Pay increases are less than half the rate of inflation, so living standards keep on falling, says TUC chief.TUC: too many low-paid jobsThe old wage/employment relationship has broken downCameron: Remarkable figures todayUK jobless rate hits 6.2% Average earnings up but still lagging inflationThe key chartsClaimant count drops below one million 3.36pm BST Adam Posen, a former member of the Bank of Englands monetary policy committee, has hit out at fellow economist Joseph Stiglitz for being, in his view, too blasé over the consequences of independence.Posen has blogged that the reality of independence is frightening. He predicted that trade with rUK would suffer badly if Scotland broke away, even if it used the pound.Leaving the United Kingdom will be a huge blow to Scottish commerce.If Scotland wishes to be part of the European Union as a sovereign nation, however, by international treaty, it has to adopt the euro. By adopting the euro, which has a Germanic business cycle focus, the Scottish economy will be repeatedly more out of sync with policy than in the United Kingdom, promoting boom/busts. But Scotland would first have to get over the long list of economic and institutional hurdles required by treaty to be admitted to the euro areawhich is a multiyear period of great vulnerability, as Greece and Italy experienced in the 1990s. 3.34pm BST Final @Panelbase #indyref poll also has YES 48%, NO 52% https://t.co/MRKc7Ra29t - that's now 4 final polls in a row with the same numbers. 3.29pm BST The pound has pushed a little higher, after a new Scottish opinion poll also reported the No side leading the Yes side by 4 percentage points.SCOTTISH VOTE: PANELBASE POLL GIVES YES 48%, NO: 52% 3.18pm BST The Conservative Party has fallen foul of the campaign to prevent wanton abuse of the y-axis on economic charts:The Y-Axis has voted to secede from the UK, and was last seen attempting to join the EU pic.twitter.com/iRxTptHC5q 3.07pm BST Putting todays unemployment rate in some historical contect: 2.12pm BST The surprise drop in US inflation today means the Federal Reserve is less likely to drop its guidance that interest rates will remain low for a considerable time after its QE programme ends (likely in October)The Fed will release a statement at 7pm BST (2pm Eastern), which will be scrutinised for language changes.The further softening in US price pressures evident in Augusts CPI data ease the pressure on the Fed to amend its considerable time rate pledge at todays policy meetingWe suspect that any such changes will be small, most likely, a tweak to the text referring to the time after QE ends before the first rate hike. Perhaps a replacement of the word considerable, in this context. 2.00pm BST Aha, heres a snap of the prime minister meeting workers at the Weir Minerals factory near Yateley, where he described todays unemployment figures as remarkable. 1.46pm BST Heres the details of the surprise drop in US inflation:Look at that deflation in the energy space! pic.twitter.com/JFzwy8sKlD 1.41pm BST Just in: consumer prices in America have fallen for the first time in 16 months.The monthly CPI index showed that prices fell by 0.2% compared with July. That dragged the annual US inflation date down to 1.7%, surprising Wall Street which expected 1.9%.Look who just got a big raise! Real earnings surge 0.4% in August pic.twitter.com/FgFNBZB9tD 1.32pm BST The underlying reason that UK firms arent offering inflation-busting pay rises is that they simply dont have to.The first is that the old relationship whereby falling jobless numbers led to employers being forced to pay more for a shrinking pool of talent has broken down. Weaker trade unions, less collective bargaining, an increase in the percentage of the workforce that is part-time or self-employed: these are all factors keeping the lid on wage increases.Eventually, the traditional pattern will re-emerge. At some point, unemployment will fall to a level that does lead to such intense competiton for labour that the balance of power in wage negotiations will shift. 12.59pm BST Back in the markets, the pound remains higher today; currently up almost half a cent at $1.632.£/$ still holding on to gains (+0.24%) as UK unemployment drops to lowest 6 yrs = 6.2%. August claimant count also lowest since 2008 = 2.9% 12.51pm BST The leader of the Green party in England and Wales, Natalie Bennett, blames the government for Britains shrinking real wages: This government said it would make work pay: instead it's made work pay a lot less: http://t.co/W0SsmQEMkA We need #jobstoliveon. 12.34pm BST David Cameron, whose mind must be whirling as the Scottish vote nears, has welcomed the drop in unemployment and taken some credit for it:During a visit to Weir Minerals Europe, a factory near Fleet in Hampshire, Prime Minister David Cameron described the fall in people claiming unemployment benefit as really remarkable. He added: We had a long-term economic plan, we stuck to that plan and you can see today that plan is working. Yeah right: Cameron reaffirms his intention not to resign in event of yes vote http://t.co/n9hqhPAeGO 12.33pm BST The CBI, which represents British businesses, is dangling the prospect of wage increases picking up:With unemployment dropping, and wage settlements in larger firms starting to pick up, we expect to see average earnings growth begin to rise in time. 12.01pm BST And this chart shows how average UK pay rises have lagged inflation for most months since the financial crisis struck.UK unemployment lowest in 6 yrs. But real earnings (wage growth minus inflation) now down 59 months in a row: pic.twitter.com/f88a8FlwRT 11.59am BST The TUCs concerns about low wage growth are also shared by Mark Miller of the Economist Intelligence Unit. He reckons that it will deter the Bank of England from raising interest rates in the next six months.In itself, the decline in unemployment of 146,000 during May-July 2014 compared with the previous quarter is clearly encouraging. But further tightening in labour market conditions is still not being reflected in firmer pay growth. Latest average weekly earnings growth data (both whole economy and excluding bonuses) remain very subdued in historical terms. This remains a key focus at the Bank of England and accordingly, we do not envisage a first interest rate increase before the second quarter of 2015. 11.38am BST Union leaders are adamant that the labour market is not yet healed, despite seeing the headline unemployment rate hit a near-six year low. Last week the Governor of the Bank of England said the fall in real wages is the worst since the 1920s and todays figures show it getting worse. Pay increases are less than half the rate of inflation, so living standards keep on falling.More people are working, but growth based on more low-paid jobs isnt working for Britain. We need jobs that ensure everyone gets a fair share in the growing economy through real increases to their wages.Todays data shows that regular pay growth remains very subdued at just 0.7% despite continued strong jobs growth, although the squeeze on real earnings has eased slightly with the recent fall in consumer price inflation to 1.5%. But to many workers facing a sixth consecutive year of declining real wages, the recovery may still seem to be something that is happening to other people.Weak pay growth appears to reflect increased labour supply in recent years, notably by older workers and immigrants, which has balanced the effect of increased labour demand. More recently, it also reflects compositional effects due to the return to the workforce of some previously unemployed or inactive younger workers with relatively low pay and productivity levels. 11.35am BST Heres economics editor Larry Elliott on todays jobs data:Unemployment in the UK has dropped to its lowest level since the height of the 2008 financial crisis as a growing economy creates more part-time jobs, according to official figures.Both government measures of joblessness are falling, although data from the Office for National Statistics hinted that the improvement in the labour market could be slowing. 11.15am BST The ONS also has an unofficial stab at the unemployment rate for July alone, rather than for the May-July quarter.And it shows that the jobless rate hit just 5.9%, suggesting the headline rate will keep falling for the next couple of months.Unemployment falling like a stone. Single month rate (July) 5.9% pic.twitter.com/4NgbNF6opV 11.03am BST Strong labour market stats today - employment good, wages still well below inflation but picking up & hopeful signs on productivity. 11.02am BST Rob Wood, economist at Berenberg, flags up that underemployment appears to have fallen: Underemployment is falling too. It is not just the headline unemployment figures that are showing significant change. Underemployment is one possible reason why wages have remained weak, but the signs are that it is declining quickly. The proportion of part time workers who wanted but could not find a full-time job has fallen from 18.4% to 16.5% in the past year, for instanc 10.50am BST Labour MP Stephen Timms, the shadow Employment Minister, says that todays fall in overall unemployment is welcome, but is also concerned that pay is still falling behind the cost of living (see chart at 10.01am). 10.47am BST Employment consultant Dr John Philpott reckons there are tentative signs in the latest figures that the balance between job creation and pay growth may have started to shift.Todays data shows that the workforce expanded by 74,000 in May-July, the small increase in just over a year. 10.37am BST Heres an important point: the number of people who arent in the UK labour market has increased, reversing a recent trend.The ONS reports that the economic inactivity rate in May-July was 22.1%, up from 21.8% in February to April. That measure the percentage of the population who could potentially be in the workforce, but are not (including full-time students). 10.26am BST The chancellor has been tweeting:New unemployment stats show claimant count fallen to under 1 million for 1st time since Great Recession. #LongTermEconomicPlan is workingToday's employment stats mark another step towards full employment. But still much more to do. Will set out further plans this autumnUnemployment in Scotland is down to 6% - below UK average. Scotland doing well as part of UK #BetterTogether 10.25am BST The claimant count has also hit a milestone.The number of people receiving unemployment benefit fell to 966,500 in August, the first time its been below one million since 2008. 10.20am BST Back to the UK unemployment data, and todays data also shows that there has been a sharp rise in self-employment.Over the last year: 10.12am BST Good news, the eurozone isnt quite as close to the quagmire of deflation as feared.The eurozone inflation rate for August has been revised up, to +0.4% annually, from 0.3%, thanks to faster rising prices in the service sector. Thats still alarmingly low, though.Upward revision to Eurozone HICP inflation, to 0.4% YoY. Not that big a deal for now, but every bp is good to take. 10.01am BST And this chart shows that real wages are still falling, based on the 0.7% rise in basic pay in todays report. 10.00am BST Britain is now close to its highest ever employment rate, set in 1974. 9.48am BST Heres the details of how the UK labour market changed over the last quarter: 9.43am BST There are signs that Britains pay squeeze may be easing, but were not there yet.The ONE reports that pay including bonuses for employees in Great Britain was 0.6% higher than a year earlier in the May-July period. A month ago, it shank by 0.2%. 9.41am BST The Office for National Statistics says:The main findings of this release are that employment continued to rise and unemployment continued to fall. These changes continue the general direction of movement since late 2011/early 2012. 9.39am BST The number of people receiving unemployment benefit has fallen again; down 37,000 in August. 9.34am BST Breaking: The UK unemployment rate has fallen to 6.2% in the May-July quarter, down from 6.4% a month ago.Thats the lowest jobless rate since the September-November 2008, the quarter when Lehman Brothers collapsed to trigger the biggest financial crisis in generations. 9.31am BST Boom, thats 9.30am. Bank of England minutes first -- they show that BoE policymakers were split 7-2 on whether to raise interest rates again. Martin Weale and Ian McCafferty both wanted to raise rates to 0.75%, but were outvoted. 9.07am BST Analysts at Dutch ING predict that todays unemployment figures will show the jobless rate falling, and earnings picking up (after dropping to just +0.6% annually last month) They say:We expect July unemployment to fall to 6.3% and are looking for a rebound in July average weekly earnings. 9.00am BST Just 30 minutes until we get the UK labour market report. Theres a few points to watch: 8.47am BST Speaking of Scotland, our Europe editor Ian Traynor has analysed how the prospect of Scottish independence is causing head-scratching in Brussels:Heres a flavour:A new regime is just taking shape in Brussels, readying to run the European Union for the next five years. Already it is clear that the three big items sitting in the in-trays for the new commission, the new parliament and the new president of the European council include what is known in Brussels as the British question whether the UK stays in the EU and on what terms.The British question could be very soon superseded or joined by the Scottish question the riddle of Scotlands future in Europe should it opt to go it alone and quit the UK.#scotland in europe. a riddle inside a conundrum wrapped in an enigma, or something churchill said http://t.co/RuNPGJj34U 8.41am BST A strong start for the UK Pound £ today as it pushes above US $1.63 and towards Euro 1.26 #GBP 8.37am BST And heres why traders are protecting themselves against sterling volatility today: The big question in the final round of #IndyRef polling is if any one poll will want to look too different compared to all the others. 8.35am BST The pound has risen a little this morning, gaining around 0.15% against the US dollar and the euro to $1.63 and 1.258.But that is partly because the dollar is generally weaker, after the WSJ predicted last night that the Federal Reserve will not hint at an earlier rate rise at todays meeting.The latest opinion polls still put the Nos ahead in the Scottish referendum, but the result will be extremely close. The FX market remains long the pound and that is why GBP/USD has only bounced modestly. The risk is greater to the downside on a Yes than to the upside on a No. 8.14am BST European stock markets are open, and the FTSE 100 has picked up 16 points, or 0.25%, in opening trading to 6806.The French and German markets both rose by 0.5%, following gains on Wall Street last night.O/N: PBoC inject $81bln liquidity into Chinas 5 largest banks, Scottish 'No' votes still in lead, Hilsenrath says Fed less hawkish 7.59am BST After some grim years, Europes auto industry may finally be looking towards a better future.Industry body ACEA reports that sales rose by 5.6% across Europe in July and by 2.1% in August. In July, France was the only major market to shrink (-4.3%). Elsewhere, growth ranged from 5.5% in Italy, 6.6% in the UK, 6.8% in Germany and 11.1% in Spain, leading to a 5.6% upturn in the region. Overall, 1,041,683 new cars were registered in the month.In August, upturn prevailed across significant markets, resulting in an overall 2.1% increase in the EU. France, Germany and Italy registered a slight decrease (-2.6%, -0.4% and -0.2% respectively), while the other major markets expanded, registering 13.7% more in Spain and 9.4% in the UK. 7.47am BST Bad news from Sony -- the Japanese electronics giant has just warned that it will incur a much larger loss than previously forecast, and has suspended its dividend.Sony is taking a 180bn yen (£1.03bn) impairment charge on its mobile communications business. It blamed tougher competition in the smartphone market.Chief Executive Officer Kazuo Hirai is struggling to revive Sony through content, consoles and mobile devices. The company has lost money in five of the last six years amid declining demand for televisions and compact cameras. 7.36am BST Good morning, and welcome to our rolling coverage of the financial markets, the world economy, business and the eurozone.Share markets seen regaining ground at the open after yesterday's losses. Financial bookies: FTSE100 +15, DAX +40, CAC40 +23 Continue reading...
 |
| READ THE ORIGINAL POST AT www.theguardian.com |