Business News Round Up (09/03/2023)
Economic growth up slightly in early 2023, but high rates, inflation begin to bite
Economic growth increased slightly in early 2023, led by “steady” consumer spending, though high inflation and higher interest rates were beginning to bite, according to the Federal Reserve’s Beige Book released Wednesday. “Overall economic activity increased slightly in early 2023,” according to the Beige Book report based on anecdotal information collected by the Fed’s 12 reserve banks through Feb. 27. There was an even split among districts reporting economic growth, with six seeing “little or no change in economic activity,” since the last report, and six reporting “economic activity expanded at a modest pace,” according to the report. The growth since the start of the year was driven by consumer spending that generally “held steady,” the report suggested, though several districts flagged concerns about rising credit card debt at a time when rising rates and inflation are making a dent in consumer income. The labour market remains tight – as demand continues to outweigh supply – with several districts highlighting the lack of available childcare as a headwind to bringing more workers into the labour force. There were some signs, however, that firms are regaining some power in the labour market as a “few Districts noted that firms are becoming less flexible with employees and beginning to reduce remote work options,” according to the report. Inflation pressures, meanwhile, remained “widespread,” the report said, with several districts reporting rising input costs, particularly for energy and raw materials, just as firms are “finding it more difficult to pass on cost increases to their consumers.”
Permanent staff appointments for the North rise for first time in four months
Permanent staff appointments across the North increased during February, the latest KPMG and REC, UK Report on Jobs: North of England survey revealed. This ends a four-month sequence of contraction. The UK-wide trend saw permanent placements decline midway through the first quarter. Temp billings also expanded across the North of England, albeit at a softer pace. Meanwhile, accelerated increases were seen for both permanent and temporary job vacancies, while recruitment agencies also signalled softer deteriorations in the supply of both types of candidates. Nevertheless, permanent salaries continued to rise, and at the fastest pace for four months. By comparison, temporary wage inflation eased to its weakest for almost two years. Warren Middleton, office senior partner at KPMG in Manchester, said: “It’s encouraging to see employers across the North had better fortunes filling vacancies in February. Indeed, it was the only region to see permanent appointments return to growth last month, arresting a trend of decline seen since October of last year. This may partly be down to businesses increasing salary offers for permanent new joiners at a faster rate than on average across the UK in order to attract talent.” He added: “Despite these positive signs on candidate availability, the findings also show that vacancies are still outpacing appointments, suggesting Northern firms are still having some difficulty in finding the right talent.” The seasonally adjusted Permanent Placements Index posted above the 50.0 no-change mark in February, signalling the first monthly rise in permanent staff appointments across the North of England since September 2022. Moreover, this contrasted with the UK-wide trend, which showed a fifth consecutive decline.
UK economy: exports to drop sharply – British Chambers of Commerce
The UK economy will not return to its pre-pandemic size until the final quarter of 2024, British Chambers of Commerce forecasts. British Chambers predicts the UK economy will shrink by 0.3% this year. It forecasts growth in 2024 of 0.6%, which would be very weak expansion by historical standards. In late January, the Centre for Economics and Business Research highlighted the UK’s significant trailing of France in the context of gross domestic product across 2022 relative to pre-pandemic levels. The CEBR said then: “GDP in France is estimated to have been 0.7% higher than pre-pandemic levels across 2022, marking the best performance on this measure amongst Western Europe’s five largest economies. For comparison, the UK economy was an estimated 0.4% smaller than its pre-pandemic size across 2022, meaning the gap between France and the UK on this measure stood at 1.1 percentage points. With France expected to see additional growth this year, and the UK set to contract, this divergence will widen further by the end of the year, reaching an estimated 3.0 percentage points.” British Chambers forecasts the UK will avoid technical recession, defined as two consecutive quarters of contraction.
Collaborative wave power project aims to decarbonise subsea operations
An ambitious collaborative project to power subsea equipment with wave power and subsea energy storage has taken to the seas in the north of Scotland. The £2million demonstrator project, called Renewables for Subsea Power (RSP), has connected theBlue X wave energy converter – built by Edinburgh company Mocean Energy – with a Halo underwater battery developed by Aberdeen intelligent energy management specialists Verlume. The two technologies have been deployed in the seas off Orkney and have now begun a minimum four-month test programme where they will provide low carbon power and communication to infrastructure including Baker Hughes’ subsea controls equipment and a resident underwater autonomous vehicle provided by Transmark Subsea. The European Marine Energy Centre (EMEC) has supplied instrumentation to measure the speed and direction of currents during the deployment, whilst Wave Energy Scotland has provided £160,000 to support the integration of the umbilical into the wave energy converter. The project aims to show how green technologies can be combined to provide reliable low carbon power and communications to subsea equipment, offering a cost-effective alternative to umbilical cables, which are carbon intensive with long lead times to procure and install.