UK Economy Adds Jobs
In the three months to December, the UK economy added 167,000 jobs. This took the calendar year growth to 444,000 and the total in work to 32.60m, a record high. The steady rate of jobs growth kept the rate of unemployment low at 4%, even as the labour force swelled.
Encouragingly, the tight labour market continued to drive wage growth as employers jostled for the remaining workers. Wage growth was constant at 3.4%, matching the highest rate since 2008 and providing a welcome boost to consumer finances. Furthermore, the makeup of the jobs market continued to improve with the vast majority of jobs added being full time, rather than part time roles. The labour market continues to oppose the UK political uncertainty and slowing global economy.
UK Public Finances Boosted
There was good news for the chancellor, Philip Hammond, last week as the Office for National Statistics (ONS) reported the largest January surplus on record, of £14.9bn. Self-assessment income tax and capital gains tax receipts drove the rise in revenue as the government collected £3.1bn more January 2018. The year to date borrowing was also lower than last year and put the government on target to undershoot the Office for Budget Responsibility’s (OBR) most recent forecast. With two months remaining of the fiscal year, the January figure will likely unlock additional flexibility for the chancellor when he comes to his next budget and may lead to further tax cuts or spending increases.
Honda to Close Swindon Plant
Japanese car maker Honda confirmed last week that it is planning to close its Swindon car plant in 2021, leading to an estimated 3,500 job losses. The factory makes 160,000 cars annually at the plant. Honda has blamed the decision on changes in the global car industry, the need to launch electric vehicles and is nothing to do with Brexit.
Nevertheless, the relatively small size of the European market for Honda and the recent trade agreement between Japan and the EU is likely to have been a primary driver. The trade agreement will make it more competitive to produce cars in Japan and ship them into the EU, lessening the requirement to make them within the EU single market regardless of the UK status with it.
|UK 10 Year Gilt Yield||1.16||1.15||-0.01||-0.86%|