FTSE 100 hits nine-month high; US job creation slows sharply – as it happened

Graeme Wearden

from on 2020-12-04 16:56 (#5B7CA)

Rolling coverage of the latest economic and financial news

4.55pm GMT

And finally, the FTSE 100 has ended the day at its highest closing level since the first week of March.

The blue-chip index has closed 60 points higher at 6550 points, a gain of 0.9% today.

Markets are ending the week on a firm footing with the S&P 500 and Dow Jones industrial average climbing to fresh record intraday highs.

The soft employment report though is seen as a positive for stocks since it ought to incentivize Congress to pass a stimulus bill this year. When you have over 9m fewer jobs since the pandemic hit you'd want an economic recovery to be developing at a faster rate and the disappointing numbers underline the urgency in getting stimulus to those who need and act as a bridge until vaccines are rolled out.

4.49pm GMT

In an illustration of the changes caused by Covid-19, Lloyds Banking Group is redeploying 700 staff into full-time homeworking roles from 2021.

It's the latest sign that big banks are embracing remote working even as vaccines put the end of Covid restrictions in sight, as my colleague Kalyeena Makortoff reports:

The UK's largest domestic lender - which has 50,000 of its 65,000 employees working from home because of the outbreak - temporarily shifted about 1,000 workers from Halifax, Lloyds and Bank of Scotland branches to customer service teams, in order to cope with a surge in demand in areas such as telephone banking and video chats during the outbreak.

The Guardian understands about 700 staff will be permanently moved, making it the largest tranche of Lloyds workers to ever be shifted into homeworking roles full-time.

4.26pm GMT

Everything you need to know about a disappointing November jobs report IN CHARTS... https://t.co/GoBYHIwwhe pic.twitter.com/OIcZvTuvTe

4.19pm GMT

The pound has dropped back from its earlier 30-month high, and is trading back below the $1.35 mark.

There's no sign of a Brexit breakthrough.... the latest chatter is that negotiators have taken a break, but are going to resume tonight.

Sounds like Brexit talks will break up shortly. No white smoke tonight

BUT I'm now told talks will resume again tonight https://t.co/QcJmBk86Cl

4.10pm GMT

Joe Biden's incoming economic team is filled with firsts, my colleague Dominic Rushe writes.

The lineup that the incoming president introduced this week will, if approved, place women and people of color at the controls of the US economy during one of the darkest periods in recent history.

While the team is historic, it also faces a historic challenge. Unemployment has fallen dramatically since the early days of the coronavirus pandemic. It fell to 6.7% in November. But it remains 3.2 percentage points above its level before Covid-19 struck, jobs growth is slowing sharply, long-term unemployment is growing and people of color are still suffering hardship at far higher levels than white Americans.

3.34pm GMT

Boom. Wall Street has hit another record high.

Investors seem to be anticipating that Congress could agree the new bipartisan $908bn coronavirus aid plan produced this week, given the warning signs flashing from the jobs market.

The S&P 500 jumped to an all-time high on Friday as data showing the slowest jobs growth in six months reinforced expectations for a new fiscal stimulus bill to help revive the economy from its worst downturn in decades.

Analysts said the dismal report could spur policymakers to push harder for a stimulus bill as more than 13 million people were due to lose their government-funded unemployment benefits on Dec. 26 without quick action by Congress.

* S&P 500 HITS RECORD HIGH

, NY

DOW HITS RECORD HIGH pic.twitter.com/bZvMa3mUj9

3.23pm GMT

Economics professor Nouriel Roubini has shown neatly why the slowdown in US job creation is worrying:

At this rate of employment growth slowdown, job creation may be negative by Q1 of 2021 and the # of unemployed may rise again. Unless we pass a large fiscal stimulus asap! pic.twitter.com/G9BMTd0xLb

3.21pm GMT

Orders at US factories have continued to rise, with a 1% pick-up in October.

That's the sixth monthly increase in a row, although down on the 1.3% recorded in September.

US Factory Orders MoM Full Report Read Here.https://t.co/KO6upyIlKv pic.twitter.com/Emkg7sXycB

2.51pm GMT

Wall Street has responded to the worrying slowdown in US jobs creation by... rising at the opening bell.

The Dow Jones industrial average is up 122 points, or 0.4%, at 30,091 points, close to its record highs.

A bad" #NFP number is not terrible for equity markets..any little shove to get stimulus agreement is probs constructive..imv..

2.41pm GMT

Sterling has climbed to its highest level against the US dollar in around two and a half years.

The pound has jumped by over 0.5% today to $1.3539, the highest level since mid-May.

Cable flirting with the 1.35 handle post NFP - around the highest levels since May '18. Big headline risk remains around Brexit negotiations $GBP pic.twitter.com/nm6IptWsMw

The Brexit negotiations may finally come to a head this week before the next EU summit on Thursday 10^th December. We still think that a deal is more likely than not and with the pound already at our year-end $1.35/ forecast it seems like the market agrees.

However, a Brexit deal is far from nailed on and a breakdown in negotiations could send the pound down to $1.15 in a cooperative" no deal or $1.10 in an uncooperative" no deal.

Pound makes a 2 1/2 year high$GBP pic.twitter.com/Qi69gZjxd6

2.27pm GMT

Cracks are starting to show in the US labor market, warns Glassdoor's senior economist Daniel Zhao:

As the pandemic surges, labor market recovery is clearly decelerating and cracks are beginning to show. The unemployment rate dropped slightly and job growth cooled in today's report. Employment is still 9.8 million short of pre-crisis levels. At November's pace, we wouldn't see a return to pre-crisis employment levels until 2024.

Today's report is a firm reminder that we're not out of the woods yet. Even with a vaccine on the horizon, many are bracing for a long winter ahead. The strong recovery we saw this summer is gone, but it's important that we sustain the gains we have made as we wait for a vaccine to be ready and available."

2.22pm GMT

Neil Birrell, Chief Investment Officer at Premier Miton, is worried that the number of Americans who have been out of work for at least six months is rising:

After better than expected jobless claims data yesterday, the November payrolls number is much weaker than expected. The employment data in the US has been ambiguous in the signs it has been giving for some time now. This is probably not surprising given the position we are in.

What is more worrying is that the number of long-term unemployed is ticking up. A fiscal stimulus package and a vaccine can't come soon enough.

Long-term unemployment continues to rise. Nearly 4 million Americans have been out of work for more than six months. pic.twitter.com/H07XHbIa3x

2.19pm GMT

The slowdown in US job creation emphasises the need for a new stimulus package, says Robert Alster, CIO at wealth manager Close Brothers Asset Management:

As COVID infections continue to rise across the US, the importance of these jobs figures can't be overstated.

Despite increasingly promising vaccine news, the reality is we are still some way off a widespread rollout. This, in addition to unemployment figures, means one of the incoming White House administration's first priorities will be developing a new stimulus package.

1.58pm GMT

Here's our US business editor Dominic Rushe on the slump in US job creation last month:

The recovery in the US jobs market collapsed in November as cases of Covid-19 hit new records, government figures revealed on Friday.

The US added just 245,000 new jobs in November, less than the 638,000 jobs added in October, the 672,000 jobs added in September and the 1.4m jobs added in August. The unemployment rate fell to 6.7%.

1.58pm GMT

The jobs report also shows that US retailers are hiring fewer staff than usual for the holiday season:

Employment sector highlights:

Private payrolls +344k
Trade/transport +121k
Business svcs +60k
Education/health +54k
Leisure/hospitality +31k
Financial +15k
Retail trade -35k
Government -99k

Retail employment down 35k when seasonally adjusted, but this is the time of year when seasonal patterns matter a lot in that sector. +302k retail jobs added when not seasonally adjusted. Stores are staffing up some, but a lot less than would be expected.

1.53pm GMT

The pace of US job creation has been slowing for some months now, and has yet to make up for April -- when more than 20 million people became unemployed.

US nonfarm payrolls lifted by 245k in November (exp 469k, prior rev 610k from 638k). #NFP pic.twitter.com/gYro4QLYS2

1.50pm GMT

The drop in the US labor force participation rate is not a good sign (it shows fewer people are either working or looking for a job).

November #NFP U.S. #Jobs report +245k jobs

The good news: the last 2 months saw positive revisions of plus 67,000

The bad news: the labor force participation rate ticked lower to 61.5%, long-term #unemployed rose 385k

Markets little changed thus far. https://t.co/SGbacamRwJ

Oof, that drop in labor force participation ... https://t.co/l2hKffNB9r

1.48pm GMT

The early verdict is that this is a bad US jobs report, with the pace of new hires slowing sharply:

BREAKING:

*U.S. ECONOMY ADDED 245,000 JOBS IN NOVEMBER, SLOWING FROM 610,000 IN OCTOBER; EST. 469,000 pic.twitter.com/MkgUuNiz8F

US unemployment rate fell to 6.7% in November, 8 percentage points below its peak, but recent payroll and labor participation data are sluggish. pic.twitter.com/A7ijKiqS3O

Yet more evidence of how the fragile recovery is losing momentum (and why more federal relief is needed):
-US added 245K #jobs in November, down from 610K in Oct

Bank of America's Ethan Harris told me payrolls could soon go negativehttps://t.co/2CHpyhgSLT by @AnnekenTappe #NFP

This confirms our priors that as stimulus wanes, and as covid cases mount, the jobs recovery will lose momentum

Given the situation isn't getting any better on either, still wouldn't be surprised to see NFP negative before winter is out

1.38pm GMT

Just 245,000 new jobs were created across the US in November, weaker than expected, as the Covid-19 pandemic hits America's economy.

That's a sharp slowdown on October, when 610,000 new jobs were created (that's been revised down from 638k).

BREAKING: U.S. added 245,000 jobs in November, vs 440,000 expectedhttps://t.co/5zpXf4Im9a pic.twitter.com/Fj0ysTHfM9

1.16pm GMT

While the Opec+ agreement to raise cautiously lift production has short-term implications, Denmark has taken a longer-term decision - deciding to end all new oil and gas exploration in the North Sea.

The move is part of a broader plan to phase out fossil fuel extraction by 2050, as my colleague Jillian Ambrose explains:

On Thursday night the Danish government voted in favour of the plans to cancel the country's next North Sea oil and gas licensing round, 80 years after it first began exploring its hydrocarbon reserves.

Denmark's 55 existing oil and gas platforms, scattered across 20 oil and gas fields, will be allowed to continue extracting fossil fuels but the milestone decision to end the hunt for new reserves in the ageing basin will guarantee an end to Denmark's fossil fuel production.

12.22pm GMT

12.01pm GMT

Several supermarkets, including Lidl today, have insisted they'd been considering what to do about their business rates relief for some time.

It was granted back in March, as part of the rescue packages for retail, leisure and hospitality firms, so they've had plenty of time to mull things over.

The basic unfairness is now glaring: the clunky mechanics haven't caught up with huge shifts in property values, which form the basis of the calculations. Simon Wolfson, the chief executive of Next, put it this way in a BBC interview a couple of months ago: Over the last six or seven years the price of warehousing has gone up dramatically, and the price of shops have come down dramatically, but both of their rates have remained exactly the same."

Wolfson thought a fair system would raise rates on warehousing between 30% and 50% to fund reductions for shops. Since Next generates half its turnover online, he can't be accused of talking his book.

11.40am GMT

Back in the City, the FTSE 100 is pushing higher -- now up 63 points at 6553 points, a new nine-month high.

Airline group IAG is now the top riser, up 4.4%, followed by oil group BP (+4%).

11.31am GMT

Major UK supermarkets and retailers have now agreed to waive around 1.9bn of business rates relief this week.

That's a handy windfall for ministers, which could be used to help firms in real distress.

And another supermarket domino falls- Lidl says that it will hand back 100m of biz rates relief. Follows Aldi, Asda, Tesco, Morrisons, Sainsbury's, B&M. Takes the amount handed back by essential retail to almost 2 billion

Lidl to pay back 100m in biz rates relief. "We've been considering this for some time," it insists.
Just Co-op and Waitrose are the major chains left to say anything...

11.19am GMT

Just in. Discount supermarket chain Lidl has decided to repay more than 100m business rates relief which it received in the UK during the pandemic.

Lidl insists that it has been considering the issue for some time, but has now brought forward plans to return the relief" to the UK government and the Devolved Administrations.

The business rates relief that was provided to us, and the rest of the supermarket sector, came with a lot of responsibility that we took extremely seriously.

We've been considering this for some time, and we are now in a position to confirm that we will be refunding this money as we believe it is the right thing to do. We feel confident that the business is well positioned to navigate and adapt to any further challenges brought by COVID-19."

Lidl relents. Repaying 100m in business rates. Says it's well placed now to manage any further changes' as a result of the pandemic

Took them a Lidl (boom boom!) more time than their rivals, but a certain supermarket group has returned the business rates relief cash it received from the government.

10.42am GMT

Cinema chain Cineworld is missing out on today's rally, with shares sliding 11% after Warner Bros announced is launching its 2021 movies simultaneously on HBO Max and in cinemas in the US.

Warner Bros is set to stream its entire slate of new movies from Dune to the Matrix sequel at the same time as cinema release next year, ending the decades-old exclusivity period that theatre owners are relying on to win back film-goers post-pandemic.

The shock announcement will see Warner Bros entire slate of 17 films due for release next year debut on new streaming service HBO Max for one month in the US at the same time as it releases them in cinemas. The announcement does not at this stage impact how films are released in international markets including the UK, where theatre owners have traditionally enjoyed running films for months before they are made available on other platforms such as pay-TV and streaming.

No one wants films back on the big screen more than we do," said Ann Sarnoff, chief executive of WarnerMedia Studios. But we have to balance this with the reality that most theatres in the US will likely operate at reduced capacity throughout 2021. We see it as a win-win for film lovers and exhibitors."

However, investors in beleaguered movie chains took the news badly with shares in Cineworld, the UK's biggest operator and second largest in the world, fell by 11%. Shares in AMC, the world's biggest chain and owner of Odeon in the UK, dropped 16% in the US on Thursday.

Our content is extremely valuable, unless it's sitting on a shelf not being seen by anyone," said Jason Kilar, the co-founder of the successful Hulu streaming service in the US who now runs WarnerMedia.

Last year, the global cinema box office hit a record $42bn. However, with the pandemic causing cinemas to be shut for months on end, and nervous Hollywood studios shifting major releases to future years over fears movie fans won't return in major numbers, global box office takings are likely to slump to about $12bn.

10.31am GMT

Britain's building industry grew at a faster pace last month, thanks to new orders surging to a six-year high.

However, construction companies also report that it's harder to get hold of raw materials and building products -- meaning longer delays, and higher prices.

Employment remained a weak spot, but the latest fall in staffing numbers was the slowest since February. Despite rising business activity and incoming new work, some firms reported ongoing job cuts amid efforts to reduce overheads.

Supply chain challenges remain on the horizon, as signalled by another sharp lengthening of lead times for construction products and materials.

Transport delays and low stocks among suppliers were reported by construction firms in November, which led to the fastest increase in purchasing costs for over one-and-a-half years."

In a bid to dampen down the effects of the sharpest rise in input costs since April 2019, builders were reducing headcounts to keep their own heads above water leading to another fall in job numbers.

As more work fills the sector's pipelines, the necessity to recruit is likely to become more urgent, and the shortfall could be reversed barring further disruption.

10.03am GMT

Demand for electric cars continued to grow last month, while sales of diesel more than halved compared with a year ago.

The SMMT explains:

Market share for battery electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) continued to grow significantly, up 122.4% and 76.9% respectively.

BEVs recorded their third highest ever monthly share of registrations at 9.1%, while PHEV share increased to 6.8% - a combined total of more than 18,000 new zero-emission capable cars joining Britain's roads.

9.52am GMT

Car sales across the UK have gone into reverse again, as the latest Covid-19 lockdown restrictions hit the economy.

New car registrations slumped by 27% in November - when England was in lockdown - to 113,781 new registrations, taking trade back to levels last seen during the 2008 recession.

Compared with the spring lockdown, manufacturers, dealers and consumers were all better prepared to adjust to constrained trading conditions. But with 1.3 billion worth of new car revenue lost in November alone, the importance of showroom trading to the UK economy is evident and we must ensure they remain open in any future Covid restrictions.

More positively, with a vaccine now approved, the business and consumer confidence on which this sector depends can only improve, giving the industry more optimism for the turn of the year."

9.28am GMT

Pets at Home has followed UK supermarkets and become the latest high street retailer to repay the 28.9m it received in business rates relief during the pandemic.

We were very grateful for the rates relief provided back in March during a time of significant uncertainty, which helped us to take the decision to keep our stores, online operations and veterinary practices open. Recent positive news around the launch of vaccinations for Covid-19 has led us to reassess the level of uncertainty ahead."

Our decision today demonstrates our clear commitment to acting responsibly and treating all of our stakeholders fairly."

9.26am GMT

Optimism about the economic recovery pushed the FTSE 100 to its post-pandemic high this morning, says Neil Wilson of Markets.com:

The move coincides with an increasingly bullish stance on UK equities being taken by investors on hopes for a broad cyclical recovery in 2021 led by vaccines and a UK-EU trade deal being struck.

Meanwhile market sentiment may improve as a US stimulus package inches closer to becoming real, with lawmakers getting behind the bipartisan $908bn package on the table now.

9.21am GMT

European stock markets are also mostly higher in early trading, with the FTSE 100 outpacing the rest of the pack:

9.19am GMT

The copper price, often seen as a bellwether of economic demand, has hit an eight-year high this morning.

By providing support for the economy through the winter, additional stimulus would reduce risks of a double-dip recession," said ANZ in a note.

Three-month copper, often used as a gauge of global economic health, on the London Metal Exchange rose as much as 1.3% to $7,772 a tonne, its highest since March 2013, and was up 3.4% on a weekly basis.

8.52am GMT

Oil companies are helping to drive the FTSE 100 to a nine-month high this morning, after the Opec group and Russia agreed a production deal.

After much wrangling, the oil producers agreed to only raise production by 500,000 barrels per day from January. That's rather less than the 2m bpd they'd previously inked in.

8.26am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After a rough year, Britain's FTSE 100 is ending 2020 on the front foot.

The bottom line is, this is right in the range of reason. It's not a perfect bill, but it is a compromise bill that can bring people together."

News that Pfizer has cut its rollout target for the covid vaccine by half, owing to supply chain obstacles has knocked risk sentiment. Vaccine optimism put the markets on a stellar run across November as investors priced in the end of the pandemic and a return to pre-pandemic growth, regardless of the dire few months expected before the vaccine becomes widely available. Then news from Pfizer means that it could now take longer to reach the end of the pandemic tunnel, but with other vaccines also coming, this is more of a setback rather than risk reset news.

However, optimism surrounding a large US economic stimulus package is helping lift US futures after the close. A $908 billion rescue package in the world's largest economy now appears within reach, offering support to the global risk sentiment picture, off-setting some vaccine disappointment

Primary Dealer #NFPGuesses
SocGen 735K
MS 630K
Citi 600K
Barx 550K
Mizuho 550K
UBS 505K
BMO 500K
Daiwa 500K
Deutsche 500K
GS 450K
Wells Fargo 425K
BNP 400K
CS 400K
Scotia 400K
NatWest 375K
RBC 375K
HSBC 350K
JPM 350K
Jefferies 340K
Nomura 320K
TD 200K
BoA 150K
Median 412.5K

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