Key events
Hannah Slaughter, a senior economist at the Resolution Foundation thinktank, said that while the unemployment rate remained steady at 4.7%, it was up from 4.2% a year ago and 3.9% before the pandemic.
She said:
The UK’s post-pandemic labour market was red hot. But that period is officially over – the labour market is loose and getting looser, having shed 165,000 payrolled jobs over the past eight months.”
She added that the job losses were concentrated in low-paying sectors such as retail and hospitality. She said it meant the government was likely to push back against campaigns for a big increase to the minimum wage next year, fearing it would lead to even larger job losses.
Here is the government’s, and unions’ response to the latest job market data data from the ONS.
Employment minister Alison McGovern said:
Today’s figures show real progress with economic inactivity down, and 384,000 jobs added to the economy since last summer, putting more money in people’s pockets.
We are determined to see unemployment fall that’s why we’re focused on getting people into good jobs by joining up work, health and skills support and transforming jobcentres to focus on genuine support not ticking boxes.
Paul Nowak, general secretary of the TUC which comprises 48 trade unions and represents 5.5 million workers, said:
It is welcome that wages continue to grow and that employment rates are still rising.
However, years of Tory cuts and underinvestment have left big challenges in the jobs market – including continued growth in the use of insecure zero hours contracts.
The government is raising national investment, repairing public services, and improving the support people need to get into work. This is putting Britain on the road to recovery.
But more is needed. Bold action must continue to match the size of the problems we face. This should include improved support for disabled workers and a comprehensive youth guarantee.
On the latest zero-hours contracts figures, which show more than a million workers employed on a zero-hours contract, he added:
There are still far too many people trapped on zero-hours contracts, unsure of how much they’ll make from one week to the next.
But Tory and Lib Dem Lords have been voting to block new rights for workers to a proper contract with regular hours. The sight of hereditary Peers voting against workers’ rights belongs in another century.
Working people need the Employment Rights Bill delivered in full.
High river temperatures force French power plant to reduce production
French nuclear power stations are struggling in the heatwave – after a swarm of jellyfish forced the shutdown of the Gravelines power plant on the North Sea coast, high river temperatures in other parts of the country mean that another plant will have to reduce output.
Power production at France’s Bugey 3 nuclear reactor is expected to be reduced by 500 megawatts (MW) on Wednesday, as high river temperatures reduce the plant’s ability to take in cooling water.
A heatwave across France has led to several warnings of power reductions at a number of nuclear plants, particularly on the Rhône river in the east and the Garonne in the west.
The high water temperature warnings for the Saint Alban plant – down river from the Bugey site – and the Golfech site in the west were moved to Thursday, but restrictions have not yet been issued.
Nuclear power accounts for about 70% of total French power consumption every year, but August is the main holiday season, reducing demand for electricity.
Today,
The Recruitment and Employment Confederation’s deputy chief executive Kate Shoesmith said:
The labour market remains challenging, with many businesses maintaining a cautious approach to hiring. But if we are to harness the optimism businesses tell us they have for future recruitment later this year, we will need the autumn budget to offer employers a bit more bandwidth on costs.
The resilience of the UK labour market is apparent in today’s official statistics, with the number of people in work slightly up and unemployment only slightly higher than in the previous quarter. Tackling economic inactivity, which saw a fall over both the quarter and the year, remains the single greatest challenge for this government if they are to ever achieve their goal of 80% employment.
Our labour market picture is mixed. Construction and other blue-collar industries are showing a gentle return to hiring, which is often a strong indicator for the wider economy, alongside sustained demand for engineering skills. But hospitality and retail saw a slow start to the summer amid cost headwinds.
With pay growth steadying overall after a volatile few years – prompted in part by inflating-busting rises in national minimum wage rates – now is the time for pragmatism from the Low Pay Commission before they make any further decisions on pay rates, and as the Bank of England continues to monitor interest rates closely. Business cannot afford further cost rises.
The breakdown of the ONS data shows that the wholesale, retail, hotels and restaurants sector posted the strongest annual regular growth rate (excluding bonuses), at 6.8%, in April to June.
The finance and business services sector, which pay out more bonuses, had the lowest annual regular growth rate, at 3.1%.
Average annual pay growth was 5.7% for the public sector, and 4.8% for the private sector.
Turning to the UK labour market: it is clearly losing momentum, with employers cutting back on bonuses and hiring.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said:
These figures signal growing turmoil in the UK labour market, with April’s leap in employment costs and a flagging economy pushing more businesses to actively cut headcount and cap pay awards.
Wage growth is likely to weaken over the course of the year as softening economic conditions, rising redundancies and elevated staffing costs increasingly hinder pay settlements.
The UK jobs market is facing more pain in the coming months with higher labour costs likely to lift unemployment moderately higher, particularly given growing concerns over more tax rises in this Autumn’s Budget.
While these disheartening figures will reassure rate-setters that last week’s policy loosening was the right call, the pace at which the labour market is currently cooling is unlikely to be sufficient to prompt another rate cut in September.
The Bank of England cut interest rates for the fifth time in a year last Thursday amid concerns over a weakening economy, but warned that rising food prices could drive inflation to 4% (the central bank is charged with keeping inflation at 2%).
Oil prices are rising as the extended tariff truce between the US and China eased worries that an escalation of their trade war would disrupt the global economy.
Brent crude futures gained 0.4% to $66.90 a barrel, while US West Texas Intermediate crude futures also rose by 0.4% to $64.20.
Stock markets in the Asia-Pacific region mostly rose, with Japan’s Nikkei index hitting a record closing high and finishing 2.15% higher.
Australian stocks extended their gains for a second day, and also reached a new intra-day all-time high. China is the main export destination for Australian goods.
Introduction: US and China extend 90-day tariff truce; UK jobless rate steady, vacancies fall
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The US and China have extended their truce on trade tariffs for another 90 days, staving off triple-digit duties on imports just as US retailers start stockpiling for the key end-of-year holiday season.
Donald Trump posted on his Truth Social platform that he signed the executive order for the extension, and that “all other elements of the Agreement will remain the same”. Beijing’s Commerce Ministry announced the extension of the tariff pause early on Tuesday.
Trump’s executive order stated:
The United States continues to have discussions with the PRC [People’s Republic of China] to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns.
Through these discussions, the PRC continues to take significant steps towards remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters.
The tariff pause was due to expire on Tuesday at 12:01am EDT. The extension until November will be welcomed by US retailers who are now able to buy electronics, toys and other products at lower tariff rates ahead of Christmas.
Trump had threatened tariffs on Chinese goods imports of up to 145% while Chinese duties on US goods were set to hit 125%.
“We’ll see what happens,” the US president said at a news conference on Monday, flagging what he called his good relationship with Chinese president Xi Jinping.
China said the extension was “a measure to further implement the important consensus reached by the two heads of state during their 5 June call”.
The UK labour market continues to cool, according to the latest official figures. Regular pay growth in the UK held steady at 5% but wage growth slowed once bonuses are included, while the unemployment rate stayed at 4.7% and vacancies fell again.
The Office for National Statistics said average wages, excluding bonuses, grew by 5% between April and June, the same pace as in the three months to May, while total pay growth including bonuses slowed to 4.6% from 5%.
Vacancies fell by 44,000 between May and July. The statistics office said feedback suggests “some firms may not be recruiting new workers or replacing workers who have left”.
At lunchtime UK time, we’ll be getting the latest US inflation data.
The Agenda
