The number of people unable to find full-time work appears to have peaked. Photograph: Getty Images.
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New employment data suggests an approaching uplift for the UK economy

The decline since November 2013 was the largest 3 month fall since 1992.

The wisdom of the Bank of England’s decision to move the goalposts on forward guidance, away from the single metric of the ILO 3-monthly average unemployment rate to a more holistic range of economic indicators, has been brought into stark relief by the latest employment data, released on 16 April.

The headline rate fell unexpectedly to 6.9 per cent, its lowest level since Feb 2009, from 7.2 per cent last month, and well below the expectated 7.1 per cent. The more contemporaneous Claimant Count Rate, fell to 3.4 per cent in March from 3.5 per cent in February, presaging further falls in the ILO rate next month and taking this measure to its lowest level since November 2008 - the pit of the financial crisis.

The unemployment rate for the single month of February was 6.6 per cent, meaning that the decline since November’s 7.4 per cent was the largest 3 month fall since 1992, and an unemployment rate of 6.6 per cent is getting uncomfortably close to the Bank of England’s own NAIRU estimate of 6 to 6.5 per cent, so that one of her new favoured indicators, the amount of labour slack in the economy, may be disappearing rather quickly.

The last BOE Quarterly Inflation Report, in February, forecast unemployment at 6.9 per cent at the end of Q1. Well, we’re already there and sure to be below that if March’s single month reading stays below 7.0 per cent.

However, there are pockets of less impressive news buried within the report. Average Weekly Earnings for February, now very closely watched by the BOE as a leading indicator for inflation, disappointed a little at 1.7 per cent, up against an expectated 1.8 per cent, but were still up 1.4 per cent in January - and I would expect further increases over the coming months; for the first time in nearly six years, weekly earnings have finally overtaken inflation. There is still some way to go however; as at Q4 real wages were still 6.5 per cent below their pre-crisis peak. The average work week fell, somewhat inexplicably, from 32.2 hours to 32.0, which won’t impress the Monetary Policy Committee.

Finally, although the rise in employment, at 239k, and in the participation rate, from 63.6 per cent to 63.8 per cent, both looked like great news, one can pick holes and point to the composition of the 239k gain; only 45k were full-time employee jobs and self-employment grew by 146K in the three months to February. However, it looks like number of people working part-time because they could not get a full-time job has peaked, which is very healthy.

All-in-all, these statistics alone, nor the recent raft of other encouraging indicators such as house prices, PMI’s, Industrial Production and Retail Sales, will not yet be enough to break the MPC’s unanimity when it comes to keeping rates at 0.5 per cent, but if the trend continues - with annualized growth approaching 4 per cent, then the minutes of June or July’s MPC meeting could make very interesting reading.

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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What I learnt when my wife and I went to Brexit: the Musical

This week in the media, from laughing as the world order crumbles to what Tristram Hunt got wrong – and Leicester’s big fall.

As my wife and I watched Brexit: the Musical, performed in a tiny theatre above a pub in London’s Little Venice, I thought of the American novelist Lionel Shriver’s comment on Donald Trump’s inauguration: “A sense of humour is going to get us through better than indignation.” It is an entertaining, engaging and amusing show, which makes the point that none of the main actors in the Brexit drama – whether supporters of Leave or Remain – achieved quite what they had intended. The biggest laugh went to the actor playing Boris Johnson (James Sanderson), the wannabe Tory leader who blew his chance. The mere appearance of an overweight man of dishevelled appearance with a mop of blond hair is enough to have the audience rolling in the aisles.

The lesson we should take from Brexit and from Trump’s election is that politicians of all shades, including those who claim to be non-political insurgents, have zero control of events, whether we are talking about immigration, economic growth or the Middle East. We need to tweak Yeats’s lines: the best may lack all conviction but the worst are full not so much of passionate intensity – who knows what Trump or Johnson really believe? – as bumbling incompetence. The sun will still rise in the morning (as
Barack Obama observed when Trump’s win became evident), and multi­national capital will still rule the world. Meanwhile, we may as well enjoy the show.

 

Danger of Donald

Nevertheless, we shouldn’t deny the risks of having incompetents in charge. The biggest concerns Trump’s geopolitical strategy, or rather his lack of one. Great power relations since 1945 have been based on mutual understanding of what each country wants to achieve, of its red lines and national ambitions. The scariest moments come when one leader miscalculates how another will react. Of all figures in recent history, the Soviet leader Nikita Khrushchev, with his flamboyant manner and erratic temperament, was probably the most similar to Trump. In 1962, he thought President Kennedy, inexperienced and idealistic, would tolerate Soviet missiles in Cuba. He was wrong and the world only narrowly avoided nuclear war.

How would Trump respond to a Russian invasion of the Baltic states? Will he recognise Taiwan as an independent country? Will he scrap Obama’s deal with Iran and support a pre-emptive strike against its nuclear ambitions? Nobody knows, probably not even Trump. He seems to think that keeping your options open and your adversaries guessing leads to “great deals”. That may work in business, in which the worst that can happen is that one of your companies goes bankrupt – an outcome of which Americans take a relaxed view. In international relations, the stakes are higher.

 

Right job, wrong time

I rather like Tristram Hunt, who started contributing to the New Statesman during my editorship. He may be the son of a life peer and a protégé of Peter Mandelson, but he is an all-too-rare example of a politician with a hinterland, having written a biography of Engels and a study of the English Civil War and presented successful TV documentaries. In a parallel universe, he could have made an inspirational Labour leader,
a more thoughtful and trustworthy version of Tony Blair.

No doubt, having resigned his Stoke-on-Trent Central seat, he will make a success of his new job as director of the Victoria and Albert Museum. If nothing else, he will learn a little about the arts of management and leadership. But isn’t this the wrong way round? Wouldn’t it be better if people first ran museums or other cultural and public institutions and then carried such experience into parliament and government?

 

Pointless palace

When the Palace of Westminster was largely destroyed by fire in 1834, thousands gathered to enjoy the spectacle. Thomas Carlyle noted that the crowd “whew’d and whistled when the breeze came as if to encourage it” and that “a man sorry I did not anywhere see”.

Now, with MPs reportedly refusing to move out to allow vital renovation work from 2023, we can expect a repeat performance. Given the unpopularity of politicians, public enthusiasm may be even greater than it was two centuries ago. Yet what is going through MPs’ minds is anyone’s guess. Since Theresa May refuses them a vote on Brexit, prefers the Foreign Office’s Lancaster House as the location to deliver her most important speech to date and intends to amend or replace Brussels-originated laws with ministerial orders under “Henry VIII powers”, perhaps they have concluded that there’s no longer much point to the place.

 

As good as it gets

What a difference a year makes. In January 2016, supporters of Leicester City, my home-town team, were beginning to contemplate the unthinkable: that they could win football’s Premier League. Now, five places off the bottom, they contemplate the equally unthinkable idea of relegation.

With the exception of one player, N’Golo Kanté (now at Chelsea), the team is identical to last season’s. So how can this be? The sophisticated, mathematical answer is “regression to the mean”. In a league where money, wages and performance are usually linked rigidly, a team that does much better than you’d predict one season is likely to do much worse the next. I’d suggest something else, though. For those who won last season’s title against such overwhelming odds, life can never be as good again. Anything short of winning the Champions League (in which Leicester have so far flourished) would seem an anti­climax. In the same way, the England cricket team that won the Ashes in 2005 – after the Australians had dominated for 16 years – fell apart almost as soon as its Trafalgar Square parade was over. Beating other international teams wouldn’t have delivered the same adrenalin surge.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era