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Growth in UK manufacturing and services activity plunged to its lowest level in 15 months, fueling recession risk. Business activity hit its lowest level since January 2021, when the country was in full lockdown. The UK’s Composite Purchasing Managers’ Index, an indicator of overall economic health, fell sharply to 51.8 in May from 58.2 in April.

Chris Williamson, chief economist at S&P Global Market Intelligence, said the results suggested “the worst is yet to come”. He added that businesses cited an increasingly cautious mood among households and business customers linked to the cost of living crisis, Brexit, rising interest rates, Covid lockdowns in China and the war in Ukraine.

Despite a tight labor market, income inequality in the UK is growing, with wages rising fastest for the highest earners, while those on the lowest incomes are hit hardest by the surge in coronavirus. inflation. Recent payroll data from HM Revenue & Customs, which includes bonuses, shows that for the top 1% of employees, pay rose by more than 7% in real terms between December 2019 and March 2022. For the tenth lowest paid salary in real terms the growth was slightly above 2%.

The acceleration in wages at the top of companies is a clear reversal in the years before the pandemic, when incomes rose fastest for the lowest paid, partly due to rapid increases in the minimum wage in the UK United.

There is also the problem of price increases that outpace wage gains, even in the hot US job market where companies are willing to offer more competitive and higher wages. Over the past year, prices for urban consumers in Atlanta, for example, have risen 10.8%, more than the 7.9% increase across the country in April, according to the Bureau of Labor. Statistics. The latest data from the agency shows that real hourly wages, adjusted for inflation, are down 2.6% year on year.

“We have this situation where it’s not really interesting to participate in the labor market. It’s expensive to go to work, especially if you don’t earn much and need to find daycare,” said Nela Richardson, chief economist at ADP.

Chart showing that most US states saw wage gains across all industries, but the strongest wage growth occurred in restaurant jobs

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Need to know: the economy

ChinaThe prime minister said the world’s second-largest economy could struggle to post positive growth in the current quarter, urging officials to help businesses resume production after the Covid-19 shutdowns.

The euro area banking system will remain “resilient” despite disruptions in energy and commodity markets caused by Russia’s invasion of Ukraine, the European Central Bank concluded after carrying out a “vulnerability analysis” of the sector.

PakistanForeign Minister Bilawal Bhutto Zardari says he hopes the country can renegotiate a loan with the IMF in response to soaring global food and fuel prices, as growing political unrest increases pressure on the new government of Prime Minister Shehbaz Sharif.

Sri Lanka opened talks with the IMF on a $4 billion bailout with observers waiting to see how China, one of the main creditors, will react. This month, the country defaulted on its overseas loans after missing interest payments on two $1.25 billion sovereign bonds. That made it the first Asia-Pacific country to do so in more than two decades, according to Moody’s data.

Latest for UK and Europe

EU officials are working on a possible centralized supply deal for smallpox vaccines to be used against the growing number of monkeypox infections in Europe, as nations race to secure orders for the relatively limited number of doses available. There were nearly 100 confirmed cases worldwide as of May 21, according to the World Health Organization.

Many consumers fear they will be forced into fuel poverty, which is one reason why a windfall tax in the UK has broad public support. Shares of some of Britain’s biggest power companies fell sharply yesterday as Chancellor Rishi Sunak drew up plans for a windfall tax on the energy sector to help offset soaring fuel bills domestic.

British Prime Minister Boris Johnson has accepted ‘full responsibility’ for a drinking culture and breaking the law in Downing Street during the Covid pandemic, after senior civil servant Sue Gray issued a scathing verdict on the partygate affair.

Latest World

The head of PfizerAlbert Bourla, has warned that the growing public complacency over Covid-19 and the continued politicization of the pandemic response will cost lives as the world is hit by new waves of the virus in the coming months.

The American President Joe Biden issued a moving plea for the country to “stand up to the gun lobby” after an 18-year-old gunman killed 19 children and two adults in America’s deadliest shooting in a decade.

Two years ago today, an African American George Floyd was murdered by a white police officer in Minneapolis. The discourse of systemic racism still dominates local politics, but efforts to address it have been frustrated by a host of factors, from a divided state legislature to distractions from the lingering Covid crisis. The anniversary of Floyd’s death comes as police reform has stalled at the federal and local levels. Today, Biden is expected to issue an executive order aimed at reforming certain areas of the police.

The George Floyd memorial site at 38th Street and Chicago Avenue in Minneapolis

The George Floyd memorial site at 38th Street and Chicago Avenue in Minneapolis © Kerem Yuce/FT

Need to know: business

The “subscription economy” is heading for its first serious downturn, writes Helen Thomas. Businesses offering services or products to consumers on a subscription basis took off around 2011, led by TV and music streaming services and quickly followed by beauty products, clothing, organic coffee, craft beer, food for pets and much more. Now this business model is about to be tested.

Hedge funds who use powerful computers to manage their portfolios are making huge profits in this year’s market turmoil, marking a resurgence for an industry trying to recover from a long period of poor performance. The $337 billion industry is now making its biggest gains since the 2008 financial crisis.

Airbnb will close operations in China this summer after a years-long push to break into the market was strangled by the effect of Beijing’s tough zero-Covid strategy on domestic and international tourism.

Amazon shareholders will challenge the company on executive pay, tax transparency, working conditions and unionization today as chief executive Andy Jassy faces his first annual meeting at the helm of the e-commerce giant.

glencore will plead guilty to multiple counts of bribery and market manipulation and pay fines of up to $1.5 billion following US, UK and Brazilian investigations that uncovered corruption at one of the largest commodity traders in the world.

The world of work

A virtual office in the metaverse is touted as the future of work, but raises many unanswered questions. One is how working in a virtual reality world across national and corporate borders can affect both labor rights and our relationships with colleagues. This week To work podcast examines the practicalities.

Working on a subtropical island sounds like a dream, but don’t get too jealous. Our tech reporter Cristina Criddle not only missed in-person interactions and the separation of home and office, but discovered that working in the sun is inconvenient – find out why.

Join us at FT Future of Work Event, focused on redesigning the digital workplace, on October 19. Hear lectures on topics such as preparing businesses for a cyberattack and creating a leadership style for the hybrid world. There will be guest speakers from NASA, the World Economic Forum, LinkedIn, Facebook and the Institute for the Future of Work.

Covid cases and vaccinations

Total number of global cases: 521.7mn

Total doses administered: 11.8 billion

Get the latest global picture with our vaccine tracker

And finally . . .

Kylie Minogue wowed the world with her catchy pop songs. In 2020, she is expanding her talents and launching her own wine brand, which will be available in the United States starting next month. Minogue tells Jessica Beresford why she couldn’t shake the idea of ​​having her own rosé from her head.

Kylie Minogue sitting on a table next to a wine glass and a balcony
Kylie Minogue: “Sometimes the bottle of wine is almost like another guest at the table” © Michelle Tran

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