Wage growth in the UK reached its fastest pace in a decade according to data released on Monday. The Office for National Statistics said that wage growth was 3.2% in the three months to the end of September, the best figure since the last quarter of 2008. Unemployment remained near record lows at 4.1%, helping push wages higher. While the news was welcomed, analysts pointed out that real wage growth was still not as high as in 2015 and had not yet returned to 2008 levels, although the fact that it was at least keeping pace with the cost of living means that most people are not seeing their income fall in real terms.
Amid all the Brexit chaos on Wednesday, the Office for National Statistics revealed inflation remained at an annualised 2.4% in October, the same figure as September. Rising utility prices placed upwards pressure on the cost of living but food prices fell sharply, offsetting the impact of rising energy costs.
Meanwhile Germany, Europe’s largest economy, contracted for the first time in over three years in the third quarter. Its car-making industry has been hit by delays in meeting new emissions standards, and exports to China are also down.
UK retail sales disappointed in October, defying forecasts for an uptick on September’s poor showing. The Office for National Statistics (ONS) said retail sales fell by 0.5% in October. Excluding fuel, sales were down by 0.4%, with a substantial 3.0% fall in sales of household goods. Compared to a year ago, sales were up 2.2%, down from an annualised 3.3% in September. The broader story is that sales have failed to bounce back from the dip following the strong consumer spending data from the hot summer. In addition, the proportion of retail sales transacted online has risen to 18.0% from 17.8% the month before, impacting bricks and mortar retailers on the high street.
Business leaders called on the government this week to tackle the growing skills shortage in the UK as data released by the ONS this week showed that the number of EU workers arriving in the UK is dropping at the fastest rate since records began. This is ahead of the new, tougher visa rules intended to be implemented post Brexit. Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said clarity was urgently needed over the proposed visa regime given the delays in publishing the white paper, which was promised over a year ago. “We need to move quickly to reassure people that there is a future for them here in the UK.” Economic sectors such as construction, food production and hospitality rely heavily on EU labour but while the government has promised a seasonal visa for agricultural workers for harvest season it has made no similar promises to other sectors reliant on EU labour.
Adding to worries of a slowing global economy, credit growth expanded at its slowest rate on record in China, the world’s second largest economy, while sales of property also fell, prompting talk of renewed fiscal stimulus to maintain economic growth. Broad credit grew at 11.0% last month, according to the Chinese central bank. China has already loosened monetary policy and incentivised banks to lend by imposing less stringent capital requirements, but lending figures have still disappointed.
Main source of information: Company Report and Accounts, Bloomberg
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