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Fed says US economy slightly better

Workers at a General Motors factory in MichiganThe Fed highlighted the carmaking industry

The US central bank has slightly upgraded its view of the US economy, saying it expanded at a "moderate pace" in recent months.

The view comes in the Federal Reserve's latest Beige Book report, which covers the period from late February to early April.

The Fed highlighted growth in the manufacturing and construction sectors.

In its previous beige book report in January, the Fed said growth was only "modest to moderate".

In its latest report, the Fed also said that carmakers were performing strongly.

Yet it cautioned that consumer spending was only increasing at a "modest" pace.

The most recent official figures showed that the US economy grew at an annualised rate of 0.4% in the fourth quarter of 2012.

Meanwhile, official data from the Commerce Department showed that retail sales fell in March, down 0.4% from February.

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Japan in record annual trade deficit

Yen and US dollar notesRecent aggressive stimulus moves by the Japanese policymakers have weakened the yen

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Japan, the world's third-largest economy, has reported a record trade deficit for the year to 31 March.

The deficit hit 8.17tn yen ($83.4bn; £54.5bn) as a slump in global demand hurt exports, while greater domestic consumption of fuel boosted imports.

A weak yen, which has dipped nearly 20% against the US dollar since November, also boosted the value of the imports.

Analysts said the deficit was likely to shrink in the coming months as the weaker yen will help Japan's exports.

The yen has dipped after policymakers introduced aggressive measures aimed at spurring a fresh wave of economic growth and stoking domestic demand.

Trade shift

Japan, which has traditionally been known for its exports, has seen a shift in its trade pattern in recent times.

Start Quote

The broad picture remains intact as the weaker yen is having more of an impact on boosting imports than exports”

End Quote Takeshi Minami Norinchukin Research Institute

It has seen its imports rise, driven mainly by an increased demand for fuel.

This was after most of its nuclear reactors were shut after the earthquake and tsunami in 2011 which damaged the Fukushima Daiichi nuclear plant and resulted in radiation leaks.

As a result, utility providers have had to turn to traditional thermal power stations to generate electricity.

These power plants need natural gas and coal to operate, resulting in a surge in imports of these commodities.

Meanwhile, its exports have been hurt by a slump in demand from key markets such as the US and Europe, while a territorial dispute has hurt sales to China.

That has seen it report a deficit for nine straight months.

Delayed impact

Policymakers have been hoping that their recent measures, which have weakened the currency, will help the country's exporters.

Japanese Yen v US Dollar

Last Updated at 19 Apr 2013, 17:50 ET JPY:USD three month chart
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A weak currency makes Japanese exports more affordable to foreign buyers and also boosts profits of exporters.

However, analysts said that while a weakening currency has an immediate impact on the value of imports, it takes longer for it to help exports.

At the same time, exports are also influenced by global demand, which analysts said had remained subdued.

"The broad picture remains intact as the weaker yen is having more of an impact on boosting imports than exports, while the recovery in the world economy, particularly China, is tepid," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

"We'll need to wait at least until around summer before the weaker yen enhances price competitiveness of Japanese products abroad to boost exports."

There were some signs of recovery in the data for March, which showed a 1.1% increase in exports during the month, from a year earlier.

That was better than the 0.4% gain that many analysts had forecast.

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Car hire firms criticised over costs

car on roadUnderstanding car hire charges can be an uphill struggle

Consumer association Which? has said that many car hire companies are confusing their customers with "sneaky charges".

Researchers examined the websites of 10 companies offering a week's car hire in Spain.

They found that some of them do not disclose additional costs, such as insurance, until after the booking has been confirmed.

Which? is asking the hire companies to disclose such charges upfront.

At the end of the online booking process, more than half of the Which? researchers were still uncertain about the total amount they were going to be charged.

There was particular confusion about charges for a full tank of fuel - charges which are compulsory.

The costs of optional excess damage waivers, to reduce the amount you would have to pay if the car was in an accident, were also unclear. The cost of such excess waivers can add £100 to the bill for a week's rental.

According to the Which? report, researchers were also uncertain as to whether such waivers covered them for damage to the windscreen or tyres.

Legal obligations

"The car hire industry is taking customers for a ride by hitting them with sneaky charges not included in the headline price," said Richard Lloyd, the executive director of Which?.

"Car hire companies must be more transparent and upfront about their fees so people can make an informed choice," he said.

Which? would like car hire companies to show clearly on their websites:

  • the amount of the excess
  • the cost of the excess waiver, and what it covers
  • the cost of compulsory fuel
  • the cost of additional extras, like sat navs and additional drivers.

It says it is a principle of both European and UK law that essential information must be clearly stated at the point of purchase.

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UK unemployment up to 2.56 million

Woman walks past job centreThe number of people claiming Jobseeker's Allowance fell in March

UK unemployment rose by 70,000 to 2.56 million between December and February, the Office for National Statistics (ONS) has said.

It pushed the unemployment rate to 7.9%, raising further questions about the UK's economic strength.

The number of people in employment also fell, while earnings growth slowed considerably, according to ONS data.

But there was positive news on the number claiming Jobseeker's Allowance last month, down 7,000 to 1.53 million.

'Challenges ahead'

The number of people in work fell by 2,000 in the latest quarter to February, to just under 30 million, the first time the figure has dipped since autumn 2011.

And the ONS said that average regular pay, excluding bonuses, rose by 1%, the lowest since records began more than a decade ago.

The news hit sterling, with the pound falling more than a cent against the dollar on concerns that a weaker labour market pointed to worsening economic prospects.

It was up against the euro as the equity markets in London closed, having reversed earlier losses.

Employment Minister Mark Hoban acknowledged that there were "still tough challenges ahead", but highlighted the importance of the fall in the number of people claiming Jobseeker's Allowance (JA), and especially the drop among young people.


So is the labour market moving into a weaker phase?

It's understandable that the question is being asked after the second successive monthly report of higher unemployment and a significant 70,000 increase.

The Office for Budget Responsibility has already forecast a slight rise in the jobless rate by next year. The employment figures suggest a levelling off in job creation after a strong run of expansion last year.

But there were more people looking for work following a fall in the number of economically inactive (those who have left the workforce) and this can be seen as a positive sign.

Those in work are still taking their share of the pain - the 1% increase in average regular pay (excluding bonuses) was the lowest since records began more than a decade ago. So with inflation unchanged at 2.8%, the squeeze on households continues.

"We will continue to give jobseekers all the help and support they need to realise their aspirations," he said.

Ministers said the number of JA claimants fell in every region of England, Wales and Scotland, while the number of new claims was at its lowest level for more than four years.

The number of young people claiming JA is down by 2,800 on the month, and is 65,400 lower than last year.

However, the ONS data also revealed that 900,000 people have been out of work for more than a year, an 8,000 increase on the three months to November, while the number of unemployed 16 to 24-year-olds rose by 20,000 to 979,000.

Despite the increase in unemployment, the total is 71,000 lower than a year ago. There has been a 62,000 fall in the number of people in part-time jobs, to just over eight million, with a 60,000 increase in full-time employment, to 21.6 million.

Labour called on Chancellor George Osborne to heed Tuesday's suggestion from the International Monetary Fund that the UK ease its austerity plans.

Liam Byrne MP, Labour's shadow work and pensions secretary, said: "Three years on it's now as clear the government's plan is failing, and failing badly. Not only are more people unemployed than at the election, it's soaring up.

"With the IMF warning George Osborne to change course and unemployment getting worse, it's clear the time has come for a fresh approach."

'Needless waste'

Alan Clarke, economist at Scotiabank, said: "It's not a disaster, but a lot of the froth and really good news we had over the last year on jobs is becoming exhausted, which shouldn't be a surprise when there is not much growth around."

George Buckley, at Deutsche Bank, said the data told two stories about the jobs market.

"On the claims numbers they were obviously quite positive in the sense that the last month's number got revised to an even bigger fall and we saw another fall this month.

"But on the negative side, first of all employment, which is down, the expectation was that it would rise slightly, we saw the unemployment rate go up and we've also seen very weak average earnings growth, much weaker than expected," he said.

GMB union general secretary Paul Kenny said: "The chancellor should heed IMF advice to change course to grow the economy to end this needless waste of human talent."

Pound Sterling v US Dollar

Last Updated at 19 Apr 2013, 18:56 ET *Chart shows local time GBP:USD intraday chart
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The Prince's Trust highlighted the particular impact of youth unemployment, which chief executive Martina Milburn said "is still dangerously close to a million".

She said: "Thousands of these young people are long-term unemployed, often facing further challenges such as poverty and homelessness. We must act now to support these young people into work and give them the chance of a better future."

Also on Wednesday, the Bank of England released minutes of its last interest rate meeting, which showed that policymakers remain divided over whether the UK economy needs more stimulus via its quantitative easing asset purchase programme.

Economists believe it is a close call whether first quarter growth data, due to be published next week, will show the economy sliding back into recession.

They said the fragile labour market underlined the continuing weakness of economy, and there was particular concern about the ONS' pay data.

That pushed the euro to 86.37 pence against the pound, its highest since 15 March. Sterling also fell 0.6% against the dollar.

"It's the earnings data that has done the damage. Combined with CPI (inflation) data yesterday it shows the brutal squeeze on real incomes is ongoing," said Adam Cole, global head of FX strategy at RBC Capital Markets.

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Rare blue diamond found in S Africa

Blue diamondThe company said it was unusual for such a diamond to go on sale

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A rare blue diamond has been unearthed at a mine in South Africa.

The 25.5-carat stone was recovered by Petra Diamonds at its Cullinan mine and is expected to bring large profits.

Experts say it could be worth more than $10m (£6m), and the find gave a boost to Petra's share price.

Similar finds in recent years from the Cullinan mine have commanded high prices and Petra, with operations in Botswana and Tanzania, is expecting a high level of interest from buyers.

"It's very unusual for a diamond of this quality and size to come to market," said company spokeswoman Cathy Malins.

Cullinan mine in South AfricaThe Cullinan mine is famed for the production of blue diamonds

The mine, north-east of Pretoria, has produced hundreds of large stones and is famed for its production of blue diamonds.

A similar 26.6-carat blue rough diamond discovered by the company in May 2009 was cut into a near perfect stone and fetched just under $10m at a Sotheby's auction.

It was named the "Star of Josephine" by its new owner.

Another deep-blue diamond from Cullinan was auctioned for $10.8m last year and set a world record for the value per carat.

In 1905, the renowned Star of Africa blue diamond - the world's second largest cut diamond - was discovered at the Cullinan mine.

The pear-shaped 530-carat stone was presented to King Edward VII and became part of the British crown jewels.

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TalkTalk fined over silent calls

phoneTalkTalk made 9,000 abandoned or silent calls in 2011, Ofcom said

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Telecoms operator TalkTalk has been fined £750,000 by the regulator Ofcom for making an excessive number of abandoned and silent calls.

In total the company made about 9,000 silent or abandoned calls to potential customers in 2011.

They were made through two call centres during a telemarketing campaign to attract new subscribers.

TalkTalk said it had terminated its relationship with those businesses as soon as the problem was discovered.

Software error

Ofcom said TalkTalk had exceeded the limit for such calls on four separate occasions in a seven week period.

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Silent and abandoned calls can cause annoyance and distress to consumers”

End Quote Claudio Pollack Ofcom

Abandoned calls occur when a person answers the phone, but the caller then hangs up.

A silent call is where the phone rings, but there is only silence on the other end of the line, and no information message is played.

Ofcom said such problems were often caused by answer machine detection (AMD) technology.

Sometimes the software mistakenly identifies an answer machine or voicemail, and terminates the call, even though it has been answered by a human being.

Fines raised

"Silent and abandoned calls can cause annoyance and distress to consumers," said Claudio Pollack of Ofcom.

"Companies must abide by the law and Ofcom's policies. If they fail to do so then Ofcom will take firm action," he said.

TalkTalk said it was fair that Ofcom had imposed the fine, and blamed the two call centre operators concerned, Teleperformance Limited and McAlpine Marketing Limited.

It said it was in the process of recovering the fine from them.

"TalkTalk demands high standards from the companies it works with and as a result TalkTalk immediately stopped using these suppliers," said a spokesperson.

Last year, energy firm Npower was fined £60,000 by Ofcom for a series of abandoned calls which were made in 2011.

Two years ago the maximum fine for abandoned calls was raised to £2m.

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