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Analysis: The UK labour market and the Bank of England’s shift to higher rates

In its jobs report released earlier today, the ONS reported that unemployment held steady at 3.8% in the United Kingdom, a fall of 0.1% on a quarterly…

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In its jobs report released earlier today, the ONS reported that unemployment held steady at 3.8% in the United Kingdom, a fall of 0.1% on a quarterly basis, and a decline of 1.1% over the last 12 months. This marks the fifth consecutive three-month rolling period where unemployment has been under 4%, i.e., since November 2021.  

Fresh data sparked concerns about both surging inflation and real wage erosion outside the crème de la crème of high earners.

The jobs data followed an unexpected improvement in GDP data published last week, which rose by 0.5% in May compared to April, while it grew by 3.5% on an annual basis. Statistics for March and April 2022 were also revised upwards to an expansion of 0.1% and a contraction of 0.2 % compared to preliminary figures that showed contractions of 0.1% and 0.3%, respectively.

Gabriella Dickens of Pantheon Macroeconomics said that the current rebound is likely driven by easing supply chain disruptions and the fulfilment of backlogs in past orders.

Following the unanticipated expansion in economic growth, consumer inflation of 9.1% in both the UK and the US, and a tight jobs market, the Bank of England (BoE) is likely to raise the policy rate by 50 bps during its 4th August meeting, as compared to its five earlier consecutive increases of 25 bps.

The primary driver here is the probability of Fed acceleration with 66.8% of respondents pricing in a three-quarter percentage point hike, while 33.2% expect a full percentage point increase, as per the latest report by CME’s FedWatch Tool.

Key jobs data

The unemployment rate stayed at 3.8% with tightness in the market confirmed by a BoE survey that found two-thirds of companies were finding it “much harder” than usual to hire staff, the highest level since the question was introduced in October of 2021. 88% of firms reported that it was “harder” to hire employees.

The tightness in the market may be partly been driven by lower immigration, elevated retiree numbers, and “a quarter of a million extra people out of the jobs market due to long-term sickness compared to pre-pandemic” as reported by ING.

Source: ONS

Looking at a complete overview of the job market, the most encouraging aspect is the fall in the inactivity rate, which implies that more workers are either employed or searching for a job.  If this trend continues, search and match should become easier for firms.

Moreover, the redundancy rate has been falling, suggesting that firms are more willing to retain employees amid higher costs of search, training, and replacement.

In the figure below, we find that the largest increases in employment are among full-time staff, while part-time opportunities are seeing a slowdown.  With a tighter job market, it may be that some workers have gravitated from part-time to full-time opportunities.

Source: ONS

In light of labour market activity, Paul Dales of Capital Economics said that “the economy is holding up well in the face of high inflation”.

However, it is important to note that labour market strength is typically a lagging indicator, with unemployment rates often being strongest near the beginning of a recession, while they peak in the aftermath of a slowdown.

This is especially clear in regards to US data as shown below where the grey shaded sections represent recessions.

Source: US FRED

At the onset of a recession, managers are still to come to terms with supply dynamics and crystalize demand outlooks. Incentivized by falling real wages, layoffs are stalled and hiring often rises. On the other hand, while exiting a slowdown, managers need time to build confidence after a period of prolonged pessimism, and this hiring hesitancy can lead to subdued head counts. 

With a further hike expected from the BoE, it is yet unclear if unemployment will remain relatively stable while corporations choose to shift to “reducing staff hours” as reported by ING economists, or if the slowdown in growth and high debt/GDP ratio will usher in a full-blown economic downturn.

Labour market inequality and the cost of living

Despite the tightness in the labour market, real wages have disappointed, falling 2.8% in the previous three months which is the sharpest decline on record. Accounting for inflation, total pay (including bonuses) fell 0.9% lower from March to May 2022 compared to 2021.

Although the rising inflation does not seem to have yet affected the demand for labour, the impact of labour pay has been sharply divergent among the workforce.

Bloomberg reported that nominal wages have only risen by 1.3% annually for the bottom 10% of workers in the UK. These workers typically earn under  £8,300 in the year, a tier of approximately 3 million people. Incomes are being squeezed by consumer inflation which has topped 9% and is expected to accelerate to 11% during the winter, despite the long series of rate hikes.

However, the labour market has been much more beneficial for those at the top of the food chain, with the highest earning 1% of the UK, seeing pay rises of 9.1% this year, in step with inflation. These workers are highly skilled and typically earn over £170,000 a year.

Although crude oil prices have eased since earlier this year, they are still at historically elevated levels with both WTI and Brent trading above $100 per barrel at the time of writing.

As a result, the research found that energy prices have skyrocketed for the average family, rising 54% in April, according to Cornwall Insight, a research firm. Annual fees could rise above £3,000 with the implementation of October tariffs on energy consumption.

Low earning households have been forced to dip into their savings, to stave off food poverty with food inflation at 15% over the last 12 months, driven by the ongoing Russia-Ukraine war.

The BoE’s sixth hike

The BoE has hiked by 25 bps consistently for the past five meetings. However, market expectations are that firm job data, an unexpected rise in GDP, high inflation projections, and accelerated Fed tightening will cause MPC members to vote for a 50-bps hike.

Inflationary pressures could also emerge from the trade deficit, which widened to historic levels since records began, reaching £28 billion in the past 3 months.

If the Fed does decide to raise its rates by 1%, this will be the first such hike since 1981, while inflation was also above 9% per annum.

Despite the unexpected upside to GDP, the UK is projected to experience no growth in 2023.

Rising rates could be a recipe for stagflation and the onset of lay-offs in the future.

Moreover, disappointing corporate earnings reports could signal a coming slowdown, with Made.com, an online furniture retailer plunging nearly 40% in a single trading session as it sees no uptick in demand for discretionary items.

Broadly, the UK is in a precarious position with the recent resignation of PM Johnson while the ongoing political turmoil will lead to a deeper sell-off in the sterling. A weakening currency would result in higher import prices and eventually more inflation.

Despite these challenges, on balance, we expect the BoE to raise rates by 50 bps in the coming meeting to guard against higher inflation and preserve currency strength. With rising inflation, the central bank will try to stamp its authority on the monetary landscape to maintain policy credibility.

Although job data is one component of the equation, it is likely to have had a muted effect on policymakers ahead of the BoE meeting. According to an article by ING economists, “In practice this data is unlikely to change many minds…hawks will stay concerned about worker shortages, while the doves will focus on the pick-up in shorter-term unemployment.”

As per a recent Institute of Directors survey, however, the worst is yet to come, with two-thirds of business leaders anticipating that inflation will peak in the spring of 2023, or later. This may prompt the BoE to frontload rate hikes.

Next steps

The BoE is likely to hike rates and assume a wait-and-watch position vis-à-vis job data while trying to maximize policy flexibility.

However, this could lead to stagflationary risks, especially in consumer-facing sectors such as pubs, restaurants, and entertainment venues, which are already experiencing declining output.

Moreover, with real wage suffering, it will be very challenging for low-income households to cope with higher borrowing costs. Ben Harrison of the Work Foundation of Lancaster University tweeted, ”The harsh reality is it will be acutely worse for the 6 million people in the UK who are in severely insecure work, and already face low pay and uncertain hours.”

With the ongoing Russian invasion of Ukraine and subsequent supply disruptions, as well as a strengthening dollar, inflation is likely to persist for the foreseeable future. The government would be well-advised to ensure mechanisms to ensure sustainable wages, although fiscal headroom remains limited.

The post Analysis: The UK labour market and the Bank of England’s shift to higher rates appeared first on Invezz.

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Nonprofit Blood Donation Service Starts Matching Unvaccinated Patients With Donors

Nonprofit Blood Donation Service Starts Matching Unvaccinated Patients With Donors

Authored by Allan Stein via The Epoch Times (emphasis ours),

Swiss…

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Nonprofit Blood Donation Service Starts Matching Unvaccinated Patients With Donors

Authored by Allan Stein via The Epoch Times (emphasis ours),

Swiss naturopathic physician George Della Pietra believes people worldwide should be free to choose whether to get a COVID-19 vaccine injection or not.

He believes the same should hold for those receiving transfusions with “vaccinated” blood.

“The problem is right now we have no choice,” said Della Pietra, founder of the nonprofit Safe Blood Donation service in 2021, matching unvaccinated blood recipients with donors in 65 countries.

“It was very clear from the beginning that the COVID hype was way out of control,” Della Pietra said. “It was not as dangerous as they say it was.

“As a naturopath, I can make no sense of this pandemic, which was never really a pandemic. It leaves space for so many explanations.”

Della Pietra believes that an mRNA injection is more dangerous than the pharmaceutical companies are willing to admit. He said the growing numbers of adverse reactions are reason to question their safety and effectiveness.

Data from the Centers for Disease Control and Prevention (CDC) showed that vaccinated and boosted people made up 58.6 percent (6,512) of the COVID-19 deaths in August—up from 41 percent in January.

We can no longer say this is a pandemic of the unvaccinated,” Cynthia Cox, the Vice President of the Kaiser Family Foundation told The Washington Post in an article on Nov. 23.

Nearly 70 percent of the world’s 8 billion people have received at least one mRNA injection for COVID-19 since the vaccines began rolling out in 2021 at the height of the virus’s spread.

Each of the three primary mRNA COVID-19 vaccines contains COVID-19 “spike protein” fragments, which bind at the cellular level to stimulate an immune response to the virus.

Della Pietra believes these spike proteins produce “classic symptoms”—namely blood clots—that “horrified” him.

“I’ve never seen anything similar—and I’m not talking only about spike proteins,” Della Pietra told The Epoch Times in a phone interview.

It’s unbelievable because we never had this problem before. It’s been only two years. They want to keep the narrative [that an mRNA vaccine] is not dangerous.”

A man looks at his phone while donating blood at Vitalant blood donation center in San Francisco on Jan. 11, 2022. (Justin Sullivan/Getty Images)

Although donated blood and plasma must undergo a cleansing process before transfusion, Safe Blood Donation says this is not enough to remove all mRNA ingredients.

“I’m talking about graphene oxide and non-declared inorganic components in the vaccine, which we can see in the blood. When I see them, I have no idea how we can get rid of them again,” Della Pietra said.

Looking at the abnormalities in vaccinated blood, he said, “OK, we have a problem.” People are receiving the vaccine “more or less through the back door.”

“You can not avoid it anymore.”

In the United States alone, there are approximately 16 million units of donated blood annually. Of those units, about 643,000 are “autologous”—self-donated—and the number is increasing yearly, according to BloodBook.com.

Della Pietra said that, to his knowledge, Safe Blood Donation, based in Switzerland, is the first unvaccinated blood donation service of its kind.

“So, there is no blood bank with mRNA-free blood yet, not even with us,” Safe Blood Donation states on its website.

“And, although we have already asked hundreds of clinics, at the moment—at least in Europe—all of them still refuse to allow the human right of free blood choice with them—or at least do not want to be mentioned because otherwise, they fear reprisals.”

A nurse works as employees donate blood during a blood drive held in a bloodmobile in Los Angeles on March 19, 2020. (Mario Tama/Getty Images)

Della Pietra said the main goal of Safe Blood Donation is not to start an mRNA-free blood bank. Rather, it is to make it possible to match unvaccinated blood donors and unvaccinated recipients, “which we bring together in a clinic (medical partner) that allows the choice of blood donor.”

Medical website Seed Scientific said that blood banks and biotech companies will offer as much as $1,000 monthly for blood donations.

While Della Pietra said there are no unvaccinated blood banks, he sees the demand for unvaccinated blood rising.

This is why I decided to do [SafeBlood Donation]. I wanted to make a network for unvaccinated people looking for a blood donor because they need it—whether they have scheduled surgery or an emergency,” he said.

Safe Blood Donation began working in the United States about a month ago, building an infrastructure of medical partners.

However, in the current medical environment, central blood banks such as the Red Cross do not segregate their blood donations based on their vaccinated or unvaccinated status.

Rendering of SARS-CoV-2 spike proteins binding to ACE2 receptors. (Shutterstock)

“The American Red Cross does not facilitate designated donations for standard blood needs, as this process often takes longer and is more resource intensive than obtaining a blood product through our normal process,” the Red Cross told The Epoch Times in an email.

In a small number of situations, there is an exception for rare blood types where compatible blood types are extremely difficult to find. A rare blood type is defined as one that is present in less than 1/1000 people.

“We want to emphasize that the Red Cross adheres to all donor and product requirements as determined by the FDA to ensure the safety of the blood supply and is committed to continuing to provide life-saving blood products for patients across the country.”

The National Library of Medicine said that “across study sites, the average hospital cost per unit transfused was $155 and the average charge per patient was $219.”

Still, the Red Cross, which provides 40 percent of the nation’s blood donations, said “no studies” demonstrate adverse outcomes from transfusions of blood products collected from vaccinated donors.

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Tyler Durden Sun, 12/04/2022 - 20:55

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Pedestrians choose healthy obstacles over boring pavements, study finds

Up to 78% of walkers would take a more challenging route featuring obstacles such as balancing beams, steppingstones and high steps, research has found….

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Up to 78% of walkers would take a more challenging route featuring obstacles such as balancing beams, steppingstones and high steps, research has found. The findings suggest that providing ‘Active Landscape’ routes in urban areas could help tackle an “inactivity pandemic” and improve health outcomes.

Credit: Anna Boldina

Up to 78% of walkers would take a more challenging route featuring obstacles such as balancing beams, steppingstones and high steps, research has found. The findings suggest that providing ‘Active Landscape’ routes in urban areas could help tackle an “inactivity pandemic” and improve health outcomes.

[A copy of the paper and images can be downloaded here]

Millions of people in the UK are failing to meet recommended targets for physical activity. Exercising “on the go” is key to changing this but while walking along a pavement is better than nothing it causes no significant increase in heart rate so only qualifies as mild exercise. Walking also fails to significantly improve balance or bone density, unless it includes jumping, balancing, and stepping down.

But would adults opt for such ‘fun’ routes if given the choice? A University of Cambridge-led study published today in the journal Landscape Research suggests that with the right design, most would.

Previous research on ‘healthy route choices’ has focused on people’s likelihood of walking instead of using transport. But this study examined how likely people are to pick a more challenging route over a conventional one and which design characteristics influenced their choices.

Lead author, Anna Boldina, from the University of Cambridge’s Department of Architecture, said: “Even when the increase in level and extent of activity level is modest, when millions of people are using cityscapes every day, those differences can have a major positive impact on public health.”

“Our findings show that pedestrians can be nudged into a wider range of physical activities through minor changes to the urban landscape. We want to help policy makers and designers to make modifications that will improve physical health and wellbeing.”

Boldina began this research after moving from Coimbra in Portugal – where she found herself climbing hills and ancient walls – to London, which she found far less physically challenging.

Working with Dr Paul Hanel from the Department of Psychology at the University of Essex, and Prof. Koen Steemers from Cambridge, Boldina invited almost 600 UK residents to compare photorealistic images of challenging routes – variously incorporating steppingstones, balancing beams, and high steps – with conventional pavements.

Participants were shown images of challenging and conventional tarmac routes and asked which route they would choose. The researchers tested out a range of encouraging / discouraging parameters in different scenarios, including crossing water, shortcuts, unusual sculptures and the presence / absence of a handrail and other people. Participants were asked to score how challenging they thought the route would be from 1 (as easy as walking on level tarmac) to 7 (I would not be able to do it).

Eighty per cent of the study’s participants opted for a challenging route in at least one of the scenarios, depending on perceived level of difficulty and design characteristics. Where a challenging option was shorter than a conventional route, this increased the likelihood of being chosen by 10%. The presence of handrails achieved a 12% rise.

Importance for health

The WHO and NHS recommend at least 150 minutes of ‘moderate’ or 75 minutes of ‘vigorous’ activity spread over a week, including a variety of activities aimed at enhancing bones, muscles, and agility to stay healthy. In addition, adults over 65 are advised to perform strength, flexibility, and balance exercises.

Boldina said: “The human body is a very complex machine that needs a lot of things to keep working effectively. Cycling and swimming are great for your heart and for your leg muscles but do very little for your bone density.”

“To improve cardiovascular health, bone density and balance all at once, we need to add a wider range of exercises into our routine daily walks.”

Psychology of choice

Co-author Dr Paul Hanel said: “Children don’t need much encouragement to try out a balance beam but we wanted to see how adults would respond, and then identify design modifications which made them more likely to choose a challenging route.”

“We found that while embarrassment, anxiety, caution and peer pressure can put some adults off, the vast majority of people can be persuaded to take a more challenging route by paying careful attention to design, safety, difficulty level, location and signage.”

The proportion of participants who were willing to pick a more challenging route varied from 14% for a particular balance beam route to 78% for a route involving wide, low stepping stones and a log with a handrail. The least intimidating routes were found to be those with wide, steady-looking balancing beams and wide steppingstones, especially with the presence of handrails.

The researchers suggest that routes that incorporate more difficult challenges, such as obstacle courses and narrow balancing beams, should be placed in areas more likely to be frequented by younger users.

The participants expressed a range of reasons for picking challenging routes. Unsurprisingly, the study found that challenging routes which also acted as short cuts appealed. Up to 55% of participants chose such routes. The researchers also found that the design of pavements, lighting and flowerbeds, as well as signage helped to nudge participants to choose more challenging routes. Many participants (40%) said the sight of other people taking a challenging route encouraged them to do the same.

The participants who picked conventional routes often had concerns about safety but the introduction of safety measures, such as handrails, increased uptake of some routes. Handrails next to one steppingstones route increased uptake by 12%.

To test whether tendency to choose challenging routes was linked to demographic and personality factors, participants were asked to answer questions about their age, gender, habits, health, occupation, and personality traits (such as sensation seeking or general anxiety).

The researchers found that people of all levels of activity are equally likely to pick a challenging route. But for the most difficult routes, participants who regularly engaged in strength and balancing exercises were more likely to choose them.

Older participants were as supportive of the concept as younger ones but were less likely to opt for the more challenging routes for themselves. Nevertheless, across all age groups, only a small percentage of participants said they would avoid adventurous options completely.

The study applies the idea of “Choice Architecture” (making good choices easier and less beneficial choices harder) plus “Fun theory”, a strategy whereby physical activity is made more exciting; as well as some of the key principles of persuasion: social proof, liking, authority, and consistency.

Future work

The researchers hope to run experiments in physical test sites to see how intentions convert into behaviour, and to measure how changes in habits improve health. In the meantime, Dr Boldina continues to present her findings to policy makers.

Critics might question the affordability and cost effectiveness of introducing ‘Active landscape routes’ in the current economic environment.

In response, the researchers argue that installing stepping stones in a turfed area can be cheaper than laying and maintaining conventional tarmac pavements. They also point out that these measures could save governments far greater sums by reducing demand for health care related to lack of exercise.

Reference

A. Boldina et al., ‘Active Landscape and Choice Architecture: Encouraging the use of challenging city routes for fitness’, Landscape Research (2022). DOI: 10.1080/01426397.2022.2142204

Media contact

Tom Almeroth-Williams, Communications Manager (Research), University of Cambridge: researchcommunications@admin.cam.ac.uk / tel: +44 (0) 7540 139 444


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Tesla’s Chinese Rivals Set New Records

Tesla’s Chinese EV rivals are putting pressure on the market leader with monthly records.

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Tesla's Chinese EV rivals are putting pressure on the market leader with monthly records.

Tesla's competition in the electric vehicle market has been heating up over the past two years as more EV manufacturers ramp up production and deliveries.

Elon Musk's Austin, Texas-based company has seen its share of the EV market shrink from about 79% in 2020 to 75.8% in June 2022 to about 65% today as rival automakers continue to ramp up their factories.

Tesla  (TSLA) - Get Free Report still has a lot of good news to report through the first three quarters of 2022, as it is well on its way to delivering 1 million EVs with 908,000 delivered in the year through Sept. 30 after delivering 343,000 in the third quarter. The company also rolled out its newest EV on Dec. 1 with the delivery of its Semi Trucks.

While Tesla's top competitors in the U.S. hold small percentages of the market -- Ford  (F) - Get Free Report, 7%; Kia, 5%; Chevrolet, 4%, Hyundai, 4% -- these companies and smaller ones are setting records at delivering EVs as they increase production.

Ford reported in November that it had a 103% year-over-year increase in EV sales. Kia in the same month said it had a 133% increase in sales year-over-year. Volkswagen reported in November that it had reached its delivery benchmark of 500,000 units a year earlier than expected after recording  a 25% year-over-year increase in deliveries in October.

Shutterstock

Pressure from Chinese Rivals

Tesla is seeing increased pressure coming from China, and not just from covid pandemic-related restrictions and factory closures. Chinese rivals Nio  (NIO) - Get Free Report, Li Auto  (LI) - Get Free Report, and BYD all had impressive numbers for November.

BYD reported that it sold 113,915 fully electric vehicles in November, which was a 147% increase year-over-year. It also sold 116,027 plug-in hybrids, which was a 164% year-over-year increase.

Nio on Dec. 1 reported it delivered 14,178 vehicles in November, a new record-high delivery amount, for an increase of 30.3% year-over-year. Cumulative deliveries of Nio vehicles reached 273,741 as of Nov. 30.

Nio's November deliveries consisted of 8,003 premium smart electric SUVs including 4,897 ES7s, and 6,175 premium smart electric sedans including 3,207 ET7s and 2,968 ET5s.

Nio said that it plans to further accelerate production and delivery in December.

Li Auto on Dec. 1 said that it delivered a record-high 15,034 EVs in November for an 11.5% year-over-year increase. Cumulative deliveries through November reached 236,101.

Li Auto SUV Sales

“We set another monthly record with 15,034 deliveries in November," Yanan Shen, co-founder and president of Li Auto said in a statement "In particular, Li L9 has been the sales champion of full-size SUVs in China for two consecutive months since it commenced delivery, establishing it as a top choice for six-seat full-size family SUVs in China."

Shen said that the Li L9 SUV in November received the highest safety rating for tests on the driver and passenger sides from the China Insurance Automotive Safety Index.   

NIO and Tencent Holdings on Nov. 28 entered into a strategic cooperation agreement to further deepen partnership in the areas of autonomous driving related cloud services, intelligent driving maps and digital ecosystem to provide users with experiences beyond expectation, according to a statement.

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