Pay day
The business news that matters
Hello and welcome to the latest edition of Off to Lunch, your daily round-up of the business news that matters.
The average pay of employees in the UK is growing significantly ahead of the rate of inflation, according to the latest official data from the Office for National Statistics.
Regular pay excluding bonuses was up 7.7 per cent year-on-year in the three months to the end of September. This is down from a 7.9 per cent increase last month but is still one of the biggest increases on record. In contrast, inflation was 6.7 per cent in September and is expected to come in at less than 5 per cent for October.
The ONS data also shows that the unemployment rate has stayed at 4.2 per cent in the UK but that the number of job vacancies has fallen for the 16th month in a row. Vacancies dropped by 58,000 between the start of August and the end of October to 957,000.
The graph below shows how pay in the UK has moved relative to inflation. The dark-blue line is real pay including bonuses, the light-blue line is real pay excluding bonuses and the red line is the rate of inflation. Regular real pay grew by 1 per cent in September…
This second graph, which is also from the ONS, shows how unemployment remains low compared to recent standards in the UK…
And here is some of the reaction to the figures today…
James Smith, developed markets economist at ING, said the slight drop in pay growth compared to last month, and other evidence that the jobs market is cooling - such as the fall in vacancies - will encourage the Bank of England to keep interest rates at 5.25 per cent rather than increasing them further. He said:
“All of that suggests the Bank’s forecast for private sector wage growth to hit 6.6% in March appears to be on track, and if anything, might be beaten on the downside. We think these figures can reach the 4-4.5% area by next summer, and that might be one of the catalysts for rate cuts to begin in August.”
You can find the ONS figures in full here. Other economic data out today shows that the number of corporate insolvencies rose 18 per cent year-on-year to 2,315 in October for England and Wales. This increase reflects the challenges facing businesses across the UK but also the unwinding of government support measures introduced during the Covid-19 crisis. The graph below from the Insolvency Service shows how insolvencies actually fell during the pandemic but have been rising since 2021…
You can find the Insolvency Service’s data in full here
Other stories that matter…
1. Following our look at the return of David Cameron to government yesterday, Rishi Sunak made further changes to his top team. This included a collection of ministers in business-related roles moving on, such as Andrew Griffith, George Freeman, and Paul Scully. You can find a summary of the reshuffle by The Independent here and a full run-through of all the new appointments by the government here
2. Overseas businesses are pulling more money out of China than they are putting in for the first time since at least 1998, according to official data. The BBC has looked at why this is happening ahead of a meeting between President Biden and China’s Xi Jinping this week. You can read that analysis here
3. France is getting its own Silicon Valley - Grenoble - and the city is emerging as one of the world’s leading locations for deeptech, with significant investment in semiconductors and quantum computing. You can read more in a fascinating piece by Sifted here
4. Rest of World, which looks at global tech stories, has done a big analysis on how Chinese companies have taken over online shopping carts. Shein, Temu and TikTok are now key players in this vital market. Full piece here
5. Hybrid meetings involving staff working remotely and in the office are creating inefficiency at work, as are other distractions during meetings such as struggling to find your presentation and focusing on trivial topics. This is according to The Economist’s latest Bartleby column on management, which you can read here
And finally…
A movie about Elon Musk is on the way. The production company A24 has bought the rights to Walter Isaacson's excellent biography of the Tesla boss and lined up Darren Aronofsky to direct the film. Aronofsky previously directed The Whale, Mother! and Black Swan. Isaacson's biography of Steve Jobs was also turned into a film, which was directed by Danny Boyle and starred Michael Fassbender. That film is worth watching if you haven’t already seen it - you can find more details here.
One of the many areas that Isaacson's biography covers is Musk’s obsession with video games, including why he thinks they make you a better chief executive. You can find out more about that - and the video games that Musk and other chief executives play - by checking-out an analysis by Business Leader here
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Best
Graham