Market Loop - Unemployment hits 50 year low

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14th September 2022

Bite-sized business news from the UK and beyond

Good morning Elon Musk’s college sweetheart is auctioning off mementos from their relationship. A card reading "Happy Birthday, Jennifer (aka, Boo-Boo)" is expected to sell for over $10,000. Moral: keep letters from your ex… if your ex is Elon Musk.

Today's stories

Unemployment hits 50 year low
Mixed fortunes for supermarkets

ECONOMY
Unemployment hits 50 year low

What happened?
Official data released yesterday showed that unemployment reached 3.6% in the three months to July, the lowest level since 1974.

How did we get here?
During the pandemic around 1m people left the British workforce in a move dubbed the ‘Great Resignation’. Analysts thought that the remarkable wave of departures from the labour market would fade as the economy slowed.

But that hasn't been the case. The decline in the jobless rate was driven by a sharp increase in the number of people classed as economically inactive or not seeking employment.

A further 194,000 people left the workforce in the three months to July, the most since the start of the pandemic.

Why are so many people leaving the labour market?
Much of this economic inactivity is being driven by rising levels of long-term sickness — including a surge in mental health conditions such as depression or anxiety and long Covid.

There is one unemployed person per vacancy, a record low, and the jobs are not being filled.

But unemployment could yet change
Last month, the Bank of England warned unemployment could hit more than 6% by 2025. A tight job market is also forcing employers to increase wages (though for private sector workers more than public), putting upward pressure on inflation and, by extension, interest rates.

Just last week, it looked like Liz Truss’s plan to freeze energy prices would put something of a lid on inflation. Labour market conditions like this only stand to blow it back off again.

Other stories to keep you in the loop

Asda rations 'Just Essentials' range amid soaring demand
Twitter shareholders approve $44bn Musk deal
Sainsbury’s injects £20m into boosting shop workers’ wages
US inflation remains high despite lower petrol prices
Center Parcs U-turns over plans to turf out guests on day of Queen's funeral
Firms will have to re-apply for Royal Warrants after Queen’s death
King Charles’s staff given redundancy notice during church service for Queen
Felixstowe port workers threaten a second eight-day strike in pay dispute
Joules shares dive after Next investment talks collapse

RETAIL
Mixed fortunes for supermarkets

What happened?
Data published yesterday revealed two of the UK’s biggest supermarkets are experiencing differing fortunes during the cost of living crisis.

32 years after entering the UK market German discount retailer Aldi has finally become the country's fourth biggest supermarket overtaking Morrisons. That’s according to new data from industry research body Kantar that showed Aldi’s market share has reached 9.3% with only Tesco, Sainsbury's and Asda ahead.

As households contend with food price inflation – which reached 12% in August - many are turning to discount retailers like Aldi and Lidl to manage their budgets. Shoppers are economising by buying more own-brand products, with sales of value ranges up by a third compared to last year.

Nevertheless, Kantar said food price rises will push up the average annual grocery bill by £571 to £5,181.

While budget retailers are thriving in the current environment, premium names like Ocado are starting to struggle. Yesterday Ocado Retail - a joint venture between Ocado Group and Marks & Spencer – reported that more of its customers are buying fewer items and trading down to cheaper options as they try to manage the cost of living crisis.

The online retailer expects that sales will fall this year for the first time in its 22 year history after originally forecasting mid-single digit growth.

Ocado was one of the big beneficiaries of lockdown as shoppers turned to ecommerce over in person retail when the high street closed. Since pandemic restrictions have lifted online shopping has trended down to pre-Covid levels.

The reversal in the company’s fortunes can be seen in the share price which peaked at £28 last year and closed down 13% at £6.91 yesterday.

Stat of the day

London has 9% fewer millionaires than a year ago according to a new survey

Interesting links from around the web

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The jobs employers just can't fill

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Market Loop - Unemployment hits 50 year low

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