Tag: Wage

U.K. stocks flip higher as pound rally fizzles after wage data

U.K. stocks flip higher as pound rally fizzles after wage data

U.K. stocks erased an earlier loss and swung higher on Tuesday after the pound pulled back from its highest level since the Brexit vote following a mixed report on the British labor market.
While the data showed wages now are rising faster than inflation, traders had hoped for a stronger number to cement expectations of a Bank of England rate rise in May.
What are markets doing?
The FTSE 100 index UKX, +0.18% rose 0.2% to 7,211.87, climbing back from a 0.1% loss earlier in the session.
The turnaround came as the pound GBPUSD, -0.0279% dropped to $1.4323, losing grip of its almost 22-month high of $1.4377.
Sterling traded at $1.4338 late Monday in New York.
Both the pound and stocks were driven by the February reading on the U.K. labor market.
The unemployment rate, however, surprised to the upside, falling to the lowest level since 1975 at 4.2%, down from 4.3% in January.
However, in the bigger picture, the consumer is still in a stronger position than before, which means we could still expect a more hawkish BOE when they meet in May,” said Fiona Cincotta, senior market analyst at City Index, in a note.
• “There was certainly nothing in this data to dissuade markets from the view that a rate hike is likely in May.

UK unemployment falls once again — and Brits are finally getting a pay rise

UK unemployment falls once again — and Brits are finally getting a pay rise

LONDON – Unemployment in the UK unexpectedly fell between December and February, according to new data released by the Office for National Statistics on Tuesday.
The headline unemployment rate, which measures the percentage of the British workforce who want a job but don’t have one, fell from 4.3% to 4.2%, marking a second consecutive month of a dropping headline jobless rate.
There were 1.42 million unemployed people in the UK over the period, according to the ONS.
That marks a decrease of 16,000 from September to November 2017.
There was also good news for wage growth, with wages growing at 2.8% over the period.
That’s higher than the rate of inflation, which was 2.7% at the most recent reading.
The figures mean that UK workers are now getting a small real wage rise on average. “The labour market continues to be strong, and for the first time in almost a year, earnings have grown slightly after inflation has been taken into account,” senior ONS statistician Matt Hughes said in a statement. “Employment rose again in the three months to February, to reach its highest ever rate since records began.
The unemployment rate fell, too, and is at its lowest since 1975.”

Union chief upbeat on prospects for deal in German wage talks

Union chief upbeat on prospects for deal in German wage talks

Thomson Reuters BERLIN (Reuters) – The head of Germany’s public sector union said he was upbeat about reaching a compromise with employers in a third round of wage talks due to begin on Sunday, after a week of strikes by more than 150,000 union members.
Verdi leader Frank Bsirske told German newspaper Handelsblatt the two sides had been far apart in the previous two rounds of wage talks, but he was more optimistic going into the third round.
Verdi, with 2.3 million members, and the dbb assocation of civil servants, which represents 344,000 public servants, have been pressing for a pay raise of 6 percent for their next 12-month contract, or least 200 euros more a month.
Ulrich Silberbach, head of the dbb and the lead negotiator for the labour side, said the unions were ready to negotiate, but it was up to Seehofer to present a counter-offer. “After the long negotiations on forming a government, we can’t afford to also have long wage conflicts,” he said in a statement.
Verdi’s Bsirske said surging German tax revenues meant the pay deal should definitely be higher than one struck two years ago, when workers got an initial 2.4 percent increase, followed by a 2.35 percent increase. “Last time we had a 2 before the comma.
Inflation edged up to 1.5 percent in March.
Germany, Europe’s biggest economy, is in solid shape, with buoyant tax revenues and a record budget surplus.
Falling unemployment, inflation-busting pay rises and low borrowing costs are fuelling a consumer-led upswing.

German interior minister rejects union’s six percent wage demand

German interior minister rejects union’s six percent wage demand

Thomson Reuters BERLIN (Reuters) – German Interior Minister Horst Seehofer said on Saturday he would press for “reasonable results” in the next round of pay talks with more than two million public sector workers, but he rejected the Verdi union’s demand for a six percent increase.
Wage talks are due to resume on Sunday after 150,000 public sector employees staged warning strikes and walkouts last week that left thousands of passengers stranded at airports, and hit hospitals, childcare centres and waste depots.
Seehofer, the federal government’s top negotiator in the talks, underscored the importance of public sector workers and said it was “self-evident” that they should benefit from the country’s economic growth.
Verdi said 17,000 people participated in walkouts on Friday, bringing the total for the week’s labour actions to 150,000.
He said public sector workers should benefit from surging German tax revenues.
The federal government and municipalities have rejected the union’s demands, but the head of the VKA association of local employer organisations last week said he expected an agreement to emerge from the next round of talks.
Inflation edged up to 1.5 percent in March.
Falling unemployment, inflation-busting pay rises and low borrowing costs are fuelling a consumer-led upswing.
The European Central Bank (ECB) is keeping a close eye on the German pay talks for any sign that wage growth is picking up, potentially lifting inflation and giving the ECB added leeway to start winding down its massive stimulus programme.
(Reporting by Andrea Shalal; Editing by Helen Popper)

Unemployment is refusing to budge in the face of booming jobs growth, keeping wages down

Unemployment is refusing to budge in the face of booming jobs growth, keeping wages down

This week in finance: Labour force data expected to show around 20K new jobs, but unemployment stuck at 5.5pc (Thursday) Federal Reserve expected to raise rates by 0.25 percentage points (Wednesday US time) Mini reporting season sees Myer set to announce a big write-down on its assets on top a 40pc fall in profit (Wednesday) Jobs growth has soared — around 400,000 new jobs created in the past year — while wages growth and the unemployment keep plodding along the same uninspired path.
The business conditions’ employment sub-index is still solid, but tracking well below what would normally deliver the average 35,000 new jobs a month over the past year.
The NAB view is that softer employment growth is likely to mean a lower participation rate, and that means unemployment is unlikely to come down in the short-term at least.
It has been seven years since the unemployment rate last ventured under five per cent and it is difficult to see how it will get back there if jobs growth slows.
That demand differential between public and private has also translated into marginally higher wage growth in the public sector.
Government spending has also propped up aggregate consumption, with real government spending growing at around four per cent over the past three years — closer to five per cent by the end of last year — while real household consumption was meandering along at under three per cent. “It is no wonder that households are feeling the pinch,” Mr Aird said.
Fed to lift rates again It all means that the Reserve Bank can’t lift rates, while in the US, where jobs growth has seen unemployment cut to around four per cent, interest rates are going up.
Back in December the dots suggested three hikes this year and two in 2019.
If the write-down sees net assets closer to Myer’s market capitalisation of $360 million, it would breach its debt covenant of net assets needing to be above $500 million.

Workers getting bigger paychecks, but wages still aren’t rising rapidly

Workers getting bigger paychecks, but wages still aren’t rising rapidly

Jeffry An ultra-low unemployment rate and multiplying labor shortages are helping to boost pay for American workers, but wages still aren’t soaring like an eagle.
While that’s faster than the annual 2% gains that were the norm early in the expansion, it still falls short of the 3% to 4% increases that usual prevail when the unemployment rate is as low as it is now.
Slower wage gains are a double-edged sword.
That’s the good news.
Is that about to change?
Some evidence suggests workers on the cusp of bigger increases in wages.
In a new study, Morgan Stanley found that earnings are rising most rapidly in high-wage industries on the service side of the economy such as finance, health care and media.
Workers in the middle are the ones who’ve gained the least.
If that keeps up, economists expects yearly wage growth to hit 3% later this year.
Indeed, it may already be happening.

Japanese wages are still going backwards after inflation

Japanese wages are still going backwards after inflation

Annual wage growth in Japan has fallen in real terms in each of the past three months.
Falling real wages are crimping the purchasing power of households, placing downside pressure on consumption and inflationary pressures.
Great odds, right?
From a supply and demand perspective, it points to a labour market that’s not only hot but scolding hot.
There’s heaps of jobs available but few workers to choose from, something that would usually lead to an explosion in wage growth.
While unemployment is incredibly low, so too is wage growth.
According to data released by Japan’s Labour Ministry, real worker wages fell 0.5% in the 12 months to February, a marginal improvement on the 0.6% contraction in the year to January.
Over the same period, Japanese consumer price inflation (CPI) rose by 1.5%.
Not only is weak wage growth making the Bank of Japan’s task of lifting CPI back to its 2% target all the more difficult, helping to explain why it continues to implement quantitative easing as other major central bank’s lift interest rates, but there’s also signs that it’s weighing on household consumption, the largest part of the Japanese economy at around 60%.
Still, even driven by temporary factors this month, falling real wages is eroding the purchasing power of Japanese households, making it more difficult for firms to pass on higher prices.

States where pay is rising the fastest, ranked

States where pay is rising the fastest, ranked

Idaho had the largest wage growth because of low unemployment and pay increases.
But employees in North Dakota, Alaska, and Iowa actually had negative wage growth.
Earnings looks at wages and salaries while income includes earnings as well as other sources of income, such as payments received from a rental property.
The national average wage growth is 3.1%.
The Plains region was by far the slowest growing of the geographic divisions in the study, with wage growth of just 1.4%, dragged down by two states that actually saw a decrease in earnings.
Only three states saw a drop in earnings over the last calendar year: North Dakota, Alaska, and Iowa.
The Far West and Rocky Mountains regions led the way with 4.2% and 4.4% earnings growth, respectively.
Seven of the eight largest increases came in states in these regions.
Idaho had the highest earnings growth of any state, which the BEA attributes to a 9.7% earnings increase of durable goods manufacturing in the state.
The state also has a low per capita income — 44th in the nation — that allows for higher growth.

These 5 charts show the state of pay and employment in Britain

These 5 charts show the state of pay and employment in Britain

The Resolution Foundation’s report included a whole heap of charts looking at the state of the labour market right now, analysing where Brits are getting pay rises, how much those pay rises are, and how the near future looks for jobs. “Job-to-job moves are an important sign of a healthy labour market, particularly when they are voluntary,” the report notes. “Moving jobs voluntarily usually comes with a pay rise and allows others to move as well.
If unemployment among the young, single parent, and BAME workers is increasing, the rest of the labour market will likely follow suit soon after. “Any indication that unemployment was on the rise would first be apparent in data on groups more likely to find themselves out of work in a downturn,” the Resolution Foundation notes. “However the unemployment rate for younger workers has plateaued, or risen, since Q1 2017. “The evidence is that those that move region and employer earn the highest pay rises, although the returns differ by region.
Interestingly the variation in returns and the difference between the average return earned and the return to moving to London have both risen in the post-crisis period,” the report notes. “While the share of people who move region for work is low (around 0.5 per cent of employees per annum or 100,000 people) it is a broader sign of labour market dynamism and those moving region tend to earn the highest pay rises.” “While the (nominal) pay rise for those moving jobs is back at pre-crisis levels (at around 6-7 per cent), the returns to moving jobs and region are down compared to the pre-crisis period.”

The economics of Australian pay rises, explained in a cricketing term anyone can understand

The economics of Australian pay rises, explained in a cricketing term anyone can understand

Australia currently requires employment to increase by just over 20,000 per month to keep unemployment steady.
It’s been below that level in each of the past two months, seeing unemployment lift to 5.6%.
Or, for the cricket fans among you, a jobs “run-rate required”.
Right now, the required rate stands at 20,000 per month, above the levels reported in each of the past two months, helping to explain the small uptick in Australia’s unemployment rate seen over this period.
As the NAB points out, on the back of strong population growth and more Australians reentering in the labour market, it’s meant that it’s been a tough slog to lower unemployment over the past year, and created headwinds for pushing up wage growth.
“Continuing strong growth in the working age population of 329,000, coupled with increased participation [which is up] nearly one percentage point over the past year, means that 383,000 jobs were needed to keep unemployment constant.
“A lot of jobs have been created, something the leading indicators suggest should continue, but it’s just that we aren’t creating sufficient jobs for the increasing population and those re-entering the workforce.
“The latter likely means that a broad-based increase in wages will be slower in emerging.” NOW WATCH: Money & Markets videos Want to read a more in-depth view on the trends influencing Australian business and the global economy?
BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future.
Sign up for free at research.businessinsider.com.au.