YOUR REGION: United States

Tag: Economy

45% think a recession is ahead

According to a report released today by JPMorgan Chase, business executives in the US hold varying opinions on the possibility of a recession this year, despite ongoing macroeconomic challenges. The study found that 45% of business leaders expect a recession to occur before the end of the year or believe that the economy is already in one. On the other hand, 36% do not anticipate a recession in 2023, and 20% are uncertain about its likelihood.

Ginger Chambless, the head of research at JPMorgan Chase’s commercial banking, stated, “The US economy has experienced a stronger start to 2023 than expected, thanks to the resilience of consumer spending and other positive factors. These factors have influenced business leaders’ confidence regarding the occurrence of a recession this year. However, businesses continue to face persistent challenges such as inflation, interest rates, and labor shortages. In this uncertain economic environment, it is crucial for leaders to position their companies for stability by maintaining strong liquidity and adequate cash balances.”

Although most business leaders maintain a pessimistic or neutral economic outlook, the report indicates a slight increase in optimism for the global and national economies since the beginning of 2023:

National economy: The percentage of business leaders expressing pessimism about the national economy decreased from 43% to 37% compared to the start of the year. Furthermore, 29% now hold a bullish outlook on the national economy, marking an increase from 22% six months ago.

Global economy: Pessimism among business leaders regarding the global economy for the upcoming year dropped from 60% to 39%, while 46% maintain a neutral outlook. Only 15% of respondents are optimistic about the global economy, up from 8% six months ago.

In the meantime, 67% of business executives maintain confidence in their company’s performance for the next year.

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0.2% decrease during the first half

China’s employment landscape remained relatively steady during the first half of 2023, according to recent data released by the National Bureau of Statistics (NBS) and reported by China News Service.

The average urban unemployment rate, as determined by surveys, decreased by 0.2% from the previous quarter, settling at 5.3%. The NBS data also indicated that the unemployment rate among individuals aged 25 to 59 remained low at 4.1% in June.

Overall, the urban unemployment rate for June remained unchanged from the previous month, staying at 5.2%. However, the surveyed unemployment rate for young people between the ages of 16 and 24 reached a new high of 21.3%, surpassing May’s rate of 20.8%.

NBS spokesperson Fu Linghui commented, “As China’s economic recovery gains momentum and employment-stabilizing policies take effect, the surveyed urban unemployment rate has exhibited an overall downward trend.”

Linghui cautioned that with more young graduates and individuals entering the job market in August, the youth unemployment data may experience a slight increase. Nevertheless, he predicted that the jobless rate would decrease as the peak graduation season concludes and more young people secure employment. Drawing from past experiences, he noted that the number would gradually decline after August.

Li Changan, a professor at the University of International Business and Economics’ Academy of China Open Economy Studies, attributed the relatively high youth unemployment to seasonal factors, particularly considering the ongoing graduation season. Changan stated, “A temporary rise in the youth unemployment rate, especially during the second quarter, is normal.”

BBC News reported that China’s economy grew by 0.8% in the three months leading up to the end of June. The sluggish pace of growth has led analysts to anticipate new measures from authorities aimed at boosting the economy. Further data indicated that the Chinese economy expanded by 6.3% in the second quarter compared to the same period last year, falling short of analysts’ expectations despite outpacing first-quarter growth.

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Estimated number of vacancies declined

The UK employment rate saw an increase in the March to May 2023 period, reaching an estimated 76.0%, up by 0.2 percentage points from the December 2022 to February 2023 period. The rise in employment was primarily driven by part-time employees, according to recent data.

However, the estimate of payrolled employees for June 2023 showed a monthly decrease, with 9,000 fewer employees compared to the revised May 2023 figure. The provisional estimate of payrolled employees in June 2023 is subject to revision once more data is received next month.

Meanwhile, the unemployment rate for the March to May 2023 period increased by 0.2% to 4.0%. The rise in unemployment was primarily due to individuals who had been unemployed for up to 12 months.

On a positive note, the economic inactivity rate decreased by 0.4% in the March to May 2023 period, reaching 20.8%. The decline in economic inactivity was largely driven by individuals who were inactive for other reasons, such as those looking after family or home, as well as retirees.

The changes in employment, unemployment, and economic inactivity rates during the latest quarter were primarily attributed to men.

In April to June 2023, the estimated number of vacancies experienced a decline of 85,000 compared to the previous quarter, bringing the total to 1,034,000. This marks the twelfth consecutive quarter of decreasing vacancies.

In terms of average total pay growth, including bonuses, there was a notable increase of 6.9% in the March to May 2023 period. Similarly, regular pay growth, excluding bonuses, reached 7.3% during the same period. This level of growth in regular pay equals the highest growth rate observed last month and during the COVID-19 pandemic period in April to June 2021.

However, in real terms adjusted for inflation, both total pay and regular pay experienced a decrease on a yearly basis in the March to May 2023 period. Total pay fell by 1.2% and regular pay fell by 0.8%.

Finally, the number of working days lost due to labour disputes in May 2023 was 128,000, marking the lowest figure since July 2022.

Michael Stull, Director at ManpowerGroup UK, commented: “The gradual decline of vacancies overall and slight rise in the unemployment rate to 4.0%, contrasts with a very strong hiring intent that we’re seeing from employers in nearly every sector and across all parts of the UK. It brings home the reality of the talent shortages reported by 80% of UK employers, with skills development now a critical longer-term priority that will help put the economy back on track.  

Added to this, questions continue to be raised over whether people are typically more productive at home or in the workplace as the debate around hybrid-working best practice rumbles on. It’s causing a lot of anxiety for both employers and employees who each have their own ideas about what ‘good’ flexibility should be.   

“In such a tight labour market consisting of many workers who are set on pursuing career progression – whether that’s by acquiring new skills, earning more money, or finding the most suitable work-life balance – many businesses are understandably reluctant to draw a line in the sand and risk losing out to competition.  But employers need to be crystal clear about their expectations are, treating their workers as an asset and with convincing and compelling reasons outlined for when employees are expected to be in the workplace.

 “Firm and fast decision-making is advised in any case. Speed is a big determinant of success in the current labour market and those organisations that are quicker to assess and interview candidates will gain a significant advantage .”

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As countries worldwide draft AI regulations, the UK seeks to lead the international conversation

The UK Government has announced a comprehensive framework to address the opportunities and challenges presented by AI. The framework aims to harness the transformative power of AI while ensuring responsible development and building public trust in its use.

AI has already demonstrated its potential in delivering societal benefits, from breakthroughs in medical research to tackling climate change. For instance, UK-based company DeepMind has developed an AI technology capable of predicting the structure of almost every known protein, leading to significant advancements in combating malaria, antibiotic resistance, and plastic waste.

Recognising the strategic importance of AI, the UK Science and Technology Framework has identified it as one of the five critical technologies. The framework emphasises the role of regulation in creating an environment conducive to AI’s flourishing. The government aims to position the UK as a global leader in AI by stimulating innovation, driving productivity, creating jobs, and improving the overall economy.

As countries worldwide draft AI regulations, the UK seeks to lead the international conversation on AI governance. The government recognises the need for swift action to provide a clear and pro-innovation regulatory environment. By doing so, they aim to establish the UK as one of the top destinations for foundational AI companies.

While capitalising on AI’s benefits, the framework acknowledges the new risks and concerns associated with its use. Issues such as potential damage to physical and mental health, privacy infringement, and human rights implications must be addressed to maintain public trust. Building trust will accelerate AI adoption, attract investment, and foster the creation of high-skilled AI jobs.

Regulation plays a crucial role in responding to risks and building public confidence. However, the government intends to adopt a clear, proportionate, and non-statutory approach initially. This approach allows existing regulators to implement the framework’s principles based on their domain-specific expertise. The government will monitor the framework’s implementation and collaborate with regulators to ensure effectiveness.

To support the framework, the government plans to establish central support functions within the regulatory architecture. These functions will monitor and evaluate the framework’s effectiveness, assess risks arising from AI across the economy, conduct horizon scanning, and support initiatives such as testbeds and sandboxes. Education and awareness programmes will empower businesses and citizens to actively participate in shaping the framework.

The UK’s proportionate approach to AI regulation aligns with various tools for trustworthy AI, including assurance techniques, voluntary guidance, and technical standards. The government will promote the use of such tools and collaborate with international partners to deliver interoperable measures. The goal is to facilitate responsible AI innovation and ensure international compatibility, positioning the UK as an attractive hub for AI innovation and investment.

Ranked third in the world for investment, innovation, and AI implementation, the UK’s reputation for pragmatic regulation strengthens its leadership role in the global AI conversation. By balancing opportunities and challenges, the government aims to maximise AI’s potential benefits while safeguarding societal well-being and ensuring a thriving innovation ecosystem.

Efe Pazarceviren, CEO and Co-Founder at VireUp, and TIARA Talent Tech Star Finalist made comment: “Regulatory framework is going to be crucial for the responsible use of AI technology. A major focus should be around the concept of Explainability. The regulation should encourage glass box models instead of black box models.

For the UK to be a major AI powerhouse, the emphasis on regulation should be in tandem with the support structures to promote innovation. The tech businesses that deliver AI innovation should be supported by large companies (due to high amount of data needs) and investors to experiment with these new technologies. And of course, the large businesses and investors should have the necessary incentives in place.”

Lucy Bennell, Strategic Advisor at VireUp commented: “At last the UK government is establishing frameworks and guidance around AI technology – this is critical if the sector is not to be subject to the influence of bad actors. The US and EU have already established clear rules around auditability and transparency for AI in the recruitment and talent management sector.  Dark algorithms spitting out inexplicable results won’t meet these requirements. Black-box AI that can’t explain how or why it “chooses” a result, is open to bias.”


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Financial leaders expect 1.0% GDP growth and highlight challenges faced by small firms

According to a recent report released by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Richmond and Atlanta, chief financial officers (CFOs) are predicting a slightly slower growth trajectory for the US economy. The CFO Survey indicates a lowering of growth expectations for the country’s gross domestic product (GDP) in the next year, with a revised forecast of 1.0% compared to the previous quarter’s projection of 1.4%.

As part of the survey, CFOs were asked to rate their optimism about the overall US economy on a scale of zero to 100. The average response remained relatively stable at 54.8, aligning with the findings from the first-quarter survey. However, a notable difference emerged among participants who responded after the debt ceiling resolution passed Congress on May 31. Among this group, the average optimism rating rose to 57.4. In contrast, respondents who had answered before the resolution reported an average optimism rating of 51.5. The resolution on the debt ceiling positively impacted the optimism levels of CFOs regarding the financial prospects of their own firms.

Sonya Ravindranath Waddell, an economist at the Richmond Fed, stated, “Financial leaders of firms became decidedly more optimistic about the US economy and their own prospects without the fear that Congress would not come to an agreement on the debt ceiling.” Despite this increased optimism, financial decision-makers still maintained their expectations for slower GDP growth in the upcoming year.

The survey also shed light on the contrasting situations faced by small and large firms. Approximately 40% of small firms, defined as those with fewer than 500 employees, expressed concerns about tighter financing conditions limiting their business spending. This figure stands in contrast to about a quarter of large firms facing similar constraints. Additionally, small firms were more likely than their larger counterparts to report difficulties in replacing or repairing capital assets and refinancing debts due to the prevailing financing conditions.

The findings of the CFO Survey indicate a nuanced outlook among financial leaders, with increased optimism regarding their own firms but a recognition of the challenges posed by slower GDP growth. Furthermore, small businesses appear to be grappling with a more challenging environment in terms of revenue growth and financing compared to larger firms.

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The organisation has lent over £3.5 billion to 3,300 businesses since 2014

Sonovate, the provider of embedded finance and payment solutions for the contingent workforce has announced an enhanced funding technology platform to enable it to better serve large, multinational recruitment businesses and launch new lines of products in the future as it continues to grow and expand its customer base.

The new platform gives customers the ability to optimise cash flow, allowing them to access funding in multiple-currencies and across multiple-sectors, with tailored pricing based on the risk profile of the industry being served to allow customers to secure the best possible rates. It also provides enhanced operational efficiencies with far faster onboarding, meaning funds can be accessed in a matter of days and firms can offer access to the liquidity that their clients need, while still offering attractive terms.  

Customers are able to view multiple ledgers across the new platform, whether they’re obtaining funding for invoices related to permanent or contract workers, or different subsidiaries of their business. Multi-ledger access also ensures that reporting requirements are quickly, easily, and consistently fulfilled both internally and in line with local market regulation. 

The enhanced capabilities of the new platform – particularly the accuracy of reporting, speed of reconciliation, and highly-scalable funding – will empower Sonovate to increase the number of large, enterprise-size customers that it serves.  

It follows a recent announcement that Sonovate is partnering with HR platform, Deel, to become the only funder to serve its global customer base. The partnership highlights the trend for recruitment businesses to operate in multiple markets as flexible and remote working becomes the norm for organisations across the world. 

Following a securitisation deal with BNP Paribas and M&G Investments, which added £165 million to Sonovate’s funding structure, it has already made strides in expanding the number of enterprise size customers it serves. The introduction of the new platform marks a step change for the organisation and will accelerate its growth trajectory over the course of 2023, particularly as it enters new markets including the Netherlands.  

Richard Prime, Co-CEO and Co-Founder, Sonovate, commented: “In uncertain economic times, ensuring a stable cash flow for a rapidly growing organisation can be challenging, even more so when operating in multiple markets. At Sonovate, we take ownership of that challenge on a customer’s behalf, providing them with the fast, flexible funding they need to grow and succeed. 

“Over the past few years there has been a mass global movement towards flexible working – be that remote or hybrid, contract, freelance, or part-time. Societal change has taken place, and now technology must keep pace. Traditional bank funding is often limited by cumbersome legacy systems that simply aren’t agile enough to quickly respond to the changing world of work and needs of rapidly growing, multinational recruitment businesses.  

“Fintech is different. Our entire offering is built around the changing needs of our customers, and this new platform is designed to grow and evolve with our customers as they enable the flexible future world of work across the world.” 

Since it started funding in 2014, Sonovate has lent over £3.5 billion to 3,300 businesses and 40,000 workers in 44 countries, and increased its revenue by over 51% from 2021 to 2022.  

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US executives feel they have not been paid fairly in-line with inflation

A 2023 Job Market Survey has examined the state of employment in the United States – highlighting the growing economic concerns between lower and high wage earners.

The survey, commissioned by the Professional Resume Writers (PRW), interviewed a cross-section of 2000 people of which 92% were employed and 59% had a college degree,

Overall, the survey revealed concerns about job security has increased by 49%, however, for those at entry-level, the percentage leaps to 91%. Working from home has impacted employees significantly, based on their level within the organisation – a concern for entry-level employees, but with no impact at the executive level.

Key survey findings:

66% of executives are worried about job security in 2023. The highest of any of the levels surveyed.
Worry about job security has increased by 49% but, for those early in their careers their worry increased 91% over last year with nearly half of entry-level workers reporting being worried about job security in 2023.
21% of workers said that job security has been impacted by working from home
97% of Entry-Level workers feel like they have been impacted by the rise in cost of living
Executives feel they have not been paid fairly in-line with inflation
6 out of 10 people are looking to change careers
Worry about job security has increased by 111% for those with bachelor degrees

Michelle Masters, co-founder of Professional Resume Writers, said: “It’s not surprising that people are concerned about their job security, given the current economic climate. It’s important for professionals to take proactive steps to maintain their employability, such as staying up-to-date on industry trends and continually honing their skills. Additionally, individuals who are considering a career change should focus on their transferable skills and how they can be leveraged in a new field.”

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US Adults Brace for Economic Recession

According to the recently released “Planning & Progress Study” by Northwestern Mutual, approximately two-thirds of US adults, accounting for 67% of the population, hold the expectation that the economy will slip into a recession later this year.

Among those who foresee a recession, 33% believe it will be a short-lived downturn lasting a year or less, while 19% anticipate a more prolonged period of economic decline extending beyond two years. The study also revealed that three out of four individuals who anticipate a recession expect it to significantly or moderately impact both their immediate and long-term financial situations, with figures standing at 78% and 75%, respectively.

In response to the economic uncertainty, the study highlights the top three actions being taken by individuals to address the situation. These include implementing cost-cutting measures (64%), building up savings (50%), and deferring major expenses until the economy stabilizes (41%).

Christian Mitchell, the Chief Customer Officer at Northwestern Mutual, emphasized the importance of using uncertain times to evaluate and test financial strategies. He stated, “Consumers want assurance that their plans for wealth accumulation and lifestyles will remain intact even if the economy experiences a setback. Many are proactively preparing for any potential economic challenges that may arise.”

Furthermore, the report’s survey indicates that 60% of Americans are postponing their plans and purchases due to economic uncertainty. Additionally, 36% are delaying everyday expenditures such as dining out, buying new clothes, and attending events. The study also found that 29% are putting off significant purchases or projects such as home renovations or buying a new vehicle.

The survey involved 2,740 US adults aged 18 or older and was conducted online by The Harris Poll between February 13 and March 2.

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Mixed signals in tech job market for April

CompTIA has analyzed the US Bureau of Labor Statistics job data from April and found that the number of tech occupations decreased by 99,000, resulting in an increase in the unemployment rate for tech occupations to 2.3%. However, the report also showed that tech sector companies increased staffing by 18,795, marking the highest monthly hiring volume since August 2022. Despite the decrease in tech occupations, there was continued demand for tech talent, as employers listed over 300,000 job postings for tech positions in April. The IT services and custom software development sectors led the hiring pace, followed by cloud infrastructure, data processing, and hosting. The job postings for tech positions were dispersed geographically and across various industries, with the highest volumes occurring in administrative and support, finance and insurance, and manufacturing sectors, and in metropolitan markets like Washington, New York City, Dallas, Los Angeles, and Chicago. Furthermore, the number of tech job postings specifying remote or hybrid work options rose to more than 65,000 positions across the US. The Chief Research Officer at CompTIA, Tim Herbert, stated that the April job data showed mixed labor market signals. The strong employment gains in the tech sector were offset by the pause in tech hiring across the economy.

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Survey: 15% of firms report rising employment

The National Association for Business Economics has released the “April 2023 NABE Business Conditions Survey,” which suggests that economic growth may be easing, while employment growth remains slow. However, the survey also indicates that inflation is cooling, with 40% of respondents reporting that prices charged are rising, down from 46% in the January 2023 survey and 49% from a year ago. The panel believes there is more work to be done against inflation as the share of panelists expecting prices to rise in the next three months has increased.

The survey found that 15% of respondents said employment had been rising at their firms over the past three months, while 15% said it had been falling, resulting in a net rising index of zero. This is the lowest net rising index since the July 2020 and October 2020 surveys. For the next three months, 15% of respondents anticipate employment will rise, while 19% expect it to fall, resulting in a net rising index of negative four, an improvement from the negative seven net rising index in the January survey.

The survey also indicates that shortages of skilled labor decreased to 33% from 40% in January, while 11% reported shortages of unskilled labor. Close to half of the respondents reported that their firms are not facing any labor shortages, while 22% expect labor shortages to start to abate in the fourth quarter of 2023 or later.

In addition, for the third consecutive survey, 63% reported rising wages at their firms over the past three months. None expects wages to fall over the next three months, but only 43% of respondents expect their firms’ wages to rise in the next three months—the smallest share since the October 2020 survey.

The panel’s view is nearly evenly split on the probability of the US economy entering a recession in the next 12 months, with 44% indicating more than 50% probability, and 53% suggesting less than or about 50% probability of a recession in the next year.

The survey included 55 business economists and was conducted from April 4 to April 12.

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