Over 288,000 new jobs were created in the United States this April, the highest level of employment growth since late 2012. The nationwide unemployment rate also fell to just 6.3%, according to new information released by the Department of Labor.
Despite the encouraging figures, economists have warned that the job growth and decline in unemployment was largely due to a reduction in the total size of the US labour force. The unemployment rate is at its lowest point since 2008, although it’s now measured using different metrics and scales than previously.
Tom Porcelli, a chief US economist at RBC Capital Markets, described the new Labor Department report as a “flat out good report.” Like other economists, he pointed out the decline in the size of the labour force: “The decline in the unemployment rate was a function of the labour force falling by 806,000 – that is a gargantuan decline.”
While economists have praised the decline in unemployment, many have expressed concerns about slow wage growth. Private sector hourly wages didn’t increase at all in April and have only budged by 1.9% in the last year. US GDP growth has also been on the decline, with the first quarter growth rate measuring just 0.1% last month.
In addition to improvements to the unemployment rate, the amount of support for the US economy provided by the Federal Reserve has declined. Earlier this month, the Federal Reserve continued its program of scaling back economic support, with its monthly bond buying programme trimmed to just $45 billion per month.
The reserve bank has been purchasing bonds as a means of keeping interest rates as low as possible in order to fuel borrowing and economic growth. The job growth of the last month was higher than expected; economists had predicted 218,000 new jobs in April instead of 288,000.Read more
UK companies are planning to spend more and hire additional employees over the next 12 months, according to professional services firm Deloitte. Approximately 80 percent of large UK businesses anticipate that they will hire new staff over the next 12 months, as well as increasing total investment.
Deloitte’s quarterly survey of finance directors is regarded as the most accurate in the business, and is frequently used to forecast long-term business development. A growing number of Britain’s chief financial officers appear to be more willing to take large risks in order to fuel expansion.
Deloitte’s chief economist Ian Stewart noted that the view that corporate spending will increase is supported by “strong risk appetite, along with positive readings on hiring and capital spending”. Deloitte believes that the UK’s largest companies may invest as much as £200 billion over the next two years.
Interestingly, the large-scale expansion plans of many leading UK companies come despite a high chance of interest rates increasing. Of the finance directors polled in the survey, 23 per cent believe that Bank of England will increase its base rate from 0.5 per cent to 0.75 per cent. 20 per cent think it will reach 1 per cent within a year.
It’s not just large businesses that plan to expand this year. Small and medium-sized companies anticipate a 12 per cent increase in spending over the next year, with the total SME spending potentially reaching £58 billion.
SMEs were polled separately by finance company GE Capital; their data also reveals that SMEs plan to hire upwards of 660,000 people over the coming 12 months. Most businesses have benefited from the decline in real wages, which makes employees cheaper to hire, relative to company earnings.
Britain’s businesses are recovering, and at a reasonable pace, according to the Office for National Statistics. Total business investment rose by 8.7 per cent during the last quarter of 2013. Data from the Deloitte survey indicates that confidence in Britain’s businesses rose more sharply than any other economic factor.Read more
Thousands of Royal Bank of Scotland staff could lose their jobs as the Edinburgh-based bank plans another round of cuts. Approximately 40,000 RBS workers have already been made redundant as the bank, which was bailed out by taxpayers in 2008, plans a £1 billion cost cutting programme to return to profitability.
Royal Bank of Scotland was bailed out during the 2008 financial crisis using over £45 billion in taxpayers’ money. The bank’s current cost-to-income ratio is 65 per cent – a figure that chief executive Ross McEwan wants to reduce to 50 per cent as the bank aims to reduce its operating costs to increase profits.
RBS’s current operating costs are £10.06 billion. The planned cost cutting measures could save the bank as much as £1.25 billion per year. Salaries currently account for more than half of RBS’s annual costs. Staff at the Edinburgh-based financial services company are preparing for what could be a swift dismissal.
Chief executive Ross McEwan presided over significant cuts to expenditures during his leadership role with the Commonwealth Bank of Australia. Analysts believe his goals include reducing RBS’s overseas commitments and automating large amounts of its retail banking business within the UK.
Royal Bank of Scotland avoided a government division last year, when lawmakers and political leaders sought to divide the bank into two – a “good bank” and a “bad bank” – to improve its ability to lend to British businesses. The bank plans to split off £38 billion in high-risk loans to a new division.
Analysts believe that RBS will produce a significant loss during 2014 due to its new plan to split off its ‘toxic investments’. RBS plans to write off around £4.5 billion in high-risk loans, releasing as much as £11 billion in capital. The bank has not made any comments on the speculated job cuts.Read more
US economic progress exceeded expectations in October, with 204,000 jobs added to the economy. Economists and employment experts were pleasantly surprised by the statistics from the Labor Department, which indicate that the 16-day shutdown of non-essential US government services did not affect job creation.
The new job figures are one of several positive indicators for the US economy. Over the last month, other reports have indicated that the United States economy grew at 2.8% annual growth page – a significant increase above the growth rates touted by major economists and financial commentators.
Investors believe that an extended period of economic growth could lead to a rapid decline in the economic stimulus packages currently being operated by the Federal Reserve. The central bank has hinted at reducing its stimulus programme over the past year but uncertain economic figures have left it largely unchanged.
Analysts had expected an increase in employment, but most estimates were below the 204,000 jobs created in October. Markit chief economist Chris Williamson said that the new figure “defied” expectations, and that most “analysts were expecting a mere 125,000 rise” in the number of new jobs in the United States.
Despite the increase in new jobs, the unemployment rate throughout the US rose by a slight amount, increasing from 7.2% to 7.3% for the month. Analysts believe that the shutdown of non-essential government services resulted in many government employees being classed as “unemployed” during the survey period.
Other economic concerns include a decline in consumer spending – considered to be an essential element of US economic growth. Consumer spending accounts for more than 60 per cent of US economic activity, and has slowed in the past quarter to rates that have concerned analysts.
However, economists believe that an increase in the number of people buying new homes, as well as rising export figures, show a healthy future for the US economy.Read more
A new Office for National Statistics report shows that the number of senior workers in the UK has doubled in the last ten years. Businesses are becoming greyer as more employees hold onto their jobs instead of retiring.
In June this year, the number of UK workers aged over 65 reached one million – an incredible milestone for the country’s labour market. The news caused approval in some quarters and concern in others, largely for the country’s economic future.
A large number of labour market analysts and economists are concerned that rising living costs are keeping senior workers in the labour market for longer than in years past. They contend that the over-65s are reducing work for the younger generation.
The data certainly supports their concerns. Information from the Office for National Statistics indicates that despite declining levels of unemployment, young people in Britain face a difficult job market that’s short of appropriate entry-level positions.
The declining unemployment rate is not systematic – certain demographics are less likely to be employed than in the past. Workers aged 16-24, for example, face a job market that’s turning to older, more experienced people in their place.
Many employers are becoming increasingly more selective and insular, hiring from within for mid-level positions and raising their requirements for entry-level jobs. A university qualification is now a requirement for many entry-level positions.
The rising cost of living is cited as a reason for the surge in over-65s remaining in the labour force. Jim Hillage, of the Institute for Employment Studies, claims that a rise in over-65s ‘may reflect the needs that some older people have to top up inadequate pension arrangements.’
For seniors struggling with inadequate pensions and young professionals fighting for a chance at entry-level positions, the rising cost of living and surge in the total number of senior workers is a major concern.Read more
United States businesses added 176,000 new jobs to the economy in August, new data from payroll processing company ADP claims. The new data has given many economists optimistic views of the US government’s upcoming jobs report.
The employment report, which will be released this Friday by the United States Labor Department, is expected to show a short-term increase in jobs after many private sector growth signals diminished in recent months.
The ADP report confirms many of the predictions, showing that a large increase in jobs has occurred in the last month. The majority of the new jobs in the report have been added by small and mid-sized businesses, indicating a possible new trend.
Of the 176,000 jobs added during August, over 71,000 were at small companies and local businesses. An estimated 74,000 were at mid-sized businesses. Finally, 32,000 new jobs were created at large companies, bucking previous employment trends.
As with previous employment progress, some sectors fared better than others. The biggest winners were the professional services sector, with 50,000 jobs, and trade, transportation, and utilities, which added 40,000 new jobs to the US economy.
The increase in housing sales across the United States resulted in 4,000 new jobs in the construction industry. Economists and political commentators have noted that a growing real estate market activity could lead to large-scale US job creation.
While the report has resulted in optimistic assessments regarding the government’s upcoming job report, some analysts believe that there could be a major difference in the findings of the reports. A previous Labor Department report estimated that only 161,000 jobs were created during July, compared to 200,000 from the ADP.
ADP has partnered with Moody’s Analytics to provide the reports, which, despite a range of initial accuracy issues, have come closer to matching US Labor Department reports in recent months.Read more
Employment September 3, 2013
Staff at the Royal Mail are planning to strike over concerns that their pay rate will be reduced following the service’s privatisation. The government plans to privatise the service in the coming months in order to raise funds and reduce spending.
The workers, who belong to the Communication Workers Union, claim that protests against the government are ‘inevitable’ unless a compromise can be reached on the long-term pay rates of Royal Mail workers.
The protest action will also be targeted at the government’s lack of communication with Royal Mail workers regarding pensions, job stability, and any changes to Royal Mail management following the sale of the service.
Analysts believe that large-scale industrial action would be a serious challenge for the government, which plans to sell the service in the coming months. Staff will get upwards of £2,000 each in free shares as the Royal Mail service is privatised.
Union workers have asked the Royal Mail to negotiate with the government prior to a potential sale. Members of the CWU believe that Royal Mail workers are entitled to ‘decent pay increases’ as part of the service’s privatisation.
Royal Mail workers were offered a small pay increase recently, which was rejected by the CWU as being ‘below inflation.’ The union claims that changes in the work of many Royal Mail staff should come with a similar increase in compensation.
The government has rejected claims that the pay offer was below inflation, claiming that CWU workers were offered a ‘generous pay offer’ of 8.6 percent during the next three years. The pay increase is far above the standard rate for public sector staff.
Teachers and nursing staff, for example, have had their pay increases capped at just one percent annually due to budget cuts. The Department of Business remarked that plans to strike will ‘not alter the government’s decision to sell shared in Royal Mail.’Read more
An AOL employee recently found out that the Internet takes corporate justice very seriously indeed. During a confidential employee meeting, AOL chief executive Tim Armstrong snapped at one of the company’s creative directors for taking photos and fired him on the spot.
The employee in question was Abel Lenz, one of AOL’s head creative directors on a new project from the company called Patch. After snapping a photo of Armstrong in the middle of his presentation to employees, Lenz was dismissed from his job on the spot with a succinct “you’re fired” from his boss.
The incident resulted in a huge amount of online coverage from business journalists and culture gurus alike debating whether the firing was a legitimate response to an annoying camera activity or an emotional outburst aimed at an employee. The latter explanation is winning out, particularly on business blogs critical of AOL.
The meeting, somewhat ironically, was about large-scale cutbacks that will begin to take place at AOL. Patch, a local news service launched by the company, will remove hundreds of employees over the coming months. For employees, the shock firing hit close to home – many of those in the crowd could lose their jobs in the near future.
Armstrong has apologized for the very public dismissal, claiming that his outburst was an ‘emotional response.’ He defended the firing, however, claiming that photos were not permitted at the confidential meeting, and that leaks had threatened the project in the past, leading to a greater focus on digital security.
AOL’s Patch project has been covered at length in the tech media, mostly in negative terms. The local news service has largely failed to attract the audience it was aimed at, resulting in upcoming cutbacks likely to affect hundreds of AOL employees.Read more
After months of increasing unemployment, the number of people out of work fell by a modest 4,000 in the three months leading up to June. 2.51 million Britons are out of work, with approximately 1.4 million individual seeking jobseekers allowance in their period of unemployment.
While the unemployment rate remains at 7.8 percent – a figure that still exceeds the target of 7 percent that the Bank of England is aiming for – the number of people on jobseekers benefits has hit a four-year low. At just 1.4 million people, the number of people on jobseekers benefits is at its lowest point since February of 2009.
The drop in unemployment beneficiaries comes with additional good news for many people – employment reached a record high. A growing number of Britons are now self-employed due to the somewhat sluggish economic growth, with over 4 million contractors, freelancers, and other self-employed professionals now in the UK.
Since the surprising progress in employment comes after several months of sluggish growth, the figures have resulted in some rare optimism from economists. Minister of Employment Mark Hoban claims that the new employment and benefit figures ‘paint a positive picture of the UK labour market.’
UK workers are now completing more aggregate hours than they have in the past five years, with total productivity coming close to the level achieved during mid to late 2008. Despite this, many employees are still working on zero hour contracts that guarantee relatively little in the way of stable employment.
The improved employment conditions have also failed to reach several employee demographics. Youth employment – the rate of employment amongst those aged between 16 and 24 – is at its highest rate in recent history, with 973,000 teenage and young adult workers currently seeking employment.Read more
New data from the Pew Research Center shows that a record 36 percent of young adults are living with their parents. Information released by the US Census Bureau studies by the Pew Research Center shows that the Millennial Generation is largely foregoing independent housing in favour of staying at home with their families.
36 percent of young adults aged between 18 and 31 are living at home, according to the data, the highest rate in four decades. Prior to the recent economic downturn an estimated 32 percent of young adults in the same age group were living with their parents, with over 65 percent living on their own or in shared housing.
The total number of American Millennial living at home reached 21.6 million in the last year. The young adults living at home are largely college students – a group that the Pew Research Center believes makes up between a third and half of all people in the survey.
Young adults aged 18 to 24 are the most likely to live with their parents, with a total of 56 percent choosing to reside in their family’s home. But older Millennials – those aged 25 to 31 – are increasingly making the same choice. A total of 16 percent of all Americans aged between 25 and 31 live at home, according to the study.
Factors affecting the increase in live-at-home young professionals include an ailing job market in which over 35 percent of Millennials are unemployed, and the costly higher education ‘bubble’ that’s affecting many students’ financial health. Men are more likely to live at home than women, with 40 percent and 32 percent living at home, respectively.
The Pew Social Trends report also indicated that declining rates of marriage are also having an effect on the number of young adults living with their parents. 25 percent of Millennials are married, while 30 percent of Millennial adults were married prior to the economic crisis in 2007.Read more