The UK’s economy rebounded more slowly than expected in May, growing just 1.8% from the previous month, as the gradual easing of lockdown had a modest impact.
Manufacturing and house building showed signs of recovery in May as some firms saw staff return to work.
But the Office for National Statistics said the economy was “in the doldrums”.
As a result of big contractions in previous months, the UK economy is now 24.5% smaller than it was in February, the ONS added.
What do the experts make of the latest figures?
The return to economic growth in May was described as “disappointing” by economists, who had expected an expansion of 5% or more.
The increase came after a fall of 6.9% in March and a record 20.4% decline in April.
In the three months to May, the economy shrank by 19.1% compared with the previous three-month period, the ONS said.
“The economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.
“In the important services sector, we saw some pick-up in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”
Are things going to get better now?
Mr Athow told the BBC’s Today programme that there could be signs of improvement in next month’s release of figures.
“Some of the survey data we’re seeing suggests that as more of the economy reopened and as some of the restrictions were eased, we did see stronger performance in June, but it’s really early,” he said.
“You’ve got one month of firm data and some indicators suggesting June might be stronger, but there’s a long road to go here and we’re still trying to figure out what the best data is to understand the overall picture.”
Which parts of the economy returned to growth?
May’s modest month-on-month expansion came as sectors such as manufacturing, construction, DIY retailers and garden centres were allowed to reopen.
Manufacturing grew by more than 8% during the month, as did construction.
What is GDP?
Gross domestic product (GDP) is the sum (measured in pounds) of the value of goods and services produced in the economy.
But the measurement most people focus on is the percentage change – the growth of the country’s economy over a period of time, typically a quarter (three months) or a year. It’s been used since the 1940s.
It’s the main way of determining the health of the UK economy.
What’s the political reaction?
“Today’s figures underline the scale of the challenge we face,” said Chancellor Rishi Sunak.
“I know people are worried about the security of their jobs and incomes. That’s why I set out our Plan for Jobs last week, following the PM’s new deal for Britain, to protect, support and create jobs as we safely reopen our economy.
“Our clear plan invests up to £30bn in significant and targeted support to put people’s livelihoods at the centre of our national renewal as we emerge through the other side of this crisis.”
Can the economy get back on track?
A quarter of the economy’s output was lost under lockdown in March and April, and May’s figures show even firms who are back in business may be struggling to get on track.
It’s one thing being allowed to open the doors again (and some firms remain mothballed); another to be confident you can do so safely. And then there’s the biggest hurdle of all, ensuring customers are willing and able to spend again.
As job losses mount, it clear that even some firms who qualify for government help are faltering. Some won’t have made it as far.
The Bank of England’s own chief economist is among those who’ve voiced hopes for a “V-shaped” recovery – a swift and full bounce back in activity.
But history tells us that economies can take years to make up lost ground after a slump. The blow from this crisis was felt within days, convalescence may be tougher. And in the meantime, the livelihoods of many may feel the strain.
What are the chances of a speedy recovery?
The British Chambers of Commerce said May’s “modest rally” in economic growth did little to alter “the UK’s historically downbeat growth trajectory”.
“The pick-up in output in May is more likely to reflect the partial release of pent-up demand as restrictions began to loosen rather than evidence of a genuine recovery,” said the BCC’s head of economics, Suren Thiru.
“While UK economic output may grow further in the short term as restrictions ease, this may dissipate as the economic scarring caused by the pandemic starts to bite, particularly as government support winds down.”
Thomas Pugh, UK economist at Capital Economics, said the data showed the recovery was “maybe not so V-shaped after all” – a reference to remarks last month by Bank of England economist Andy Haldane, who said the UK was on track for a quick recovery.
He said May’s figure was “a disappointing first step on the road to recovery” and suggested that “hopes of a rapid rebound from the lockdown are wide of the mark”.
“Indeed, the path to full economic recovery will probably be much longer than most people anticipate,” he added.
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A $900 Billion Plan Would Help the Economy, but Not Fix It – The New York Times
The economic recovery, slowing for months, is in danger of going into reverse. That’s why a growing list of economists, business lobbyists and other advocacy groups are urging lawmakers to rally around the $908 billion aid package currently gaining bipartisan support in Congress.
A plan of that size would fall short of doing everything that economists argue Congress should do to help workers and businesses during the coronavirus pandemic. But they said that if lawmakers could get the details right, Congress should do it anyway.
“It’s within the range where you could argue it does enough good that it would be worth taking it,” said William E. Spriggs, a Howard University economist who served in the Labor Department under President Barack Obama. “But it leaves a ton on the table, and still leaves us with a big problem going forward.”
The $908 billion compromise is not even a legislative proposal yet. It is a bipartisan framework, assembled by a group of senators led by Susan Collins, Republican of Maine, and Joe Manchin III, Democrat of West Virginia. Many of its details are still being negotiated, including how the government ought to distribute more aid to small businesses.
Once the bill is complete, its success is not assured: Senator Mitch McConnell of Kentucky, the majority leader, has stopped short of endorsing it, and so has President Trump, who would need to sign any legislation approved in the lame-duck congressional session. But Speaker Nancy Pelosi of California has backed it as a starting point for renewed negotiations, and President-elect Joseph R. Biden Jr. said Friday that he was “encouraged” by the effort.
Experts say the plan would provide relief to several battered corners of the economy. It includes nearly $300 billion for small-business aid, $180 billion for unemployed workers, and $160 billion for state, local and tribal governments.
The plan wouldn’t help everyone who needs aid, and the support might not last long enough to bridge the economy to the rebound that is expected to come when coronavirus vaccines are widely distributed. And much depends on the details, particularly when they come to Americans who have been unemployed for months and small businesses that struggled to tap government programs early in the pandemic.
But if the plan was passed soon, it would send money out quickly. And with virus cases rising and economic gains stalling, a growing number of politicians are willing to accept such a compromise.
“You get most of the way there, you don’t turn around at the end,” said Gov. Mike DeWine of Ohio, one of several Republican governors who has called for more federal aid. “We can’t stop now, and I guess I would say that to my friends in Congress: We need your help one more time here. Help get us through what’s going to be a very tough winter.”
November employment data released by the Labor Department on Friday underscored his point. Job growth slowed to 245,000, the weakest monthly gain of the recovery so far. The number of people trapped in long-term unemployment rose to nearly four million. Restaurants and retailers, whose rehiring of furloughed workers helped power the rebound in earlier months, cut jobs in November. The number of people who have lost their jobs permanently rose, the latest sign that the crisis will leave lasting economic scars.
“I do feel a greater sense of urgency now, especially after seeing the jobs report,” said Karen Dynan, a Harvard economist and former Treasury Department official in the Obama administration. “We’re really starting to see the cracks now.”
Perhaps the top goal for the aid package is preventing millions of families from losing their only source of income the week after Christmas.
As many as 13 million Americans are receiving benefits under two programs that expanded and extended the existing unemployment insurance program. Those programs, created by Congress in the spring, are set to expire at the end of the year — an outcome that members of both political parties have said they want to avoid.
The aid package being discussed in Congress would extend both programs, while also reviving the extra unemployment benefit that expired over the summer, most likely at half the original $600-a-week level. But depending on how the negotiations go, it may not further extend eligibility for people who are close to the end of their benefits already.
Putting money into the pockets of the unemployed could be good for the broader economy: Research has found that unemployment benefits are among the most effective forms of economic stimulus because recipients are likely to spend rather than save the money. And by helping families avoid foreclosures, evictions and debt defaults, unemployment benefits can prevent the financial damage from spreading.
But the most compelling argument may be not economic but humanitarian: Without the money, many families could go hungry, become homeless and face other hardships.
“If households are in financial catastrophe, then we have a moral obligation as a country to help households regardless of what their spending or not spending does to the aggregate economy,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution.
Money in the proposal would similarly provide a lifeline to some small businesses that risk closing for good amid weak demand between now and when vaccines become available. Even large companies could be hurt if many smaller firms go under, which is one reason large business groups have called for immediate aid to small companies.
“Jobs created by small businesses impact big businesses’ ability to sell to those people,” said Suzanne Clark, the president of the U.S. Chamber of Commerce. “So we’re really worried about the totality of the ecosystem and the number of small businesses just hanging on by a thread.”
But many business groups warn that the compromise plan does not include enough money, potentially leaving some companies without aid, in a repeat of the government’s initial round of Paycheck Protection Program loans in the spring. Lawmakers could again find themselves almost immediately facing pressure to allocate more money to the program.
The structure of the aid is unlikely to provide a long-term bridge for certain types of businesses, including many in the hospitality industry, that might not return to pre-pandemic levels of activity for months or years.
The deal would provide money to state and local governments, though the $160 billion being discussed is a small fraction of the $1 trillion that Democrats initially proposed last spring.
State and local aid has been a major sticking point in negotiations, with Mr. McConnell dismissing it as a “blue-state bailout.” But Republican-led states face some of the biggest revenue gaps.
States and local governments, which have been battered by pandemic-related costs and collapsing tax revenues, have already cut more than 1.3 million jobs, and much deeper cuts loom. Those cuts could have both short- and long-term consequences. A new round of public-sector layoffs and furloughs, combined with slowing private-sector hiring, could derail the precarious recovery. And cuts to schools, public transportation and other services could make it harder for the economy to regain momentum once the pandemic has passed.
Even if Congress does reach a deal before the end of the year, Mr. Biden warned Friday that lawmakers would need to spend more once he took office. “The country’s going to be in dire, dire, dire straits if they don’t,” he said.
Canadian economy added 62,000 jobs in November, Statistics Canada says – KitchenerToday.com
Statistics Canada says the economy added 62,000 jobs in November compared with an addition of 84,000 in October.
The gains were mostly focused in full-time work with a gain of 99,000 jobs, offset somewhat by a decline in part-time work of 37,000 positions.
The average economist estimate had been for a gain of 20,000 jobs and the unemployment rate to remain unchanged, according to financial data firm Refinitiv.
The gains in November left the country 574,000 jobs short of recouping the approximately three million jobs lost from lockdowns in March and April that sent the unemployment rate skyrocketing to 13.7 per cent in May.
Last month, the unemployment rate fell to 8.5 per cent compared with 8.9 per cent in October.
But the pace of gains has slowed, with employment rising by 0.3 per cent in November compared to an average of 2.7 per cent per month between May and September.
In Waterloo Region, the unemployment rate dropped from 10.8 per cent in October to 9.1 per cent in November.
Local entrepreneurs pitch their ideas for circular food economy – GuelphToday
Local entrepreneurs got the chance to pitch their ideas to create a circular food economy earlier this week
The second cohort of graduates from the R-Purpose MICRO program presented their ideas for a more circular economy to a panel of judges for constructive criticism.
The virtual Demo Day event allowed companies to present business pitches and make connections with leaders from various industries.
The program is aimed at micro-companies who have fewer than five employees and is part of Guelph-Wellington’s Our Food Future initiative.
“This initiative is to create Canada’s first circular food economy by 2025,” said Cher Mereweather, president and CEO of the Provision Coalition. “The circular food economy is inspired by the planets natural cycle, it re-imagines and regenerates the systems that feed us, it eliminates waste, it shares in economic prosperity and it nourishes our community.
Each company has an individual idea to create a more circular food economy, from home hydroponic kits to soy-based cream liqueur.
The judges came from various backgrounds:
– Barb Swartzentruber, Executive Director for the City of Guelph Smart Cities office
– Sheri Evans, local development manager for Sobeys
– Marcia Woods, CEO and co-founder for Freshspoke
– Evan Clark, vice-chair of the Golden Triangle Angel Network
“What’s amazing is the one thing we all share,” said Clark. “We’re all optimistic about a world that can be a little bit better and a little bit more environmentally friendly. We’re all here to combat a variety of things related to climate change and how we connect with each other. ”
Out of 13 presentations, the judges picked 5th bean, a soy-based cream liqueur company, and A Friendlier Company, a company that is creating reusable takeout packaging, as the runners up.
However, a unanimous vote crowned Well Baked Box as the winner. The company works on creating sustainably-sourced boxed baking and snack kits that are delivered. The kits are all free of gluten, dairy and refined sugar.
“I think being very niche in baking is a very smart play,” said Woods. “Being able to provide that for folks who have specific dietary requirements is very cool.”
Husband and wife duo Stewart Russell and Courtney Clayson-Russell were inspired by their passions for helping others make healthier choices. Russel said when they created the company, they wanted to make a commitment to running a sustainable and environmentally conscious business.
Russell said the taking the R-Purpose MICRO course shaped the direction Well Baked Box is going to be taking.
“This has been crazy, what we thought we were doing at the being of R-Purpose MICRO and what we’re doing now and planning to do is completely different,” said Russell. “It was very special for us to be part of the course.”
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