Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.An unnamed large employer’s late supply of earnings information to the UK statistics agency risks skewing the country’s main official measure of wage growth, raising doubts about data that guides monetary policy. The Office for National Statistics said in a little-noticed footnote to its release of earnings figures last week that “as an exception”, it was working on revisions that could go further back in time than usual, “to allow for late and updated returns we received from one business to be included, as part of improving the quality of these estimates”. Including the mystery employer could have “a small impact at whole-economy level”, the ONS said, as the agency promised a full explanation when it published the revisions. The earnings figures issued by the ONS are based on a survey of businesses, and are closely watched by the Bank of England when taking interest rate decisions.The ONS also said last week it was reviewing the way it adjusts earnings figures to account for seasonal fluctuations — an exercise it conducts periodically — and that “if required” it would implement revisions to its entire historical series of wage data in “the early part of 2025”. The revisions are potentially important because the strength of UK wage growth on almost any measure has been a puzzle for analysts, at a time when the economy and jobs market are stagnant. The latest ONS figures showed average weekly earnings — excluding bonuses — were 5.9 per cent higher in the three months to January than one year earlier.Private sector wage growth was running even higher, at 6.1 per cent, after apparently accelerating at the end of 2024, even as employers cut back on hiring after tax rises on businesses outlined in chancellor Rachel Reeves’ October Budget. The BoE, which has become increasingly vocal about its concerns over the quality of the UK’s official statistics, drew attention last week to discrepancies between the ONS earnings figures and other data that suggested pay growth, while still strong, had been easing. The BoE also focused attention on recent volatility in GDP data, ongoing problems with official labour market data and “the importance for policymaking of high-quality and reliable official data across the full range of economic and labour market statistics”. The earnings figures have not been affected by a drop in response rates by households to the ONS labour force survey that underpins the jobs data.But Andrew Goodwin, chief UK economist at the consultancy Oxford Economics, said that on top of well-publicised issues with jobs, population, trade and price data, other problems with ONS statistics were emerging “that are yet to be officially acknowledged”. These included “extreme” swings in retail sales figures around the turn of the year, and an emerging pattern of GDP growth tailing off in the middle of the calendar year, which suggested problems with seasonal adjustments, he claimed. Goodwin said the earnings figures are “arguably the most important series for the Bank of England”, as they offer an indicator of inflationary pressures in the economy.The ONS, which first flagged the potential revisions in February, said it could not yet be more precise about when they would be implemented, or identify the employer concerned.However, the agency noted that both its survey-based data and separate figures based on tax records showed similar, “relatively strong” wage growth. The ONS said it regularly reviewed its approach to seasonal adjustments as new data became available, and that one-off impacts such as the Covid pandemic “need to be carefully considered and accounted for in any detailed analysis”.  More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldCredit rating group Moody’s has warned on the US fiscal outlook, saying President Donald Trump’s trade tariffs could hamper the country’s ability to cope with a growing debt pile and higher interest rates.The rating agency said on Tuesday that America’s “fiscal strength is on course for a continued multiyear decline”, having already “deteriorated further” since it assigned a negative outlook to America’s top-notch triple A credit rating in November 2023.While Moody’s highlighted the “extraordinary” economic resilience of the US and the role of the dollar and the Treasury market as backbones of the global financial system, its analysts also warned on Tuesday that the policies of the second Trump administration — including sweeping tariffs and plans for tax cuts — could do more harm than good for government revenues.“The potential negative credit impact of sustained high tariffs, unfunded tax cuts and significant tail risks to the economy have diminished prospects that these formidable strengths will continue to offset widening fiscal deficits and declining debt affordability,” Moody’s said. “In fact, fiscal weakening will likely persist even in very favourable economic and financial scenarios,” they added.Moody’s warning comes amid a furious debate on Capitol Hill and inside the Trump administration over how to place the US on a more sustainable fiscal path. Analysts and investors have warned that the US’s rapidly rising debt and deficit could ultimately dent demand for Treasuries, which form the bedrock of the global financial system. Pimco, one of the world’s biggest bond managers, said late last year that “sustainability questions” had made it hesitant to purchase long-term Treasuries. The federal budget deficit reached $1.8tn for the fiscal year ending September 30, up 8 per cent from the previous year. When Moody’s lowered its outlook on the US’s credit rating to negative just over two years ago, it highlighted sharply higher debt servicing costs and “entrenched political polarisation”. America’s credit rating is watched closely because it plays a critical role in the country’s debt affordability — with higher ratings and positive outlooks typically translating into lower borrowing costs. Moody’s said on Tuesday that US “debt affordability remains materially weaker than for other triple A-rated and highly rated sovereigns”, with even the most positive economic and financial scenarios highlighting “increasing risks that the deterioration in US fiscal strength may no longer be fully offset by its extraordinary economic strength”.The rating agency conceded that it expected the world’s biggest economy to “remain strong and resilient”. But its analysts added that “the evolving US government policy agenda on trade, immigration, taxes, federal spending and regulations could reshape parts of the US and global economy with significant long-term consequences”.While Trump has repeatedly stated his preference for lower US borrowing costs, the Fed last week held interest rates steady in a range of 4.25 per cent to 4.5 per cent — with its policymakers predicting roughly two quarter-point cuts over the course of 2025. Moody’s said it anticipated a federal funds rate of 3.75 per cent to 4 per cent by the end of the year. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The price of copper is likely to set new records this year at $12,000 or more a tonne, according to several of the world’s largest trading houses, lifted by growing global demand and the threat of US President Donald Trump’s trade tariffs.Trading houses Mercuria and Trafigura and hedge fund Frontier Commodities said at the Financial Times’ Commodities Summit in Lausanne on Tuesday that they expected the price on the London Metal Exchange to move higher this year.The London copper price hit a record of almost $11,000 in May 2024. After falling back late last year, it has risen in 2025 and was trading at about $10,000 on Tuesday. “I think we’ll see higher than $12,000,” said Kostas Bintas, global head of metals and minerals at Mercuria. The copper market was “experiencing tightness”, he added.Bintas said huge US imports of copper had reshaped the market, which is normally dominated by Chinese demand. He estimates that about 400,000 to 500,000 tonnes of copper is at present on its way to the US. Traders have rushed to import copper into the US ahead of the potential imposition of tariffs on the metal following an investigation that Trump has instigated into “the threat to national security from imports of copper”.The threat of US tariffs has driven a widening gap between the London and New York prices for the metal. This spread had risen on Tuesday to more than $1,350 a tonne. Levies of 25 per cent have already been introduced on all US aluminium and steel imports.Demand for copper should also expand as a result of developed economies such as the US and EU needing to upgrade their electricity grids, said traders.This investment would require huge amounts of the metal, said Aline Carnizelo, managing partner at Frontier Commodities, who also believes copper could test $12,000.Copper is used in a wide variety of industries, including technology, construction and renewable energy, and is key for electrical wiring and power grids.Graeme Train, head of metals and minerals analysis at Trafigura, said copper could hit a new high but cautioned that the global economy was “a little fragile” and that some uncertainty remained in the market about whether the US would impose tariffs on copper.Nevertheless, US metal buyers continue to seek out copper, since “there is not a quick solution” to increasing domestic supplies, he added.Copper stocks in Comex warehouses in the US rose to close to their highest level in February since 2019. Copper in those facilities is stored on a so-called duty paid basis, meaning any taxes and levies on the metal must have been settled. As a result, it would not be hit with additional tariffs.The volume of copper waiting to leave the LME network of warehouses is also close to a four-year high.Meanwhile, commodities exchange ICE Futures Europe said on Tuesday that it planned to launch futures contracts for key battery metals this year. The group will launch eight new index settled, monthly contracts covering lithium carbonate, hydroxide, spodumene and cobalt. ICE Futures Europe president Chris Rhodes told the FT’s Commodities Summit that the development of a liquid secondary market was important for the “bankability” — or ease of financing — of cobalt and lithium projects, with the prices of both metals having been hit by oversupply. “Often what you hear from end users is, ‘I’ll be able to do more physical deals if I have a hedge contract,’” he said.In October last year, rival CME Group, which also competes with the LME, launched futures on spodumene, while it also has a cobalt contract. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump is living up to his “tariff man” brand. On Monday, he appeared to invent a new one altogether. Secondary tariffs — a mash-up of secondary sanctions and tariffs — will be imposed by the US on any nation that buys oil or gas from Venezuela. The import duties will take effect from April 2, the day when the world expects to hear what the US administration’s plans are for its headline agenda of reciprocal levies.One Must-ReadThis article was featured in the One Must-Read newsletter, where we recommend one remarkable story each weekday. Sign up for the newsletter hereHow will it work? Trump says America would apply a 25 per cent tariff on buyers of Venezuelan crude “on top of existing tariffs”. How it will be applied and enforced is unclear. But for the US president, the details are beyond the point (America was in fact the largest importer of oil from the South American country last year, based on ship tracking data). Trump reckons the mere threat of losing access to the US market is enough to get other nations to act as he pleases. “It’s quite clever, and could actually work in this situation,” says former UK trade department official Allie Renison, now at consultancy SEC Newgate. “But it’s a concerning move if it becomes precedent and other countries acting in bad faith follow suit.”The White House accuses Venezuela of “purposefully and deceitfully” sending “tens of thousands of high level, and other, criminals” to the US. Oil is a lifeline for President Nicolás Maduro’s authoritarian regime: it accounts for over four-fifths of its exports. Other than the US, most of the rest goes to China, India and Spain.Mess around and find out is in effect what Trump is telling buyers of Venezuelan oil. Analysts reckon most nations will “self-sanction”, by clamping down on Venezuelan oil supplies to, well, avoid finding out. The art of the deal here is creating a supposed win-win situation. The calculation is that lost revenues will force Maduro into accepting more Venezuelan deportees from the US, while also raising tariff income from anyone not complying with the secondary sanction.Trump has form here. In January, the president threatened Colombia with 25 per cent tariffs, among other sanctions, for its refusal to take deported migrants. Colombia’s government backed off. After pulling America out of the Iran nuclear deal in 2018, Trump reintroduced secondary sanctions on those doing business with the country too.Extortion-by-tariff will be a feature of the president’s plans to reshape the international order in his favour. Trump is less keen on financial sanctions, which he has suggested risk undermining the dollar (although his chaotic tariff agenda appears to be doing that anyway.) Though the transactional approach of dangling access to US markets to gain concessions might seem to be potent on a deal-by-deal basis, for Trump’s broader objectives for America, tariffs are a blunt instrument.Venezuelan oil comprises a small portion of the international market, but the most immediate impact has been a jump in global oil prices. That’s probably not what US consumers, who are already fearing higher inflation, wanted to hear. Nor is it consistent with the administration’s objective to lower pump prices, though it could be congruent with its plans to encourage US producers to “drill baby drill”.Who knows? In the leaked Signal messages between senior White House staff, vice-president JD Vance worried air strikes on Houthis could lead to a “spike in oil prices”.That’s the risk of reading too much into Trump’s tariff plans. Beyond trying to coerce other nations, there isn’t a coherent strategy here. Indeed, if the administration continues to use tariffs as its economic tool of choice, faith in doing business with America will fade (as it has started to already). In that case, over time, its tariff threats will lose their bite as well. More

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Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldTech stocks led a rebound on Wall Street on Monday amid rising optimism that Donald Trump’s impending tariffs will be less aggressive than feared.The blue-chip S&P 500 jumped 1.8 per cent, while the tech-heavy Nasdaq Composite rallied 2.3 per cent. Tesla, which has tumbled in recent weeks as Big Tech stocks have come under heavy pressure, soared nearly 12 per cent.Monday’s gains come after the S&P last week snapped a four-week losing streak and are the latest sign that a period of marked underperformance for US stocks this year may be easing. Analysts said sentiment had been boosted by reports over the weekend that the White House was considering watering down some of the tariffs expected to take effect on April 2, dubbed “Liberation Day” by Trump. The president said on Friday that there would be “flexibility” in his plans to apply reciprocal tariffs to US trading partners.“I think this ultra bearishness on the US and the end of US exceptionalism theme is a little overcooked,” said Brad Bechtel, an analyst at Jefferies. “We knew this was going to be a noisy process and the noise has created a lot of bearishness. [But] that bearishness will not last and the positive vibes can come back.”Better than expected US manufacturing and services sector data, released on Monday morning, provided investors with further encouragement. S&P Global’s flash US composite purchasing managers’ index rose to a three-month high of 53.5. Any reading above 50 suggests that most businesses are reporting growth in activity. Expansion in the US’s services sector accounted for the rise, with manufacturing activity contracting.Hope that “regularisation and rationalisation of tariff policy is coming” was driving the gains, said Thierry Wizman, global foreign exchange and rates strategist at Macquarie. US government bonds fell sharply on Monday as stocks climbed, with the 10-year Treasury yield, which moves inversely to prices, rising 0.09 percentage points to 4.34 per cent. The dollar rose 0.2 per cent against a basket of six other major currencies.Stocks held their gains after Trump said the US would impose a 25 per cent tariff on all imports from any country that buys oil or gas from Venezuela.European stocks were relatively subdued. The region-wide Stoxx Europe 600 fell 0.1 per cent and Germany’s Dax closed 0.2 per cent lower. London’s FTSE 100 was flat. Investors have rotated out of US equities this year after Trump outlined plans to radically reorientate trade policy and gave Elon Musk licence, as head of the so-called Department of Government Efficiency, to find potential savings across the federal government. More

Unlock the White House Watch newsletter for freeYour guide to what the 2024 US election means for Washington and the worldDonald Trump has recently notched up an impressive roll of investment pledges from companies as he attempts to turn the US into a manufacturing powerhouse. Last week, the chief of semiconductor giant Nvidia hinted at ploughing “several hundred billion” dollars into the country over the next four years. Multinational carmaker Stellantis, Japanese brewer Asahi, and South Korea’s automaker Hyundai have all recently unveiled plans for new US production. The White House proudly claims that “the list of manufacturing wins is endless”. The self-congratulation is premature. The Trump administration will find that there is a limit to how much investment it can attract, particularly if it persists with its central strategy of trying to prod businesses into the country with tariffs. For starters, the lead time to build a factory is often several years long. That means the costly decision to shift production to the US depends partly on how long businesses reckon the current protectionist stance will last. But companies have no clarity on what Trump’s plans to implement reciprocal tariffs next week looks like, let alone what US policy will be in a few years. With Trump’s import duties affecting numerous raw materials, such as aluminium and steel, producers will also wonder if domestic supply chains will be strong enough to meet their demand. Investors will be weighing up factors beyond tariffs too. The recent surge in US factory construction spending, which hit a half-century high in 2024, has largely been driven by financial incentives provided under the Biden administration. For instance, big investment pledges by semiconductor companies have been backed by subsidies from the Chips Act. But both that legislation and the Inflation Reduction Act — which offers tax credits for investments in renewable technologies — are in limbo under Trump, who has been deeply critical of them. Access to labour is another consideration. Right now, there are mounting warnings from industry that the White House’s large-scale plans to deport undocumented workers will exacerbate worker shortages, particularly in the manufacturing and construction sectors. New factories could face building delays. As it is, many companies complain of cumbersome and complex permitting processes. Signs of a slowdown in the US economy will also weigh on investors’ minds. Consumers, businesses and the stock market are flinching at the prospect of Trump’s inflationary tariffs and the widespread uncertainty.It will be tempting for the Trump administration to see recent pledges from manufacturers as proof that the threat of losing competitive access to the world’s richest consumer market is enough to attract investment. That will undoubtedly have played a role in some companies’ decisions. But broader factors are at play too. For instance, TSMC’s recent $100bn commitment included funds to boost research and development activities. Given the long timeframes to build factories, companies are also likely to be making decades-long decisions on the need to expand their US presence, regardless of tariffs. Still, for most foreign companies the least risky, and most logical, option would be to wait and see how US tariff plans evolve. Others may even double down on investment projects elsewhere, where the policy environment is more predictable. Smaller businesses, with less resilient balance sheets, might also find that they need to reduce their US exposure. Indeed, given America’s relatively high labour costs, the inability to procure low-cost imports from abroad could make some operations in the country less viable. There are bigger questions on why Trump believes a focus on manufacturing is the best path to greater US prosperity. But if the goal is to build more factories in the country, Trump is better off removing barriers to business, not raising them. More

This article is an on-site version of our Swamp Notes newsletter. Premium subscribers can sign up here to get the newsletter delivered every Monday and Friday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersShipbuilding and maritime security will be all over the news this week. Today, the US Trade Representative will hold hearings on proposed interventions to support the US shipbuilding industry, which both the Trump administrations (and the Biden administration) believe have been unfairly hit by Chinese mercantilism. While some of the groups testifying (including a number of private businesses, foreign companies and state actors) will try to argue that the state supports being proposed by the Trump administration are illegal or unwarranted, I don’t think it will make much of a difference. Shipbuilding is where Trump will put his industrial policy stake in the ground. Indeed, I’ve been told by sources in or near the White House that the president’s new executive order on shipbuilding may drop as early as the end of this week. (In my column today I wrote about how the administration’s efforts to build more maritime security are part of a new Great Game in the Arctic). A leaked copy of the order was floating around last week, and it includes some pretty ambitious, whole of government goals to reconnect military and commercial shipbuilding. They included beefing up training for the maritime workforce (which has dwindled in the US), penalising adversaries like China with port fees and other restrictions, and also rewarding companies and countries that support US flagged vessels and American shipbuilding efforts.As Mike Wessel, the shipbuilding 301 case co-ordinator (and a member of the US-China Economic and Security Review Commission) told me last week, “If all the policies being discussed are implemented and durable, it would be the biggest investment and commitment to US maritime capabilities since the Liberty shipbuilding programme of the second world war.” For those readers who aren’t ship buffs, this was the public-private war effort that resulted in over 2,700 vessels being built in 18 shipyards in the US between 1941 and 1945, as part of the country’s war effort. Basically, the US built these ships faster than the Germans could sink them.I’ve written much about the reasons why America needs to bring back shipbuilding capacity, from the need for more security in the face of Chinese and Russia aggression near US territorial waters, to America’s over-reliance on China for commercial shipping. Every day brings a new drumbeat of maritime risk. See recent headlines about Chinese warships sailing closer to Sydney as China looks to project its power in the Pacific.But there are challenges. America recently signed an agreement with the Canadians and Finns to build icebreakers together. But amid the president’s tariff troubles with Canada, Prime Minister Mark Carney announced a $6bn Canadian deal with Australia to build Arctic radars to detect hypersonic missiles. That money might have gone to the US, but Carney is no pushover and has made it clear that Canada isn’t interested in being the 51st state. There are now calls for Canada to cancel an F-35 fighter jet order from the US.Likewise, the new US maritime strategy, while it is bipartisan (there’s a SHIPs Act on the table that was crafted by Democratic Senator Mark Kelly and former Republican representative Mike Waltz, now the national security adviser) will also have to walk a fine line between military and labour goals. While the defence department wants as many ships in the water as quickly as possible, labour leaders — including the United Steelworkers and the other unions that brought the 301 case — want as many new jobs and as much capacity created in the US as possible.One model for this would be the purchase of the Philadelphia shipyards by Korean company Hanwha. Another would be the outsourcing of shipbuilding to yards in places like South Korea or Japan. Unions and some security hawks worry that this won’t enhance the industrial base in the US but rather recreate some of the problems of the past 20 years of outsourcing. Either way, the US is going to need help from allies like the Finns and Koreans to retrain workers.Industrial policy is a tricky business at the best of times. Add in Trump’s unpredictability and you have a fragile and potentially volatile scenario. Julius, my question to you is, how do you imagine America’s shipbuilding efforts will go? What opportunities and pitfalls do you see here? And do you think Trump will crack a bottle of champagne on a new US icebreaker before he leaves office?  Recommended readingLots of wonderful pieces in the FT this week: I agree with Constanze Stelzenmüller that reopening Nord Stream 2 would be absolute folly for Europeans, who should continue to move away from dependence on Russian gas. And John Thornhill’s opinion piece on the fifth estate (social media) is a must-read. The ubiquity and power of hyper-individualised, high-speed media is a fundamental challenge to our politics and economics, one we ignore at our peril.Meanwhile, I just finished reading When the Going Was Good, former Vanity Fair editor Graydon Carter’s memoir, and I must say that I was disappointed. As a former Condé Nast magazine person, I was drawn in by the possibility of outrageous anecdotes about the glory days of publishing. And there were some of those, but there was also just a lot of stale navel-gazing and stories about Carter’s Canadian youth that I could have done without. There was also some name calling of writers and editors which I never enjoy. The book made me feel we should all finally close this chapter of New York media history and move on.Julius Krein responds At this point, the American commercial shipbuilding industry is so hollowed out that the first step in rebuilding it must involve attracting foreign shipbuilders to the US. In this respect, there are parallels with the Chips Act, one goal of which was to entice TSMC and Samsung to build production facilities here. But we’re starting from an even weaker position in shipbuilding. In 2022, the United States built only five oceangoing commercial vessels, compared to 1,794 in China and 734 in South Korea. We will, therefore, need foreign companies to lay basic foundations in manufacturing process knowledge, workforce training, and so on.The Biden administration previously identified icebreaker ships as a promising starting point, and I would expect continuity here. In addition to the geopolitical importance of the Arctic, it may be easier for the US to compete in markets for relatively specialised vessels — such as icebreakers — where price and quantity are not the only factors that buyers typically consider. Moreover, there are some benefits to starting from virtually zero. The need to construct new facilities is an opportunity to deploy at scale the most advanced manufacturing technologies. It should also be easier to optimise the co-location of new commercial and defence production facilities, rather than deal with stranded legacy assets. This presents an opportunity to build a larger manufacturing ecosystem that includes the adjacent technologies, supply chains and applications required for any shipyard to operate effectively.Ultimately, however, the shipbuilding industry is a game of competitive subsidisation. The major shipbuilding nations provide considerable support to their industries, and Michael Lind has recently shown how the elimination of subsidies under the Reagan administration resulted in the precipitous decline of US shipyards despite the Jones Act.With that in mind, US policymakers will need to consider more robust forms of investment support, in addition to the measures already announced by the Trump administration. Both shipyards and the vessels they produce provide ample opportunities for creative public-private financing structures as well as procurement and contracting mechanisms. America has somehow managed to financially engineer seemingly everything except critical national security supply chains and technologies; shipbuilding offers a chance to rectify that.The president’s executive actions should also be supported by complementary legislation. The bipartisan Ships for America Act has already been introduced. Passing bills like this through Congress would not only put more resources behind shipbuilding efforts, but would also signal a bipartisan policy commitment — and one that is more durable than executive orders alone — to private sector investors.Finally, on the question of allies, I would personally encourage the administration to take a more “materialist” approach to foreign policy. A core tenet of the “nationalist” perspective that drove Trump’s rise is respecting the sovereignty of other nations, rather than intervening in their internal debates to impose American values, or projecting our domestic culture wars on to them. American right-populists did not like it when Democratic administrations intervened in foreign elections on behalf of progressive parties. They should not be especially surprised, then, if interventions in the other direction end up generating hostility and blowback. Re-industrialisation in general, and shipbuilding in particular, offers an opportunity for more constructive engagement.Your feedbackWe’d love to hear from you. You can email the team on [email protected], contact Ed on [email protected] and Rana on [email protected], and follow them on X at @RanaForoohar and @EdwardGLuce. We may feature an excerpt of your response in the next newsletterRecommended newsletters for youTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More