There’s an acrimonious campaign, a vote and then a cliff-hanger result. The routine is all too familiar for bond and currency traders.
After the shock of Britain’s Brexit referendum and Donald Trump’s U.S. presidential election victory, trading desks are readying for another sleepless night on Dec. 4 as they await the outcome of a ballot that again has the potential to disturb the political order. This time it’s in Italy, where a vote on curtailing the power of the Senate has turned into a judgment on Prime Minister Matteo Renzi’s leadership and the latest potential banana skin for investors.
Previous nights in the office taught Neil Staines, head of trading at money manager ECU Group Plc in London, what to watch. “It’s less about reading the polls and more about reading the markets, liquidity and pain thresholds in particular,” he said.
This time, it will be more about impact than shock. All major polls before a two-week blackout showed Renzi losing by a narrow margin and the question would be what happens next.
Volatility in the euro against the dollar approached levels seen just after Trump’s win as markets adjusted to the possibility that a defeat for Renzi might trigger early elections and gains for Five Star Movement, a populist group that wants a referendum on Italy’s membership of the euro.
Renzi, 41, has staked his political future by suggesting he would resign if he were to lose, and the first projections of the result are due just before midnight Rome time.
“You have to ask how much the market will react to something they are expecting,” said Andy Soper, head of Group of 10 foreign-exchange options at Nomura in London. “The difference this time is that it might be less about the result and more about how the vote is won or lost. There are a lot of unknowns.”
The euro, which will trade throughout the night, dropped 3 percent against the dollar this month while Italian government bonds lost 2.5 percent. That market will open the next morning, as will the stock exchange. A key concern for traders is liquidity in the early hours, whether enough banks are buying and selling as currency markets open in Asia after the weekend break.
Brokers including London Capital Group and Saxo Bank’s equities department will ask clients for larger deposits before placing a trade, adding an extra buffer against potential gaps in the market. There will also be more staff. While London Capital will deploy extra people on the night, Citigroup Inc.’s bond trading desk is planning an early shift, said Zoeb Sachee, head of European government bond trading at the bank.
“We are planning for the worst,” said Laurence Crosby, head of trading at London Capital Group. Liquidity has the potential to be “particularly bad” when the first projections are published, but having extra people awake and at their desks will make trading conditions “better than a normal day,” he said.
That said, the consequences of the Italian referendum won’t be as widespread as Trump’s win or the U.K.’s decision to leave the European Union, said Richard Benson, managing director and co-head of portfolio investment at Millennium Global Investments in London.
“It’s front and center in people’s minds,” he said. “But if you think about Brexit and the U.S. election being Premier League, this is Division Four stuff.”
Regardless of how box office the Italian referendum may or may not be, for London-based money manager Gordon Shannon it’s become more important than ever to monitor — vote by vote — politics across Europe.
“A couple of years ago I’d just have expected to read about the result early Monday morning,” said Shannon at TwentyFour Asset Management. Not anymore, he said. “I’ll be staying up all night to watch the results come in and if that means a couple of 2 a.m. margheritas, that’s a price I’ll just have to pay.”
Britain began consultations on encouraging better corporate behaviour and curbing excessive executive pay on Tuesday, part of Prime Minister Theresa May’s campaign to help those who voted for Brexit in protest at “out of touch” elites.
May is walking a fine line – not wanting to attack business at a time when she needs companies’ support to prepare for Brexit but also trying to keep on board voters who want to leave the European Union and are frustrated with growing inequality.
Taking aim at high executive pay, company boards and the behaviour of large privately-held businesses, her government will ask for opinions on questions such as: Should a new pay ratio reporting requirement be introduced?
But among dozens of proposals, May’s plans to have workers represented on boards have been watered down, with business minister Greg Clark saying the government would not “overturn” Britain’s successful system of having unitary boards.
In a statement, the Conservative government said it wanted to stop “an irresponsible minority of privately-held companies acting carelessly – leaving employees, customers and pension fund beneficiaries to suffer when things go wrong”.
“Ordinary working people, who work hard for their living deserve to have confidence that businesses act responsibly and fairly,” Clark told parliament on Wednesday.
“There is no conflict between good corporate governance and profitability,” he said, describing May’s government as “unashamedly pro-business” to ease concerns in some companies that their businesses may be undermined by the reforms.
In a speech to her Conservative Party last month, May struck fear in some business leaders when she announced that “a change has got to come” because the “actions of the few tar the reputations of the many”.
The director general of the British Chambers of Commerce, a leading business lobby group, welcomed the proposals but warned May that “heavy-handed regulation could reduce investment or create significant costs for firms”.
“Reforms need to be proportionate, and businesses will want reassurances from government that any changes resulting from these proposals will not create additional, costly regulatory burdens for medium-sized and smaller companies,” Adam Marshall said in a statement.
Clark, the business minister, reassured some businesses by saying the government did not want to impose regulation, but rather to use non-legislative standards for companies to make sure that they are held to a “high standard”.
Although May has not named any companies, she is clear that she wants to avoid a repeat of the demise of the BHS department store, which saw the loss of 11,000 jobs and a huge hole in its pension fund that could affect 20,000 pensioners.
The government’s statement said it would look at ways to ensure that employees, customers and other stakeholders are better represented in the boardroom and that executive pay packages reflect company performance.
The proposals will include a demand that the largest private firms comply with “a bespoke code of practice” or explain in their annual accounts why they have not done so, and make privately-held businesses report more consistently on diversity, greenhouse gas emissions and social and community issues.
The proposals will be discussed by a wide range of interested parties before a White Paper is published setting out the ideas for future legislation. This may also be consulted on before a formal bill is presented to parliament.
While describing the proposals as “a big change”, Clark, who will deliver the Green Paper to parliament, said the government would not aim to “overturn” the tradition of company directors not necessarily being the delegates of certain groups.
Saying companies could have workers represented on boards, he added: “It is available for companies … We’re not going to make it happen. But I think what we do want to do is to give a stronger voice to workers on boards.”
On executive pay, he said the government would propose ways of curbing excessive rates, including considering whether there should be an annual binding vote by shareholders.
The average pay of bosses in Britain’s FTSE 100 rose more than 10 percent in 2015 to an average of 5.5 million pounds ($7 million), meaning CEOs now earn 140 times more than their employees on average, according to a survey released in August.
“Executive pay has grown much faster over the last two decades than pay in general and at times is not in line with corporate performance,” Clark said. “It’s right to ask business to play its part in building an economy that works for everyone.”
Source: Reuters (By Elizabeth Piper and William James, Additional reporting by Kylie MacLellan; Editing by Michael Holden and Mark Heinrich)
Business minister Greg Clark said on Tuesday the British government was “unashamedly pro-business”, but that he wanted to strengthen existing corporate governance structures to avoid damaging public trust in the private sector.
Britain hopes to encourage better corporate behaviour, part of Prime Minister Theresa May’s drive to support the millions of people she says voted for Brexit in protest at ‘out of touch’ elites.
“This government is unequivocally and unashamedly pro-business, but we hold business to a high standard in doing so,” Clark told parliament. “It’s right ask business to play its part in building an economy that works for everyone.”
Source: Reuters (Reporting by Elizabeth Piper, writing by William James)
The European Commission’s Brexit negotiator suggested at a briefing with the region’s governments that they only have a small window of time to seal a Brexit deal once talks begin.
Michel Barnier held a meeting Tuesday in Brussels about the upcoming negotiations and discussed a possible timeline. The need for the European Parliament to approve divorce terms means that any deal must be concluded by the second half of 2018 if U.K. Prime Minister Theresa May triggers two years of talks by the end of March, according to a government official present. A spokesperson for the Commission declined to comment.
Such an approach would put both sides under pressure to find common ground in a short period of time. Billed as a seminar, the gathering of three experts from each member state other than the U.K. indicate Barnier and European Union governments are working to form a united front. Also discussed were how Britain’s exit would affect the EU’s budget, according to another government official familiar with the matter.
As the Brussels meeting was underway, European officials elsewhere stuck to the line that there can be no engagement with the U.K. about the outlines of Brexit until May has invoked Article 50 of the Lisbon Treaty. European Commission spokesman Margaritis Schinas told reporters in Brussels “it’s no notification — no negotiation; and no speculation.” Italian Foreign Minister Paolo Gentiloni agreed.
Are we Clear?
“I made this clear in my talks” with May, German Chancellor Angela Merkel said in Berlin. “First there is Article 50, then there will be common guidelines by the European Council, and then there will be negotiations.”
That lack of flexibility is a disappointment to banks and businesses pressuring May to secure a transitional arrangement that preserves current trading terms between the U.K. and EU until a new relationship is agreed. Rupert Harrison, chief macro strategist at BlackRock Inc., said on Monday that May would need to ask for such a deal before triggering Article 50.
Standing alongside Merkel, Maltese Prime Minister Joseph Muscat said he had “seldom witnessed” this much convergence among European governments.
There are few signs anyone in Europe is willing to give the U.K. a break. European Union President Donald Tusk declined a request by some U.K. lawmakers for the rights of Europe’s citizens to be confirmed before official talks. People shouldn’t be “bargaining chips,” he said.
Click here for a refresher on what makes a Hard Brexit harder than a soft one.
Dutch Finance Minister Jeroen Dijsselbloem warned London may lose its status as the euro-area’s financial capital if the U.K. refuses to fully apply EU regulations after Brexit .He predicted a “tough ride” for every EU government, but especially the U.K.
“We can’t allow the financial service center for Europe and the euro-zone to be outside Europe and to go its own way in terms of rules and regulations,” Dijsselbloem said in the European Parliament. “We have to take a firm stand on this. There’s no alternative.”
For all the obstacles standing in Britain’s way, U.K. Trade Secretary Liam Fox continued his charm offensive in a trip to Frankfurt. Back in London, the government denied a handwritten memo photographed being carried to the May’s residence that revealed parts of its Brexit strategy. Among the apparent insights in the document was the intention to “have cake and eat it” and that some were “loath to do” a transitional plan.
European Council President Donald Tusk said the European Union cannot enter into side talks about the status of EU citizens in the U.K., or British citizens in the EU, until the U.K. government triggers formal negotiations on its exit.
In a response to a letter from U.K. lawmakers requesting a side deal on the rights of U.K. and European citizens directly affected by Brexit, Mr. Tusk said he couldn’t, as asked, put the issue up for discussion at next month’s meeting of EU leaders.
“That would in effect mean the start of the negotiations already in December. The EU stands ready to do so but that can only happen on the condition that Article 50 has been triggered,” Mr. Tusk wrote, referring to the legal clause which would trigger the U.K.’s exit from the bloc.
“Let me reiterate, however, that the decision about triggering Article 50 belongs only to the U.K., which we fully respect.”
The letter to Mr. Tusk came from a group of 80 U.K. lawmakers, mainly from the Conservative Party. They included several people prominent in the Brexit campaign.
The U.K. government has said it would trigger Article 50 by March 2017, starting a formal two-year negotiating period with the EU on exit terms.
When she came into office, U.K. Prime Minister Theresa May ruled out unilaterally offering EU citizens already in the U.K. for some time a guarantee they could stay, a position supported by some leading U.K. politicians, including Brexit champion-and current Foreign Secretary-Boris Johnson.
Mrs. May has said she wants to secure reciprocal agreements on the rights of U.K. nations in the EU and U.K. nationals in the EU quickly but only once the formal negotiations start.
However, on Monday, Politico reported that German Chancellor Angela Merkel declined Mrs. May’s request to provide reciprocal assurances on the issue when they met in Berlin earlier this month.
In his letter, Mr. Tusk said he agreed with the U.K. lawmakers who had written, saying he also didn’t want to see U.K. and EU nationals treated as “bargaining chips” in the Brexit negotiations.
However he said the uncertainty had been created by the U.K. decision to leave the bloc and that a solution could be worked on once the U.K. decided to trigger Article 50.
“In your letter you state that the European Commission?are attempting to prevent negotiations, thereby creating ‘anxiety and uncertainty for the U.K. and EU citizens living in one another’s territories,'” Mr. Tusk wrote. “It is a very interesting argument, the only problem being that it has nothing to do with reality,” he said. “Would you not agree that the only source of anxiety and uncertainty is rather the decision on Brexit.”
The European Union cannot let London remain the main financial centre for the euro zone after Brexit if Britain does not want to be bound by EU financial rules, Eurogroup President Jeroen Dijsselbloem said on Tuesday.
The Dutch finance minister told a European Parliament committee he did not expect Britain to accept being bound by EU rules after leaving the bloc, and so the Union would have to take a “firm stand” against London remaining the main financial centre for the continent.
“We cannot allow a third country to have access, full passporting rights, to financial service markets in Europe if at the same time we allow them to deviate in terms of capital standards, requirements, consumer protection, etc etc,” Dijsselbloem said at a committee hearing.
“We can’t allow the financial service centre for Europe and the euro zone to be outside Europe and the euro zone and to go its own way in terms of rules and regulations, requirements etc,” he added. “Simply … we can’t allow that to happen.”
“We have to take a firm stand on this,” he added. “There is no alternative.”
Noting his own country’s strong trading ties with Britain, he said the European Union should be prepared to try and dampen economic fallout from Brexit on both sides of the Channel.
But uncertainty over the departure terms would already push investors to shift interests away from Britain, he said.
“I say this without any joy at all – this will start having an impact on the British economy, on the City, in the coming years,” he said. “We should be fully prepared. But it’s going to be a tough ride, specifically for the UK.”
Source: Reuters (Reporting by Alastair Macdonald; Editing by Tom Heneghan)
In 2015, households in the European Union (EU) devoted nearly a quarter of their total consumption expenditure to “housing, water, electricity, gas and other fuels”. This represents a total spending of almost €2 000 bn (equivalent to 13.4% of EU GDP) and is by far the most significant expenditure of EU households. This is also the expenditure item whose share increased the most significantly over the last decade, from 22.5% of total household expenditure in 2005 to 24.4% in 2015 (or +1.9 percentage points). Similar trends can be observed in an overwhelming majority of the EU Member States, albeit to different extents.
Large shares of total household consumption expenditure were also spent on transport (13.0% of total expenditure), on food and non-alcoholic beverages (12.3%), on miscellaneous goods and services (11.5%) such as financial services, insurance and personal care, on recreation and culture as well as on restaurants and hotels (both 8.5%), while other types of expenditure were less important.
This information, based on detailed breakdowns of household final expenditure by COICOP groups, is issued by Eurostat, the statistical office of the European Union. While this News Release has a specific focus on housing expenditure, a more detailed picture of household final consumption expenditure by consumption propose is available in a dedicated article on the Eurostat website, complemented with an interactive infographic.
Weight of household expenditure on housing highest in Denmark and Finland, lowest in Malta
In a large majority of EU Member States, “housing, water, electricity, gas and other fuels” represents the first item of household expenditure. In 2015, households devoted the largest share of their total expenditure to housing in Denmark (29.4%) and Finland (28.2%), followed by France (26.4%), Sweden (26.0%), the Czech Republic (25.9%) and the United Kingdom (25.6%).
At the opposite end of the scale, the lowest proportion of household expenditure spent on housing was registered by far in Malta (10.1%), ahead of Lithuania (15.8%), Cyprus (16.6%), Estonia (18.0%), Bulgaria (in 2014), Portugal and Slovenia (all 18.8%) as well as Hungary (19.1%).
Share of housing, water, electricity, gas and other fuels in total household expenditure in the EU Member States, 2015 (%)
Between 2005 and 2015, the share of “housing water, electricity, gas and other fuels” in total household expenditure grew in a vast majority of Member States. In particular, the most remarkable increases over this 10- year time period were recorded in Spain (from 17.4% of total household expenditure in 2005 to 23.0% in 2015, or a rise by 5.6 percentage points – pp), Ireland (+5.0 pp) and Portugal (+4.5 pp), followed by the Netherlands (+3.8 pp), Finland (+3.6 pp), Italy and Latvia (both +3.3 pp) as well as Denmark (+3.1 pp).
In contrast, the share of “housing water, electricity, gas and other fuels” in total household expenditure slightly dropped between 2005 and 2015 in Slovakia (from 26.2% in 2005 to 24.9% in 2015, or a decrease by 1.3 pp), Sweden (-1.0 pp), Malta (-0.9 pp), Poland (-0.7 pp), Germany (-0.4 pp) and Slovenia (-0.1 pp), while it remained stable in Estonia.
The European Union (EU) includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.
The euro area consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
Methods and definitions
Data presented in this News Release come from annual national accounts, which are compiled in accordance with the European System of Accounts (ESA 2010).
Household final consumption expenditure, abbreviated as HFCE, consists of the total outlay on individual goods and services by resident households, including those sold at below-market prices. HCFE includes imputed expenditures or transactions which do not occur in monetary terms and can therefore not be measured directly.
Household consumption expenditure is classified by consumption purpose according to the COICOP classification (Classification Of Individual COnsumption by Purpose) which includes up to 60 categories. Data reflect the domestic concept.
The division “Housing, water, electricity, gas and other fuels” includes expenditure related to rentals for housing, maintenance and repair of the dwelling, water supply and miscellaneous services relating to the dwelling, as well as electricity, gas and other fuels.
The European Central Bank’s monetary policy is proving to be “very effective” and the bank will review its policy stance in December, ECB President Mario Draghi said in a letter to a Member of European Parliament.
“We have ample evidence that our measures have substantially eased the borrowing conditions of firms and households, strengthened credit creation and, hence, supported the momentum of the euro area’s economic recovery,” Draghi said.
“The Governing Council remains committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation towards levels below, but close to, 2 percent over the medium term.”
Source: Reuters (Reporting by Balazs Koranyi; Editing by Francesco Canepa)
The economy grew at the fastest pace in over two years in the third quarter, as consumers and government stepped up their spending and exports surged.
Gross domestic product expanded at a 3.2% annual rate in the Commerce Department’s second reading, released Tuesday. That’s the strongest pace since the second quarter of 2014. It beat the consensus estimate of a 3.1% growth rate among economists surveyed by MarketWatch.
Consumer spending rose 2.8% in the quarter, stronger than the original estimate of 2.1% and the strongest pace since 2002. Another big contribution to the economy was business investment in structures like offices and factories, which expanded at a 10.1% pace, faster than the initial estimate of a 5.4% clip.
Corporate profits soared 6.6% in the third quarter, a much better performance than the 0.6% decline in the second.
Residential investment, which has run at a much weaker pace than economists expected based on other economic indicators, like housing starts, contracted 4.4% in the second revision. That’s better than the 6.2% decline initially reported.
Exports were marked up slightly, to a 10.1% gain from 10.0%, largely thanks to a surge in soybean exports. Exports of goods are at the strongest in three years. Imports, which detract from overall GDP growth, were marked down slightly, to a 2.1% gain from 2.3%.
Given the quirks involved in GDP calculations, some economists prefer to track gross domestic income. That measure was up 5.2% in the third quarter, the government said.
A measure of core inflation, which excludes volatile categories like food and energy, rose 1.7% during the quarter, unrevised from the initial reading. That’s inching closer to the Federal Reserve’s 2% target.
Most economists and investors expect the central bank to raise the benchmark interest rate at its December meeting as inflation firms and economic growth remains sturdy.
The benchmark 10-year Treasury note yield has moved up sharply in recent weeks in anticipation of stronger federal government spending and economic growth.
Consumer confidence soared in November to prerecession levels, a survey released Tuesday shows.
The consumer-confidence index rose to 107.1, the highest since July 2007, the Conference Board said Tuesday. The index had reached a 20-month high of 103.5 in September but pulled back in October to a revised 100.8.
Economists polled by MarketWatch had expected the index to rise to 102 in November from an initial October estimate of 98.6.
U.S. stocks, namely the S&P 500 index and the Dow Jones Industrial Average which had been trading near break-even levels in the morning before the confidence data was released, edged slightly higher afterward.
The jump in confidence couldn’t directly be tied to the victory of President-elect Donald Trump. Most of the consumers were surveyed before the election at a time when Democratic challenger Hillary Clinton was widely seen as the favorite.
However, Lynn Franco, director of economic indicators at the Conference Board, said the small sample of postelection responses showed that consumers’ optimism wasn’t dimmed by Trump’s victory.
Stephen Stanley, chief economist at Amherst Pierpont, said data show a natural flurry of optimism following elections.
“This campaign was so acrimonious that having the election over may have had people feeling better,” he said.
The present situation index, a measure of current conditions, increased to 130.3 from 123.
The labor market didn’t lift confidence as consumers outlook for the labor market was mixed. The number of people who anticipated more jobs in the months ahead was virtually unchanged while the percentage who expected jobs to be scarce fell slightly.
The future expectations index increased to 91.7 from 86.0.
Donald Trump was elected because half of America is unhappy about the economy, but the new president is inheriting a labor market that has shown huge improvement in the past few years.
The U.S. has added an average 181,000 new jobs a month in 2016 to nudge the unemployment rate down to 4.9%. Economists predict a similar 180,000 gain in hiring in November in the first jobs report to come out since Trump won the 2016 presidential contest.
With many companies complaining about a shortage of skilled workers, wages are also on the rise as firms bid to attract a dwindling pool of available talent. Hourly pay climbed 2.8% in the 12 months ending in October, the strongest increase since the end of the Great Recession more than seven years ago.
“We are close to full employment,” said Sam Bullard, senior economist at Wells Fargo Securities. “Firms will have to become more generous in their compensation packages.”
All the seeming good news on the labor front, however, obscures lingering problems.
While some Americans have found good jobs at good pay, many are stuck in menial jobs that don’t pay as well. And millions of others who want to work full time can only find part-time work.
A broader measure of unemployment that includes under-employed Americans and discouraged job-seekers also stands at a much higher 9.5%. The so-called U6 rate was around 8% before the last recession.
The percentage of able-bodied Americans in the workforce, meanwhile, is also near a three-decade low and it’s not just because so many baby boomers are retiring. Some younger workers have been locked out of the labor market because of insufficient skills or lack of opportunities in industries that used to used to provide lots of jobs for people without college degrees.
Trump beat Hillary Clinton in large part because disaffected Americans think he can do a better job of improving their own job and income prospects. The New York businessman has vowed to boost growth by cutting taxes, reducing regulation and killing free-trade deals he views as unfair.
After a brief moment of panic, investors have celebrated the full Republican takeover of Washington by pushing stocks DJIA, +0.36% to an all-time high
Even if Trump succeeds, however, the economy might not show much improvement right away. For one thing, it will take time for Congress to pass and implement measures to aid the economy. Businesses might be reluctant to spend and investment until they get a clearer idea of what’s going to happen.
“The lay of the land: uncertain,” said Gregory Daco, head of U.S. macroeconomics at Oxford Economics. “It’s just too soon to tell.”
Some forces unleashed by Trump are already at work that could constrain the economy in the short run.
The value of the dollar just hit a 13-year high, making U.S. exports more expensive for foreigners to buy and enticing Americans to splurge on imports.
Interest rates have also climbed rapidly on the view that the Trump White House will goose the economy and cause inflation to rise. The result: the cost of business and consumer loans such as home mortgages are significantly more expensive compared to a month ago.
Still, there’s clearly a renewed feeling of optimism in the air. Consumer sentiment surged in November after Trump’s victory and buoyant stock markets testify to anticipation. Just don’t expect an overnight change.
“It will take time for positive benefits to the economy to accrue,” Bullard said. “A lot of dominoes have to fall into place.”
U.S. online sales surged on Black Friday, with Amazon.com Inc offering the steepest discounts among e-commerce sites as it set the agenda for what has traditionally been the biggest shopping day of the year for brick-and-mortar retailers.
In-store shopping began to pick up in the afternoon, but the increase in customer traffic paled in comparison to the jump in online sales, analysts said.
Macy’s Inc website saw such heavy traffic that it had to delay customers from entering the site at three different times.
Online sales on Friday hit $1.70 billion as of 3 p.m. EDT, according to Adobe Digital Index, after reaching $1.13 billion for the day on Thursday, up almost 14 percent from a year ago.
The National Retail Federation has said it expects total sales this holiday season to increase by 3.6 percent to $655.8 billion, mainly due to the rise in online shopping.
This weekend’s shopping could reflect signs of faster economic growth in the fourth quarter this year. Nationwide U.S. retail sales rose 0.8 percent in October, driven by a 1.5 percent jump in receipts at online retailers.
The lowest unemployment rate in eight years of 4.9 percent in October and a rise in hourly wage rates of 2.8 percent for the year, the biggest increase since 2009, is fuelling consumer confidence and spending power.
“All of this adds up to the consumer feeling better about their current situation and I’m hoping they … buy all of their gifts from Macy’s,” the retailer’s chief executive officer, Terry Lundgren, told Reuters.
Administrative assistant Kelsey Gilford, 52, was shopping at Chicago’s Water Tower mall on Friday but had already made purchases online on Thursday.
“I looked at some online deals on J.C. Penney which were good. I bought a small kitchen appliance yesterday,” she said.
The deepest average discounts for Black Friday came from leading online retailer Amazon.com Inc, with an average of 42 percent off, compared with 33 percent off at Walmart , 35 percent at Target and 36 percent at Best Buy, according to e-commerce analytics firm Clavis Insight.
Amazon said Black Friday would surpass last year in terms of the number of items ordered on its website. The Seattle-based company declined to provide specifics.
Both Target and Wal-Mart, two of the country’s biggest brick-and-mortar retailers, said Thanksgiving online sales were some of their best ever.
Customer traffic online could be up 20 percent over Black Friday from a year ago, Cowen & Co analysts forecast in a note, while store traffic is likely to fall 3 to 4 percent this year on Black Friday.
“We expect negative (store) traffic given (the) earlier start this year of the holiday selling season and rise of mobile, which could be as much as 60 percent or more of all traffic, and consumer exhaustion from a saturated promotional environment,” the analysts said.
At many malls, more consumers turned up as the day progressed. Reuters reporters saw bigger crowds by midday at the Fashion Outlets of Chicago mall near O’Hare International Airport, which houses shops for high-end brands and retailers, and at Sawgrass Mills Outlet Mall in Sunrise, Florida.
But other malls, like the outdoor City Place mall in downtown West Palm Beach, remained largely subdued. Nicholas Wingo, a 32-year-old security officer at Hugo Boss in the Fashion Outlets of Chicago mall, said the store had a steady stream of customers but no long lines.
TRUMP STORE OFFERS A DEAL
President-elect Donald Trump also stepped into the online sales excitement. On Friday morning, Trump’s online store announced it was offering a 30 percent-off deal on all campaign products, including a $149 Christmas ornament.
“President-elect Trump loves a great deal,” a promotional email said.
For years, Black Friday has started the holiday shopping season in the United States with retailers offering steep discounts. But its popularity has been on the wane with the rise of online shopping and cheap deals throughout the year.
The holiday shopping season, which runs through Christmas on Dec. 25, can account for as much as 40 percent of retailers’ annual sales.
Source: Reuters (By Nandita Bose and Siddharth Cavale, Additional reporting by Svea Herbst Bayliss in Providence, Renita Young and Nandita Bose in Chicago, Siddharth Cavale in Bangalore, Amy Tennery, Stephanie Brumsey and Aleks Michalska in New York and Ruthy Munoz in Palm Beach, Florida; Editing by Jo Winterbottom and Cynthia Osterman)
Bank of England Governor Mark Carney wants British businesses to retain access to the European Union’s single market for two years after the country leaves the bloc, the Sunday Times reported, without citing sources.
Carney laid out a plan to allow companies a lengthy Brexit transition period when he hosted two dinners last week with Britain’s biggest lenders, the newspaper said.
Britain would remain subject to the European Court of Justice until at least 2021 under Carney’s plan, the Sunday Times said.
By contrast, the paper quoted May as saying that she wanted to “get on with the deal” of leaving the EU, in an interview published late on Saturday.
A Bank of England spokesman declined to comment on the report.
Earlier this month, Carney told lawmakers it would be in the interest of British companies – especially in the financial sector – to have a transitional deal to cover the period between Britain leaving the EU and the finalising of new trade deals.
Carney said the shortest transition period he had ever seen was two years for a Swiss-EU deal on insurance, but that they normally last four to seven years.
The Bank of England does not have any role in the Brexit negotiations with the EU but can provide technical assistance to Britain’s government.
The Canadian BoE governor has maintained a robust defence of the central bank’s operational independence since June’s Brexit vote.
Last month he said BoE officials would not “take instruction” from politicians, a week after May had highlighted the “bad side-effects” of the Bank’s near-zero interest rates and said a change had to come.
Source: Reuters (Reporting by Andy Bruce; Editing by Jonathan Oatis)