UK payrolls down by 178,000 over last year; Bundesbank chief defends central bank independence after Trump’s attacks on Powell – as it happened
Today’s jobs report shows that there has been a steady drop in the number of payrolled employees in the UK this year,Company payrolls peaked in July 2024, the month of the general election, at 30,451m,But they have fallen in most months since; by last month, payrolls had dropped to an estimated 30,265m.
That, the ONS reports, is a decline of 178,000 employees over the 12-month period since June 2024,This decline will fuel criticism of Rachel Reeves's budget last autumn, which hiked taxes on employers, leading to warnings that companies would cut back on hiring,Today’s jobs report estimates that last month, payroll numbers fell by 41,000 people,But there is some good news for the government,The ONS has revised its estimate for May’s payroll numbers, to a decrease of 25,000, not the whopping 109,000 fall first estimated.
That suggests the jobTime to recap….UK unemployment climbed and wage growth slowed in the three months to May, according to official figures that will pressure the Bank of England to cut interest rates next month.Data from the Office for National Statistics, released on Thursday, showed that Britain’s official unemployment rate rose to 4.7% in the three months to May, up 0.1% from April to reach the highest level since June 2021.
Pay growth slipped from 5,3% to 5%, as forecast by City analysts,Unemployment had been expected to remain at 4,6%,In the private sector, pay rises were 3.
7% on average in May, a sharp fall from 4.3% in the three months to April.The ONS director of economic statistics, Liz McKeown, said the labour market “continues to weaken”.The jobs data showed that payrolls have fallen by 178,000 over the last year – a worrying decline, but less severe than expected after May’s payroll data was revised higher.The chances of a UK interest rate cut in August pushed higher after the data was released, to over 77%.
The head of Germany’s Bundesbank has warned that the high import tariffs U.S.President Donald Trump currently plans to impose on European goods could push the German economy into recession.Bundesbank President Joachim Nage also warned against interfering with the independence of central banks, following Donald Trump’s attacks on Federal Reserve Chair Jerome Powell.Nagel says:“Independence of central banks is the DNA of central banks.
So I believe it is dangerous to play with the independence of a central bank.”Elsewhere….A “challenging” luxury market and retreat from gaming have prompted a fall in sales and profits at Mike Ashley’s Frasers.Jaguar Land Rover has said it will axe up to 500 management jobs in the UK after reporting a plunge in sales linked to Donald Trump’s tariffs.An HS2 subcontractor has been terminated from its role supplying labour to build a £100m “bat tunnel” following an investigation into allegations of overinflating rates for staff.
On the economic front, US jobless claims fell last week while retail sales across America rose faster than expected in June,This data makes an early US interest rate cut less likely, economists said,And the amount of tax paid by current and former non-doms in the UK rose by 2% in 2023-24, new data shows,ING say today’s US jobless claims, and retail sales, data suggest there is little need for an imminent rate cut,James Knightley, chief international economist, US at ING, says:Today’s US data is generally on the firmer side in terms of activity and jobs, while import prices are a touch softer than anticipated.
Overall, it supports the view that there is little pressing need for another interest rate cut from the Federal Reserve,Irish exports to the US rocketed in the first five months of the year as pharma, food and whiskey manufacturers scrambled to beat Donald Trump’s tariffs, my colleague Lisa O’Carroll writes,Overall exports to all parts of the globe went up by 47% to €134,4bn compared with the same period last year, Ireland’s the Central Statistics Office said,Jane Burmanje, statistician in the international trade in goods division, explained:“This is largely driven by growth in the exports of goods to the US.
Year to date, January to May 2025 exports of goods to the US increased by 153% (€42.8 billion) to €70.8 billion compared with the same period last year (€28 billion).”Exports of medical and pharmaceutical products represented almost 58.7% of all goods exports in May alone, according to the Central Statistics Office, a government agency.
Its monthly trade data shows that exports of pharma year on year rose by a massive 74% to €13.9bn in May.Imports of the same products also increased, shooting up by 60% to €703.8mn year on year.This could reflect the complex supply chain involving active ingredients or sometimes entire drugs being imported by multinationals allowing the to book their profits in Ireland.
The head of Germany’s Bundesbank has also warned that Donald Trump’s trade wars could drive Europe’s largest economy into recession,Speaking in South Africa, where G20 finance ministers are meeting, Bundesbank President Joachim Nagel warned:“If tariffs materialise in August, a recession in Germany in 2025 cannot be ruled out,”A cautious start to trading in New York has seen the main indices rise slightly in early trading,Here’s the details:Dow Jones industrial average: up 129 points or 0,3% at 44,384S&P 500: up 6 points or 0.
1% at 6,270 pointsNasdaq Composite: up 24 points or 0,12% at 20,754 pointsBack in the UK, an HS2 subcontractor has been terminated from its role supplying labour to build a £100m “bat tunnel” following an investigation into allegations of overinflating rates for staff,BAM Nuttall (BAM), part of a consortium that is the main works contractor for the much-delayed £80bn-plus high-speed rail line between London and Birmingham, said it had ended the involvement of Danny Sullivan Group (DSG) on projects where “compliance issues have been identified”, my colleague Mark Sweney reports,It is understood that BAM sent a letter to DSG this week stating it is to terminate its contract on the 1km (0,6-mile) mesh structure to shield bats in Buckinghamshire ancient woodland, so that it can proceed with another labour supplier.
HS2 Ltd launched a separate investigation in May into DSG’s role providing workers to build the West Midlands section of the line amid allegations about its billing practices.More here:US retail sales have risen more rapidly than expected – which may be a sign that tariffs are pushing up cost.US retail and food services sales are estimated to have risen by 0.6% month-on-month in June, and were 3.9% higher than in June 2024.
Although the data is seasonally adjusted, it is not adjusted for price changes – so this increase could reflect higher prices, rather than increased volumes,Consumer spending rebounded in June,Retail sales rose 0,6% last month, easily beating expectations of +0,2%.
It was the first monthly gain since March.Control group sales, a key GDP input, increased by 0.5%, outpacing expectations of +0.3%.pic.
twitter.com/j2BgK8ROHxThe report shows that sales at retail trade sites were up 3.5% on an annual basis, while spending at non-store retailers (web retailers) jumped by 4.5%.Sales at food service and drinking places were up 6.
6% from June 2024.Solid retail sales spending is an encouraging sign for the US economy; it could also sway some Federal Reserve policymakers from voting to cut interest rates soon.The US labor market continues to shrug off the impact of Donald Trump’s trade wars.The number of American filing new ‘initial claims’ for unemployment support fell by 7,000 last week to 221,000, on a seasonally adjusted basis.Jobless claims fall for a 5th straight week, and come in better than expected.
With that and better than expected retail sales, yields are up this morning,All in the middle of the President's pressure campaign on the Fed chair,Jobless claims at the lowest level since… pic,twitter,com/eaqhalfUd0Initial claims are a proxy for layoffs, so this indicates US companies are still holding onto staff despite the uncertainty about where tariffs will fall.
The money markets are still pricing in two more quarter-point cuts to UK interest rates this year, but some traders think the Bank of England could lower borrowing costs faster,Bloomberg reports that some traders have placed wagers in the UK options market that could net a more than 1,000% return if the Bank of England delivers more cuts this year than rates pricing suggests, ignoring the fact inflation has hit an eighteen month high,Bloomberg report:The bets were initiated on Thursday by purchasing option strategies tied to the Sterling Overnight Index Average rate — a proxy for policy rates,They’ll pay out out almost £20m on initial outlays of around £1,5m if the benchmark rate falls to 3.
5% this year — a quarter-point more than money markets are currently implying.The wagers could entail such unusually large winnings because they’re somewhat contrarian.Expectations for BOE easing have been dialed back this week after stronger-than-expected UK inflation and wage growth figures.Over in Somerset, The world’s largest crane has lifted a 245-tonne dome into place on top of the first nuclear power station to be built in the UK for 30 years.The crane, known as Big Carl, lifted the 14-metre tall steel construction onto Hinkley Point C’s second reactor building this morning.
With the dome in place, the fit-out of the 44-metre-high Unit 2 of Hinkley Point C can now accelerate.Tom Greatrex, chief executive of the Nuclear Industry Association, said:“The lift showcases the value of Hinkley Point C: the project is creating thousands of skilled, well-paid jobs like the operatives who lifted the dome into place, and billions of investment are flowing into the local area.Hinkley is driving economic growth in our industrial supply chain right across the country and proving the benefits of replication, with Unit 2 construction going 20-30% faster than Unit 1.We should secure the replica project at Sizewell C as soon as possible to preserve and expand the jobs, investment and construction expertise that Hinkley will provide.”Earlier this week, hundreds of workers at Hinkley Point C staged a wildcat strike in protest against alleged bullying by the project’s supervisors.
Here’s Kit Juckes, foreign exchange expert at Société Générale, on the market moves yesterday following reports (later denied) that Donald Trump had floated a plan to sack Fed chair Jerome Powell,Yesterday evening’s Washington shenanigans aren’t just the stuff of ‘silly season’ because they reflect the President’s desire to replace Fed Chairman Jay Powell with someone who would be more enthusiastic about cutting rates,Maybe this is aimed at wearing the Chairman down, or maybe it was a trial balloon, to see how the market might react,We got an 8bp fall in December Fed Funds pricing, a smaller fall in 10year yields, a spike in 30y yields, a 1% rise in EUR/USD and a 1% fall in the S&P 500,A reaction, but certainly not a big enough one to stop the President’s campaign as he mutters under his breath ‘will no one rid me of this turbulent banker?’Yesterday we got a glimpse of what might happen if the Trump administration removed Fed chair Jerome Powell from office, says Deutsche Bank strategist Jim Reid.
Using the probabilities from Polymarket, the likelihood of Powell’s removal this year had mostly been in the 10-15% range since January,But this week we moved to a higher range and yesterday we peaked at almost 40% before retracing back to around 20% by the close,That was still around 5pp lower than the open after Trump said he was “not planning” on firing Powell and that it was “highly unlikely, unless he has to leave for fraud”,In the ~60 minutes between the CBS story broke that Trump was considering firing Powell, to the qualifying denial, the probability of Powell being ousted by the end of the year increased by around 15pp to 38%,Over this period, 10yr USTs yields climbed around +5bps, 30yr yields rose around +11bps, 2yr yields fell around -5bps and the EUR rose around +1
Internet-safe iPhone for children goes on sale for £99 a month
A neutered iPhone, stripped of web browsers and social media apps, is going on sale to parents worried about their children’s phone use, but the “peace and freedom” its creators promise will come at a steep price.The pared-back version of the top-selling handset, which will not allow internet searches, gaming or downloads of Instagram, TikTok, Snapchat and other social media, is being offered in the UK for £99 a month by a US company that wants children to “reconnect with real life, not just reduce screen time”.At more than double the price of a typical two-year iPhone contract, Sage Mobile, an iPhone 16 handset loaded with custom software, will be a pricey way to avoid online harms. But it reflects growing parental dilemmas over the best way to start their children’s digital lives.Research has shown children with problematic smartphone use are twice as likely to experience anxiety and almost three times as likely to experience depression compared with those whose use did not resemble addiction
WeTransfer says user content will not be used to train AI after backlash
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Elon Musk’s Grok chatbot melts down – and then wins a military contract
Hello, and welcome to TechScape. This week, Elon Musk’s X, formerly Twitter, saw its artificial intelligence chatbot Grok go Nazi. Then its CEO resigned. In the past three years of Musk’s ownership of the social network, it feels like X has weathered at least one public crisis per week, more often multiple.Last week, Musk’s artificial intelligence firm, xAI, saw its flagship chatbot Grok declare itself a super-Nazi, referring to itself as “MechaHitler”
AI chatbot ‘MechaHitler’ could be making content considered violent extremism, expert witness tells X v eSafety case
The chatbot embedded in Elon Musk’s X that referred to itself as “MechaHitler” and made antisemitic comments last week could be considered terrorism or violent extremism content, an Australian tribunal has heard.But an expert witness for X has argued a large language model cannot be ascribed intent, only the user.xAI, Musk’s artificial intelligence firm, last week apologised for the comments made by its Grok chatbot over a 16-hour period, which it attributed to “deprecated code” that made Grok susceptible to existing X user posts, “including when such posts contained extremist views”.Sign up for Guardian Australia’s breaking news emailThe outburst came into focus at an administrative review tribunal hearing on Tuesday where X is challenging a notice issued by the eSafety commissioner, Julie Inman Grant, in March last year asking the platform to explain how it is taking action against terrorism and violent extremism (TVE) material.X’s expert witness, RMIT economics professor Chris Berg, provided evidence to the case that it was an error to assume a large language model can produce such content, because it is the intent of the user prompting the large language model that is critical in defining what can be considered terrorism and violent extremism content
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