US New Jobs At Lowest Level For Nine Months

US Jobs Figures Are Deeply Worrying

Updated: 4:04pm UK, Friday 05 April 2013

By Ed Conway, Economics Editor

Americans are dropping out of the jobs market, and fast. That's the depressing takeaway from today's non-farm payroll report.

The overall participation rate – a measure, essentially, of the proportion of people of working age either in a job or looking for one – has fallen to the lowest level since 1978.

It is, as far as employment experts are concerned, a deeply worrying signal: increasingly, potential workers are giving up on getting work, dropping out of the jobs market instead of attempting to find a new position.

In fact, as you can see from the chart, participation has been falling since the turn of the millennium, though it's only in the wake of the financial crisis that the drop has become more vertiginous.

Why be concerned about this? Well, a high participation rate has typically been seen as evidence of the American economy's strength – a complement to its high productivity rate and consistently-strong GDP growth rate.

A low participation rate, on the other hand, is often evident in economies which are more sclerotic and less efficient – particularly ones with over-generous welfare states which some think discourage people from working.

So, for instance, Japan and Spain both have participation rates below 60%: Germany's has only just tipped fractionally above it.

The reality is that now, for the first time since 1977, America's participation rate, at 63.3%, is lower than Britain's, which is 63.6%, or was in the three months to the end of January.

It would be nice to claim that this was because Britain was in some way becoming leaner and meaner, but the statistics suggest otherwise: Britain's participation rate has remained steady since 2005 while America's has fallen sharply as people leave the workforce.

It might be odd, having said all of the above to say that today's nasty US jobs report (the headline, by the way, was that a mere 88,000 net jobs were added in March – well below the rise in the population) also technically make it more likely that the Federal Reserve will scale back its stimulus.

But in one sense they do. The Fed has committed to more quantitative easing, buying up $85bn (£55.8bn) of debt each month until the unemployment rate drops below 6.5%.

But because unemployment measures the number of working people as a percentage of the total workforce, it can fall as a direct result of the workforce falling – and that's what happened this time, with the rate dropping from 7.7% to 7.6%.

Now, pragmatically speaking the Fed will try to "look through" this optical illusion. But it's an important reminder that when you tie your monetary policy to a very specific number, it doesn't always make it easy to predict future moves from the central bank.

Mark Carney, who is coming in as Bank of England Governor this summer and has nodded approvingly over at what the Fed has been doing, should take note.

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HMV Rescue Saves 141 Stores And 2,500 Jobs

By Mark Kleinman, City Editor

HMV's future as a high street retailer has been salvaged in a £50m deal that secures 2,500 jobs on Britain's beleaguered high streets.

Hilco, a restructuring firm, confirmed on Friday morning that it had struck an agreement with Deloitte, the administrator to HMV, to rescue the retailer.

The deal, which was revealed exclusively by Sky News on Thursday night, will keep 141 shops open, including 25 which had already been earmarked for closure by Deloitte. All nine of the Fopp-branded shops are included in the transaction.

While that represents little more than half of HMV's UK stores that were open before it called in administrators in January, it represents a more optimistic outcome for the chain than many analysts had predicted.

Hilco acquired HMV's Canadian operations two years ago, since when the performance of the business has surpassed expectations.

Paul McGowan, Hilco chief executive, said the deal had the backing of key HMV suppliers and landlords.

He said: "We hope to replicate some of the success we have had in the Canadian market with the HMV Canada business which we acquired almost two years ago and which is now trading strongly.

"The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business but we believe it has a successful future ahead of it."

Mr McGowan will become chairman of HMV, with two other Hilco executives taking key roles with the retailer.

HMV had been weighed down by a mountain of debt, allied to a combination of waning consumer confidence and intense pressure from supermarkets encroaching on its entertainment retailing turf, as well as the rapid rise of low-cost digital rivals.

Hilco said it would abandon a recently-introduced practice of selling tablets and other digital devices, using the space instead for an expanded music and visual entertainment range.

Ian Topping, one of the Hilco executives who will be involved in running HMV, said: "The reaction of the British public to the administration of HMV shows a strong desire for the business to continue to trade and we hope to play a constructive part in delivering that."

Hilco also confirmed that it would seek to re-establish a presence for HMV in Ireland.

Nick Edwards, joint administrator at Deloitte, said the deal "provides a solid financial footing on which the business can be taken forward".

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Axminster Rescue To Save 100 Devon Jobs

By Mark Kleinman, City Editor

One of Britain's oldest carpet-makers is to be rescued today in a deal that will preserve about 100 jobs in the south-west of England.

I understand that Axminster Carpets, which traces its roots back to 1755, will be bought out of administration by a local consortium. An announcement about the deal is expected to be made on Saturday afternoon.

The consortium is being led by Stephen Boyd, a businessman who chairs Pittards, a major leather supplier, and includes backing from Centric Commercial Finance, an invoice discounting and asset-based lending group.

Axminster fell into administration last month, citing difficult trading conditions, with the loss of about three-quarters of the company's 400-strong workforce.

A supplier to Clarence House, 10 Downing Street and the Royal Albert Hall, the carpet-maker was founded by the Whitty family in the 1750s, and gave rise to what became known as the Axminster method of weaving.

After going out of business in the 1830s, it was subsequently revived a century later.

Joshua Dutfield, grandson of the founder of the current incarnation of Axminster, is expected to remain involved with the company following the rescue deal.

Axminster's collapse sparked an emotional response in Devon, with thousands of people signing a petition aimed at saving the company.

A spokeswoman for Axminster declined to comment ahead of the announcement. Duff & Phelps, which has been handling the administration, could not be reached for comment.

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Petrol Sales Crash As Consumers Choose Diesel

Petrol sales have plummeted in the last five years, according to official figures, with retailers dispensing 5.4 billion fewer litres than five years ago.

In 2007, filling stations sold a total of 22.87 billion litres of petrol, the AA motoring group said.

But the latest Government figures revealed that last year, retailers dispensed 17.43 billion litres of petrol - a fall of almost 24%.

The combined sales of both petrol and diesel also fell over the period - by 9.3% to 34.16 billion litres in 2012.

The AA said that the total decrease was equivalent to 35 days of fuel sales being lost since the start of the credit crunch.

But diesel sales increased slightly over the last five years, in part due to companies buying the fuel directly from forecourts instead of storing it in depots, the AA said.

Sales of diesel rose from 14.8 billion litres in 2007 to 16.73 billion litres last year.

The organisation's president Edmund King said the increasing popularity of diesel cars and smaller vehicles had contributed to the overall decline in fuel sales.

Car registrations rise by 5.9%, with Vauxhall's Astra among the top sellers

"However, soaring pump prices have taken a huge toll on petrol sales more recently - during the 10p-a-litre price surges last March and October, pump sales of petrol fell by up to 5%," he added.

"The trouble is that, with global economic recovery, the stock market will predict greater oil and fuel demand and push up commodity values accordingly."

The AA said non-supermarket fuel retailers had been hardest hit by the sales slip, with petrol sales down 7.7% last year compared with 2011. Supermarkets saw a 0.6% decrease over the same period.

The RAC Foundation's director Professor Stephen Glaister warned that the UK's infrastructure could not cope with an increase in diesel's popularity.

"Our ageing refineries are not geared up to cope with growing demand for diesel and you can't just flick a switch to produce more," he said.

"Already we are a net importer of diesel and, if sales of diesel-powered cars continue to surge, our reliance on foreign imports will grow, especially if the economy recovers and mileage increases."

It comes as industry statistics revealed that new car registrations rose by 5.9% in March - the thirteenth consecutive month of growth.

Volumes were their highest since 2010 when the vehicle scrappage scheme was in place, the Society of Motor Manufacturers and Traders (SMMT) said.

Over 394,806 cars were registered in March, with sales of the mini and SUV vehicle types growing especially strongly.

The figures take registrations over the first quarter of the year to 605,198 units - an increase of 7.4%.

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Ex-HBOS Head Quits After Bank Report Criticism

Former HBOS chief executive Sir James Crosby has resigned from his new job as an adviser to a private equity firm following criticism of his role in the collapse of the bank.

He has left European investment firm Bridgepoint after a report by the Parliamentary Commission on Banking Standards criticised the role played by top HBOS executives before the bank's bailout.

Sir James was the "architect of the strategy that set the course for disaster" and held primary responsibility for the collapse along with former chairman Lord Stevenson and fellow chief executive Andy Hornby, the report said.

It blamed their "toxic" misjudgements for the bank's downfall and £20.5bn taxpayer bailout at the height of the financial crisis, and said they should not be allowed to work in the financial sector again.

Lord Stevenson, Sir James Crosby and Andy Hornby were slammed in the report

The former HBOS bosses also failed to admit their mistakes, the report said, and should apologise for their "incompetent and reckless board strategy".

Peter Cummings is the only former HBOS director to have been penalised by City regulators after being fined £500,000 and banned for life from working in the City last September.

But the commission said it was wrong that he should shoulder the blame alone and called on the new City regulator, the Prudential Regulation Authority, to consider stripping Sir James, Mr Hornby and Lord Stevenson of their Approved Person-status - which permits individuals to carry out particular financial functions.

Sir James was chief executive of HBOS from 2001 to 2006 and also former deputy chairman of the Financial Services Authority.

He was a member of the European Advisory Board at Bridgepoint and is also a senior independent director of catering firm Compass.

Mr Hornby's current employer - bookmaker Gala Coral - has defended his position of the company's boss.

"Coral as a business is performing extremely well and that coincides with Andy's tenure as chief executive," spokesman Simon Clare said.

"He's doing a great job and we're delighted with the job he is doing. He has the complete backing of the business."

Lord Stevenson was singled out for special criticism in the report for claiming reckless lending at HBOS was not his fault because he was "only there part-time".

It said he had shown himself "incapable of facing the realities of what placed the bank in jeopardy from that time until now".

While Royal Bank of Scotland's disgraced former boss Fred Goodwin has been stripped of his knighthood, Sir James and Lord Stevenson have retained their titles.

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HMV Rescue Saves 141 Stores And 2,500 Jobs

By Mark Kleinman, City Editor

HMV's future as a high street retailer has been salvaged in a £50m deal that secures 2,500 jobs on Britain's beleaguered high streets.

Hilco, a restructuring firm, confirmed on Friday morning that it had struck an agreement with Deloitte, the administrator to HMV, to rescue the retailer.

The deal, which was revealed exclusively by Sky News on Thursday night, will keep 141 shops open, including 25 which had already been earmarked for closure by Deloitte. All nine of the Fopp-branded shops are included in the transaction.

While that represents little more than half of HMV's UK stores that were open before it called in administrators in January, it represents a more optimistic outcome for the chain than many analysts had predicted.

Hilco acquired HMV's Canadian operations two years ago, since when the performance of the business has surpassed expectations.

Paul McGowan, Hilco chief executive, said the deal had the backing of key HMV suppliers and landlords.

He said: "We hope to replicate some of the success we have had in the Canadian market with the HMV Canada business which we acquired almost two years ago and which is now trading strongly.

"The structural differences in the markets and the higher level of competition in the UK will prove additional challenges for the UK business but we believe it has a successful future ahead of it."

Mr McGowan will become chairman of HMV, with two other Hilco executives taking key roles with the retailer.

HMV had been weighed down by a mountain of debt, allied to a combination of waning consumer confidence and intense pressure from supermarkets encroaching on its entertainment retailing turf, as well as the rapid rise of low-cost digital rivals.

Hilco said it would abandon a recently-introduced practice of selling tablets and other digital devices, using the space instead for an expanded music and visual entertainment range.

Ian Topping, one of the Hilco executives who will be involved in running HMV, said: "The reaction of the British public to the administration of HMV shows a strong desire for the business to continue to trade and we hope to play a constructive part in delivering that."

Hilco also confirmed that it would seek to re-establish a presence for HMV in Ireland.

Nick Edwards, joint administrator at Deloitte, said the deal "provides a solid financial footing on which the business can be taken forward".

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Triple-Dip Fears Ease With Upbeat PMI Survey

Britain's services sector recorded its strongest expansion in seven months in March, helping to ease fears of a pending triple-dip recession.

The main Markit/CIPS Purchasing Managers' Index (PMI) for the dominant service sector climbed to 52.4 in March from 51.8 in February.

The rise further above the 50 point line that divides growth from contraction confounded economists' forecasts for a drop to 51.5 and was the highest reading since August when the London Olympics boosted business.

"The Government and Bank of England will breathe sighs of relief in seeing signs of a gathering upturn in the service sector during March," Chris Williamson, chief economist at survey compilers Markit, said.

"(It) looks set to have helped the UK avoid a triple-dip recession by the narrowest of margins."

The British economy shrank at the end of last year and another consecutive quarter of contraction would tip it into a third recession in less than five years.

Official data on how the economy fared in the first quarter is not due until April 25.

But it looks to have made a positive start after an Office for National Statistics (ONS) release showed the strongest growth in services in five months in January.

Services as measured by the ONS make up more than three-quarters of British economic activity.

However, Markit's survey does not include the public sector or retailers, focusing instead on areas such as transport and communication, business services and entertainment.

Nonetheless, March's improvement in the services PMI offset contractions in manufacturing and construction and points to 0.1% economic growth in the first three months of 2013, Mr Williamson said.

The Bank of England is now less likely to extend asset purchases to support output, although economists expect more action before the end of the year.

Moreover, Mr Williamson said the economy was probably stronger than recent data suggested because unusually cold and snowy weather early this year hurt many businesses, whether by keeping consumers at home or disrupting deliveries to factories.

"We would therefore expect to see faster economic growth in the second quarter and, barring any surprises such as a further worsening of the euro zone crisis or severe weather, monetary policy is set to be on hold for the foreseeable future," he added.

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Bank Holds QE And Interest Rate Firm

The Bank of England (BoE) has decided to hold its quantitative easing (QE) programme at £375bn as the base interest rate remains at an historic low of 0.5%.

The BoE's decision comes just hours after its Japanese counterpart decided to pump new money into its finance system.

The bank's decision, despite a new remit that gives it clearer leeway to disregard above-target inflation, comes as Britain's economy remains stagnant.

The central bank said it would not add to the £375bn of Government bonds it purchased between March 2009 and October 2012.

"The Bank of England's Monetary Policy Committee (MPC) today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%," the BoE said in a brief statement at the conclusion of its regular monthly meeting.

Melanie Bowler from Moody's Analytics said: "While the asset-purchase programme was not increased as we had expected, quantitative easing is expected to be expanded this year.

"With its remit extended, the BoE is also expected to expand the use of other unconventional monetary policy tools this year."

She added: "Meanwhile, the policy rate will remain at the record low 0.5% for two years more."

HIS Global Insight economist Howard Archer said: "The Bank of England's decision to hold off from quantitative easing was highly likely once again the result of a split 6-3 vote.

"With consumer price inflation set to move above 3% in the near term and sterling still vulnerable despite rising from its lows, several MPC members may want to see evidence that underlying price pressures are broadly contained before approving further stimulative action."

Mr Archer added: "However, we suspect that it is more a matter of when, rather than will, the MPC approve further quantitative easing to try and support the economy."

Japan has made a sweeping shift in its monetary policy, aiming to spur inflation and get the world's third-largest economy out of a long, debilitating slump.

Bowing to demands from Prime Minister Shinzo Abe for more aggressive monetary easing, the Bank of Japan has announced a policy overhaul.

It said the plan was intended to double the money supply and achieve a 2% inflation target at the "earliest possible time, with a time horizon of about two years."

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Boeing's Dreamliner: IAG Orders More Planes

Boeing 787 Dreamliner Timeline

Updated: 8:24am UK, Thursday 04 April 2013

The turbulent history of the Boeing 787 Dreamliner:

Apr 3, 2013: Company says it has completed more than half of its battery tests

Mar 25, 2013: Boeing says its first test flight with the new lithium-ion battery went according to plan.

Mar 15, 2013: Boeing unveils modifications to its 787 batteries, saying the Dreamliner is "absolutely safe".

Mar 12, 2013:  FAA approves Boeing's certification plan for a new battery system for the aircraft.

Mar 7, 2013: US National Transportation Safety Board says it has failed to identify the cause of the Jan 7 fire.

Feb 28, 2013: Boeing says it has found a "permanent" solution to fix problems with Dreamliner batteries.

Feb 25, 2013: All Nippon Air (ANA) confirms all of its fleet will remain grounded until the end of May.

Feb 8, 2013: Boeing confirms it has sent letters to airlines expecting imminent deliveries of possible delays.

Feb 7, 2013: US Federal Aviation Administration (FAA) allows limited test flight of the grounded Dreamliner.

Feb 5, 2013: Japanese official reveal CT scans of failed batteries does not reveal fire cause.

Feb 4, 2013: Boeing requests FAA approval for test flights of grounded model.

Jan 30, 2013: Amid revenue loss forecasts of $500m to $5bn, Boeing CEO addresses investors and downplays impact.

Jan 28, 2013: Investigators widen battery examination to sub-contractors of lithium ion battery maker GS Yuasa

Jan 21, 2013: Safety officials start probe of lithium ion battery maker GS Yuasa

Jan 19, 2013: Boeing says it is stopping deliveries of the Dreamliner to airlines

Jan 18, 2013: FAA officials arrive in Japan to examine a 787 and its melted battery pack after an ANA emergency landing two days earlier

Jan 17, 2013: The European Aviation Safety Agency,  FAA and Qatar Airways ground Dreamliners under their regulatory control

Jan 16, 2013: Japan Air Lines Co Ltd (JAL) follows suit and suspends Dreamliner flights from Japan over safety concerns

Jan 16, 2013: ANA grounds all 17 of its 787s after four of its aircraft suffer problems

Jan 16, 2013: ANA 787 Dreamliner makes emergency landing in Takamatsu, Japan, after smoke appears in cabin

Jan 11, 2013: The Federal Aviation Authority (FAA) announces a review of the 787 design and systems

Jan 11, 2013: ANA discovers engine oil leak after a domestic flight lands at Miyazaki

Jan 11, 2013: A separate ANA flight to Matsuyama reported a crack appearing in the pilot's window

Jan 9, 2013: ANA cancels a Boeing 787 Dreamliner flight due to a brake problem

Jan 8, 2013: Japan Air Lines (JAL) grounds a jet at Boston Logan International Airport after a 787 leaks 150 litres of fuel

Jan 7, 2013: A fire erupts in a battery pack in another JAL Dreamliner at Boston

Dec 13, 2012: Qatar Airways grounds one of its Dreamliners because of a faulty generator

Dec 5, 2012: The FAA orders inspections of all 787 Dreamliners in service in the US

Dec 4, 2012: A United Airlines 787 is forced to make an emergency landing in New Orleans after a generator fails

July 23, 2012: ANA grounds five Dreamliners due to an engine component issue

Feb 22, 2012: Boeing says around 55 Dreamliners may be affected by a flaw in the fuselage

Oct 26, 2011: The Dreamliner makes its maiden flight with paying passengers on board an ANA jet

Sep 26, 2011: Boeing delivers its first 787 Dreamliner to Japan's ANA, three years late

Jun 23, 2010: Boeing postpones the first flight of the Dreamliner because of a structural flaw

Dec 15, 2009: The passenger jet 787 Dreamliner takes off on its maiden test flight

Apr 9, 2008: Boeing says there will be a revised plan for the first 787 flight and initial deliveries

Dec 11, 2008: Boeing announces further delays due to strike action by machinists Sept-Nov

Oct 19, 2007: Boeing says there will be a six-month delay to deliveries due to assembly issues

Jul 8, 2007: The first assembled 787 goes on display to media, employees and customers

Jul 18, 2006: Boeing says it is making "solid progress" on the 787 Dreamliner programme

Jan 28, 2005: Boeing gives its new commercial airplane an official model designation number - 787

Jan 29, 2003: Boeing announces the launch of a new aircraft called the 7E7

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Barclays 'Must Learn' From Culture Review

Barclays has revealed that an independent review of its former business practices makes for "uncomfortable reading in parts".

The company said it must learn from the findings revealed in the review.

The report, by veteran lawyer Anthony Salz, called on the bank to maintain and publish a global code of conduct and to ensure a sufficient number of non-executive directors have banking experience.

"The report makes for uncomfortable reading in parts," Barclays chairman David Walker said in a statement.

The bank said it will report ahead of its annual general meeting on implementation of the review.

"Our plan is to report back in advance of the AGM on how we intend to implement the recommendations made, particularly those that go beyond the scope of work already underway."

Barclays, which was criticised for its key role in Libor-fixing and payment protection insurance mis-selling, said the review of business practices already substantially aligned with its transformational progress.

The Barclays share price dropped around 1% in mid-morning trading.

The company came under fire recently amid its promise of pay restraint.

Barclays picked Budget Day in March to reveal nine executives will receive more than £40m in shares.

It was earlier revealed that the bank paid 428 staff more than £1m - with some of those receiving £5m salaries.

Meanwhile, chief executive Antony Jenkins has also revealed that the growing automation of banking services could result in tens of thousands of jobs disappearing from its workforce during the next decade.

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