Soaring bonuses for City bankers and high signing-on fees for construction and IT professionals pushed Britons’ average annual pay up by 7% in March, but most workers suffered a fifth consecutive month of falling living standards.
Without bonus payments, workers were paid an average 4.2% wage increase in the three months to the end of March, well below the 7% inflation rate recorded in the same month.
After taking inflation into account, average pay including bonuses rose 1.4% in the year to January to March 2022, while excluding bonuses it fell 1.2%.
— Office for National Statistics (ONS) (@ONS) May 17, 2022
The Office for National Statistics also reported that the UK’s unemployment rate dropped to the lowest since 1974, while competition for workers pushed up vacancies to record highs.
For the first time on record, there were more job vacancies than people unemployed - with more adults dropping out of the labour market with long-term sickness.
Leading children’s charity Action for Children warned that hard-up families are skipping meals, wearing coats indoors to stay warm, and living in the dark because they can’t afford to switch on the lights.
Soaring food inflation could force schools to choose between offering smaller portions at lunchtime and using cheaper ingredients, according to the boss of one of the UK’s largest food wholesalers.
Archie Norman also backed government plans to override parts of the Northern Ireland protocol, saying that some food exported south of the border now requires 700 pages of customs documents, partly written in Latin.
WalMart, though, missed analyst estimates and cut its earnings forecasts as rising price pressures hits its margins and operating costs. It cited higher fuel prices and labour costs, along with supply chain problems.
Stock markets have rallied, as concerns over the global economy eased, with Shanghai outlining plans to end its lockdown in June.
Elon Musk’s takeover of Twitter is in fresh uncertainty, after he said the deal “cannot move forward” until the social media company proves that less than 5% of its users are fake or spam accounts.
Twitter, though, says it is committed to completing the deal “on the agreed price and terms as promptly as practicable”.
Land Securities has reported record office leasing in London as the lifting of Covid restrictions fuels a return of workers and a surge in demand for prime space, as the property company bounced back to profit last year.
A quarter of Britons say they’ve skipped meals due to rising cost of living
The cost-of-living squeeze in Britain has led to a quarter of adults skipping meals, a survey has found.
Polling group IPSOS also found that two-thirds have kept their heating off when they would normally have turned it on, while half (52%) are already going out socialising less than normal.
As the Bank of England warns of "apocalyptic" food prices, new research from @IpsosUK / @SkyNews shows due to the cost of living:
Among people on lower incomes, one in three people say they have missed meals recently because of the surge in inflation.
Ipsos also found that:
Those in the North East/Yorkshire and Humber and Greater London most likely to believe they will be hit harder by cost of living than other parts of the country.
Three-quarters say the UK Government is not doing enough to support the people through the crisis.
Gideon Skinner, Ipsos’s head of political research, said:
Concern about inflation is at a thirty-year high in Ipsos polling, and Britons across the country see the cost of living as both a national, local, and personal priority.
People are already telling us they have taken a range of actions to mitigate its effects – some with a direct impact on basics like food and heating – but given the economic forecasts there may well be more anxiety on the horizon.
This is going to maintain pressure on the Government to take more steps to help people through the cost of living crisis – already an area where they are less trusted than Labour, but this is an issue where even their own supporters want them to do more.
As the Bank of England warns of "apocalyptic" food prices, new research from @IpsosUK / @SkyNews shows due to the cost of living:
The New York Stock Exchange (NYSE). Photograph: Spencer Platt/Getty Images
Stocks have jumped in New York at the start of trading, as anxiety over the global economic outlook eases.
Dow Jones industrial average: up 326 points, or 1%, at 32,549
S&P 500: up 57 points or 1.44% at 4,065 points
Nasdaq Composite: up 260 points or 2.2% at 11,923
The rise in US retail sales last month has calmed concerns that America’s economy could be stumbling, while Home Depot’s (+3%) good results have cushioned the impact of Walmart (-8%) missing forecasts.
Worries about China’s slowdown have also dropped, after Shanghai set out plans for the return of more normal life from 1 June, ending the lockdown that has lasted more than six weeks and hit China’s economic activity.
The US retail sales report for April is very solid and points to a willingness amongst households to run down accumulated savings to maintain lifestyles at a time when inflation is hurting real income growth.
It fully backs the case for a sharp recovery in GDP growth in the second quarter and a series of 50bp rate hikes from the Federal Reserve.
Fuel giants are under fresh pressure from Downing Street to pass on tax cuts to motorists as diesel prices hit a new high, PA Media reports.
Business Secretary Kwasi Kwarteng will write to the industry “to remind them of their responsibilities” following claims retailers hiked profits following the 5p per litre fuel duty cut in March’ss spring statement.
Figures from the Department for Business, Energy and Industrial Strategy show the average price of a litre of diesel at UK forecourts was 179.7p on Monday. That was up from 178.4p a week earlier.
The average price of petrol on Monday was 165.1p per litre. That was narrowly below the record of 165.4p set on March 21, based on the Government’s figures.
Separate fuel price statistics by data firm Experian Catalist using a different methodology show average prices on Monday were 180.3p per litre for diesel and 166.8p per litre for petrol.
Chancellor Rishi Sunak implemented a 5p per litre cut in fuel duty on March 23 to help cash-strapped motorists. But the RAC said retailers are taking an average profit of 2p per litre more than before the policy was introduced.
The firm’s analysis showed the average margin for a litre of petrol and diesel is currently 11p and 8p respectively. In the month up to the duty cut it was 9p for petrol and 6p for diesel.
The Prime Minister’s official spokesman said:
“The public rightly expect retailers and others in the supply chain to pass on the fuel duty cut at the forecourts. It’s the biggest cut ever on all fuel duty rates and can mean big savings for families.
“We know that a number of retailers - big supermarkets, Asda, Tesco and Sainsbury’s - are passing on the cuts and we will raise this with other petrol retailers.
“The Business Secretary will be writing to the industry again to remind them of their responsibilities here so they should be in no doubt about the need to make sure that everyone is passing on these cuts on the forecourt.”
Never bet against the US consumer has always been a good adage to bear in mind throughout my 20-plus years in the markets.
Despite the surge in prices weighing on their purchasing power, the US consumer now appears to be single-handedly keeping the global economy afloat.
The big surprise is that, stripping out gas, autos and building materials, control group sales increased by 1.0% m/m in April (consensus 0.5%) and sales are now estimated to have increased by 1.1% in March (previously a 0.1% decline), Ashworth adds:
Given this show of strength from consumers, speculation that the US economy is in danger of an imminent plunge into recession look badly misplaced.
Together with the surprising strength of core CPI last month, this is another reason to expect the Fed to continue hiking rates by 50bp per meeting, despite the recent swoon in stock markets.
US retail sales jump as consumers keep spending amid high inflation
US consumers kept spending last month, despite economic uncertainty and rising interest rates, as inflation pushed up prices.
Spending at US retailers and food outlets rose 0.9% in April, and were 8.2% higher than in April 2021.
Excluding motor vehicles and gas stations, sales rose 1% during the month.
The figures aren’t adjusted for inflation, so they also reflect the jump in many prices.
Spending at gasoline stations were up 36.9% compare with April 2021, due to the jump in fuel costs in the last year. They dropped month-on-month, though, reflecting the easing in gas prices after crude oil spiked in March.
Takings at food services and drinking places were up 19.8% year-on-year.
Total April US retail sales up 8.7% over the prior year. A solid outcome, but 2.3 percentage points of that growth comes from higher spending at gas stations. The consumer is still out and buying but volumes in many categories are falling.
Electronics & appliance store sales rose 1% in the month, but were 5.2% lower than a year ago.
Furniture sales were up 0.7% in the month, suggesting demand for merchandise remains resilient despite inflation surging to 40-year highs.
March’s retail sales were also revised up, to show 1.4% growth - twice the 0.7% first recorded.
BREAKING: U.S. retail sales rose 0.9% in April, a solid increase that underscores Americans' ability to keep spending with inflation at nearly a 40-year high. The increase was driven by a boost in sales of cars, electronics and at restaurants. https://t.co/pK4VvdJwxn
NIESR, the economic research institute, predicts that UK private sector pay will continue to outpace the public sector in the current quarter.
Having analysed today’s jobs report, it says:
NIESR’s wage tracker predicts that average weekly earnings growth will grow at 6.1% in the second quarter of 2022, after increasing by 7.0% in the first quarter. The strong growth is underpinned by a combination of high bonus payments and increasing regular pay.
We maintain our AWE [average weekly earnings] forecast for total pay in the private-sector to grow at 6.7% in the second quarter of this year, with growth in regular pay expected to be slightly lower than in the first quarter of this year.
We expect public-sector total AWE growth to reach around 3 % in the second quarter of the year.
⚠️OUT NOW⚡Our latest monthly #NIESRwage Tracker suggests that despite average weekly earnings growing strongly they fell further behind the rate of inflation, therefore intensifying the squeeze on UK living standards📉
Shares in power generation business ContourGlobal have jumped by a third today, after it became the latest London-listed firm to attract a takeover approach.
U.S. private company KKR has agreed to buy the power generation company for £1.75bn ($2.16 billion) in a bid to expand its renewable energy portfolio.
ContourGlobal, which operates 138 thermal and renewable power plants across Europe, Latin America, North America and Africa, will recommend that its shareholders accept the offer, KKR said.
Today’s ‘mixed’ jobs report adds to the dilemma facing the Bank of England, as growth slows and inflation climbs, says Craig Erlam, senior market analyst at OANDA:
The UK labour market report can be viewed as okay or bad depending on which way you look at it.
From a cost-of-living perspective, bonuses boosted average earnings to 7% and closed the gap between income and inflation which could ease some of the pressure on households across the country, albeit while still pointing to a squeeze on real incomes. Excluding bonuses, the data was a concern with earnings rising only 4.2% and falling well short of inflation, ramping up the pain for many.
After taking inflation into account, average pay including bonuses rose 1.4% in the year to January to March 2022, while excluding bonuses it fell 1.2%.
— Office for National Statistics (ONS) (@ONS) May 17, 2022
From a central bank perspective, the data isn’t ideal, he adds:
Higher earnings may ease some pressure on households but, as Governor Bailey alluded to, they also contribute to the inflation spiral and makes their job of achieving price stability all the more difficult.
The spikes we’ve seen in UK yields and the pound this morning suggest markets are anticipating more rate hikes as a result, and at a time when a recession is already the base case.
