02 12 2015

UK oil and gas jobs fall at steepest rate since 2004

The oil and gas sector in Britain has witnessed a rapid decline in the number of contractors employed in industry, which is the steepest over the past 11 years. An annual survey by Aberdeen & Grampian Chamber of Commerce in association with the Fraser of Allander Institute and the Bond Dickinson law firm has claimed that about 85% of employees feared job cuts continuing in 2016.

Findings of the survey

Overall employment in this sector fell an estimated 6% in the year to September 2015.
About 62% of contractors, or companies providing services to the sector, said they had cut jobs during this period
Only 24% of the contractors said they had increased their workforce during this period compared with more than 70% a year ago.
About 85% feared job cuts continuing in 2016.
Four out of five contractors are less confident about their future than they were last year. This marked confidence levels plunging to record lows in the embattled North Sea oil and gas industry.
More than 5,000 jobs have been cut in the oil and gas sector in the country since late 2014. This was in the backdrop of plummeting oil prices and companies were forced to lower their budgets, which led to cancellation of projects.

The North Sea industry has been hit particularly hard as the region's oil fields approach depletion. Further, the region has witnessed an increase in exploration costs and crash in oil production.

Uisdean Vass, oil and gas partner at Bond Dickinson said that this was "the most negative survey we have ever had". Nonetheless, he pointed out some positives mentioned below:

Both operators and contractors did not see the North Sea disappearing
Both of them had belief that the industry could survive at $50 a barrel and that there would be a price increase over the next three years, which would help increase profits of companies.
There were still 1% of them who had replied that they were now more confident than before about the North Sea's future.
Consumer spending tepid; savings near 3-year high

U.S. consumer spending barely rose in October as households took advantage of rising incomes to boost savings to their highest level in nearly three years, pointing to moderate economic growth in the fourth quarter.
The Commerce Department said Wednesday consumer spending edged up 0.1 percent after a similar increase in September.

That suggests consumer spending, which accounts for more than two-thirds of U.S. economic activity, has slowed from the third quarter's brisk 3.0 percent annual pace.

In other economic reports Wednesday:
Jobless claims fall as labor market tightens
US durable goods orders soar
Mortgage applications fall 3.2% as rates retrench
The tepid rise in consumer spending could combine with an anticipated drag on the economy from an ongoing inventory reduction to hold the economy to around a 2 percent growth rate in the fourth quarter. The government reported Tuesday that the economy expanded at a 2.1 percent rate in the third quarter.

Economists polled by Reuters had forecast consumer spending rising 0.3 percent last month. When adjusted for inflation, consumer spending gained 0.1 percent in October after rising by the same margin in September.
Personal income increased 0.4 percent last month, accelerating after a 0.2 percent gain in September. Wages and salaries shot up 0.6 percent, the largest increase since May. With income outpacing spending, savings rose, which could boost consumer spending in the coming months.

Savings increased to $761.9 billion last month, the highest level since December 2012, from $722.9 billion in September.

There was still no sign of inflation, which has persistently run below the Federal Reserve's 2 percent target.

A price index for consumer spending ticked up 0.1 percent after declining in September for the first time since January.

In the 12 months through October, the personal consumption expenditures price index was up 0.2 percent after a similar rise in September.

Excluding food and energy, prices were unchanged after rising by 0.2 percent in September. The so-called core PCE price index rose 1.3 percent in the 12 months through October, for the 10th-straight month.