1 US nears full employment (Khaleej Times) Federal Reserve Chair Janet Yellen said she continues to see some slack remaining in the US labour market even as the economy shows “tremendous progress” following the financial crisis and the worst recession since the Great Depression.
“We are coming close to our assigned congressional goal of maximum employment,” Yellen said. Many measures of unemployment, she said, “really suggest a labour market that is vastly improved.” Still, Yellen said, other broader measures of underemployment are “higher than one would expect” and show that some slack remains.
Unemployment in the US has been at or below five per cent since October, down from 10 per cent in October 2009. Jobless claims have been lower than 300,000 a week for more than a year, signaling firings remain at a very low level given the size of the labour force.
Yellen said most members of the Federal Open Market Committee anticipate unemployment will continue to drop, overshooting somewhat what Fed officials see as its lowest sustainable level. She added that the committee is not aiming for a level that will drive inflation above the Fed’s two per cent target. “But it’s also the case that two per cent is our goal, and it’s not a ceiling,” she added.
While the domestic economy is expanding, with solid gains in employment underpinning consumer spending, persistent global risks threaten to derail the recovery. Policy makers are concerned that slowing world growth could reduce corporate investment plans and restrain US exports.
2 UK business department may cut 4,000 jobs (Rowena Mason in The Guardian) The Conservative cabinet minister in charge of trying to save jobs in the steel industry is considering plans to cut up to 4,000 employees in his own department and its agencies, and slash costs even more deeply than George Osborne’s austerity requires, according to official leaked documents.
Sajid Javid, the business secretary and former banker, ordered a review of the Department for Business, Innovation and Skills (BIS) from management consultants McKinsey soon after taking on the job after the election. A leaked strategy paper marked “official, sensitive” shows BIS is already planning to cut a minimum of 1,526 posts before 2020.
The job losses could go as high as 4,103 at the top end of the scale if it takes the advice of McKinsey, whose proposals are under consideration. This would involve cutting the core staff of BIS by almost 40%. The aim of the strategy paper is to save BIS £350m, which goes further by £100m than the department needs to cut to stay inside the Treasury’s spending controls.
The leak also reveals how BIS is planning major cost-cutting in agencies that support apprenticeships, with plans to shut down the Commission for Employment and Skills entirely and reduce staff at the Skills Funding Agency by 40%.
The strategy paper has been leaked in the week that Labour called for Javid to be sacked over his laissez-faire approach to Tata’s withdrawal from UK steel operations, arguing he is ideologically wedded to small government and a hands-off approach to industry.
3 Uniqlo reflects Japan deflation (Gulf News) When Japan’s cheap-and-cheerful clothing brand Uniqlo raised its prices in 2014, it was an endorsement of Prime Minister Shinzo Abe’s efforts to stimulate a lacklustre economy: with confidence high, even purveyors of affordable jumpers became price setters.
But as Abe’s expansionary policies struggle to rekindle growth, Uniqlo has reversed those rises, lowering prices last year and stepping up discounts again in the first two months of this year. The brand’s owner, Fast Retailing Co Ltd, now illustrates a bleaker picture of a corporate sector squeezed by sticky overhead costs, cooling consumer enthusiasm and lower prices.
“Things aren’t looking good — they’re rather bad,” Tadashi Yanai, the group’s charismatic CEO told reporters after the retailer reported quarterly earnings. A stunning move by the Bank of Japan to introduce negative interest rates in January to try to get companies and consumers spending again has yet to boost sales, stock prices or arrest an unwelcome rise in the yen.
Japan’s economy shrank in October-December on weak exports and lacklustre consumption, and some analysts expect it to have contracted again in the first quarter of this year, pushing the country back into recession.