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U.K. unemployment Rate Falls Amid Signs Labor Market May Be Cooling

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  • U.K. unemployment Rate Falls Amid Signs Labor Market May Be Cooling

U.K. unemployment fell to its lowest rate in 11 years in the third quarter but there are signs that the labor market is slowing in the wake of the Brexit vote.

The jobless rate fell to 4.8 percent from 4.9 percent in the second quarter, the Office for National Statistics figures Wednesday show. But the economy added only 49,000 workers, half the number expected and down from a 172,000-increase in the previous three months.

“Unemployment is at its lowest for more than 10 years, and the employment rate remains at a record high,” ONS statistician David Freeman said in a statement. “Nonetheless, there are signs that the labor might be cooling, with employment growth slowing.”

There were also signs that rising inflation is taking its toll on living standards, as real wages grew just 1.7 percent in the third quarter, matching the slowest rate since February 2015.

A cooling jobs market and rising prices threaten to undermine consumer spending, which has driven almost four years of economic expansion. Uncertainty as Britain negotiates its split from the European Union is expected to hit hiring and investment, making it hard for workers to negotiate significant pay increases.

Sapping Strength

Unemployment fell by 37,000 to 1.6 million as the economy registered little increase in the economically active workforce. Jobless claims — a narrower measure of unemployment — increased for a third month in October. They gained 9,800, the biggest rise since May, following an upwardly revised 5,600 increase in September.

“Today’s figures confirmed the indications from the surveys that the Leave vote is starting to sap the jobs recovery of its previous strength,” said Ruth Gregory, an economist at Capital Economics Ltd. in London. “The weakening in the employment surveys suggest that employment growth will probably slow further. This moderation should prevent wage growth from picking up in coming months.”

Average-earnings growth stayed at 2.3 percent in the three months through September, though the rate excluding bonuses picked to 2.4 percent from 2.3 percent.

The pressure on real wages is expected to intensify, with some economists predicting inflation could reach almost 4 percent next year as the 12 percent fall in the pound since the Brexit vote drives up import costs.

The Bank of England has said it is prepared to tolerate inflation above its 2 percent target for now. Much will depend on whether cost pressures in the labor market remain subdued.

That in turn partly depends on whether Britain can improve its poor productivity performance. New figures from the ONS Wednesday showed output per hour rose just 0.2 percent in the third quarter, compared with a 0.6 percent increase in the previous three months.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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