6.8%, a bigger fall than expected.
9.05am BST
Just 25 minutes until we get the latest UK unemployment data.
Britain's "cost of living crisis" will return to the fore today when official data shows real wages falling again.
Pay growth briefly edged higher than inflation in the spring, marking a break in years of falling real wages and providing a boost to the Conservatives as they seek to take the squeeze on household budgets off the pre-election agenda. Labour has argued that what it calls a cost of living crisis is far from over.
In fact over the last eleven months the decline in jobless claims has more or less averaged around 30k a month, a pretty good sign of an economy that appears to be humming along nicely.
8.51am BST
Germany's Lufthansa just startled the Frankfurt stock market with an unexpected profit warning, sending its shares tumbling 9%.
Other airline shares have also been hit, after Lufthansa slashed its operating profit forecast by a third, to 1bn, from up to 1.5bn before.
Reason for lowering the forecast is a weaker than expected revenue development in the passenger and freight businesses as well as negative result impacts from strikes and the devaluation of the Venezuelan Bolivar.
Lufthansa dragging down the sector with IAG down 3.5%, Air France down 3.5%...
Carnage in Lufthansa shares this morning, after surprise profit warning: pic.twitter.com/1L3BG5z4BZ
8.39am BST
Europe's stock markets are open, and the main indices have fallen by around 0.2%-0.3%.
The FTSE 100 is down 13 points, pulled down by heavyweight Vodafone going ex-dividend (ie, it's too late to qualify for the next payment to shareholders).
King sticks by like for like sales slightly up this year. Q1 up against tough year-earlier when horsemeat scandal boosted Sainsbury sales.
8.31am BST
Hungary has slipped into deflation, after its Consumer Price Index showed that prices fell by 0.1% over the last 12 months.
And another one bites the dust. Hungary joins negative inflation club, -0.1% yoy. #deflation
8.30am BST
Hold onto your hats, folks. An inquiry into the Payday loan market has discovered that it's uncompetitive.
The Competition and Markets Authority (CMA) has concluded that a payday customer could typically save around £30 to £60 per year if the market worked properly.
Wonga did not create modern Britain; modern Britain created Wonga.
8.14am BST
The World Bank also warned that the global economy is not "totally out of the woods yet". Governments need to prepare for further trouble ahead:
Kaushik Basu, the bank's senior vice president and chief economist, said:
A gradual tightening of fiscal policy and structural reforms are desirable to restore fiscal space depleted by the 2008 financial crisis. In brief, now is the time to prepare for the next crisis."
World Bank: 'Now is the time to prepare for next crisis' http://t.co/ecSxZZ4Ju3
7.58am BST
Overnight, the World Bank warned that growth in the euro area is "tepid", having emerged from recession a year ago.
The Euro Area is still in the early phases of recovery. GDP and private consumption spending in some periphery economies remain nearly 10 percent below pre-crisis peaks and investment is 40-50 percent lower in Spain, Portugal and Ireland. To date the recovery in the periphery has been driven by exports, reflecting competitiveness gains earned painfully through weak or even negative wage growth that have brought down unit labor costs.
Competitiveness gains continue to remain strong, supporting underlying activity. Encouragingly, there are signs that the labor market may be bottoming out, with unemployment rates throughout the Euro Area beginning to inch down, albeit from extremely high levels. Financial conditions have also eased considerably, reflected in the fall in periphery sovereign debt spreads to pre-crisis lows.
7.47am BST
WH Smith also reported underwhelming results this morning, driven down by a 4% decline in sales on the high street.
Total takings across the newsagent group were flat in the last 14 weeks, while like-for-like sales (a better measure of performance) fell 2%.
March-June WHSmith High Street total sales down 4%, like-for-like sales were also down 4%. When was the last time you went to WH Smith?
7.42am BST
Sainsbury isn't immune to the shockwaves reverberating through Britain's grocery business -- its sales have fallen for the second quarter in a row.
Like-for-like retail sales fell by 1.1% in the first three months, excluding fuel.
Lower food price inflation and reduced fuel prices are a welcome respite to customers finances but they continue to spend cautiously, leading to industry growth in the quarter being the slowest in a decade.
Justin King's last figures before he steps down as Sainsbury's boss. He's been capturing the moment with his team... pic.twitter.com/cn6JRpPY8w
7.36am BST
Good morning, and welcome to our rolling coverage of the financial markets, the economy, the eurozone and business.
Quite a lot going on in the UK this morning -- starting with the latest unemployment figures, at 9.30am BST.
Bad weather in the US, tension in the Ukraine, the slowdown in China and political strife in countries such as Turkey will all delay an expected pick-up in activity, the bank said in its half-yearly Global Economic Prospects.
Its president, Jim Kim, expressed disappointment at the prospect of a third straight year of sub-5% growth in the developing world, which he said was insufficient to meet his aim of eradicating extreme poverty by 2030.
Continue reading... |
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