U.K. companies added payrolls at a record pace in June as the reopening of the economy triggered an unprecedented scramble for staff.
The number of employees on company books climbed by 356,000, the Office for National Statistics said Thursday. Demand for staff rose, with vacancies in June alone increasing to a record 962,000, up seven per cent from May.
“The rise in vacancies confirms the ongoing struggle to hire staff,” said Suren Thiru, head of economics at the British Chambers of Commerce. “The recruitment difficulties faced by firms go well beyond temporary bottlenecks. Staff shortages may drag on any recovery.”
The figures come a day after Bank of England Deputy Governor Dave Ramsden highlighted the unexpected buoyancy of the labor market and signaled that officials may soon have to consider whether to withdraw emergency stimulus to keep inflationary pressures in check.
Wages including bonuses rose an annual 7.3 per cent in the three months through May, the fastest on record. Statisticians cautioned that the figures are being distorted by the pandemic.
The increase reflected depressed wages a year earlier, the loss of low-paid jobs and the return to full-time work of staff who were previously furloughed on just 80% of their pre-pandemic salary. The ONS estimates underlying pay growth is running at 3.9 per cent to 5.1 per cent, and at between 3.2 per cent and 4.4 per cent when bonus payments are excluded.
”Do we think that is going to lead to sustained wage pressures? At the moment the answer would be ‘no,’” said Sanjay Raja, senior economist at Deutsche Bank. “I think we’ll see a string of very strong near-term wage growth, but we do think that will subside as we move into 2022. By the end of the next year, official wage data should come back down to reality. I don’t think we should lose sight of the fact that there’s still plenty of slack in the labor market.”
For the Bank of England, the key question is what happens when wage subsidies for furloughed workers end on Sept. 30. While the number of people receiving the benefit has fallen sharply — new ONS estimates Thursday put the figure as low as 1.1 million — many of them are likely to find themselves out of work come the autumn. Economists expect the jobless rate to reach 5.2 per cent by the end of the year.
Another risk facing the economy is that removing most of the remaining restrictions on July 19 may trigger a spike in coronavirus infections, making consumers more cautious about going out and spending.
The number of vacancies increased to 862,000 in the second quarter, above the pre-pandemic level for the first time. Demand for staff increased across most sectors of the economy last month.
Chancellor of the Exchequer Rishi Sunak hailed the latest labor market data as evidence that the economy is “bouncing back.”
British retailers contacted by Bloomberg say although there are clear issues with recruiting warehouse workers and delivery truck drivers currently, the much bigger challenge is staff, or sometimes whole teams, being forced to self-isolate when contacted by the National Health Service track and trace system.
The impact “will only get worse right across the economy, as cases are already rising fast and the final restrictions are eased,” said Helen Dickinson, chief executive of the British Retail Consortium.
Mike Cherry, national chairman of the Federation of Small Businesses, said labor recruitment issues in the fields of agriculture, tourism and hospitality mean many small firms are struggling to reopen fully despite being able to do so for the first time in more than a year.
The total number of people in work rose by 25,000 in the three month through May, much lower than the pace of previous periods. Inactivity — those neither in work nor looking for job — rose by 71,000. That resulted in a 68,000 drop in the unemployment level.
The jobless rate, which has been held down by the government’s furlough program, rose to 4.8% in the three months through May — only marginally above where it was before the pandemic struck
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
