Page 25 - Aruba Today

BUSINESS A25
Friday 4 December 2015

OPEC likely won’t move any to Jobs report: Will pay growth continue?
boost oil price amid infighting
C. S. RUGABER report will be the last one checks, in turn, typically
GEORGE JAHN AP Economics Writer the Fed will see before that boost consumer spend-
Associated Press WASHINGTON (AP) — Is meeting. ing and drive economic
VIENNA (AP) — Cheap oil that could get even the U.S. job market final- Fed Chair Janet Yellen said growth.
cheaper: That’s the challenge OPEC ministers face ly healthy enough to lift in a speech Wednesday There have been signs in
as they try to cut their losses at a time when supply is Americans’ long-stagnant that the job market should recent weeks that the im-
outstripping demand. pay? soon reach full health proving job market is finally
But their hands appear tied. Some tantalizing signs as long as the economy raising pay. In October, av-
Ahead of their meeting Friday, there is recognition have suggested that wag- keeps growing at its cur- erage hourly earnings rose
that the 12-member Organization of the Petroleum es are beginning to pick up rent pace. More hiring and 2.5 percent from 12 months
Exporting Countries will be unable to nudge up pric- after barely moving in the better pay should also lift earlier — the fastest annual
es, at least in the short term. 6½ years since the Great inflation back up to the increase since the reces-
Non-OPEC countries like Russia and the U.S. continue Recession officially ended. Fed’s 2 percent target over sion ended. It’s still below
to challenge OPEC for customers. And within the car- On Friday, the govern- time, Yellen added. the roughly 3.5 percent an-
tel, Iran and Iraq want to start pumping more, even ment’s jobs report for No- But given the significant nual gain consistent of a
though regional rival Saudi Arabia appears unwilling vember should offer some gains the job market has strong economy.
to play along by reducing its own output. clues about whether the made in recent years, the And last week, the govern-
The Saudis and other OPEC states are looking to modest pay gains will con- Fed won’t likely be dis- ment said total wages and
maintain their market share at a time when low prices
are already cutting into their revenues. Military veteran Mark Cannon, of Miami, right, talks with Cynthia Carcillo about employment
The upshot is the meeting will likely decide to main- opportunities in Pembroke Pines, Fla. Signs have suggested that US wages are beginning to pick
tain the official OPEC level of 30 million barrels a day, up after barely moving in the 6½ years since the Great Recession officially ended.
urge members to cut back on overproduction and
hope for better times next year. That means oil could (AP Photo/Lynne Sladky)
get even cheaper.
Iran’s comeback is tied to the looming end of sanc- tinue. suaded from a rate hike salaries rose at a much
tions imposed over its nuclear program. Embargoes By many measures, the later this month no matter faster pace in the spring
on Iranian oil are to be lifted over the next few months job market is nearly back what Friday’s report says. and summer than it had
once a nuclear deal it signed with six world powers to normal. The unemploy- “It is hard to imagine how previously estimated.
goes into force. ment rate is 5 percent, weak (the report) would “Rising wages are proof
Senior oil official Amir Hossein Zamaninia said last down from its 10 percent have to be for the Fed to positive that we are at full
week Iran hopes to bring an extra 500,000 barrels on peak in 2009. Employers reverse course,” said Drew employment,” said Mark
the market by early next year. He said he hopes the have added a robust av- Matus, an economist at Zandi, chief economist
extra output will be accommodated within OPEC’s erage of 206,000 jobs a UBS. Even so, wage growth at Moody’s Analytics. Full
formal ceiling of 30 million barrels a day. month this year, more than has remained perhaps the employment, as defined
Arriving for Friday’s meeting, Iranian oil minister Bi- enough to keep lowering job market’s biggest weak- by most economists, is the
jan Namdar Zanganeh said Iran is ready to discuss a the jobless rate over time. ness since the recession lowest the unemployment
ceiling for its production — but only after his country Economists have forecast ended. Average hourly rate can go without spark-
makes a “full return to the market.” that Friday’s report will pay has grown at only ing inflation.
But Iran’s hopes of a cutback from others for now show that 200,000 more about two-thirds of the Yellen highlighted the po-
are unlikely to be fulfilled. Ahead of Friday’s meet- jobs were added last pace typical of a healthy tential turnaround in her
ing, OPEC already was churning out well over than month and that the unem- economy. Some econo- speech Wednesday.
31 million barrels a day and OPEC members are likely ployment rate remained mists point to the lagging “We have seen a welcome
to continue producing more than their share as they at 5 percent, according to pay as evidence that the pickup in the growth rate
push to compensate for low prices by increasing out- data firm FactSet. job market isn’t as healthy of average hourly earnings
put. Even if hiring falls far short of as the low unemployment ... and of compensation
Some of those extra barrels will likely come from Iraq. those numbers, the Federal rate would suggest. per hour,” she said.
The world’s fastest-growing source of crude this year, Reserve is widely expected With the number of unem- Most economists expect
it was pumping more than 4 million barrels a day last to raise the short-term in- ployed dwindling, com- pay increases to continue,
month and was responsible for last month’s biggest terest rate it controls for the panies eventually should though the data tends to
monthly rise in output among all OPEC countries. first time in nine years af- feel compelled to offer be volatile and there may
These trends mean that the pressure is on Saudi Ara- ter its next policy meeting higher pay to attract and not be solid gains in each
bia, which accounts for about a third of OPEC’s out- Dec. 15-16. Friday’s jobs keep workers. Thicker pay- month’s jobs report.q
put, to cut back.
Saudi opposition to a cut in OPEC output a year ago
was calculated to put higher-cost outside competi-
tors — such as U.S. shale oil producers — out of busi-
ness, in the hope that would eventually lead to a
drop in supply and a rebound in prices. That strategy
clearly hasn’t worked, with benchmark U.S. crude’s
value falling by more than 40 percent over the past
year and now hovering around the $40 mark per bar-
rel.
Cushioned by past profits on oil, the Saudis can hold
out, even if production costs exceed sale revenues.
Not so much some others.
“Prices have gone down too much,” said Vice Prime
Minister Abdourhman Ataher Al-Ahirish of strife-
torn Libya, where GDP is expected to shrink more
than 6 percent this year. “This has its effect on our
economy.”q