US employment increased by 201,000 in August, dollar rallies
The US nonfarm payroll for August was released today at 8.30a.m EDT. Employment increased by 201,000 in August, the Bureau of Labor Statistics reported. Additionally, the unemployment rate remained unchanged at 3.9%.
Job gains occurred across a variety of sectors. These include the professional and business services, healthcare, wholesale trade, transportation and warehousing, and mining.
Additionally, with the unemployment rate remaining at 3.9%, the 6.2 million people unemployed changed only slightly.
Accounting for 21.5% of the unemployed are the 1.3 million people facing long-term unemployment (people jobless for over 27 weeks).
The total nonfarm payroll employment increased by 201,000 in August which remains in line with the average monthly gain of 196,000 over the past year.
Moreover, the average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents to $27.16. This contributes to a total increase of 77 cents across the year.
Interestingly, economists surveyed by Reuters were expecting earnings to increase by 2.7%, payrolls to rise by 191,000 and the unemployment level to decline one-tenth of a point to 3.8%.
The monthly nonfarm payroll considerably impacts the rate of the Great British Pound against the US Dollar. The better than expected figure has strengthened the value of the dollar against all major currencies, sending GBP/USD back down towards 1.29.
The better than expected figure has increased the chance of the Federal Reserve increasing rates in the future.
IAG shares drop after British Airways report stolen customer data
International Airways Group (LON:IAG) has seen a decrease in its shares today after subsidiary British Airways reports stolen customer data.
IAG is the multinational airline holding company of Aer Lingus, British Airways, Iberia and Vueling. Additionally, the company employs over 63,000 people.
British Airways is currently investigating the theft of customer data from its website and the airline’s mobile app. Customers had their personal and financial details stolen. However, this does not include travel or passport details.
The data breech took place for a total of 15 days between August 21 and September 5. That said, it has now been resolved.
Moreover, authorities have been notified and British Airways is currently communicating recommended advice to affected customers.
British Airways’ Chairman and Chief Executive, Alex Cruz, has commented: “We are deeply sorry for the disruption that this criminal activity has caused. We take the protection of our customers’ data very seriously.”
As a result, at 11:27 BST shares in the International Airlines Group has dropped by 2.94%.
Greene King reports a soar in beer sales after World Cup success and hot weather
The UK’s largest pub retailer and brewer, Greene King (LON:GNK), has reported that 3.7 million pints of beer were sold during England’s seven World Cup Matches.
In the 18 weeks to September 2, like-for-like (LFL) sales were up 2.8%. Moreover, growth over the last 10 weeks was 3.2%.
Trading was particularly successful for the Greene King branded pubs with LFL sales increasing by 5.5%. This strong performance was driven by a successful World Cup and hot weather. On the day of England’s semi-final alone, LFL sales were up 61%.
Greene King runs over 2,900 pubs, restaurants across the nation which makes it the country’s leading pub retailer and brewer. The company employs 39,000 people.
Additionally, total beer volumes in Brewing & Brands increased by 4.0%. Own-brewed volumes increased by 0.3%.
The company has also reported it is on course to dispose of 100-110 pubs this year and are expected to open around 9 new pubs.
Greene King has said: “We continue to focus on profitably driving top line growth, developing a more streamlined and efficient organisation and further strengthening our capital structure to deliver long-term value creation for our shareholders.”
At 10:42 BST today shares were up by 8.46% at 515.63.
Iraqi oil growth under threat from internal tensions
Amidst a period of growth for Iraq’s oil production, its success is now under threat because of political antagonism between domestic parties and outside influences.
So far this summer, southern Iraqi oil production has increased by 40,000 barrels per day since July – which is statement of intent about trying to compete with the currently straggling Iranian output. Officials from Baghdad announced at an OPEC meeting in Vienna that they are working towards a quarterly production average of 3.549 million bpd, which is 109,000 bpd higher than the rate achieved in the first five months of the year.
However, political tensions look set to hamper efforts to maintain high production output, with a power struggle currently under way between Prime Minister Al Abadi and former PM Al Maliki – both of whom face pressures internally and externally. The deciding factor in the current struggles could well be a potential coalition deal between Al Abadi and Shi’ite cleric Muqtada Al Sadr, who leads the rival Sairoon movement.
The issue here is that Al Sadr has already said that time is running out to agree on a deal, and his support for the violent protests over amenities and food shortages in the southern city of Basra are well-known.
Meanwhile, the protests look likely to spill over into the rest of Southern Iraq, and Al Abadi’s opponent, Al Maliki, has just managed to form an alliance with militia commander Hadi al-Amiri, leader of the Shi’a militia Hashd al Shaabi – the latter being supported or even partly led by Iran’s Islamic Revolutionary Guards Corps (IRGC). The group look set to either consolidate their position or get a grip on the Iraqi government, in order to block Baghdad’s attempts to either bring Iraq back into the Arab fold or block Iran’s ability to use Iraq as a route to Syrian battlegrounds.
Despite the unrest, southern oil output continues to exceed expectations, with Iraq’s State Oil Marketing Organization (SOMO) reporting that 2.727 million bpd of Basrah Light have been shipped from the terminals, as well as 856,000 bpd of Basrah Heavy crude. Between the seven tankers currently berthed and the four tankers to arrive at a later date, there is an expected delivery of round 7 million barrels.
Similarly, oil production in Northern Iraq is promising, though lack of agreement between the Kurdish Regional Government and the government in Baghdad could be costing Iraqi output 200,000 bpd.
Overall, production is promising and continues to increase. However, if current struggles are not resolved they have the potential to escalate into larger scale civil unrest, with the government and prospective Western backers facing off protesters and Iranian militias and proxies.
Emerging markets continue slump with currency sell-offs
After a strong start to 2018, emerging markets have faced a procession of headwinds, with the ensuing crises only set to worsen with the latest wave of currency sell-offs.
Yesterday, the FTSE emerging index of the developing world’s largest companies saw its largest slump in three weeks, a dip of 1.6%, continuing the downward trend for a sixth consecutive day to its lowest level in over a year.
Indonesia’s rupiah was trading down close to its lowest level since the 1998 Asian financial crisis, with its Jakarta Composite down 3.8% in its largest one day slump since November 2016. Additionally, the South African rand was down by over a percent and India’s rupee hit a record low of 71.78 to the dollar, causing its central bank to intervene. However, the major slumps have been seen in Turkey and Argentina who are both in crisis, with the worst yet to come.
Capital Economics analyst Oliver Jones, said, “We think there is more to come. We doubt the main factors which have caused equities across much of the emerging world to weaken together recently will go away just yet.”
Charles Robertson, Renaissance Capital’s chief economist, said, “At the moment, emerging markets are under pressure most days and all it needs is another bad headline out of one country or another and the whole asset class gets a bit of a hit.”
With commodities slowing down, investors are shifting away from more risky emerging market investments and are buying the US dollar with increasing enthusiasm. This is normally a tell-tale sign of economic slow-down, but in the short-term poses a problem to developing countries, as the dollar climbs for a fifth day and the Federal Reserve increases interest rates, it becomes harder for developing countries to pay off their dollar-denominated debts.
Christophe Barraud, an economist at Market Securities, said, “People are looking closely at what’s happening in emerging markets, at the trade war and the fact that the United States is likely to implement another wave of tariffs against China. If you look at global growth, more and more signs are that it will slow in coming months.”
Not only are people edging towards lower-risk investments, they are moving away from the developing world asset class, as seen with the FTSE emerging index having dropped 20% since January.
In addition to these ongoing trends, immediate causes of developing world slow-down include the ongoing crisis in Argentina. The country is currently negotiating terms for a $50 billion loan from the IMF, to help its ailing economy. This has caused the country’s currency, the peso, to fall 53% against the dollar so far this year.
Similarly in Turkey, the country are in the midst of a financial crisis as inflation soars and its account deficit grows, both of which have caused the lira to dive by 40%.
While the risk of slow-down in developing countries is increasing, it is not thought that widespread stagnation in growth will occur. Following the latest updates on emerging market dips, fear spread to Europe with the FTSE closing down 1% and the DAX down 1.4%, though it is thought no macroeconomic dips will occur unless either China or the US economies slow down.
Post-Brexit visa pilot scheme announced for non-EU migrants
This morning the Home Office and Department for Environment, Food and Rural Affairs announced a joint pilot scheme for seasonal migrant worker visas post-Brexit.
The scheme will, if successful, allow up to 2500 non-EU migrants to take up seasonal employment in the UK’s agricultural sector, on a six-monthly basis. The scheme will undergo a trial run from the Spring of 2019, with Ministers saying the scheme could be terminated, should the workers fail to return to their country of origin upon completion of their employment.
Following a dip in the frequency of EU labourers coming to the UK, farmers have become increasingly concerned by the impending reality of a labour shortage post-Brexit, with Environment secretary Michael Gove saying that close attention will be paid to the pilot scheme to see how best to support the long-term needs of the agricultural sector.
“We have listened to the powerful arguments from farmers about the need for seasonal labour to keep the horticulture industry productive and profitable,” he said.
Home Secretary Sajid Javid said: “This pilot will ensure farmers have access to the seasonal labour they need to remain productive and profitable during busy times of the year.”
The news is, “a great victory”, according to Minette Batters, president of the National Farmers Union.
“Farmers and growers have seen worker availability tighten significantly in recent years, with the shortfall so far this year reaching 10%.
“Growers will take great confidence in knowing that they will have access to workers for the 2019 harvest, during what have been extremely testing and uncertain times for the sector.”
The government said that the UK will see an increase in automated harvesting solutions in coming years, though they appreciate there is a need to bring in seasonal workers in order to stay competitive. The post-Brexit scheme will be the only one of its kind since the seasonal employment scheme for Romanian and Bulgarian workers ended five years ago.
Steak restaurant Gaucho saved from collapse
Business lenders have saved the steak restaurant Gaucho from collapse. Banking groups Investec and SC Lowy, or Lomo Bidoc, won an auction saving the dining chain.
Gaucho is an Argentinian steak-restaurant serving premium quality beef and wine with restaurants located across the country.
The deal successfully saved 750 jobs across all 16 outlets.
Earlier this year, Gaucho and its sister chain CAU filed for administration. However, Gaucho was spared whilst CAU collapsed along with 540 jobs.
Sky reports that a spokesman for Investec said: “We have supported Gaucho since 2016 and continued to provide support to the business through the difficult conditions experienced in 2018.
“We know the Gaucho team well and have significant confidence they can reinvigorate and grow the Gaucho brand.
“In light of this we have acted in conjunction with SC Lowy to ensure the survival of Gaucho.
“We believe the creditor group will support the necessary CVA allowing Gaucho shortly to exit administration so we can take the business forward.”
Correspondingly, Gaucho’s current CEO, Oliver Meakin, will be stepping down from his position. The former managing director, Martin Williams, will be returning to Gaucho. That said, Williams’ specific role has not been specified.
RBS set to close additional 54 branches
RBS (LON:RBS) are set to continue the trend of highstreet withdrawal, and close 54 more branches in addition to the 162 closures previously announced for this year, with the loss of 792 jobs.
The next round of closures will be of 53 branches in November. The 54 closures announced today will be brought into force in January and cost 258 jobs, with the highest concentration of these being in the region surrounding Manchester and Liverpool.
The closures have been attributed to failed plans to float off a new challenger bank called William and Glyn.
An RBS spokesperson said, “As we are no longer launching Williams & Glyn as a challenger bank we now have two branch networks operating in close proximity to each other in England and Wales – NatWest and Royal Bank of Scotland.
“As a result we have reviewed our overall branch footprint in England and Wales and have made the difficult decision to close 54 Royal Bank of Scotland branches.”
RBS then said they would “ensure compulsory redundancies are kept to an absolute minimum”, and that there would be no more closures “until at least 2020”.
In response to the news and RBS’s comments, Unite’s National Officer Rob MacGregor has said, “It is utterly disgusting that Royal Bank of Scotland has the audacity to announce that yet more important local bank branches will permanently close their doors.”
He said that this is compounded misery for communities across England and Wales, “that have already seen the demise of local banking services”.
Additionally, “The disabled, elderly and many local businesses will today be deeply disappointed that their bank has chosen to withdraw from their community and no longer provide them with the access to banking services which we all deserve.”
In light of the news RBS have done well in trading today, with their share price currently at 251.4p, up 4.9p or 1.99% since trading began.
Taxes and minimum wage should rise, says Archbishop of Canterbury
The Archbishop of Canterbury has urged for a major rethink of the British economy.
Archbishop Justin Welby told the BBC that changes including higher taxes on technology giants, wealthy individuals and an increase on public spending.
“What is clear is that tax should be a fundamental part of being a citizen, and that those who have the most should pay the most and that no company, through being multinational, being global, can evade the responsibilities of paying its proper amount of tax based on the revenues it earns in this country,” he said in the interview.
The Archbishop said a new watchdog should be given the role to ensure firms including Google (NASDAQ: GOOG) and Facebook (NASDAQ: FB) should pay the correct amount of tax as well as use consumers data responsibly.
“They have enormous power and the use and handling of data has huge implications for people’s security,” he said.
“But it also has huge implications for the flourishing of individuals and the prosperity and fairness of our society. If you corner the market in data, you have probably more wealth advantages than if you corner the market in gold or oil.”
“Data is the real place where the money is, and we’ve always said that people with huge power should be regulated,” he added.
Archbishop Justin Welby also called for a higher minimum wage that would reflect the cost of living.
“People suffer from injustice in the economy,” he told the BBC.
“People suffer from the need to go to a food bank, even when you’ve got two adults both working. People suffer from being caught in a debt trap, because they can’t replace a basic bit of equipment they need like a new stove, a washing machine – let alone have luxuries.”
“I think one of the regrettable things in the last few years has been to call what we used to call the minimum wage a ‘living wage’. We need a living wage because that enables people to live with dignity, and the dignity of the human being is fundamental to our understanding of what a just economy is about,” he added.
Research released this week by the Smith Institute found that a rise in the minimum wage would help boost local economies by more than £1 billion.
Avocet Mining and Managem complete Guinea mine deal
Avocet Mining PLC (LON:AVM) has transferred 30% of its Tri-K gold project to the Moroccan mining group Managem SA.
Avocet is a West-African focussed gold mining and exploration company with its primary projects in Burkina Faso and Guinea. Moreover, Managem is a Moroccan company active in the mining industry.
Initially announced in October 2016, the agreement will see Managem hold a 70% interest in the Guinea-based project. This is based on various conditions. Firstly, Managem must pay $4 million for 40% of the project and related share holder loans. Next, Managem must complete a $10 million work programme. Finally, Managem must produce a bankable feasibility study for an operation with a reserve of at least 1 million ounces.
In May 2017, Managem received the 40% after paying $4 million. In August 2018 Managem sent Avocet an overview of the work programme and the feasibility study, meeting the final two conditions.
Today, Avocet has transferred the remaining 30% of the Tri-K project and the related shareholder loans. Despite this, an ongoing discussion remains between the two companies concerning the significant overspend of the costs incurred by the work programme.