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UK jobless rate hits 5.1% as Sunak readies more job support

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UK jobless rate hits 5.1% as Sunak readies more job support 1

By William Schomberg and David Milliken

LONDON (Reuters) – Britain’s jobless rate rose to 5.1% in the last three months of 2020, its highest in nearly five years but still lower than it would have been without a huge coronavirus jobs support scheme that finance minister Rishi Sunak looks set to extend next week.

Separate data from the Office for National Statistics showed that the number of employees on company payrolls in January rose by 83,000 from December, the second monthly increase and its biggest since January 2015.

The jobless rate – the highest since the first three months of 2016 – was in line with the median forecast in a Reuters poll of economists.

Unemployment has been suppressed by the government’s Job Retention Scheme which is supporting about one in five employees.

The programme is Britain’s most expensive COVID economic support measure and will cost an estimated 70 billion pounds ($98 billion) by its scheduled expiry date of April 30.

But figures based on tax data show the number of employees on business payrolls has still fallen by 726,000 since February 2020 – equivalent to just over 2% of the workforce – with the majority of job losses suffered by workers aged under 25.

The Bank of England has said it thinks the unemployment rate will jump to almost 8% in mid-2021 after the furlough scheme ends.

Sunak is expected to announce an extension of his jobs support, at least for sectors hardest hit by the government’s lockdowns, in a March 3 budget statement.

“At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery,” Sunak said after Tuesday’s data.

Prime Minister Boris Johnson announced his plan for easing England’s lockdown on Monday that would keep some businesses shut until the summer but allow a gradual, earlier reopening for others.

“The outlook for the UK economy is getting clearer and with continued support from the Treasury, it is likely the Bank of England’s peak unemployment forecast of 7.75% will prove too pessimistic,” Jon Hudson, a fund manager at Premier Miton, said.

Samuel Tombs, at consultancy Pantheon Macroeconomics, said he thought the jobless rate would hit 6% in the summer.

The ONS said the number of job vacancies in the three months to January was 26% lower than a year ago, a less severe fall than last summer when vacancies were down by nearly 60%, although the pace of improvement slowed in the past few months.

Pay growth was the strongest since 2008. Total pay including bonuses rose by 4.7% in the October-December period compared with the same three months of 2019.

The pick-up in pay growth in part reflects how the brunt of job losses has fallen on people working in lower-paid jobs in areas such as hospitality, and the ONS said pay growth was likely to be below 3% if this effect is stripped out.

Britain went into a new COVID lockdown on Jan. 5 due to a rapidly rising death toll that has passed 120,000, the highest in Europe.

($1 = 0.7108 pounds)

(Reporting by William Schomberg and David Milliken; Editing by Kate Holton)

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Damage to United Boeing 777 engine consistent with metal fatigue – NTSB

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Damage to United Boeing 777 engine consistent with metal fatigue - NTSB 2

By David Shepardson and Jamie Freed

WASHINGTON (Reuters) – Damage to a fan blade on an engine that failed on a United Airlines Boeing 777 flight is consistent with metal fatigue, based on a preliminary assessment, the chairman of the U.S. air accident investigator said on Monday.

The Pratt & Whitney PW4000 engine failed on Saturday with a “loud bang” four minutes after takeoff from Denver, National Transportation Safety Board (NTSB) Chairman Robert Sumwalt told reporters following an initial analysis of the flight data recorder and cockpit voice recorder.

There was minor damage to the aircraft body but no structural damage, he said.

He said it remained unclear whether the incident is consistent with an engine failure on a different Hawaii-bound United flight in February 2018 that was attributed to a fatigue fracture in a fan blade.

“What is important that we really truly understand the facts, circumstances and conditions around this particular event before we can compare it to any other event,” Sumwalt said.

The engine that failed on the 26-year-old Boeing Co 777 and shed parts over a Denver suburb was a PW4000 used on 128 planes, or less than 10% of the global fleet of more than 1,600 delivered 777 widebody jets.

In another incident on Japan Airlines (JAL) 777 with a PW4000 engine in December 2020, Japan’s Transport Safety Board reported it found two damaged fan blades, one with a metal fatigue crack. An investigation is ongoing.

The focus is more on engine maker Pratt and analysts expect little financial impact on Boeing, but the PW4000 issues are a fresh headache for the planemaker as it recovers from the far more serious 737 MAX crisis. Boeing’s flagship narrowbody jet was grounded for nearly two years after two deadly crashes.

The United engine’s fan blade will be examined on Tuesday after being flown to a Pratt laboratory where it will examined under supervision of NTSB investigators.

The U.S. Federal Aviation Administration (FAA) said on Monday it had already been evaluating whether to adjust fan blade inspections in the wake of the December incident in Japan after reviewing maintenance records and conducting a metallurgical examination of the fan blade fragment.

Boeing recommended that airlines suspend the use of the planes while the FAA identified an appropriate inspection protocol, and Japan imposed a temporary suspension on flights.

Pratt & Whitney, owned by Raytheon Technologies Corp., has recommended airlines increase inspections in a plan that is being reviewed by the FAA, sources with knowledge of the matter said. Pratt did not respond immediately to a request for comment.

The FAA has said it plans to issue an emergency airworthiness directive soon that will require stepped-up inspections of the fan blades for fatigue.

“United Airlines has grounded all of the affected airplanes with these engines, and I understand the FAA is also working very quickly as well as Pratt & Whitney has reiterated or revised a service bulletin,” Sumwalt said. “It looks like action is being taken.”

In March 2019, after the 2018 United engine failure attributed to fan blade fatigue, the FAA ordered inspections every 6,500 cycles. A cycle is one take-off and landing.

South Korea’s transport ministry said on Tuesday it had told its airlines to inspect the fan blades every 1,000 cycles following guidance from Pratt after the United incident.

Sumwalt said the United incident was not considered an uncontained engine failure because the containment ring contained the parts as they were flying out.

NTSB will look into why the engine cowling separated from the plane and also why there was a fire despite indications fuel to the engine had been turned off, Sumwalt added.

Industry sources said that although the engine is made by Pratt, the cowling, or casing, is manufactured by Boeing. Boeing referred questions on the part to the NTSB.

Nearly half of the global fleet of PW4000-equipped Boeing 777 jets operated by airlines including United, JAL, ANA Holdings, Korean Air and Asiana Airlines had already been grounded amid a plunge in travel demand due to the coronavirus pandemic.

(Reporting by David Shepardson in Washington and Jamie Freed in Sydney; additional reporting by Tracy Rucinski in Chicago, Joyce Lee in Seoul and Tim Hepher in Paris; Editing by Kim Coghill and Gerry Doyle)

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Oil prices jump more than $1 as U.S. output slow to restart

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Oil prices jump more than $1 as U.S. output slow to restart 3

By Jessica Jaganathan

SINGAPORE (Reuters) – Oil prices jumped by more than $1 on Tuesday, underpinned by optimism over COVID-19 vaccine rollouts and lower output as U.S. supplies were slow to return after a deep freeze in Texas shut in crude production last week.

Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output that shut down because of cold weather, as frozen pipes and power supply interruptions slow their recovery, sources said.

Brent crude was up $1.08, or 1.7%, at $66.32 a barrel by 0437 GMT, after earlier hitting a high of $66.79. U.S. crude rose 92 cents, or 1.5%, to $62.62 a barrel, having reached a session high of $63. Both benchmarks have risen more than 2% on Tuesday after climbing nearly 4% in the previous session.

“The positive momentum continues in the oil complex, with investors unabashedly predisposed to a bullish view,” said Stephen Innes, chief global markets strategist at Axi in a note.

Goldman Sachs Commodities Research raised its Brent crude oil price forecasts by $10 for the second and third quarters of 2021, citing lower expected inventories, higher marginal costs to restart upstream activity and speculative inflows.

The Wall Street bank expects Brent prices to reach $70 per barrel in the second quarter from the $60 it predicted previously and $75 in the third quarter from $65 earlier.

Morgan Stanley expects Brent crude prices to climb to $70 per barrel in the third quarter on “signs of a much improved market” including prospects of a pick-up in demand.

“It is hard not to be bullish with oil prices now that the deep freeze disruption practically guarantees the summer pickup in crude demand will erase whatever supply glut is left,” said Edward Moya, senior market analyst at OANDA in New York.

“The global oil demand is looking a lot better now that the Pfizer vaccine shows positive results after one dose, the U.K. sees the end of the pandemic ‘in sight’, and as hospitalizations and deaths continue to decline after peaking in early January.”

Stockpiles of U.S. crude oil and refined products likely declined last week, a preliminary Reuters poll showed on Monday, due to the disruption in Texas.

(Reporting by Jessica Jaganathan; editing by Richard Pullin & Shri Navaratnam)

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Unlocking the potential of APIs

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Unlocking the potential of APIs 4

Corporate expectations for fast, efficient and convenient payment services are now the norm. BNY Mellon Treasury Services’s Sindhu Vadakath, Head of Global Digital Channels and Asia Payments Product Management, explores how banks are leveraging APIs to keep pace with these demands and maintain a competitive edge.

The expectation for a quick, seamless and user-friendly banking experience has long been the norm in the consumer space. Today, treasurers expect no less from their corporate banking applications.  The gap between this desire for new and improved offerings and delivering greater levels of client service is being bridged by APIs (Application Programming Interface) – a key innovation that banks are harnessing.

APIs are a type of computing interface that enable streamlined, efficient communication and integration between software components.  Benefits include operational speed and efficiency and, where process automation is also deployed, rapid – or even real-time – data flows, superior analytics, and real-time visibility over balances and payments statuses.

APIs have become a familiar term in the finance space. In the past few years, regulators and industry bodies have helped drive adoption – with uptake currently varying from market segment to market segment and region to region. Traction has been highest in the US, with momentum building in APAC, EMEA and LatAm.

While many banks have already incorporated APIs into their strategies, the overall progress has been somewhat limited by a lack of standardized, interoperable systems and processes across the financial services industry. But, with upcoming industry initiatives, such as the global migration to the ISO 20022 messaging standard, pushing the industry further towards greater harmonization, the full potential of APIs can be unlocked. Now, therefore, is the opportune time for banks and their clients to invest in their API capabilities.

Leveraging APIs

In today’s fast-paced world, an effective and successful bank needs to deliver optimized payment capabilities, with accurate and efficient processes. This is being achieved through API solutions targeted at specific use cases.

For example, while making a payment may appear straightforward at the point of execution, the underlying processes are complex. Ensuring the streamlined and successful completion of these processes – which include payment initiation, reporting and sanctions screening – is critical for businesses, with any lapses potentially causing financial and reputational damage. As a result, banks are increasingly looking to APIs to provide real-time visibility for the entire payment process – meaning that any potential issue can be spotted and resolved in a timely manner.

APIs can also be used to integrate real-time account balances and transactional data across multiple channels, including Treasury Management Systems (TMS) and Enterprise Resource Planning (ERP). For example, BNY Mellon’s Treasury APIs enables the bank to integrate its solutions with its clients’ internal systems. This allows clients to streamline efficiencies by automating payment processes – with necessary tasks, such as reconciliation, able to be performed seamlessly. Automating previously manual functions via APIs saves time and frees up resources previously spent on repetitive tasks,  thereby enabling this capacity  to be redirected to value-added  processes, such as forecasting analysis, customised reporting and transaction capabilities. Through this solution, clients can also securely access global payment capabilities through a single endpoint to initiate payments and track the status of transactions, from initiation to completion.

Elsewhere, as the Covid-19 pandemic has proved, it is important to have a robust business continuity plan (BCP) in place to offset against the impact of any unexpected events. APIs can be used in BCPs to help create an effective, resilient active-active alternate channel solution for contingency scenarios. For example, if a bank suffers a disruption or outage to their network provider, they will have to ensure they are able to seamlessly switch to an alternate digital channel to process their payments in a timely manner with no financial implications. Traditionally, banks relied on the provider’s online bank portal to instruct payment orders – a process that, to execute accurately and within the cut-off time, uses a significant amount of resources. Depending on the timing and intensity of the disruption, these resource are sometimes challenging to mobilize and activate within a short interval and could lead to serious financial and reputational implications. APIs offer a good alternative to these traditional contingency plan solutions. By enabling a fully functional integration with their network bank providers, banks can process a certain share of daily volumes via an API in addition to their usual channels – allowing for a smooth transition during a contingency scenario.

The next steps for APIs

Though enthusiasm for API adoption is relatively strong, we have only just started to scratch the surface in the B2B space. So far, the biggest strides have been made by Big Techs, which have been particularly adept at delivering API solutions thanks to their nimble business models. While the financial industry is making efforts to evolve – embracing the start-up work culture, breaking silos and developing an open and collaborative work environment – the success and speed of delivery is often hindered by the size and complexity of the solution required. For instance, an API might need to work for multiple parties across various jurisdictions that are each bound by unique regulations in their domestic markets. As a result, consortiums formed by fintech and financial firms, various market network providers and regulators are each working on ways to simplify these processes.

One path forward is increased industry standardization. For example, the lack of cross-border interoperability between market infrastructures and networks currently makes the exchange of data and APIs much less effective. The upcoming migration to ISO 20022 – the new global payments messaging standard – looks set reduce these frictions. With major market infrastructures and network providers each migrating to the new standard, banks looking to leverage APIs and other messaging channels may no longer be required to maintain multiple variations of the message specifications by channels, currency and markets – something that today represents one of the biggest barriers for adoption. Elsewhere, plans are also underway to connect the various domestic real-time payment infrastructures to create an interoperable system for digital payments – one that could eventually support API adoption for cross-border real-time payments.

As the industry standardizes and simplifies its processes, and banks begin to integrate APIs into their own and their clients’ infrastructures, a host of new opportunities, including real-time data feed of balances to drive more proactive functions for treasuries, is set to be unlocked. Importantly, the onus is now on banks to invest in APIs and advocate their adoption to clients.

Sindhu, who is based in the BNY Mellon Singapore Branch, recently took part in the “Executing business strategies with the power of APIs” Sibos webinar. To sign up to Sibos to view the webinar, please click here.

 The views expressed herein are those of the author only and may not reflect the views of BNY Mellon. This does not constitute Treasury Services advice, or any other business or legal advice, and it should not be relied upon as such.

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