Mentioned in last week’s Beaufort Analysis, oil remains in the headlines with the price of Brent crude reaching $80 a barrel last Thursday. This is due to the continuing concerns that Iranian exports could fall because of renewed US sanctions, reducing supply in an already tightening market. Donald Trump’s decision this month to withdraw from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC’s third-largest producer, has boosted oil prices. This is in addition to the already strong global demand and plummeting Venezuelan production; the latter potentially worsened by the alleged rigged re-election of President Nicolas Maduro which could lead to further sanctions.
The number of low-paid workers in the UK has hit its lowest level since 1982. Thinktank Resolution Foundation said the share of employees earning less than £8.50 a hour had fallen to 18% due to the introduction of a higher minimum wage. The Office for National Statistics (ONS) announced that wages rose at an annual rate of 2.9% in the three months to March, faster than inflation for the first time in more than a year. Over the same three-month period, the inflation rate was 2.7%. The ONS also confirmed that the employment rate – the proportion of people aged 16 to 64 years in work – was 75.6%; the highest since 1971.
Nevertheless, UK productivity fell during the first three months of 2018, contrary to the strong second half of last year, with manufacturing output slowing, as both domestic and export orders declined. This follows the previous week’s announcement that the construction sector had contracted at its sharpest rate for more than five years, as poor weather hit the building industry. This further addition to slowing economic growth providing the backdrop to the Bank of England’s delay in raising interest rates.
Finally, despite the slowing economy, UK markets have reached all-time highs as measured by both the FTSE 100 and FTSE 250 Indices, surpassing their January levels; the main index hitting a new closing high last Thursday of 7787 and the 250, going one better, by closing above 21,000 for the first time. As we write, both indices are extending their gains further.
