U.K. Unemployment at 42-Year Low Fails to Spur Wage Pickup
For British workers, the lowest jobless rate in more than four decades isn’t enough to maintain their standard of living. Basic wages rose an annual 2.1 percent in the three months through July, unchanged from the second quarter and below market forecasts, figures on Wednesday showed. Pay fell 0.4 percent when adjusted for inflation, which is now running just shy of 3 percent. The pound weakened against the dollar after the report, and slid for the first time in four days versus the euro. The squeeze has taken a toll on consumer spending, creating a drag on the economy. Bank of England Governor Mark Carney has said that an “element of Brexit uncertainty” is preventing firms from awarding bigger wage increases, while other explanations include poor productivity and companies clamping down on pay to offset rising import costs, another Brexit fallout. Pressure on real incomes is particularly hitting public-sector workers, who have had pay increases capped at 1 percent since 2013. That followed a two-year freeze as the government sought to bring down the budget deficit. Prime Minister Theresa May said this week that the government will relax the cap for police and prison officers but Trades Union Congress General Secretary Frances O’Grady responded by demanding “a pay rise across the board” for Britain’s 5 million public-sector workers.
China Data Blast May Show Factory Pickup, Cooling Investment
A batch of China’s official economic indicators, due Thursday, is expected to signal improving consumption and factory output along with some softening in investment. The official releases set for 10 a.m. in Beijing will show industrial production and retail sales both picked up while fixed-asset investment slowed slightly, according to economists surveyed by Bloomberg. That’s an outlook largely confirmed by private-sector proxy indicators. Other reports from the central bank this week are forecast to show credit growth held up. Robust growth this year provides ample room for authorities to curb financial risk ahead of the key 19th Party Congress next month. Factory inflation has remained buoyant, lifting global inflation and domestic sentiment. Rising incomes have also served as a buffer, while investment is expected to wane the rest of the year amid cooling property markets. “China’s economy has continued to expand rapidly so far this year,” Mark Williams, chief Asia economist at Capital Economics Ltd. in London, wrote in a recent report. “But credit growth has been slowing for a while and policy makers are still tightening up on financial sector risks. As such, economic growth looks set to slow.”
U.S. Equities Hover Near Record High as Oil Climbs: Markets Wrap
U.S. stocks failed to extend the rally that had pushed equities to records and the dollar gained for a third day as investors assessed the latest readings on inflation for clues on the Federal Reserve’s next policy move. The S&P 500 Index was little changed after closing at an all-time high. Apple Inc. weighed on equity benchmarks, falling a second day after unveiling new products. Treasury yields climbed with the dollar amid data showing a rise in wholesale prices last month that added to speculation the Fed may strike a hawkish tone at a meeting next week. Oil advanced after the International Energy Agency said demand will climb this year by the most since 2015. Record stock prices are provoking concern in some corners of the market, with the number of investors seeking protection from a possible plunge jumping. Leon Cooperman, the billionaire founder of hedge fund Omega Advisors, says a correction could start “very soon.” The reduction of bond purchases by central banks in coming months will put pressure on riskier assets including high-yield bonds and equities, according to Citigroup Inc.