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Economy Generated 187,226 Jobs in Q3

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A man walks past job seekers as they fill out job applications for recruiters during a job fair in New York
  • Economy Generated 187,226 Jobs in Q3

The Nigerian economy added 187,226 new jobs in the third quarter of 2016 (Q3 2016), from 155,444 jobs in the previous quarter, the National Bureau of Statistics (NBS) has stated.

Also, labour productivity for the quarter rose to N713.7 per hour, compared to N636.3 per hour in the second quarter.

Notwithstanding the employment generation report, which was released alongside the labour productivity index by the NBS monday, the data came amid rising unemployment of 13.9 per cent during the quarter under review.

The NBS further stated that the economy needed to generate 2.6 million jobs annually to hold down the current unemployment rate, as the country’s labour force is estimated to grow at over 2.6 million per annum.

According to the job creation report, employment generation was insufficient to meet the ever-growing labour market, leading to the continuous rise in the level of unemployment in the country.

NBS said the huge number of unemployed was a reflection of the current economic realities, as only few businesses are growing and employing while many others are shedding jobs.

It further noted that both the public and private sectors are currently finding it difficult to create jobs due to the economic crisis, adding that most states are currently finding it difficult to pay the salaries of existing workers.

According to the NBS, “In the third quarter of 2016, the total number of jobs generated rose to 187,226, from the 155,444 generated in quarter two, representing an increase of 20.4 per cent quarter-on-quarter, but a decline of 60.6 per cent year-on-year.

“The formal sector recorded 49,587 jobs, representing a 26.5 per cent share of new jobs in quarter three while the informal sector recorded a larger share of new jobs, compared to the previous quarter, reporting a figure of 144,651 jobs and representing 77.3 per cent of new jobs in quarter three.

“The public sector again recorded a negative growth in employment, with a figure of -7,012 in quarter three. The reported negative growth in public sector job numbers over the last year has not been entirely surprising, as many state governments across the country have struggled to pay salaries, hence restricting the number of new intakes and in some instances placing a complete embargo on new employment into the public service.”

The report said despite negative economic growth, net jobs created were still positive in both the formal and informal sectors as more jobs were created despite job losses especially through informal low paying jobs.

On labour productivity for the quarter, the NBS said the overall level was low, compared to the same period last year as a result of several challenges that generally impacted on output and labour, and indirectly on labour productivity, which kept it below optimal levels.

It said: “Investment in the economy was still relatively low, though some government investments were recorded during the quarter, the volume of private investment and foreign direct investments was still considerably low compared to previous years.

“Power was relatively stable throughout the quarter, which partly accounted for the increase in labour productivity. Though there was a contraction in the economy in the third quarter in real terms accompanied by an increasing unemployment rate, the growth in labour productivity implies a gradual increase in labour efficiency employed in the economy.”

The labour productivity index also showed that the agriculture sector recorded a growth of 4.5 per cent, the highest among any major economic activity, as the third quarter was the harvest season in the Nigerian calendar.

The report added that other labour intensive sectors such as human health and social services, as well as accommodation and food services, also accounted for the most jobs created in Q3 2016.

Labour productivity refers to the quantity of manpower input required to produce a unit of output. High above productivity can be an important signal of the improvement in the real income (wages of workers).

Also, the manufacturing sector of the economy recorded an expansion in new orders in December after eleven months of contraction, the Purchasing Managers’ Index (PMI) report released by the Central Bank of Nigeria (CBN), has shown.

The new orders index stood at 45.1 points in November but increased to 51.8 points in the month under review, with five sub-sectors recording expansions in new orders.

The increase was reflective of increased demand for consumer goods during the yuletide season.

The sub-sectors that recorded increased orders last month were cement; food, beverage and tobacco products; textiles, apparel, leather and footwear; paper products; and fabricated metal products.

The plastics and rubber products sub-sector remained unchanged, while 10 sub-sectors recorded a decline in orders.

Notwithstanding, the manufacturing employment index in the month of December stood at 48.6 points, indicating a drop in employment for the twenty-second consecutive month.

However, the PMI showed a slowdown in contraction in manufacturing employment, compared to the preceding month.

The report stated: “Of the 16 sub-sectors, nine recorded a contraction in employment in the following order: computer and electronic products; electrical equipment; appliances and components; printing and related support activities; furniture and related products; chemical and pharmaceutical products; primary metals; fabricated metal products; and non-metallic mineral products.”

Nevertheless, the manufacturing raw materials inventory index indicated an expansion in raw materials inventory in December at 51.6 index points.

The manufacturing and non-manufacturing PMI report on businesses is based on data compiled from purchasing and supply executives.

Survey responses indicate whether there is a change or no change in the level of business activities in the current month compared with the previous month.

New orders for non-manufacturing showed a slowing contraction in December at 46.6 index points while the composite PMI for the non-manufacturing sector declined for the twelfth consecutive month.

The index stood at 47.1 points, indicating a slowing contraction, compared to the previous month.

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 market.

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Economy

UK Slides Into Deepest Recession Following 20.4% Economic Contraction in Q2

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UK Finally Slides Into Recession, Expert Expects Investors to Look Elsewhere

United Kingdom experienced its deepest economic recession on record in the second quarter of 2020, according to the Office for National Statistics (ONS).

This was coming shortly after the world’s fifth-largest economy exit the European Union in January.

The economy had contracted by 2.2 percent in the first quarter of the year when the negative impacts of COVID-19 were partially captured by the ONS.

In the second quarter, the report captured the complete impacts of COVID-19 on the economy in the second quarter and the entire first half of the year.

The report showed the United Kingdom’s economy contracted by another 20.4 percent in the second quarter, the deepest in the history of the nation.

A break down of the report revealed that the country’s most dominant sector, the services sector contracted by 19.9 percent in the second quarter. While the construction plunged by 35 percent.

This was followed by another 16.9 percent decline in the production industries that comprises of manufacturing, mining and energy provision.

Similarly, spending in the economy dropped with the lockdown that forced many people to stay at home during the quarter. Spending dipped by a quarter on weak retail sales and mostly idle factories and production sites.

While the economy contracted by 20.4 percent in the second quarter, the data reported a unique improvement in the last month of the quarter. The British economy expanded by 8.7 percent in the month of June, suggesting that the economy picked with the gradual reopening of business operations and activities across key sectors.

However, experts doubt the noticeable recovery would be enough to sustain the economy given the lack of COVID-19 vaccine.

Whilst the economy grew 8.7% in June, which beat economic estimates, and confirms a recovery is now underway, the real test will be after the summer when there are no more national lockdown-easing measures to lift the economic spirits, more local restrictions are likely to be imposed and as significant programmes such as the furlough scheme which has protected jobs come to a halt,” stated Nigel Green, the Founder and Chief Executive Officer (CEO) of deVere stated on Tuesday in an email to Investors King.

All of this creates ever more uncertainty in the UK economy.

The CEO added that global investors are likely to initiate precautionary measures to protect their assets against potential fall in UK-based financial assets going forward.

Mr. Green said “UK and global investors will be becoming increasingly nervous of this worrying situation and can be expected to take precautionary measures to insulate themselves against a potential fall in the value of UK-based financial assets.

“A growing number inevitably and quite sensibly are likely to be looking to grow and safeguard their wealth by moving assets overseas through various established international financial solutions.

“The pace of this trend, I believe, will increase over the next few months as the issues intensify.”

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Jagged Reopening of Nations Worldwide Paves Uncertain Path to Economic Recovery

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Economy

As economies reopen globally, there is a constant battle to achieve a balance between surging COVID-19 cases and addressing economic slowdown.

Due to the prevailing uncertainty following COVID-19, Global Data’s 2020 forecast for global economic growth has been revised downward from -0.9% (estimated 6 April) to -3.95% (estimated 3 August).

The signs of a faltering rebound is evident in countries such as the US, which may act as a drag on the European economy. GlobalData expects the global economy to witness a contraction of real GDP by 3.95% in 2020 accompanied with a growth of 5.27% in 2021, which is subject to change in the event of a second wave of COVID-19 spread amid resurgence of cases in major economies.

Shruti Upadhyay, Economic Research Analyst at GlobalData, states: “As businesses have been allowed to reopen and retail sales improved, an uptick was observed in the manufacturing and service sectors in the last three months (May–July) globally. GlobalData noted that manufacturing PMI showed an overall improvement in June for countries such as the US (49.8), Brazil (51.6), India (47.2), Russia (49.4), the UK (50.1), France (52.3) and China (50.9). Historically, when the index surpasses 50, it gestures an end to a manufacturing recession. However, with regional lockdowns gaining traction due to resurgence of cases, business conditions now continue to witness patchy recovery.

Retail sales in the Eurozone plunged to record lows when confinement measures were put in place, but sales rebounded as economies started reopening in a phased manner. Asymmetric demand led to rise in retail sector activities and a fall in demand for contact-intensive sectors. Countries that are cripplingly reliant on contact-intensive industries are expected to be deeply impacted in short-term. A slow recovery is being noticed in the active jobs and stock market, both in advanced and emerging economies with varying severity of fresh outbreaks and different pace of openings in the economy.

Upadhyay concludes: “The Eurozone’s reopening provides a beacon of light to countries such as the US, India and Brazil which are battling with rising number of cases in the country. However, with draconian lockdown measures lifted to reignite the damaged economies, the number of virus cases crept higher in Spain, France and Germany as these nations grapple between saving the economy and averting fresh outbreaks.

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UK Recession Will Prompt Investors to Consider Overseas Options

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transport equipment

UK Investors Likely to Look Elsewhere as Economy Shrinks by 20.4%

A growing number of UK and global investors are likely to move their assets overseas as Britain enters its worst recession in history, affirms the boss of one of the world’s largest independent financial advisory and fintech organisations.

The observation from Nigel Green, founder and chief executive of deVere Group, which has $12bn under advisement, comes as it is revealed that the UK economy suffered its biggest drop on record between April and June as coronavirus lockdown measures pushed the country officially into recession.

The economy contracted by 20.4% compared with the first three months of the year.

Mr Green notes: “As was expected, Britain is now officially in recession. It’s the deepest recession in UK history and the deepest of any G7 country.

“Whilst the economy grew 8.7% in June, which beat economic estimates, and confirms a recovery is now underway, the real test will be after the summer when there are no more national lockdown-easing measures to lift the economic spirits, more local restrictions are likely to be imposed and as significant programmes such as the furlough scheme which has protected jobs come to a halt.

“All of this creates ever more uncertainty in the UK economy.”

He continues: “UK and global investors will be becoming increasingly nervous of this worrying situation and can be expected to take precautionary measures to insulate themselves against a potential fall in the value of UK-based financial assets.

“A growing number inevitably and quite sensibly are likely to be looking to grow and safeguard their wealth by moving assets overseas through various established international financial solutions.

“The pace of this trend, I believe, will increase over the next few months as the issues intensify.”

The deVere CEO goes on to add that the confirmation of a recession “may be a good excuse to start that much-needed rebalancing in favour of global stocks, bonds, currencies and perhaps property.”

The weak economy also further boosts the chances of tax hikes and relief cuts in the UK November Budget.

“It is highly likely taxes will rise and reliefs be cut. Possible targets for hikes could include income tax for higher earners, capital gains tax, inheritance tax, and VAT.

“In addition, new wealth taxes may be brought in, which was something the Prime Minister was considering before the pandemic hit,” notes Mr Green.

These potential changes in the Budget can be expected to prompt those overseas with financial ties to the country, to look into the international options available to them.

He concludes: “Now could be a good time to revise your financial planning strategies to ensure you’re best-positioned to be able to grow and protect your wealth.”

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