Aurelia Butler

OTTAWA (Reuters) – More than a year after the Great Resignation took hold in the United States, Canada is grappling with its own greyer version: The Great Retirement.Canada’s labor force grew in August, but it fell the previous two months and remains smaller than before the summer as tens of thousands of people simply stopped working. Much of this can be chalked up to more Canadians than ever retiring, said Statistics Canada.It is not just the 65-and-over crowd packing up their offices and hanging up their tool belts. A record number of Canadians aged 55-64 are now reporting they retired in the last 12 months, Statscan data shows. (Graphic: https://tmsnrt.rs/3RVXvNM) Graphic: Canadians are retiring in droves – https://graphics.reuters.com/CANADA-ECONOMY/EMPLOYMENT/lgpdwdxkovo/chart.png That is hastening a mass exodus of Canada’s most highly skilled workers, leaving businesses scrambling, helping push wages sharply higher and threatening to further drag down the country’s sagging productivity, economists say. “We knew from a long time ago that this wave was coming, that we would get into this moment,” said Jimmy Jean, chief economist at Desjardins Group. “And it’s only going to intensify in the coming years.””The risk you have, and in some sectors you’re already seeing it, is that people are leaving without there being enough younger workers to take over. So there’s a loss of human capital and knowledge.”During the pandemic, retirements fell as many Canadians decided to stay in their jobs longer. With restrictions now lifted, many are rushing to make up for lost time, choosing to travel and spend more time with family.Their departures are shrinking the labor force, which could weigh on economic growth at a time when the central bank is aggressively hiking interest rates to counter spiking inflation, fanning fears that the economy will fall into recession.Canada – which has ramped up immigration to help drive economic growth – has the largest working-age population, as a percentage of the overall population, in the G7, but at the same time its labor force has never been older, according to Statscan. One in five workers in Canada is 55 or older. (Graphic: https://tmsnrt.rs/3RTcMyJ) Graphic: Canada’s labor force is rapidly aging – https://graphics.reuters.com/CANADA-ECONOMY/EMPLOYMENT2/xmvjoajkypr/chart.png There were 307,000 Canadians in August who had left their job in order to retire at some point in the last year, up 31.8% from one year earlier and 12.5% higher than in August 2019, before the onset of the pandemic, Statscan said. Adding to the problem, more than 620,000 Canadians entered the 65+ age category during the pandemic, a 9.7% increase in that population group. Despite three straight months of job losses, job vacancies and postings remain well above pre-pandemic levels.NURSES AND TRUCKERSThe retirement problem is particularly dire in skilled fields like trades and nursing. Since May, Canada has lost 34,400 jobs in healthcare even as a record number of nurses reported working overtime hours. Those were not jobs being cut, but rather people retiring, said Cathryn Hoy, president of the Ontario Nurses’ Association.    “It’s a huge problem right now, because we’ve had so many that have retired unexpectedly,” she said, citing the pandemic, working conditions and a wage dispute with Canada’s largest province. The transportation industry is also grappling with a severe worker shortage, both because of the pandemic-driven frenzy for more goods and as the workforce ages.”More and more drivers are aging and therefore retiring or contemplating different lifestyle,” said Tony Reeder, owner of Trans-Canada College, a career college that trains transport truck drivers. At the same time, demand is booming from trucking companies, many of which take on student drivers for on-the-job training courses and then hire them outright as soon as they are fully licensed, said Reeder.”Without trucks and people to drive trucks … goods will sit at ports and in warehouses as opposed to getting to the destination where they can be consumed,” he said. More

Strikes have periodically paralysed the rail service in recent weeks and a further stoppage had been planned for this week.Sunday’s deal comes amid surging inflation in the Netherlands and the wider European Union, and is significantly higher than average wage settlements in the country so far this year.State owned NS Railways said pay would rise retroactively from July by 5%, or a minimum of 185 euros ($186) a month, with an additional 3.45% in January. It called the deal good news for passengers and rail workers. Trade union FNV Spoor said the average combined increase would be 9.25%.Unions said they also secured agreement on a minimum wage of 14 euros per hour and two additional payments of 1,000 euros ($1,000) per worker. The company had 38,600 staff as of 2020.The average pay increase negotiated so far in 2022 in collective labour agreements for roughly 2.5 million Dutch workers is 3.2%, according to data from employers association AWVN. Policymakers in Europe have expressed concerns that if inflation stays high for too long, businesses will start to adjust their pay settlements, setting off a hard-to-break wage-price spiral.Dutch inflation hit 12% in August, Statistics Netherlands said on Tuesday, driven largely by a 151% year-on-year leap in gas and electricity prices.($1 = 0.9961 euros) More

Investors have eased bets on the Bank of England cutting interest rates next year following the prime minister’s first major policy announcement last week. They’re also worried that longer-dated bonds will suffer from rising inflation expectations and more government borrowing.Truss’s bailout could add around £200 billion of extra gilt issuance over this fiscal year and next, according to Deutsche Bank AG (NYSE:DB). That’s unwelcome news for a market already grappling with the fastest pace of inflation in 40 years. The UK central bank has signaled it will act “forcefully” to curb prices by tightening monetary policy.“I think the quantum of extra debt, the greater risks around the twin deficits will mean higher yields further out,” said Howard Cunningham, a portfolio manager at Newton Investment Management. “The energy price cap is likely to lead to lower headline inflation, but more persistent core inflation because consumers will keep spending.”He sees 10-year gilt yields rising to around 3.5% from about 3% currently. They’ve already increased 1.3 percentage points from the beginning of August.Money markets responded to Truss’s program by dialing down short-term inflation expectations but also anticipating that interest rates will remain elevated for longer into 2023. Traders are wagering on just 15 basis points of cuts from June to December 2023, as opposed to around 25 basis points of cuts in the last month.The BOE delayed its next rates decision a week until Sept. 22 after the death of Queen Elizabeth II, giving policy makers more time to analyze the Truss energy plan as well as key data on jobs and inflation due out next week.Economists from JPMorgan (NYSE:JPM) Securities, BNP Paribas (OTC:BNPQY) and Credit Suisse already are anticipating the BOE will deliver a 75 basis-point increase in the base rate to 2.5% this month. That’s on top of the half-point rise in August, the biggest boost in 27 years.Policy makers have two conflicting forces to assess in the coming months. Truss says that her plan to freeze energy bills will shave up to 5 points off the headline inflation rate, which economists surveyed by the Treasury estimate will peak around 15%. The concern is that cushioning consumers now will add to strains in the economy and push up prices later.“Recent measures lower short-term inflation and may reduce the urgency from the BOE,” said Rohan Khanna, rates strategist at UBS. “But that may mean more stickier inflation as purchasing power gets hit less than previously thought, hence less easing after a peak in rates.”Higher rates in financial markets and from the BOE would add to the strains facing consumers, who are struggling with the worst squeeze on their spending power in a century. The timing of the BOE’s next decision adds to the complexity of the assessment. Policy makers were to meet on Sept. 15, before Chancellor of the Exchequer Kwasi Kwarteng plans to deliver more detailed estimates of the cost of the Truss energy package. By delaying a week, it’s possible the BOE will now decide on rates after seeing those estimates.The BOE also was planning to use this month’s meeting to confirm sales of some of the bonds it built up during the years of quantitative easing, when it amassed £895 billion of assets to stimulate the economy. Those sales now may crash into Kwarteng’s own fund-raising plans.“This will mark a huge step change in net gilt issuance that will clash with Bank of England quantitative tightening and hikes,” wrote Citigroup (NYSE:C) strategist Jamie Searle in a note to clients. NatWest Markets UK rates strategist Imogen Bachra is envisaging a “regime shift” for gilts due to these headwinds, forecasting 10-year gilt yields hitting 4% by year-end. Gilts could also suffer from the faltering demand from pension funds and foreign investors, according to HSBC.A remark earlier this week from BOE Chief Economist Huw Pill that the Truss plan would cut inflation in the immediate term was interpreted as a dovish sign and led to a surge in two-year gilts. But that’s balanced by the BOE’s ambition to return inflation back to its 2% target quickly.“The Bank of England will likely still feel under immense pressure to prove its commitment to returning inflation, and a 75 basis point rate hike next week is a very real possibility,” said JPMorgan Asset Management global market strategist Hugh Gimber. This Week©2022 Bloomberg L.P. More

Numbers of hotel guests rose 42% year on year to 12 million, and the expectations is for “a strong tourism recovery in the upcoming winter season” said Sheikh Mohammed bin Rashid al-Maktoum, who is also the UAE’s prime minister and ruler of Dubai.($1 = 3.6727 UAE dirham) More

Did US inflation ease for the second month in a row?Lower petrol prices should have helped slow the pace of inflation in the US in August for the second month in a row. But the Federal Reserve is unlikely to be swayed from implementing a steep interest rate rise later in September, as inflation remains well above its target with persistent growth in services prices.Economists polled by Reuters forecast that the US consumer price index fell 0.1 per cent month-on-month in August, after remaining flat in July. They expect a year-on-year reading of 8.1 per cent for August, down from 8.5 per cent a month earlier.Lower energy prices were largely responsible for driving down inflation in July, and the same trend is likely to have continued the following month as petrol costs fell further.Some economists said that consumers have started to spend less on goods, while businesses have increased supply of their products to match demand, which may also contribute to a decrease in price growth.“Inflationary pressure on goods prices has clearly eased and some overheated prices, for example used cars, are starting to fall in absolute terms,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management.But despite the expected moderation in the August report, the Fed has still signalled that it will continue to tighten monetary policy, as inflation remains well above the central bank’s target. Chair Jay Powell and vice-chair Lael Brainard vowed last week to keep raising rates, fuelling expectations that a third consecutive 0.75 percentage point increase will be implemented later this month.Demand for services has strengthened, which Marcelli said has caused more “persistent pressure” on this component of the consumer price index.Core inflation, which excludes energy and food prices, is forecast to have edged up 0.4 per cent month-on-month in August, following a reading of 0.3 per cent in July.Housing costs are a large contributor to the services component of the index and shelter costs are expected to continue rising, led by rental price growth.“The biggest single contribution to the month-to-month core CPI print will come from housing rents,” said Ian Shepherdson at Pantheon Economics. “But we see a decent chance that the pace of rent increases has now peaked, though the uncertainty here is still great, given the unprecedented conditions in the rental market.” Alexandra WhiteDid UK inflation pick up pace in August?UK inflation data for August are expected to offer no respite. Economists polled by Reuters forecast that the annual pace of consumer price growth accelerated from a 40-year high of 10.1 per cent in July to 10.4 per cent last month.A consumer price index reading at that level would confirm that the UK is the only G7 economy with a double-digit inflation rate. It would also intensify pressure on the Bank of England to raise interest rates again, having already implemented six consecutive increases to 1.75 per cent.The inflation outlook for the UK and the rest of Europe worsened over the summer, reflecting surging European wholesale gas prices following a squeeze on Russian energy flows to the rest of the continent. Even before the gas price peaked in late August, the BoE had forecast that inflation would soar to 13 per cent in January, causing a prolonged economic recession.However, the medium-term inflation forecast has been mitigated to an extent by an energy package announced last week by new UK prime minister Liz Truss, which included a freeze on average annual household energy bills at £2,500 over the next two years.Truss’s government expects the intervention to curb inflation by up to 5 percentage points.Paul Dales, chief UK economist at Capital Economics, said the measure would lower the expected peak inflation to 11.5 per cent in November from the level of 14.5 per cent previously forecast for January, and would make inflation fall faster next year.However, he thinks that because the stimulus supports economic activity, “it will boost inflation further ahead”. Valentina RomeiDid Japan’s trade deficit expand last month?Surging commodity prices and rising import costs due to a weaker yen have knocked the Japanese economy in recent times, forcing it to record a trade deficit for 12 consecutive months through to the end of July. The big question, as downward pressure on the currency continues to build, is whether the trend continued in to August.Japan posted a trade deficit of ¥1.43tn ($10bn) for July, and clocked record-high import costs for the fifth consecutive month. The offset of a cheaper currency — more competitive exports — has yet to make a definitive mark. Despite the historic depreciation of the yen, which has weakened by about a fifth against the dollar this year to more than ¥140, export growth has been limited due to the disruption of semiconductor production and other component shortages.Analysts suspect the world’s third-largest economy is likely to have taken a further hit in August, with the yen sliding to a fresh 24-year low against the US currency in recent days as the Bank of Japan remained committed to its ultra-loose monetary policy even as the Federal Reserve continued to raise interest rates.Economists are divided about whether the trade deficit expanded last month. Goldman Sachs economist Naohiko Baba expects the deficit to have widened to ¥2.47tn, estimating that export volumes have declined slightly year-on-year. Weakening demand for exports in the US has affected the move, he added.Increasing cases of Covid-19 and subsequent lockdowns in China as well as a decline in production in the country due to drought are likely to affect Japanese exports, he noted.Citigroup economist Kiichi Murashima, meanwhile, believes the trade deficit narrowed in August as supply constraints eased, driving car exports. Eri Sugiura More