Unemployment rate falls – business news 18 August 2021
James Salmon, Operations Director.
Unemployment rate falls. Wages up 8.8% year-on-year. London office lettings at highest level since before pandemic. Pension triple lock set to be watered down. Supermarket sales. UK is Europe’s eighth-lowest taxing country for workers and more.
Unemployment rate falls to 4.7%
Data from the Office for National Statistics (ONS) shows that the unemployment rate fell 0.2% over the last quarter, hitting 4.7%.
While the number of employees on payroll rose 182,000 over the last month to reach 28.9m in July, this is still 201,000 below the pre-pandemic level.
Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The world of work continues to rebound robustly from the effects of the pandemic”. Chancellor Rishi Sunak said the ONS figures show that the Government’s Plan for Jobs is working, “saving people’s jobs and getting people back into work.” He added that while “there could still be bumps in the road … the data is promising”.
The ONS also revealed that the number of job vacancies reached a record high over the last quarter, with 953,000 vacancies between May and July. Looking ahead, Yael Selfin, chief economist at KPMG, said: “For some sectors, the ending of the furlough scheme in September could come before a significant recovery in demand, threatening to create a wave of redundancies later this year,” while Martin Beck, senior economic adviser to the EY Item Club, said that while “the jobless rate could feasibly creep up in the short-term … the risk of a serious increase in joblessness when the furlough scheme closes in September looks low.”
Wages up 8.8% year-on-year
Office for National Statistics figures show that wages including bonuses jumped by 8.8% in the three months to June against the same period last year, with earnings excluding bonuses up 7.4%.
The ONS said the rise in earnings was driven in part by the fact people who had been receiving furlough payments during the same period last year were now receiving full pay. Tom Pugh at RSM commented: “At first glance, the surge in headline pay growth to 8.8% is another reason for the Bank of England to start raising interest rates next year, but headline pay has been inflated by base and compositional effects.”
Noting that payroll data suggests there were about 200,000 fewer people in employment in July than before the pandemic, he added: “As such, there is enough slack in the labour market to prevent wage growth concerning the Monetary Policy Committee.”
London office lettings at highest level since before pandemic
London office lettings have reached their highest level since the pandemic struck as businesses commit to physical workplace strategies. According to Cushman & Wakefield, 1.8m sq ft of office space was let in Q2 – a 39% increase on Q1 and the highest volume since the first lockdown. Office leasing deals in central London reached a record quarterly low of 570,000 sq ft in Q4 2020. The 1.8m sq ft of lettings agreed in the second quarter of this year compares with 3.1m sq ft that was let in the second quarter of 2019.
BME unemployment increase outpaces white worker rate
The unemployment rate for Black and minority ethnic (BME) workers has risen at three times the rate of that of white workers, Office for National Statistics (ONS) figures reveal. Over the last year, the percentage of people from these communities who are unemployed has risen from 6.1% to 8% while among white people the rate has gone from 3.6% to 4%. The ONS data also shows that the number of people on zero-hours contracts fell from 1.08m in April-June 2020 to 917,000 in April-June 2021. The report flagged a disparity in the workers who are likely to be on such contracts, with BME women twice as likely to be on them as white men.
Pension triple lock set to be watered down
The Telegraph reports that the Government’s pension triple lock guarantee is set to be watered down next year in a move that will save the Treasury billions of pounds. It comes after average earnings excluding bonuses increased by 7.4% in the three months to June. Two options are understood to have been submitted to Boris Johnson to get around the issue, both of which would see state pensions rise by closer to 3% than the more than 7% which should be due under the current arrangements. One would see a two-year – rather than a one-year – average for earnings rises adopted. The second would see average earnings not included in the calculation for pensions next year, with the inflation rate picked instead.
Supermarket sales
UK supermarket sales remained above pre-pandemic levels despite a decline in recent months, according to data from Kantar yesterday. In the 12 weeks ended August 8, grocery sales fell by 4% year-on-year to £29.55 billion from £30.77 billion. Sales were however still 9.9% higher than they were in 2019, before the covid shutdowns. Kantar noted shoppers have been “steadily returning to pre-pandemic” habits, making less sizeable but more frequent trips to supermarkets.
The proportion of Britons buying groceries online fell 20% in the 12 weeks to August 8, to the lowest level seen since October 2020. This came as shoppers returned to stores amid the ending of lockdown restrictions. The share of grocery sales made online was 13%, down from a peak of 15.4% in February.
Year-on-year, total grocery sales were down 4% over the 12-week period. Of the big four supermarkets, Morrisons has seen the steepest fall in supermarket sales, with a 6.2% decline in the 12 weeks. Asda saw a fall of 4.7%, Sainsbury’s recorded a 2.6% dip while Tesco saw a decline of 1.8%. Waitrose’s 0.6% increase was the only upturn in sales among major grocery retailers.
The analysis also shows that consumers made an extra 108,000 shopping trips in the latest four-week period compared to a year earlier, while average basket sizes were 10% smaller and grocery prices were up 0.4%. Elsewhere, the latest sales monitor from the Scottish Retail Consortium and KPMG shows sales north of the Border were up 7.4% in July compare to the same month in 2020 but down 4.4% on July 2019.
UK is Europe’s eighth-lowest taxing country for workers
Analysis by Income Tax UK show that the UK is the eighth-lowest taxing country in Europe, with Brits taking home £2,058 from a £2,580 wage.
The study looked at how much income people in the UK and the EU would receive after tax, based on a monthly salary of €3000 or £2580. Bulgaria came out on top, with it shown to have the lowest taxed workers in Europe thanks to a 10% tax rate. Poland came in second, with it found to allow taxpayers to keep 86.3% of an average £2,580 monthly wage. Ireland ranked third, while Norway, Luxembourg, Ukraine, Netherlands, Greece and France made up the rest of the top ten low tax havens for workers.
At the opposite end of the rankings, Lithuania has the highest taxes on workers, with rates in Romania found to be similarly high.
A spokesperson for Income Tax UK said: “It’s very interesting to see the tax differences across Europe for an average monthly salary.” They added: “As we shift to a more remote working culture, those with the ability to work from anywhere also have the opportunity to maximise their income.”
Business rates reform ‘unfair on firms’
The Government’s planned business rates reform will mean the difficulties of launching appeals outweigh the benefits, ministers have been warned. The Government has proposed that business rates will undergo a revaluation every three years. Experts have said the proposals will result in difficulties for companies as they will toughen up the current appeals policy. John Webber, head of business rates at Colliers, said this will result in a “much more onerous and expensive way” for businesses to appeal. “This new system would increase the bar to appeal against unfair rating assessments and thus reduce the number of appeals,” he added.
BHP Biliton
BHP announced they would end their dual listing on the London Stock Exchange, listing in Australia only. Activists have been calling for the Australian miner to do so for a while to take advantage of Australian tax law. But the move will be a loss to London where BHP were among its largest listings by market capitalisation. The miner will retain a secondary listing in London.
Persimmon
Housebuilder Persimmon reported a 64% rise in H1 pre-tax profits and a sharp rise in revenue to £1.8b from £1.19B the year before. Persimmon also noted forward sales of £2.23b in H2, up 9% on 2019
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