Cable Update (GBPUSD)

1. Business optimism at a 22-year high
2. Court rejects union plea on tribunal fees
3. Recruiters struggle to meet rising demand
4. City barrister disbarred over false CV

IN UK ECONOMY

1. Carney defends BoE’s decision on guidance
2. Police and military face 40% job cuts
3. Foreign visitors to UK spend over £20bn
4. Tens of thousands lose power after storm

It found that earnings growth was likely to remain muted, with average basic pay predicted to increase by 2 per cent this year – up from 1.6 per cent forecast in the previous quarter.
Economists expect the unemployment rate to remain steady at 7.1 per cent of the workforce in official labour market data, to be released on Wednesday, according to a Reuters poll. The rate has fallen from 7.9 per cent in the past nine months.
The rapid drop has forced the Bank of England to abandon its target of a 7 per cent jobless rate as the potential trigger for considering an interest rate rise.
The central bank’s forward guidance will now focus on a wider range of elements – notably spare capacity in the economy. It will also monitor indicators including participation in the labour market, average hours worked, recruitment difficulties, wage growth and the extent of involuntary part-time working.
In the CIPD survey, the net employment balance – those planning to increase staff in the first quarter minus those planning to reduce them – fell to plus 16 from plus 24 three months ago.
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It found expectations of employment growth were only slightly higher in the south of England than in the north, in contrast to the pattern of recent months.
Gerwyn Davies, the CIPD’s labour market adviser, said: “Employment growth, normally a lagging indicator of recovery, seems to have preceded the stronger signs of growth we’re now seeing. So it is unsurprising that employment intentions are now dipping just as economic growth seems to be taking hold, with employers needing to tackle the major productivity hangover affecting the UK economy.”
He said weak productivity partly explained why a majority of employers expect to continue awarding below-inflation pay rises for their workforce.
The Bank of England predicts that the five-year squeeze on real earnings will end in the second half of this year. But few forecasters expect substantial rises unless productivity starts to improve substantially.
Howard Archer, an economist at IHS Global Insight, said he expected employment growth would “increasingly be limited by increasing productivity as many companies are able to make greater use of the workers they already have”.
Meanwhile, the number of new job vacancies in the City dipped slightly in January, compared with the previous year, in spite of the London financial services sector’s recently improved confidence.
Morgan McKinley, a financial recruitment specialist, said the number of newly available positions was down by 6 per cent on January 2013.
The number of people chasing City jobs was up by 64 per cent on a year ago, partly fuelled by French bankers seeking a move because of their country’s difficult economic situation and higher taxes.
Barclays announced plans last week to cut 7,000 banking jobs in the UK. But Hakan Enver, operations director at Morgan McKinley Financial Services, forecast continued optimism in the City.
“Recent reports that pension funds are in their strongest financial position for two-and-a-half years, and are helping the UK government bonds reverse the deepest losses since 1994, means that we predict increased hiring activity within the asset management arena as we progress through 2014,” he said.