UK Economy: GDP for the three months ended June contracted 0.2% compared to the previous quarter, the Office for National Statistics said Friday. Experts had expected growth to be flat.
The contraction comes as the global economy slows and fears rise that Britain could crash out of the European Union, dealing a gut punch to an already-weak economy.
Prime Minister Boris Johnson has committed to leaving the bloc on October 31 even without an exit agreement in place to protect trade. That would plunge the economy into recession, according to government forecasts.
The pound fell 0.6% against the dollar on Friday below $1.21, marking a decline of about 5% since the beginning of July. It dropped 0.7% against the euro.
Uncertainty over Brexit helped drag down the UK economy last quarter.
Companies unwound stockpiles that they’d built up ahead of an earlier Brexit deadline at the end of March. Shutdowns at car plants that were timed to coincide with the deadline also held back growth.
The largest drag came from a drop in manufacturing output, which caused the production sector to shrink 1.4%.
Weakness in other parts of the economy added to the environment of uncertainty.
“The often-dominant service sector delivered virtually no growth at all,” said Rob Kent Smith, head of national accounts at the Office for National Statistics.
Additionally, business investment continues to trend downward. It’s not clear that will improve as companies pump more resources into planning for a messy Brexit.
“Contraction in the second quarter is a rude awakening,” said Tej Parikh, chief economist at the Institute of Directors, a business lobby. “While consumers have helped keep the economy afloat, it is increasingly worrying that underlying growth is largely absent.”
The UK government tried to put a positive spin on the data, with Treasury chief Sajid Javid saying it comes during a “challenging period across the global economy.”
“The fundamentals of the British economy are strong — wages are growing, employment is at a record high and we’re forecast to grow faster than Germany, Italy and Japan this year,” Javid said.
Many economists believe the United Kingdom will dodge an immediate recession by rebounding in the current quarter.
Resumed stockpiling, along with solid consumer spending, should provide a boost, according to James Smith, developed markets economist at Dutch bank ING.
“The contraction in the second quarter appears at this stage to be an outlier,” Commerzbank economist Peter Dixon said.
But Brexit could quickly put any recovery into reverse.
Official forecasts have warned that a disorderly Brexit would cause UK stock markets to fall 5%, while the pound would plummet 10%. GDP would shrink by 2% by the end of 2020, it estimates.
“We would expect to see quite a sharp contraction — an instantaneous contraction, almost,” Dixon said.
Slowing global growth and listlessness in Europe also pose a threat. “There are downside risks to the UK forecast, whatever happens to Brexit,” he added.
Why Corporate America Is Bullish on the Economy – Investopedia
Corporate executives are surprisingly bullish about the U.S. economic outlook for 2020, judging from an extensive analysis of management commentary in Q3 2019 earnings conference calls, as conducted by Goldman Sachs. Among the companies making particularly optimistic comments are Marriott International Inc. (MAR), Procter & Gamble Co. (PG), Republic Services Inc. (RSG), Harley-Davidson Inc. (HOG), and Allegion PLC (ALLE).
“Despite high levels of uncertainty, executives remained upbeat on the 2020 economic outlook. Corporate managers were optimistic about recent economic data, particularly consumer data,” Goldman writes in the current edition of their quarterly S&P Beige Book publication, released on Friday. “However, uncertainty remains high and executives expect to be dealing with US-China trade tensions for the foreseeable future. Consequently, inventories have declined and dealer demand has dropped,” they add.
- U.S. corporate executives are upbeat about the economy in 2020.
- This is based on analysis of Q3 2019 earnings calls.
- However, other surveys of CEOs and CFOs indicate growing gloom.
- The OECD, IMF, and Conference Board see lower U.S. growth in 2020.
Significance For Investors
Hotel operator Marriott calls the U.S. economy “robust” overall, and notes that its industry has low unemployment and high occupancy. Consumer products company Procter & Gamble sees “no signs of weakness.” Waste hauling company Republic says “the underlying economy is pretty strong…our view now and our view for 2020 is the economy is in pretty good shape.” Motorcycle manufacturer Harley-Davidson does not see any more uncertainty than 6 months ago, and noted that its own industry enjoyed a Q3 “pick up,” calling this “an encouraging sign.”
Security products and services company Allegion says “we are solid, positive, upbeat on the economy.” They find that the key indicators for their business are encouraging, including consumer confidence, low unemployment, high tax revenues for state and local governments, low interest rates, and a tight housing market. In conclusion, they “don’t know how you could not be positive about the view going forward.”
However, the bullish views observed by Goldman in Q3 conference calls conflict with recent surveys that show declining confidence among senior executives. CEOs are more gloomy about the future than at any previous time since the global financial crisis of 2008, according to a survey conducted by the Conference Board that was cited in a previous Goldman report. Meanwhile, “More than half (53%) of US CFOs believe that the US will be in recession by the 3rd quarter of 2020 and 67% believe that a recession will have begun by the end of 2020,” per the latest Duke University CFO Global Business Outlook survey.
Other key trends discussed in Goldman’s Beige Book relate to spending plans and the upcoming 2020 U.S. national elections. “S&P 500 cash spending plummeted in 2Q driven by a ten-year low in CEO confidence, but has stabilized in 3Q. Many executives highlighted deferring capital expenditures as they approached investments with increased caution,” the report noted. “Firms also outlined plans to divert cash from capital projects and [stock] buybacks in favor of strengthening the balance sheet,” the authors added.
Regarding the 2020 elections, many companies indicated that they are planning for multiple outcomes. Others preferred to discuss their long-term plans, while avoiding comments on politics. Some noted that there often is a big difference between what politicians advocate as candidates, and what they they actually do once elected.
In contrast to the bullish notes on the economy that Goldman finds in earnings commentary, Q3 2019 profits for the S&P 500 are on track to be down on a year-over-year (YOY) basis for the third consecutive quarter. However, while aggregate S&P 500 Q3 earnings are down by about 1% YOY so far, the median S&P 500 stock actually has a 5% increase, per Goldman’s current US Weekly Kickstart report.
Real GDP growth in the U.S. will slow from average rates of 2.9% in 2018 and 2.3% in 2019 to its long-term trend of 2.0% in 2020, per The Conference Board. However, this will represent a slight increase from annualized rates of 1.9% in Q3 and Q4 2019. The OECD calls for 2.28% U.S. real GDP growth in 2020, while the IMF projects U.S. economic growth to be 2.1% in 2020, down from their estimate of 2.4% for 2019.
Business owners want to beef up Toronto’s economy
On a Thursday night, Councillor is bustling with staff and servers doling out cocktails and pub fare.
But while the year-old upscale Parkdale sports bar is now thriving, it’s owner says getting to this point was “hell,” thanks to a cumbersome approval process at the city.
It took Chris Sherwood two years to actually open the bar on Queen Street West thanks to layers of red tape, including thousands of dollars for application fees and site maps, and trips to the committee of adjustment to get the green light for zoning variances.
Once Councillor opened, there was another challenge: getting people in the front door.
“It’s a busy area, but the people who live the condos — they don’t come out as often as people think they do,” Sherwood said with a laugh.
Sherwood makes it all work through advertising and word-of-mouth promotion, but he’s among those wondering if there’s more the city could do to help support late-night businesses like his.
“We’re supposed to be a world-class city,” he said. “That’s what world-class cities do.”
Increasingly, Toronto’s late-night scene is indeed on the radar of city officials.
On Wednesday, Mayor John Tory announced the appointment of Deputy Mayor Michael Thompson as the city’s new “night economy ambassador.” It’s just the latest step to boost Toronto’s overnight social and economic spheres following council’s July endorsement of a report focused on strengthening the city’s nightlife.
“Right now, the city is not set up to encourage [late-night] enterprises … I think we have to take a look at the laws, regulations and practices,” Tory said on Wednesday.
Businesses want fewer restrictions, lower property taxes
The growing focus comes amid fears over sky-high property taxes for corporate buildings — which are shuttering businesses like restaurants on main streets across the city — and a rising number of music venues closing down in recent years.
“We’re losing venues now because they’re being used for other types of economic initiatives and so on. This is an area we want to focus … We are a music city,” said Thompson.
Back at Councillor, Sherwood said the city could help businesses like his thrive by lobbying the province for lower commercial property taxes, which have been spiking thanks to rising building value assessments, and later drinking hours.
The province is reviewing its assessment system, officials recently told CBC Toronto, and already extended drinking hours to allow customers to imbibe earlier in the morning.
Ben Swirsky, co-founder of live music bar and restaurant Alchemy Food & Drink on College Street, agrees extending last call could be a boon for music venues in particular, which often rely on both foot traffic and, mostly, residents flowing in from other neighbourhoods.
“Obviously, you hope to be the next viral thing … The reality is, it’s more of a slow grind,” he said.
To Sherwood, the top thing municipal officials need to look at is streamlining the approval process to get late-night offerings open in the first place.
“No one at city hall will actually leave their office and come inspect what you’re trying to do,” he said. “They just look at paperwork and say, ‘Next, next, next.’ It was long and tedious.”
Ultimately, he said, Toronto needs fewer restrictions on where people can open late-night venues — since they’re what keep neighbourhoods thriving around-the-clock.
“Restaurants, bars, cafes — they bring people together,” he said.
How To Thrive In The Hybrid Job Economy by Forbes
Even though the job market is booming and unemployment remains at or near record lows, there are signs that this favorable environment may be waning. Automation is accelerating, eliminating jobs that have always been performed by humans. For the jobs that remain, many will become almost unrecognizable combinations of formerly separate positions. A 2019 report from Burning Glass Technologies argues persuasively that hybrid jobs are the future. The good news is that if you can build up the right skill areas, your career will not only survive; it will thrive.
Hybrid Skills Can Mean Job Security
There’s no doubt that the effects of the coming wave of automation will be felt for years to come. All employees will need to learn new skills, but they can minimize their chances of an employment interruption by getting ahead of the curve, acquiring these capabilities before they’re completely necessary. According to Burning Glass, hybrid jobs only have a 12% likelihood of automation compared to 42% for jobs overall.
As technology alters the job landscape, formerly vertical skills are colliding in surprising ways. The technical skills that hybrid jobs demand generally lie in areas such as big data and analytics or technical design and development, but soft skills such as creativity and collaboration are just as important. Instead of learning a single one in isolation, employees who learn complementary skills will prosper in the hybrid job economy.
Increasingly, employers are placing a premium on people who are well-versed in a range of areas. “Today, we and our employees all have to become more da Vinci-like in our career,” notes Josh Bersin, founder of business strategy firm Bersin by Deloitte. “It’s the secret of success in the digital world ahead.”
Taking advantage of the hybrid economy doesn’t have to mean going back to school for another degree, but it does require a strategy—especially to protect the consistency of your personal brand. By following these steps, you’ll expand your brand without losing focus. You’ll also expand the opportunities available to you, and maybe even earn a higher salary:
1. Identify trends in job postings.
Job posting pages aren’t just for job seekers. According to Matt Sigelman, Burning Glass’s CEO, anyone can analyze what top companies are looking for and come away with an idea of the skill combinations that will be in high demand down the road. “In many industries, companies are now trying to hire for combinations of skills they believe they’ll need in the near future and don’t yet have,” Sigelman says. “If you read enough job postings, you’ll begin to see patterns emerge that will show you where to focus your efforts.”
The company’s research indicates that 85% of job vacancies are now posted online, so internet job boards are a great place to begin your research. Decide which fields are a natural match for your authentic brand traits and then read about the combinations of traits that hiring managers are looking for. You can also sign up for notifications about open positions using LinkedIn or follow relevant industry influencers to stay in tune with the latest trends as they emerge.
2. Make collaboration skills a priority.
A key component of the hybrid job economy is the overlap of responsibilities and understandings across teams and departments. This overlap means coordination across teams is critical, so it should come as no surprise that LinkedIn names collaboration as one of “The Soft Skills Companies Need Most in 2019.”
“If intellectual capital powers the knowledge economy, then sophisticated collaboration is how businesses will earn a return on investment,” says James Henry, chief technology officer at PureWeb, an interactive 3D streaming service. Sophisticated collaboration is more than just using a company Slack channel—it’s app developers having design experience so they can better communicate with graphic designers, or data scientists having marketing skills so they can more effectively work with marketing and sales departments.
3. Embrace coding as your new language.
Digital building block skills, such as coding and analytics, are becoming increasingly important because they’re applicable in a growing array of fields. A skill like coding can make you more effective in many different roles. Employers recognize this versatility, and it’s being reflected in the compensation they offer. Skeptical? Bersin reports that marketing managers with a firm grasp of SQL pull in 41% larger paychecks than their less technical peers.
Boosting your coding chops doesn’t have to cost a fortune. Head to YouTube for a free 44-part video series from Microsoft that will teach you the basics of coding in Python, or visit Twitch to watch programmers offer coding tutorials on a livestream. Coding experience will help nontechnical employees communicate with developers and other technical personnel, and this improved communication can help generate better results from a team.
4. Emphasize management skills.
Management and business skills aren’t just a bonus—they’re critical in a wide variety of roles. Citing the Burning Glass research, Bersin notes that business and management skills are essential in one-third of IT jobs and more than half of engineering roles. Even when these skills aren’t required, their value can influence how workers are compensated. For example, employees with project management experience draw a 21% higher salary than those who don’t.
There are many project management methodologies out there, such as Agile and Lean, and you can benefit from exposure to several of them. Once you determine which one is most relevant to your industry, you can delve more deeply by taking a course or pursuing a certification. No matter what route you go, this project management knowledge base will help you perform your role more effectively and may even net you a raise or promotion.
The hybrid job economy is coming, and those who embrace it will enjoy both improved performance and greater resilience in the face of change. Start by dipping your toes into a few complementary skills, and then decide where you want to expand your areas of expertise. Just remember that checking off a skill box isn’t enough; you need to communicate what’s unique about the way you perform that skill, applying your personal brand in a way that no machine can duplicate.
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