Closing summary: Fed puts June hike in play
And finally..... here’s my colleage Jana Kasperkevic on today’s Fed minutes:
The US Federal Reserve could rase interest rates as early as June, according to minutes from its April meeting, with Fed members arguing the risks of a slowdown in the global economy have receded.
Yet even as the members have become more bullish about US economic resilience, they remained cautious about raising rates. They voted 11-1 to keep interest rates unchanged for a third time this year at the April meeting.
The minutes released on Wednesday listed concerns about the slowing growth ofUS economy in the first quarter, Britain’s potential exit from the EU and lingering uncertainty over China’s economy.
“Since the March FOMC [Federal Open Markets Committee] meeting, foreign financial market conditions eased, on net, and overall risk sentiment appeared to have improved,” the Fed noted in its minutes.
Yet concerns about potential risks of a slowing US economy and global markets remain.
Here’s the full story:
And with that, goodnight and thanks for reading... GW
The New York stock market has closed for the night, pretty much where they started it:
The Dow Jones index has only shed 5 points, or 0.03%, at 17,524.
The broader S&P 500 index closed flat, while the tech-heavy Nasdaq index finished 0.5% higher.
Basically, the selloff sparked by the Fed minutes did wipe out early gains, but didn’t prompt a rout.
a baby born right now would have no idea that the 2 PM minutes sent the stock market red.
— Joe Weisenthal (@TheStalwart) May 18, 2016
Tariq Zahir, crude oil trader and managing partner at Tyche Capital Advisors, reckons the US dollar could continue to strengthen.
He says:
“We think people really had a June rate hike off the table.
“But with the Fed disputing that, we could have a much stronger dollar from here, which is typically bearish for oil and other commodities.”
This afternoon’s dollar rally has already driven down commodity prices, and sunk oil’s latest attempt to hit the $50/barrel mark for the first time this year.
Brent crude is ending the day down 1.5% at $48.55.
Jack Ablin, chief investment officer at BMO Private Bank in Chicago, has got the Fed’s message, telling Reuters that:
“They are ready to pull the trigger on a rate increase in June.”
Poor Janet Yellen.... As Fed chair, she’s going to have to keep a close eye on the nitty-gritty of Britain’s EU referendum battle, points out the FT’s Mehreen Khan.
Fed's June meeting is a week before Brexit referendum. Yellen to become discerning observer of online v phone polls debate
— Mehreen (@MehreenKhn) May 18, 2016
Wall Street now reckons there’s a 25% chance of a June rate hike - up from below 5% last week:
Futures market pins greater than 1-in-4 chance of June rate rise. https://t.co/1LmoraN7YY pic.twitter.com/VeWw1rl83t
— Adam Samson (@adamsamson) May 18, 2016
Fed: Brexit and China are threats
The Federal Reserve is pretty clear that Britain’s EU referendum is a potential shock to the world economy, as is China’s slowdown.
The minutes state that:
[Many policymakers] indicated that they continued to see downside risks to the outlook either because of concerns that the recent slowdown in domestic spending might persist or because of remaining concerns about the global economic and financial outlook.
Some participants noted that global financial markets could be sensitive to the upcoming British referendum on membership in the European Union or to unanticipated developments associated with China’s management of its exchange rate.”
The next Fed meeting takes place just a week before Britain goes to the polls in a vote that will determine its place in, or our, of the European Union. So the Fed might well judge it too risky to raise borrowing costs after all (as Joseph Lake, US analyst at the Economist Intelligence Unit, suggested earlier today)
The yield, or interest rates, on US government bonds has spiked sharply since the minutes were released.
That’s another sign that investors are now expecting American interest rates to rise earlier than before.
For those without a Bloomberg, this is what the 10yr UST made of the lead-up and release of the FOMC minutes pic.twitter.com/Ud5JSQvA7Q
— Toby Nangle (@toby_n) May 18, 2016
Updated
Jeremy Cook, chief economist at foreign exchange firm World First, reckons the Federal Reserve are trying to signal to the market....
Fed wiggles big stick to beat overt dovishness out of market. Would still be surprised if it was June
— World First (@World_First) May 18, 2016
Ironically, by pushing up the dollar, markets create the kind of tighter monetary conditions that allow the Fed to hold off actually raising rates at all.....
US rate hike odds are spiking
Investors are rapidly repricing their expectations for US interest rate moves this year.
There’s now a greater expectation that borrowing costs could rise during 2016, based on market moves in the last 20 minutes.
However, they still don’t think that a June hike is terribly likely, despite the Fed saying that many policymakers think it could be justified if the data improves.
CNBC has the details:
- June rate hike: 26 percent chance, up from 19 percent prior to the minutes being released
- July: 46 percent chance, up from 38 percent
- September: 62 percent, up from 57 percent
- November: 64 percent, up from 60 percent
- December: 78 percent, up from 74 percent
- February 2017: 80 percent, up from 76 percent
More here: Rate hike odds spike across the board after Fed minutes
Fed sends dollar up, but stocks slide
Shares on Wall Street have erased all their gains after the Fed minutes revealed that a June rate hike is certainly possible.
U.S. stocks erase gains after Fed minutes while banks hold rally https://t.co/KFbngvsyX3 pic.twitter.com/LTq4KelesI
— Bloomberg (@business) May 18, 2016
And the dollar is soaring... hitting a nine-week high against the Swiss franc and a three-week high against the yen.
US Fed: prepared to hike in June if data merits it
Breaking: Policymakers on the Federal Reserve’s monetary policy-setting committee are leaning towards raising interest rates at their next meeting in June.
That’s the top line from the minutes of last month’s meeting, which just hit the wires.
They show that “most” policymakers judge that a June rate hike would be appropriate, if data suggest that the US economy is recovering this quarter after its winter slowdown.
And some Fed officials are concerned that the markets aren’t ready for a June hike -- that’s true, given many investors only expect one hike in 2016.
This is the key quote from the minutes:
“Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor markets continued to strengthen, and inflation making progress toward the committee’s 2 percent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June.”
However, the minutes also show that the Fed is concerned that Britain’s EU referendum could spook the financial markets next month.
Updated
Nearly time for the final event of the day....the minutes of the Federal Reserve’s April monetary policy meeting.
Paul La Monica of CNN hopes we don’t get too carried away...
Fed minutes in less than 15 minutes. My excitement is palpable. Nothing like overanalyzing something that was said three weeks ago.
— Paul R. La Monica (@LaMonicaBuzz) May 18, 2016
European markets higher but FTSE 100 flat
Another mixed day for stock markets, with the FTSE 100 hit by falling commodity stocks in the wake of the strong dollar but a rebound in banks providing support elsewhere. And even the FTSE 100 managed to end virtually unchanged on the day. Tony Cross, markets analyst at Trustnet Direct said:
It seems fair to say that today could have been a whole lot worse for equity markets and by all accounts that shock IPSOS/MORI poll on the referendum does seem to have played at least some part in helping ensure the FTSE-100 rounds the day out broadly unchanged. It paints a picture that the remain campaign is quite literally a country mile ahead and whilst the stronger pound has done little to help commodity stocks, many other sectors seem to be finding some solid support off the back of this shift in sentiment.
So the final scores showed:
- The FTSE 100 finished virtually flat, down 1.97 points or 0.03% at 6165.80
- Germany’s Dax added 0.54% to 9943.23
- France’s Cac climbed 0.51% to 4319.30
- Italy’s FTSE MIB rose 1.23% to 17,713.62
- Spain’s Ibex ended up 0.88% at 8775.1
- In Greece, the Athen’s market added 0.31% to 628.29
On Wall Street, the Dow Jones Industrial Average is currentlyi up 33 points or 0.19%.
Meanwhile oil prices have shaken off their earlier dip following a surprise rise in US crude stocks. Brent is now up 0.65% at $49.60 a barrel.
More on the Fed:
Interesting that before the April meeting there were hawkish comments then a dovish statement will we get the same again today... 1/2
— Anthony Cheung (@AWMCheung) May 18, 2016
Vice-Chair Fischer & Dudley are both scheduled to speak tomo... is this strategic Fed timing to calm impending volatility from mins?!... 2/2
— Anthony Cheung (@AWMCheung) May 18, 2016
There has been much talk about when the US Federal Reserve would raise interest rates again after December’s hike, and the minutes of last month’s Fed meeting which will be released later could give further clues.
On Tuesday two - albeit non-voting - members said the June meeting was a live one, and two to three rate increases could be expected this year. Along with stronger than expected US data, this seemed to put a June rise firmly on the table. Not everyone agrees, however, with Joseph Lake, US analyst at the Economist Intelligence Unit, suggesting there will be no move until at least September:
All eyes today are on the release of the minutes of the April FOMC meeting, which will give markets an indication of the future direction of interest rates, and the likelihood of a Fed rate rise in June. This will influence the future direction of the US dollar, and have a large bearing on whether commodity prices can sustain their recent rally.
Politics will play a key role in when the Fed decides to increase the policy rate. The next FOMC meeting is on June 14-15, just one week before the UK votes on whether it will leave or remain in the European Union. Although the EIU expects the UK to vote to remain in the EU, polls are close and the vote will be tight. This will weigh on financial markets and factor in to the Fed’s decision. It would be risky to lift US interest rates just one week before a UK poll which could have wide ranging consequences for the global economy.
Had the domestic economic data been overwhelmingly positive in the past two months, the Fed would probably have moved in June. However, while economic data has been positive, it has not been overwhelmingly so and, combined with the Brexit vote, this will be enough to persuade the Fed to delay the next rate increase. It is unlikely to move at the following FOMC meeting, in July, as it is not accompanied by a press conference. Although the Fed insists that all meetings are live, given the very gradual nature of this tightening cycle, and the importance of clear communication, the Fed will probably skip July, leaving the following FOMC meeting in September as the most likely date of the next policy rate increase.
Thereafter, politics will once again enter the Fed’s calculations, but this time it will be domestic matters. The lead up to the November presidential and congressional elections will increase investor uncertainty, and raise volatility in financial markets. Although we think the domestic economic prospects for the second half of 2016 are bright, the uncertainty generated by politics will deter the FOMC from tightening policy at the November meeting, leaving the FOMC gathering in mid-December as the last chance to increase the policy rate for a second time in 2016.
A quick look at what is expected at this week’s G7 finance ministers’ meeting in Japan, from Capital Economics. In sum, not much:
This weekend’s G7 finance ministers meeting in Sendai, Japan, is likely to focus on exchange rate and fiscal policy and to end with another warning about the dangers of Brexit. However, no major policy announcements are on the cards.
In more detail:
The hosts, Japan, will be looking for support for the view that currency intervention can be a legitimate policy option in some circumstances. After all, the appreciation of the yen, of 10% so far this year, has been much bigger than that of the euro (and has had a major impact on corporate earnings. And Japanese officials have hinted recently that they may intervene to push the yen down...US officials are not likely to criticise the euro-zone’s or Japan’s exchange rate policy too heavily at this weekend’s meeting because neither the ECB nor the Bank of Japan has been intervening to weaken their currencies.
Indeed, the US is more concerned about China, which is of course not a G7 member, though the People’s Bank has been selling foreign currency over the past year in order to prop the renminbi up, rather than trying to gain competitive advantage.
All in all, it seems highly likely that the G7 will stick to its established formula on exchange rate policy. The key elements are a commitment to market-determined exchange rates and to using fiscal and monetary policies to achieve domestic objectives.
Finance ministers will also discuss fiscal policy, with Germany likely to be singled out for criticism once again. But the Japanese government is unlikely to push for a coordinated statement in favour of fiscal stimulus given implacable opposition from Germany itself. Moreover, Japan is not in a good position to argue for a coordinated fiscal stimulus: under current plans, its fiscal policy will be tightened more than that of any other G7 economy apart from the UK during 2016-2020.
Finally, the G7 will surely issue yet another warning about the dangers posed by Brexit. With only five weeks to go until the referendum, getting this in any formal communiqué will be the only significant objective of the UK government. But this would surely do little to change anybody’s view on the merits of Brexit.
Oil is still in negative territory following the US inventory figures, but it is not seeing a major slide, with Brent crude down just 0.2% at $49.17 a barrel. Fawad Razaqzada, market analyst at City Index, said:
Crude oil dropped in the immediate aftermath of the latest official US oil inventories report from the EIA as traders responded to the headline build of 1.3m barrels. Clearly this wrong-footed many speculators who had expected to see another drawdown following last week’s 3.41m barrel decrease in US oil stocks.
This is the second time in as many weeks that the API has got it completely wrong. [The American Petroleum Institute earlier this week reported a 1.1m barrel drop in US crude oil supplies.]
But the other aspects of the oil report were not too bad at all. For a start, oil production fell once again. What’s more, there were larger-than-expected draws in distillates and – more importantly for this time of the year – gasoline stocks as refineries processed more crude now that the driving season is underway. Hence, [US benchmark] oil has not exactly fallen off a cliff (yet).
Updated
Back with the latest shareholder spring, and nearly 32% of the votes cast at Paddy Power Betfair’s annual meeting were against the approval of the remuneration report.
Updated
US COMMERCIAL CRUDE STOCKS rose counter-seasonally by +1.3 million bbl to 541 million (YoY surplus rose to +59 mn) pic.twitter.com/4P4UAaAOJA
— John Kemp (@JKempEnergy) May 18, 2016
Unsurprisingly, oil prices have fallen on the US inventory news. Brent crude, having touched $49.54 a barrel earlier, is now down 0.3% at $49.13. Reuters has the report on the US data:
U.S. crude stocks rose unexpectedly last week even as gasoline and distillate inventories fell more than expected, data from the Energy Information Administration showed on Wednesday.
Crude inventories rose by 1.3 million barrels in the week to May 13, compared with analysts’ expectations for an decrease of 2.8 million barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 461,000 barrels, hitting a fresh record high, the data showed.
Refinery crude runs rose by 192,000 barrels per day, EIA data showed. Refinery utilization rates rose by 1.4 percentage points.
Gasoline stocks fell by 2.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 150,000-barrel drop.
Distillate stockpiles, which include diesel and heating oil, fell by 3.2 million barrels, versus expectations for a 642,000-barrel drop, the EIA data showed.
U.S. crude imports rose last week by 22,000 barrels per day.
US crude stocks in surprise rise
US crude stocks have unexpectedly risen compared to expectations of a weekly decline.
According to the Energy Information Administration, crude stocks rose by 1.3m barrels to 541.29m compared to forecasts of a 2.8m draw.
#Crude: EIA says US oil inventories increased by 1.31 million barrels last week. A decrease was expected. API wrong again. #WTI drops ^FR
— FOREX.com (@FOREXcom) May 18, 2016
Oil goes negative on EIA build vs last week's surprise drawdown; EIA data at odds with this API drawdown
— Mike van Dulken (@Accendo_Mike) May 18, 2016
Updated
US oil inventory data is due shortly and the crude price is steadying ahead of the news, given the recent supply problems including the Canadian wildfires. Brent is currently up 0.3% at $49.45 a barrel having earlier fallen as low as $48.88.
The US stock market has opened in the red, as Wall Street continues to ponder the possibility of a hike in interest rates.
Hawkish comments from some Federal Reserve policymakers yesterday, plus strong inflation data, have reignited talk about higher borrowing costs.
We’ll get a better clue at 7pm tonight (2pm Washington time), when the minutes of last month’s Fed meeting are released.
In the meantime, the Dow has lost 30 points or 0.2% to 17,499, extending yesterday’s selloff.
US stocks open lower ahead of Fed minutes: https://t.co/IDMu6fL6JE pic.twitter.com/zf3d3GdTpr
— CNBC Now (@CNBCnow) May 18, 2016
Bloomberg’s Lucy Meakin has shown how the pound has jumped against all major currencies today, as Brexit fears suddenly ease.....
The pound really is having quite a party after those #Brexit polls https://t.co/6pqQq4l0lO via @LukanyoMnyanda #FX pic.twitter.com/zCVyxBMP6z
— Lucy Meakin (@lucy_meakin) May 18, 2016
Updated
Pound hits 10-week high
Money is continuing to pour into sterling, after the latest EU referendum poll gave the Remain side a shock 18 point lead.
Investors are reacting to the news that 55% of those polled want to stay in the EU, while 37% want so leave, according to IPSOS MORI.
The pound has now surged by 1.2 cents against the US dollar to $1.459, up from $1.446 overnight. That’s a two-week high.
Sterling has also jumped by 1.5 eurocents against the single currency, to €1.2935 – a 10-week high.
And the pound is also surging against the Japanese yen and the Australian dollar, sending it to a three-month high against a basket of currencies.
GBP +0.93% on USD, +1.28% EUR, +1.8% AUD, +1.34% JPY.
— Mike Bird (@Birdyword) May 18, 2016
Booooooooooom.
Investors are clearly calculating that this poll is a turning point in the EU campaign, and suggests Britain will decide against Brexiting the EU.
However, it’s only one poll – others have suggested that the race is tighter, especially as Leave voters are more likely to actually vote....
Indeed, Gideon Skinner, head of political research at Ipsos MORI, told the Evening Standard that:
“Remain has been boosted by a Conservative swing, but they are also more likely to change their mind, so in this volatile election, with voters divided over the short and long-term impacts of their decision, nothing can be taken for granted.”
Updated
Mitsubishi president quits over testing scandal
The test manipulation scandal that is gripping the automobile industry has claimed another casualty.
The president of Mitsubishi Motors, Tetsuro Aikawa, has resigned today, four weeks after the company admitted it had falsified fuel efficiency reports for decades.
Mitsubishi’s mistake was not to adjust its testing to reflect new rules introduced in 1991 to better reflect stop-start urban driving.
Aikawa’s departure – marked with a traditional Japanese bow – came hours after rival carmaker Suzuki revealed that it had also used improper methods to test the fuel economy of its vehicles.
Shares in Suzuki plunged by 10%.
By delaying sanctions against Spain today, the EC could be preparing the ground to rebuke the next Spanish government (if they don’t comply with Brussels’ demands)...
My interpretation of @pierremoscovici's words: EU Commission is ready to fine Spain after the elections (if a leftwing government is formed)
— Erik Wesselius (@erikwesselius) May 18, 2016
Wait til after Spanish elections, then put Troika Death Star into orbit,https://t.co/NZVgh35in3
— WEAYL (@WEAYL) May 18, 2016
EC gives Spain and Portugal a break
Speaking of Europe...Spain and Portugal have just been given more time to get their finances into order.
The European Commission had been expected to get tough with both countries for running deficits over the 3% target mandated by Brussels. It could even have imposed its first ever fines against a member state.
But with political tensions high in both countries, and the Brexit vote threatening to destabilise Europe, eurocrats have taken a softly-softly approach.
Spain, which is holding a general election in June, has now been given until the end of the year to cut its deficit.
Portugal’s deadline for fixing its public finances will be extended to 2017 - a boost for its new socialist government.
Commissioner Pierre Moscovici has admitted that political concerns played a factor:
"This is not the right moment economically or politically to take action against Spain & Portugal" on deficit level: @pierremoscovici
— Tony Connelly (@tconnellyRTE) May 18, 2016
The FT’s Mehreen Khan explains why:
The delay will be a source of relief for Madrid, where voters will be heading to the polls in a second general election in just seven months.
Spain’s incumbent prime minister Mariano Rajoy was defiant ahead of today’s showdown with Brussels, promising to implement a fresh round of tax cuts should he be re-elected in the summer....
More here:
The European Commission has avoided imposing its first ever fine on member states for budget failings https://t.co/8xzv4PDDWu
— fastFT (@fastFT) May 18, 2016
Pound jumps on latest Brexit poll
Breaking away from the jobs report, the pound has jumped after a new opinion poll showed a big lead for the campaign to Remain in the EU.
IPSOS MORI reports that 55% of the public are planning to vote to stay in Europe in June’s referendum, with just 37% backing Brexit.
£ on latest poll - pic.twitter.com/XvfEJKBiUB
— Guy Johnson (@GuyJohnsonTV) May 18, 2016
The poll also found that the public haven’t swallowed some of the more alarmist claims from the two sides.
That includes the prime minister’s warning that Brexit would raise the risk of another World War..... Here’s the story.
Ipsos MORI #EUreferendum poll:
— Alberto Nardelli (@AlbertoNardelli) May 18, 2016
Remain 55%
Leave 37%https://t.co/Je8Oj4XAHp
Josh Hardie, CBI Deputy Director-General, reckons that George Osborne’s new ‘national living wage’ is starting to hit the labour market:
“While it’s encouraging that employment has risen there are some signs of a softening in the labour market, particularly with job vacancies falling back.
“However, continued uncertainty could be weighing on hiring intentions. In addition we are seeing evidence that employers are considering the impact of the National Living Wage, introduced last month.”
The NLW means that all workers aged 25 and over are now legally entitled to at least £7.20 per hour, which will rise to £9 per hour by 2020.
The Department for Work and Pensions have riffled through their old collection of vinyl to give today’s report some musical context:
Can you spot the records? 🎤 📈 🎧 #getbritainworking pic.twitter.com/bSZByZioVP
— DWP Press Office (@dwppressoffice) May 18, 2016
(Disappointing lack of Stone Roses, but otherwise pretty neat)
PwC: UK labour market is cooling off
John Hawksworth, chief economist at PwC, has sent over a handy summary of today’s jobs report.
“Today’s data confirms that the great UK job creating machine slowed somewhat in the first quarter of this year, with unemployment flattening off at pre-crisis levels and average earnings growth remaining relatively muted at around 2%.
“The employment rate is still rising, however, reaching record levels of 74.2% in the first quarter, fuelled in part by more women in the 60-64 age group working as the state pension age rises.
“Continued strong inflows of workers from other EU countries has also been important, accounting for over half of the net rise in UK employment over the past year. This has helped the economy to grow steadily over this period without sparking inflationary wage pressures.
“The relative cooling of the jobs market in the first quarter may in part reflect worries about the global economy, which reached a peak in January and early February, and in part uncertainty related to the EU referendum outcome, particularly from mid-February onwards once the timetable for this became clear. If these uncertainties abate after the vote on 23rd June, we may see both jobs and earnings growth pick up in the second half of the year.”
The pound has dipped a little this morning, despite Britain’s employment rate hitting a record high.
Andy Scott, economist at HiFX, says traders are concerned that March’s claimant count was revised high this morning, to show the biggest jump since autumn 2011.
Today’s figures continue to show that the UK economy has lost momentum with the claimant count rising by almost 15,000 in March – the biggest increase for over four years.
There was some positive news on average earnings including bonuses which rose unexpectedly, but even if you strip out some potential impact from Brexit concerns, underlying growth has weakened.
Ian Stewart, chief economist at Deloitte, is concerned that wage growth has dipped. It could be a worrying signal....
“The jobs market has been a standout success for the UK economy in recent years, delivering record levels of employment and one of the lowest jobless rates in Europe.
“But the momentum of job creation has eased in recent months and we still haven’t seen lift-off for wages.
“Indeed, real wage growth has slowed in the last year, a development that represents a real risk to the consumer-led recovery.”
Young people "losing out" as permanent hiring stalls
Ian Brinkley, chief economic advisor at Lancaster University’s Work Foundation, flags up that young people are continuing to get a rough deal:
For the first time in many quarters, there was no rise in permanent jobs. All of the increase was for the self-employed and temporary employee workers.
With weak hiring it is the young, as usual, who lose out. Overall unemployment remained unchanged at 5.1% but unemployment among 18 to 24 year olds went up from 12% to 12.2%.
Brinkley also thinks it’s “unlikely” that the EU referendum is hurting the labour market.
Worsening world trade conditions pushing some export based sectors such as manufacturing into recession and increased costs from the introduction of the National Living Wage are more immediate explanations for employers being more cautious about new hires.”
Updated
If you adjust for inflation, then average earnings have fallen from their recent peak:
At 1.8 per cent, earnings growth has fallen further from the pre-crisis trend of 2.2 per cent pic.twitter.com/puWq1DHPdz
— ResolutionFoundation (@resfoundation) May 18, 2016
Employment, the key charts
Here’s the main charts points from today’s labour force report:
Some fascinating historical context from Royal Bank of Scotland:
UK employment as a % of total population since 1855. Only higher during 1941-1943. pic.twitter.com/gWiIjGbMg6
— RBS Economics (@RBS_Economics) May 18, 2016
Updated
ONS: Women working longer due to pension changes
Digging into today’s report, its clear that the employment rate has hit a record high partly because more women are working longer.
That’s because of changes to the retirement age, pushing it up to 65 for men and women by November 2018, and then 66 by October 2020 (more details here)
The ONS explains:
- 79.3% of men and 69.2% of women aged from 16 to 64 were in work
- the employment rate for men (79.3%) was the highest since January to March 2005
- the employment rate for women (69.2%) was the highest since comparable records began in 1971, partly due to ongoing changes to the state pension age for women resulting in fewer women retiring between the ages of 60 and 65
It’s also possible that more older people of both gender are having to work longer, of course, for economic reasons, but that isn’t spelled out in today’s report.
Updated
Work and Pensions Secretary Stephen Crabb has welcomed this latest rise in the employment total, and the small drop in unemployment:
“These are another record-breaking set of figures, with more people in work than ever before and the unemployment rate is the lowest in a decade at 5.1%.
More people in work means that more families across the UK are benefiting from the security of a regular wage and the fulfilment that employment brings.
“But the job is not done, which is why our welfare reforms, such as Universal Credit, are making sure that it always pays to be in work.”
Real wages continues to grow in the last quarter, the Office for National Statistics reports. But it’s a mixed picture.
Average weekly earnings for employees in Great Britain increased by 2.0% in January-March, up from 1.9% in October-December.
But if you strip out bonuses, pay rose by 2.1%, down from 2.2% the previous quarter.
Updated
Today’s report also shows that the number of people out of work dipped by 2,000 in the last quarter, to around 1.69m. That’s 139,000 fewer than for a year earlier.
UK employment rate hits record high
Breaking: The proportion of people in work across the UK has hit a new record high.
The latest labour market report, just released, shows that the employment rate has hit 74.2%, the highest since comparable records began in 1971.
The total number of people in work has risen again, by 44,000 in the last three months, to 31.567 million.
Here are other key points from the report, just released:
- Britain’s unemployment rate remains unchanged at 5.1% in the January-March quarter.
- Surprisingly, the claimant count (the number of people receiving unemployment benefit) has fallen in April, to 738,000.
- But March’s claimant count has been revised up, to show a gain of 14,700 – the biggest monthly rise since September 2011.
#Unemployment rate 5.1% for Jan-Mar 2016, down from 5.6% a year earlier https://t.co/Qs15Wgmjtc pic.twitter.com/ddQ64gTgvl
— ONS (@ONS) May 18, 2016
More to follow....
Updated
5mins UK employment and wage data
— Nicola Duke (@NicTrades) May 18, 2016
UK government blasted over disabled employment
A new report has warned that Britain’s government is “years behind schedule” in its bid to halve the employment gap between disabled and non-disabled people.
According to the TUC union, the target may not be hit until 2030 - a whole decade later than planned.
The Daily Mirror explains:
Tory promises to halve the unemployment gap of disabled workers will be missed by a shameful 10 years, research shows.
The election manfesto pledge is “years behind schedule” at current rates of progress, according to a TUC study.
Ministers had promised to reach the milestone of halving the employment gap between disabled and other workers by 2020.
That would see nearly two-thirds (63%) of disabled people in work by the end of the decade, but the government is on target to miss the target by 11% with just over half (52%) in work.
More here:
Tories miss their target for cutting unemployment among disabled workers https://t.co/JyUFqLWlJU pic.twitter.com/KkSQTnUdBD
— Daily Mirror (@DailyMirror) May 17, 2016
The US dollar has hit a three-week high against the euro, on that renewed talk of an American interest rate hike.
This has pushed the euro down to $1.1265, from $1.1311 last night.
A weaker euro will be welcomed by the European Central Bank, as it should help exporters and raise inflation.
Mario Draghi and the #ECB #QE crew will enjoy their espresso coffee this morning as they see the Euro dip to 1.127 versus the US Dollar
— Shaun Richards (@notayesmansecon) May 18, 2016
Burberry shares slide after latest gloomy report
Fashion chain Burberry is under pressure again this morning after it issued yet another downbeat report to the City.
Burberry posted a 10% drop in profits for the last financial year, and warned that earnings in the current financial year will be at the bottom of analyst expectations.
Shares have slumped by 4%, making it the worst performer on the FTSE 100.
The company has been hit by slowing demand in key markets such as China and Hong Kong, where consumer have been cutting back.
It tells shareholders that:
Burberry’s performance [last year] reflected a difficult period for the luxury sector as a whole as demand slowed in many markets for both cyclical and structural reasons.
Burberry is now launching a three year plan aimed at raising revenues, improving productivity and deliver at least £100m of cost savings.
And CEO Chris Bailey warns that he expects “the challenging environment for the luxury sector to continue in the near term”.
More here:
Updated
US rate hike talk hits the markets
World stock markets are sliding this morning as investors begin to worry that America’s central bank might raise interest rates again soon.
The FTSE 100 has shed 40 points, down 0.7%, to 6125, which erases all yesterday’s gains.
Other European markets are down too, following a selloff on Wall Street last night.
The selloff is being driven by speculation that America’s central bank could be closer than thought to raising borrowing costs again, possibly in June.
Yesterday Dennis Lockhart, the head of the Atlanta Fed, told reporters he still expects two or three rate hikes before the end of the year.
Investors had expected fewer – quite possibly none – due to signs of economic slowdown, particularly in an election year.
But yesterday’s surprisingly strong US inflation data, which showed core inflation above 2.1%, is causing some rethinking....
Overnight, Japan made a rather spectacular escape from recession.
New growth figures showed that the Japanese economy expanded at an annual rate of 1.7% in the last three months (meaning it grew by over 0.4% during the quarter).
Economists had only expected growth of 0.3% – but Japan surprised them with unexpectedly strong consumer spending. Here’s our story:
Now the prime minister, Shinzo Abe, must decide whether to press on with a sales tax that could hurt growth but improve the battered Japanese public finances....
#Japan dodges recession thanks to consumers, public spending. Now sales tax decision eyed. https://t.co/ZILUJ6PEXS pic.twitter.com/whdFVotDeY
— Holger Zschaepitz (@Schuldensuehner) May 18, 2016
The agenda: UK unemployment report in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The resilience of Britain’s labour market has been one of the more remarkable aspects of the aftermath of the financial crisis.
Despite the government’s austerity crackdown, the jobless rate has fallen steadily from 8.4% in autumn 2011 to just 5.1% at the start of 2016. But last month, the unemployment total jumped by a worrying 21,000 while wage growth stalled.
And new figures released at 9.30am will show whether this trend is continuing. Economists expect earnings growth (including bonuses) to have slipped again, from 1.8% to 1.7%.
The employment total, which has regularly hit record highs, could possibly have bottomed out.
And the number of people signing on for unemployment benefit is tipped to have risen by 4,500, on top of a 6,700 jump last month.
That might show that jitters over the EU referendum are hitting the labour market, but may also reflect the fact that Britain’s growth appears to be slowing.
If the numbers are bad, we can probably expect the government to warn about the dangers of Brexit.
And if the numbers are good, we can also probably expect the government to warn about the dangers of Brexit.
Also coming up today....
The European Commission is announcing its latest review of national budget policies around 11am BST (I think). This may include penalties against countries who have failed to hit fiscal targets, such as Spain and Portugal....
We’re also getting results from luxury fashion chain Burberry, beermaker SAB Miller and energy firm SSE.
And late tonight (7pm BST), the minutes of the Federal Reserve’s most recent meeting are released. That’s quite timely, after US inflation jumped yesterday - putting talk of another rate hike back on the agenda....
Updated
