Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The UK’s cost of living squeeze has tightened, with basic pay falling behind inflation at the fastest rate in over seven years.
The latest jobs figures, just released, show that regular real pay (adjusted for inflation) fell by 1% year-on-year in the three months to January. That’s the biggest fall in real regular pay since May to July 2014 (it also fell 0.9% early in the pandemic).
Total pay rose just 0.1% in real terms, due to strong bonus payments over the past six months.
Wages did rise in nominal terms: total pay (including bonuses) grew 4.8%, while regular pay (excluding bonuses) was 3.8% in November-January 2022.
But those pay increases were eroded by rising prices — CPIH inflation (the ONS’s preferred inflation measure) averaged 4.8% in the quarter.
And the squeeze will continue in the coming months, as higher energy and food prices push up the cost of living. Consumer inflation is expected to jump over 7% by April.
The report also shows that the UK unemployment rate fell again, to 3.9% from 4.1% three months earlier — back to its pre-coronavirus pandemic levels.
But while the employment rate rose by 0.1 percentage points, to 75.6%, it was still 1.0 percentage points below pre-pandemic levels, due to the fall in self-employment.
There were nearly 32.5m people in employment – up 380,000k in the last year, but still 580k less than before the pandemic.
Vacancies rose to a new record of 1,318,000 in the three months to February, as companies struggled to fill roles.
The number of people on company payrolls hit a new record high in February, up 275,000 to a new record of 29.7 million.
More details and reation to follow.
Also coming up today
Stock markets are edgy as Covid-19 infections rise sharply in China, raising fears that more lockdowns could be introduced to slow the pandemic.
Domestically-transmitted cases more than doubled yesterday to 3,507, testing the country’s tough “dynamic clearance” approach to Covid.
Yesterday, a province of 24 million people was locked down, leading companies such as Apple supplier Foxconn to suspend work.
Hong Kong’s Hang Seng index, which hit a six-year low yesterday, is down another 6% today.
European markets are set to open lower.
Britain is expected to name hundreds of oligarchs, individuals and organisations with links to the Putin regime who will be added to the UK’s sanctions list, after the economic crime bill was fast-tracked last night.
Investors are also watching Russia, which faces a $117m debt repayment tomorrow. Last night, Moscow said it has started the payment process, but it’s not clear if the payment is in US dollars — the currency they were issued in — or roubles.
With much of Russia’s foreign exchange reserves frozen, it may not be able to make the dollar payments, meaning it could default (after a 30-day grace period).
- 7am GMT: UK labour market report
- 7.45am GMT: French inflation for February
- 10am GMT: ZEW survey of eurozone economic confidence
- 12.30pm GMT: US PPI measure of American producer prices for February