Economy

The airport capped the number of passenger departures at 100,000 a day in July and in August extended the cap until Oct. 29 in a move to limit queues, baggage delays and flight cancellations after struggling to cope with a rebound in travel.The Wall Street Journal first reported on Monday that the airport has told airlines it will lift the cap on passenger numbers at its terminals later this month.Airlines and airports across Europe struggled to cope with the rebound in post-lockdown travel, with many failing to recruit enough staff to handle check-ins and baggage.Passenger journeys improved with fewer last-minute cancellations, better punctuality and shorter wait times for bags since the cap was introduced, Heathrow had said in August. More

Unemployment is low, and hiring is strong. But there are signs that frenzied turnover and rapid wage growth are abating.Last year, Klaussner Home Furnishings was so desperate for workers that it began renting billboards near its headquarters in Asheboro, N.C., to advertise job openings. The steep competition for labor drove wages for employees on the furniture maker’s production floor up 12 to 20 percent. The company began offering $1,000 signing bonuses to sweeten the deal.“Consumer demand was through the roof,” said David Cybulski, Klaussner’s president and chief executive. “We just couldn’t get enough labor fast enough.”But in recent months, Mr. Cybulski has noticed that frenzy die down.Hiring for open positions has gotten easier, he said, and fewer Klaussner workers are leaving for other jobs. The company, which has about 1,100 employees, is testing performance rewards to keep workers happy rather than racing to increase wages. The $1,000 signing bonus ended in the spring.“No one is really chasing employees to the dollar anymore,” he said.By many measures, the labor market is still extraordinarily strong even as fears of a recession loom. The unemployment rate, which stood at 3.7 percent in August, remains near a five-decade low. There are twice as many job openings as unemployed workers available to fill them. Layoffs, despite some high-profile announcements in recent weeks, are close to a record low.But there are signs that the red-hot labor market may be coming off its boiling point.Major employers such as Walmart and Amazon have announced slowdowns in hiring; others, such as FedEx, have frozen hiring altogether.Americans in July quit their jobs at the lowest rate in more than a year, a sign that the period of rapid job switching, sometimes called the Great Resignation, may be nearing its end. Wage growth, which soared as companies competed for workers, has also slowed, particularly in industries like dining and travel where the job market was particularly hot last year.More broadly, many companies around the country say they are finding it less arduous to attract and retain employees — partly because many are paring their hiring plans, and partly because the pool of available workers has grown as more people come off the economy’s sidelines.The labor force grew by more than three-quarters of a million people in August, the biggest gain since the early months of the pandemic. Some executives expect hiring to keep getting easier as the economy slows and layoffs pick up.“Not that I wish ill on any people out there from a layoff perspective or whatever else, but I think there could be an opportunity for us to ramp some of that hiring over the coming months,” Eric Hart, then the chief financial officer at Expedia, told investors on the company’s earnings call in August.Taken together, those signals point to an economic environment in which employers may be regaining some of the leverage they ceded to workers during the pandemic months.The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.August Jobs Report: Job growth slowed in August but stayed solid, suggesting that the labor market recovery remains resilient, even as companies pull back on hiring.Factory Jobs: American manufacturers have now added enough jobs to regain all that they shed during the pandemic — and then some.Missing Workers: The labor market appears hot, but the supply of labor has fallen short, holding back the economy. Here is why.Black Employment: Black workers saw wages and employment rates go up in the wake of the pandemic. But as the Federal Reserve tries to tame inflation, those gains could be eroded.That is bad news for workers, particularly those at the bottom of the pay ladder who have been able to take advantage of the hot labor market to demand higher pay, more flexible schedules and other benefits. With inflation still high, weaker wage growth will mean that more workers will find their standard of living slipping.But for employers — and for policymakers at the Federal Reserve — the calculation looks different. A modest cooling would be welcome after months in which employers struggled to find enough staff to meet strong demand, and in which rapid wage growth contributed to the fastest inflation in decades.Too pronounced a slowdown, however, could lead to a sharp rise in unemployment, which would almost certainly lead to a drop in consumer demand and create a new set of problems for employers.Leila and David Manshoory have struggled for months to recruit workers for their fast-growing skin care and beauty brand, Alleyoop. In recent weeks, however, that has begun to change. They have begun to get more applications from more qualified candidates, some of whom have been laid off by other e-commerce companies. And notably, applicants aren’t demanding the sky-high salaries they were last spring.“I think the tables are turning a little bit,” Mr. Manshoory said. “There are people who need to pay their bills and are realizing there might not be a million jobs out there.”Alleyoop, too, has pared its hiring plans somewhat in preparation for a possible recession. But not too much — Mr. Manshoory said he saw this as a moment to snap up talent that the three-year-old company might struggle to hire in a different economic environment.“You kind of want to lean in when other people are pulling back,” he said. “You just have more selection. There’s a lot of, unfortunately, talented people getting let go from really large companies.”The resilience of the labor market has surprised many economists, who expected companies to pull back on hiring as growth slowed and interest rates rose. Instead, employers have continued adding jobs at a rapid clip.Klaussner Home Furnishings, which has about 1,100 employees, is testing performance rewards to keep workers happy rather than racing to increase wages.Eamon Queeney for The New York Times“There are some signs in the labor market data that there’s been a bit of cooling since the beginning of the year, or even the spring, but it’s not a lot,” said Nick Bunker, director of North American economic research for the career site Indeed. “Maybe the temperature has ticked down a degree or two, but it’s still pretty high.”But Mr. Bunker said there was evidence that the frenzy that characterized the labor market over the past year and a half had begun to die down. Job openings have fallen steadily in Indeed’s data, which is more up to date than the government’s tally.And Mr. Bunker said the decline in voluntary quits was particularly notable because so much recent wage growth had come from workers moving between jobs in search of better pay.Recent research from economists at the Federal Reserve Banks of Dallas and St. Louis found that there had been a huge increase in poaching — companies hiring workers away from other jobs — during the recent hiring boom.If companies become less willing to recruit workers from competitors, and to pay the premium that doing so requires, or if workers become less likely to hop between jobs, that could lead wage growth to ease even if layoffs don’t pick up.There are hints that could be happening. A recent survey from another career site, ZipRecruiter, found that workers had become less confident in their ability to find a job and were putting more emphasis on finding a job they considered secure.“Workers and job seekers are feeling just a little bit less bold, a little bit more concerned about the future availability of jobs, a little bit more concerned about the stability of their own jobs,” said Julia Pollak, chief economist at ZipRecruiter.Some businesses, meanwhile, are becoming a bit less frantic to hire. A survey of small businesses from the National Federation of Independent Business found that while many employers still had open positions, fewer of them expected to fill those jobs in the next three months.More clues about the strength of the labor market could come in the upcoming months, the time of year when companies, including retailers, traditionally ramp up hiring for the holiday season. Walmart said in September that this year it would hire a fraction of the workers it did during the last holiday season.The signs of a cool-down extend even to leisure and hospitality, the sector where hiring challenges have been most acute. Openings in the sector have fallen sharply from the record levels of last year, and hourly earnings growth slowed to less than 9 percent in August from a rate of more than 16 percent last year.Until recently, staffing shortages at Biggby Coffee were so severe that many of the chain’s 300-plus stores had to close early some days, or in some cases not open at all. But while hiring remains a challenge, the pressure has begun to ease, said Mike McFall, the company’s co-founder and co-chief executive. One franchisee recently told him that 22 of his 25 locations were fully staffed and that only one was experiencing a severe shortage.A Biggby Coffee store in Sterling Heights, Mich. Until recently, staffing shortages at some locations were so severe that many of the chain’s 300-plus stores had to close early some days.Sarah Rice for The New York Times“We are definitely feeling the burden is lifting in terms of getting people to take the job,” Mr. McFall said. “We’re getting more applications, we’re getting more people through training now.”The shift is a welcome one for business owners like Mr. McFall. Franchisees have had to raise wages 50 percent or more to attract and retain workers, he said — a cost increase they have offset by raising prices.“The expectation by the consumer is that you are raising prices, and so if you don’t take advantage of that moment, you are going to be in a pickle,” he said, referring to the pressure to increase wages. “So you manage it by raising prices.”So far, Mr. McFall said, higher prices haven’t deterred customers. Still, he said, the period of severe staffing shortages is not without its costs. He has seen a loss in sales, as well as a loss of efficiency and experienced workers. That will take time to rebuild, he said.“When we were in crisis, it was all we were focused on,” he said. “So now that it feels like the crisis is mitigating, that it’s getting a little better, we can now begin to focus on the culture in the stores and try to build that up again.” More

Whisper it, but markets may be in something of a sweet spot right now, opening up the potential for a few weeks of respite and decent-sized rebounds.Ok, maybe a few days until the next crisis rears its head and 2022 normal service is resumed. But there is a glimmer of hope. It’s a new quarter, and after three quarters of misery, if ever there was a time for investors to pause and even put some chips back on the table, this is it. Financial assets are (relatively) cheap.A lot of bad news is priced in. For example, the United States entering recession within the next 12-18 months is now overwhelming consensus. Citi’s economic surprises indices, with the exception of EM, are mostly back in positive territory at around three-month highs. Graphic: Citi economic surprises indexes – https://fingfx.thomsonreuters.com/gfx/mkt/akpezdowlvr/CitiSurprises.png Ditto central bank tightening. Broadly speaking, the balance of risks now must surely be that policymakers are less aggressive relative to market expectations rather than more. Up to 50 basis points of Fed tightening has been taken out of the 2023 U.S. futures curve in recent days – the implied rate for December next year dipped as low as 4.03% on Monday. Key to this is a steep decline in inflation expectations. Breakeven rates on the U.S. two-, five- and 10-year horizons fell to around 2.15% on Monday, the lowest in 18 months and very close to the Fed’s 2% target. Graphic: US breakeven inflation rates – https://fingfx.thomsonreuters.com/gfx/mkt/gkplgrlylvb/Breakevens.jpg That’s not to say the coast is clear. Far from it. And liquidity in Asia this week will be light due to China’s Golden Week break and Hong Kong’s public holiday on Tuesday. But market waves are a little less choppy, and from Wall Street to Brazilian assets to sterling, investors have started Q4 on the offensive.Key developments that could provide more direction to markets on Tuesday:Japan inflation (September)Australia interest rate decision (50 bps hike expected)South Korea PMI (September)Fed’s Williams, Logan, Mester, Jefferson, Daly speak More

Good evening,“The babiest of baby steps” in restoring the UK’s fiscal credibility was how one strategist described this morning’s U-turn from the UK government on scrapping the top rate of income tax.The move, announced by chancellor Kwasi Kwarteng (just ahead of his big speech at the Tory party conference), follows waves of criticism from the public and from fellow MPs that have seriously damaged the authority of Prime Minister Liz Truss. It also follows criticism of Kwarteng’s appearance at a champagne reception at the home of a hedge fund boss just hours after his “mini” Budget had delivered a tax cut to some of the richest people in the country.The chancellor’s initial proposals had prompted S&P, one of the world’s largest credit rating agencies, to put the UK on a “negative outlook” late on Friday. FT chief economics commentator Martin Wolf has also lambasted the government again, deriding its growth plan as a “magical potion” mixed up by “mad, bad and dangerous” people.While markets gave a cautious welcome to this morning’s U-turn by buying sterling and UK government bonds, the political danger for Truss remains and could yet deepen if the government decides on swingeing public spending cuts to help balance the books. Truss now needs to deliver a barnstorming speech in her headlining conference slot on Wednesday morning if she hopes to regain the confidence of her party.Today also brought a reminder of the other big policy problem facing the PM: the energy crisis. Regulator Ofgem warned of a “gas supply emergency”, raising fears of shortages and power cuts this winter. The National Grid, which is responsible for ensuring Britain has enough gas and electricity, has been carrying out stress tests with the government and publishes its winter outlook report on Thursday.In better news for ministers (although not for green campaigners), the regulator for North Sea gasfields told the FT it would fast-track applications for new discoveries that could boost domestic production. The North Sea currently produces enough gas to meet 40 per cent of UK demand, but this is forecast to fall to 30 per cent by 2030.The controversy over tax cuts in the “mini” Budget has also overshadowed Kwarteng’s announcement of plans to reform wholesale energy markets to break the link between soaring gas prices and the cost of electricity.Latest newsUkrainian forces break through Kherson frontlineIsrael’s central bank raises benchmark interest rate to 2.75%Credit Suisse CDS hit record high as shares tumbleFor up-to-the-minute news updates, visit our live blogNeed to know: the economyJair Bolsonaro will face leftwing former leader Luiz Inácio Lula da Silva in a run-off vote on October 30 after neither candidate gained a winning margin in Brazil’s closer than expected presidential election. Latin America editor Michael Stott said the result showed Bolsonaro’s “beef, bible and bullets” coalition was here to stay.Latest for the UK and EuropeBrussels is proposing giving EU member states more time to curb their debts and open up space for public investment. The move, mooted as a way of simplifying the bloc’s complex fiscal rules, belies some increasingly discordant policymaking, reports our Europe Express newsletter (for Premium subscribers). A cold weather warning meanwhile has added to the gloom surrounding Europe’s energy crisis.Liberals fear that Italy’s first far-right government since the second world war will turn back the clock on social freedoms and stir up animosity towards those who do not fit neatly into traditional Italian family models. Turkish inflation hit a new 24-year high of more than 83 per cent in September but President Recep Tayyip Erdoğan shows no sign of reversing his unorthodox economic solution of decreasing interest rates.Global latestNato chief Jens Stoltenberg has warned of “severe consequences for Russia” if Vladimir Putin were to use nuclear weapons in Ukraine. Western leaders believe the threat has grown since Friday, when the Russian president formally annexed swaths of eastern and southern Ukraine and declared it Russian territory.The Opec+ oil alliance is planning to cut production to bolster falling prices as it prepares to meet in person for the first time since March 2020. The reduction, which could top 1mn barrels a day, could create problems for US president Joe Biden who has been trying to lower fuel prices ahead of midterm elections. The Lex column cautioned that the real test of the cartel’s consensus has yet to happen.Need to know: businessVodafone and Three are in talks to create the UK’s biggest mobile phone operator. Vodafone, which has been under pressure from activist investors to change strategy, said the combined business would have the necessary scale to expand broadband and 5G capacity across the country.Shares in Chinese property companies rose today after Beijing stepped up measures to help the stricken sector. The crisis is having a significant effect on the global cement industry, with worldwide output falling 8 per cent year on year in the first six months of 2022.Investors are returning to US manufacturing, spurred on by “Buy America” federal policies, writes columnist Rana Foroohar.Social media platform TikTok increased its European turnover nearly six-fold in 2021 to more than $990mn. The company is bolstering its advertising offering to benefit from its billions-strong user base and plans to expand its live shopping function into North America in time for the holiday season.UK banks are set for a “cha-ching moment” in the third quarter as rocketing interest rates deliver bumper profits.The World of WorkDuring the pandemic we heard a lot about the compassionate and caring approach of chief executives but, as work and careers editor Isabel Berwick asks, is that still the right approach for the tough decisions associated with our new economic uncertainty?Now IRL meetings are back, does this mean a revival for the business card? Yes and no, says columnist Pilita Clark.Included in the recent UK “mini” Budget were plans to change IR35 off-payroll rules. Here’s our explainer on what it means for contractors.Get the latest worldwide picture with our vaccine trackerSome good news . . . A new report highlights how better legal protections and improving habitats are giving new hope to wildlife species across Europe.The population of some European wildlife species, including grey wolves, have grown over the last 40 to 50 years © Getty Images/Flickr RF More

Analysts have downgraded their 2023 economic growth forecasts for the UK in the wake of the “mini-Budget”, with many warning of little improvement in the medium term. Chancellor Kwasi Kwarteng said last month that the government wanted to “turn the vicious cycle of stagnation into a virtuous cycle of growth”.But many analysts think the government’s fiscal package, which sent gilts and sterling tumbling, has piled a borrowing costs crisis on top of an existing living costs crisis. The economy is expected to contract 0.3 per cent next year, according to Consensus Economics based on an average of leading forecasts — a significant fall from the 0.1 per cent expansion forecast in August. Gaurav Ganguly, senior director of economic research at Moody’s Analytics, said the government’s “recent actions had made stagflation and a deep recession almost inevitable”.At the same time, many economists see no improvement in the medium-term outlook, with predicted annual average growth fixed at 1.5 per cent, well below the chancellor’s target of 2.5 per cent. In fact, Ganguly said there was a risk that medium-term growth “trends lower” as questions lingered “around the stability of the pound and the desirability of the UK as an investment location”.Kallum Pickering, senior economist at Berenberg Bank, said more information on policies over deregulation was needed to make a full assessment.However, he noted that without some supply-side reform the tax cuts “cannot raise UK potential growth in the future”. He expected a 1.5 per cent contraction in economic growth in 2023, reflecting a more pessimistic view than the consensus. He added that while tax cuts would support demand, the “confidence shock” and “significant tightening in financial conditions” that followed the government’s announcements “will overwhelm any of their near-term effects”.The mini-Budget “is a clear policy failure, and therefore the economy will pay a price for that”, Pickering said. Economists from Berenberg, UBS, Goldman Sachs and HSBC are forecasting three quarters of economic contraction from the three months to September, followed by either weak growth or the economy flatlining until the end of next year.This is despite the package of state energy support, which will freeze average household energy bills at £2,500 a year for two years.Prime minister Liz Truss’s cancellation of the tax rate cut for the highest earners, which accounts for £2bn in the £45bn package of cuts, was only “a small part of the equation”, said Susannah Streeter, senior investment and markets analyst at asset manager Hargreaves Lansdown. Markets are still pricing in that the Bank of England will raise interest rates to above 5.5 per cent by August 2023. This is a sharp increase on the current 2.25 per cent rate, and more than a full percentage point above what was previously expected.Ross Walker, chief UK economist at NatWest Markets, warned that the hikes in the bank rate had barely fed through to the real economy. “This hit is coming and its force will increase,” he said.Even if people are not immediately hit by rising rates they will probably be worried about what their mortgage payments will be in six months’ time or a year, said Martin Beck, chief economic adviser at the consultancy EY Item Club. This would cause households to “spend less and save more”. Some analysts predict current conditions will lead to a recession at the end of next year, rather than this year. Ganguly said the positive effects of the tax cuts “will have faded by this time next year” with the UK likely to slip into a deep recession lasting several quarters. Streeter, noted that consumers face “severe cost-of-living headwinds” due to the higher price of imports brought about by the weaker pound.These worries, she said, would be compounded by fears about rising housing costs, at a time when many would already be grappling with higher energy bills; “purse-tightening will continue”, she said. More

ROME (Reuters) -Italy’s economy probably shrank in the third quarter and will keep contracting until mid-2023, according to Treasury forecasts that will make grim reading for Giorgia Meloni, the rightist leader expected to be named prime minister this month. The forecasts indicate the euro zone’s third-largest economy, hit by soaring energy costs and record high inflation, is already in the early stages of a recession, widely defined as two consecutive quarters of declining gross domestic product.Growth was firmer than expected in the first half of the year and GDP jumped 1.1% in the second quarter from the previous three months, but the Treasury’s Economic and Financial Document (DEF) published on Friday said a downturn has already begun.The slump is already emerging in monthly data. Some 74,000 jobs were lost in August, the second consecutive decline, according to statistics bureau ISTAT, which also recorded a sharp drop in consumer and business moral in September.On Monday, Italy’s closely-watched S&P Global (NYSE:SPGI) Purchasing Managers’ Index showed the manufacturing sector contracted for a third straight month in September, albeit by somewhat less than expected.Meloni, who led a right-wing alliance to victory in Italy’s Sept. 25 election, is negotiating with her allies to put together a cabinet, with the role of economy minister widely seen as the most important and difficult position to fill.Names repeatedly cited in Italian media include European Central Bank board member Fabio Panetta and Morgan Stanley (NYSE:MS) executive Domenico Siniscalco, who already held the position 18 years ago.However, Panetta has made clear he is not interested in the job and Siniscalco has not been contacted by Meloni, political sources told Reuters.One of the sources said Meloni was not keen on Siniscalco.The prime-minister-in-waiting is not expected to take office for at least three weeks, giving her time to find a suitable candidate.The Treasury estimated “slightly negative” GDP readings in both the third and fourth quarters, weighed down by contractions in the industrial sector.”A further decline in GDP is forecast for the first quarter (of next year) followed by a pickup from the second quarter,” the DEF document said.It forecast the recovery would be led by a rise in international demand, a fall in gas prices and an increasing contribution to GDP from European Union pandemic recovery funds and reforms Italy implements in return for receiving them.However, the DEF showed that Italy will spend around 13 billion euros ($12.62 billion) less this year of the EU recovery funds than it previously targeted, underscoring the country’s problems in implementing investment programmes.The DEF, whose main numbers were released earlier last week, slashed next year’s full-year GDP growth forecast to 0.6% from the 2.4% projected in April. More

“In line with the OECD and other economic organisms we see a growth higher than what we had expected at the beginning of the year, at 4.4% in 2022,” she told reporters ahead of a meeting with fellow Euro Zone ministers in Luxembourg.The economic growth upgrade comes one week after the statistics institute raised the second quarter growth to 1.5% from a previous 1.1% announced a month earlier and amid a three-decade high inflation close to 10%. More

The central bank lifted its key rate to 2.75% from 2.0%. In April, policymakers had begun raising the rate from 0.1% — an all-time low where it had stayed for the prior 15 decisions since a 0.15 point reduction at the outset of the COVID-19 pandemic.Israel’s annual inflation rate stood at 4.6% in August after reaching a 14-year high of 5.2% in July, topping the government’s 1%-3% annual target range and creating public anger at spiking living costs ahead of a Nov. 1 election.At the same time, Israel’s economy grew an annualised 6.8% in the second quarter from the first quarter. More