US jobless claims fall to pandemic low; UK factory output strengthens – as it happened

Graeme Wearden

from on 2021-05-20 17:46 (#5J1RX)

Rolling coverage of the latest economic and financial news

Latest: 444,000 initial claims last week, lowest since March 2020
Economist: Jobless claims moving in right direction

Earlier:

UK factory output growth fastest since 2018
Export orders weaker than domestic demand
K ingfisher warns supply chain problems could last six months
Trainline shares slide as UK reforms railway tickets maze
Bitcoin back over $40,000 after Wednesday's plunge

6.45pm BST

Time to recap

The US jobs recovery has taken another step forward, with the smallest increase in new unemployment claims since the pandemic. Around 444,000 initial claims were filed last week, which economists said showed the labor market continued to pick up.

6.21pm BST

Trade news: Australia's biggest cattle farmer has predicted that the nation's beef exports to the UK could rise as much as tenfold if the two countries strike a free-trade deal.

Boris Johnson is determined to push through a free-trade deal with Australia, despite warnings from the National Farmers' Union over the irreversible damage" such a deal would do to UK agriculture. It was discussed by ministers at a cabinet meeting on Thursday.

We are looking forward to the conclusion of free-trade negotiations with the UK."

6.00pm BST

The Financial Times have an interesting piece tonight on yesterday's crypto flash crash, explaining how the use of leveraged bets on prices going up accelerated the wave of selling:

Here's a flavour:

When the price is crashing, everyone that leveraged and [bet on rising prices] sees their leverage ratio blow up," said David Fauchier, a fund manager at crypto specialist Nickel Digital, noting that the market went through two so-called liquidity cascades" in less than an hour when bitcoin crashed.

In established asset markets, traders use cash as collateral to finance leveraged bets. In cryptocurrencies, however, they often use bitcoin. That meant that when bitcoin fell heavily, leveraged bets were quick to fold.

The bitcoin flash crash has exposed how systemic issues" under the surface of the cryptocurrency market, combined with leverage offered by many leading exchanges, exacerbate episodes of volatility. https://t.co/Wd6hsIIIRC @eva_szalay @staffordphilip

5.27pm BST

Back in London, stocks have finished the day broadly higher.

The blue-chip FTSE 100 index closed 1% higher at 7019.79, up nearly 70 points.

Fechamento da Europa:

STOXX 600 1,27%
FTSE 100 1%
FTSE MIB 0,88%
IBEX 35 0,59%
PSI 20 1,15%
CAC 40 1,29%
DAX 1,7%

It's been a bumpy day for the London markets which couldn't make up their minds initially if they were going to shake off yesterday's lows or not. By lunchtime optimism was in the driving seat again, partly fuelled by a rally in Bitcoin and given an afternoon shove by US markets responding nicely to better-than-expected jobs news. The FTSE 100 ended the day comfortably back above the 7,000 mark at 7,019.

The space is a crowded one but demand is growing fast and the brand is intending to use cash raised through the IPO to expand operations.

5.10pm BST

Shares in Oatly, the oat milk company backed by Oprah Winfrey. have surged as it joins the US stock market.

After ringing the Nasdaq opening bell, in a virtual ceremony, Oatly jumped 30%, which values the vegan food and drink maker at around $13bn.

The IPO underscores plant-based products' jump into the mainstream, as environmental and health concerns spur consumers to seek alternatives to traditional meat and dairy products.

Investors have been looking for ways to replicate the public-market success of Beyond Meat Inc., whose shares have surged more than 300% since it went public in May 2019.

Hooray! We're a now public company (Nasdaq: OTLY). What does being a public company mean? That we are owned by the public, of course! You can now support the Post Milk Generation by buying a carton of barista edition oat drink or by buying a couple of shares of OTLY. Or both! pic.twitter.com/ShK0qJD9W9

I drink your plant-based milkshake? Oatly pops in IPO. $OTLY up more than 25%.

Drink it in: @Oatly is now #NasdaqListed.

Headquartered in Malmo, Sweden, $OTLY is the world's original and largest oat drink company. Today, the team rings @Nasdaq's Opening Bell in celebration of the listing.

Cheers to the Post Milk Generation. pic.twitter.com/1Pt4OufMKk

4.54pm BST

Fugitive former car magnate Carlos Ghosn has been ordered to repay 5m to Nissan and Mitsubishi after a Dutch court rejected his claims to have been unfairly removed by the carmakers.

The case was brought by Ghosn, who 18 months ago sensationally broke house arrest in Tokyo and fled to Lebanon after being accused of financial misconduct.

The case, one of a series of legal battles involving one of the best known figures in the auto industry, centres around the Dutch-registered joint venture Nissan-Mitsubishi BV (NMBV), where Ghosn was ousted as chairman in 2019.

Ghosn claimed the Japanese companies violated Dutch labour laws when they dismissed him and had demanded compensation of 15 million euros for missed wages and severance payments.

Fugitive former car executive Carlos Ghosn suffered a setback on Thursday when a Dutch court ordered him to repay 5 million euros in wages to Nissan and Mitsubishi in a case he had brought.https://t.co/9bqln6AJ7B

4.06pm BST

Back in the UK, the usually lively bank AGM season was put on pause in 2020, due to social distancing rules. But the gradual relaxing of Covid restrictions has allowed some lenders to open their doors to shareholders this year.

Please stop littering allegations, we need to get on with this meeting,"

3.59pm BST

In New York, stocks are pushing higher as investors pile back into technology companies.

The Nasdaq is outpacing the other indices, suggesting that concerns over rising inflation prompting central bank tightening are fading (although for how long, who knows....)

A number of participants suggested that if the economy continued to make rapid progress toward the Committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases,"

More crucially, the meeting took place before the weak April jobs report and given that the Fed has made it clear it is prioritizing employment over inflation during the recovery, the minutes have not substantially altered the outlook for the Fed's policy path.

Even if policymakers were to begin the taper debate as early as June, a decision is unlikely to come before the autumn and many investors still have their sights on August's Jackson Hole event as the most realistic date that the Fed chief, Jerome Powell, would flag a policy shift.

3.33pm BST

Today US data support concerns about supply bottlenecks and inflation pressures, says Mohamed El-Erian, chief economic advisor at Allianz.

Today US data support concerns about supply bottlenecks and inflation.@philadelphiafed #manufacturitng missed;
Prices paid surged to highest level since 1980;
Initial #jobless claims improved further: 444,000 versus last week's 478,000 and median expectation of 450,000.#Economy

3.25pm BST

Manufacturing activity in Philadelphia has cooled this month, with factories in the city being hit by the wider surge in commodity prices.

The Philadelphia Fed Manufacturing Index has dropped to 31.5 in May, from a near 50-year high of 50.2 in April, which was the strongest reading in nearly 50 years.

The @philadelphiafed Mnfg Index fell from 50.2 to 31.5. New order and shipment growth slowed slightly to 32.5 and 21.0. Prices paid and received accelerated to 76.8 and 41.0. Employment growth slowed to 19.3. Optimism slowed. https://t.co/fE0xV407RY pic.twitter.com/t8wZWKMpAC

Over 43 percent of the firms reported increases in current activity this month (down from 59 percent last month), while 12 percent reported decreases (up from 8 percent). The index for new orders decreased 4 points to a reading of 32.5.

The current shipments index fell 4 points to 21.0 in May. Over 42 percent of the firms reported increases in shipments this month, while 21 percent reported decreases.

After soaring to the fastest pace in 48 years in April, manufacturing activity in the @philadelphiafed region slowed in May but continued the expand solidly. The composite index fell from 50.2 in April to 31.5 in May, with some softening in new orders, shipments and employment. pic.twitter.com/51qY6uGF4v

Price increases were more widespread this month for the firms' inputs and own goods. The prices paid diffusion index increased 8 points to 76.8, its highest reading since March 1980. Nearly 77 percent of the firms reported increases in input prices, while none reported decreases.

The current prices received index increased 7 points to 41.0, its highest reading since May 1981. Nearly 43 percent of the firms reported increases in prices of their own manufactured goods, up from 36 percent in April; most firms (55 percent) reported stable output prices.

At the same time, inventories jumped at a rate not seen since July 1973, and the index for prices paid rose at the briskest rate since March 1980. Likewise, prices received were also sharply higher, up at a rate note seen since May 1981.

Yet, survey respondents anticipated raw material prices to continue to accelerate very robustly. Manufacturers in the region predict that prices for final goods and services will jump 5.0% over the next four quarters, with compensation costs and consumer inflation rising 4.0%.

2.46pm BST

The total number of Americans receiving unemployment help from the various programs has fallen to its lowest level since the first lockdowns, at just below 16m, points out Greg Daco of Oxford Economics:

Lowest level of continuing #unemployment benefit claims since the onset of the recovery & cleartrend

This trend will accelerate in the coming weeks based on initial claims data & there will be a marked drop-off in early July given 22 states ending emergency benefits pic.twitter.com/32fHtiNbo6

Very encouraging continuing #unemployment benefits claims data for w-e May 1 & claims through May 15 confirm solid trend

3.7mn people on regular benefits (-79k)
5.6mn people on **long-term** benefits (-127k)
6.6mn on PUA (-678k)
------------------------
16.0 mn claimants pic.twitter.com/bdpgPtJT7Q

2.26pm BST

America has made tremendous progress" in the last two months in reducing unemployment claims, says Robert Frick, corporate economist at Navy Federal Credit Union.

However, he cautions that the improvements may slow.

Weekly unemployment claims edged down for another week, and while we can expect continued improvement, the progress will slow as we get closer to the pre-virus average of about 200,000 per week.

We shouldn't lose track of the tremendous progress that's been made in the last two months, as weekly claims have fallen from about 750,000 to the most recent week's 444,000."

Another new low in jobless claims. pic.twitter.com/AYcYE50LfK

2.07pm BST

new jobless claims fell by 34K to 444K during the week ending 15 May, its lowest level since before the national emergency declared for the pandemic. Continuing claims rose by 111K to 3.751 million and the unemployment rate for the week ending 8 May rose 0.1 points to 2.7%. pic.twitter.com/IjOoMDMZwt

2.05pm BST

Although the number of Americans applying for unemployment support is falling, it's still much higher than before the pandemic.

Pre-Covid, initial claims were typically in the low 200,000s - less than half the current number of layoffs. So although there's progress in the jobs market, the recovery isn't complete.

Last week 539,000 people applied for UI. This included 444,000 who applied for regular state UI (seasonally adjusted) and 95,000 who applied for Pandemic Unemployment Assistance (PUA). 1/ https://t.co/tg071kRKs8

Claims are moving in the right direction. The 539,000 who applied for UI last week was a decrease of 43,000 from the prior week. The 4-week moving average of total initial claims decreased by 40,000. 2/

However, total initial claims are still nearly three times what they were before COVID. (If you restrict to regular state claims-because we didn't have PUA pre-COVID-initial claims are 2.4 times where they were before COVID.) 3/

This chart shows continuing claims in all programs over time (the latest data for this are for May 1st). Continuing claims are generally declining but are still over 14 million above where they were before the virus hit. 4/ pic.twitter.com/qcTMxx42jj

Many are asking whether expanded unemployment benefits are damaging the labor market by keeping workers from taking jobs. THERE IS NO COMPELLING EVIDENCE OF THIS. This thread has some info showing that. 5/ https://t.co/yfuKpqDUaP

Nevertheless, many republican-led states are preparing to cancel pandemic UI benefits. This will not just hurt workers who can't find work or can't work right now, it will hurt the economy in these states, b/c those benefits are supporting spending.It's terrible economics. 6/

This piece by @pelhamprog shows, by state, how many workers will lose benefits and how much money they (and their states) will lose if states cancel federal unemployment benefits. 7/ https://t.co/TRJmRiQYrG

1.47pm BST

The number of US workers filing new claims for unemployment benefits has fallen to a fresh pandemic low, as American firms cut fewer jobs as the economy strengthens.

There were 444,000 new initial claims' for unemployment support last week, the Bureau of Labor Statistics reports, down from 478,000 in the previous week (this is on a seasonally adjusted basis).

Number of workers filing for unemployment benefits reached a new pandemic low of 444,000 last week https://t.co/2IxuvAY62Y pic.twitter.com/4qsKX8Hsgh

More progress from this morning's UI report! Total initial claims (non-seasonally adjusted) are now just under the 550,000 mark. Both regular initial and PUA initial claims declined. We're clearly moving in the right direction! pic.twitter.com/i3s9yri2aP

Initial claims at 444k vs. 450k est. & 478k in prior week; continuing claims up to 3.75M vs. 3.63M est. & 3.64M in prior week ... largest increases in NJ (+4.4k), WA (+2.3k), & OK (+2.2k); largest decreases in GA (-8.2k), KY (-7.2k), & TX (-4.8k) pic.twitter.com/Kw0cwWuGDt

1.35pm BST

The oil price has dipped today, extending recent losses, on the possibility that sanctions on Iran could be lifted soon, which would boost supply of crude.

Speaking at a ceremony inaugurating several petrochemical projects, Rouhani asserted that solutions to major issues like sanctions" had been agreed to by diplomats, while other issues remained under discussion.

We have taken a major and big step and the main agreement has been done," Rouhani said.

Iranian President Hassan Rouhani said in a televised speech on Thursday that sanctions on oil, shipping, petrochemicals, insurance and the central bank had been dealt with in the talks.

However, senior diplomats from Britain, France and Germany offered a note of caution on Wednesday, saying that while there was some tangible progress with the contours of a final deal emerging, success was not guaranteed

Oil prices were on course for a third day of losses on Thursday after diplomats said progress was made towards a deal to lift sanctions on #Iran, which could boost crude supply. #OOTT https://t.co/3wYnP5kBZ6

NEW: Rohani says the US has already agreed to lift all main economic sanctions on Iran, including those on oil and banking. But while his deputy FM yday said some key sticking points remain, Rohani has dismissed what remains as "small details." #oott https://t.co/sFjjWj3ojW

1.02pm BST

After yesterday's chaotic trading, the crypto world is rather calmer today.

Bitcoin is trading around $40,500, up 5% today, having crumbled up to 30% yesterday before rebounding in a dizzying twist.

Crypto prices collapsed [yesterday], with Bitcoin tumbling 30% to $30k on the nose before staging a big rally off this level. Outages at the Coinbase and Binance exchange didn't help, fuelling a sharp leg lower around midday to the lows at $30k, but chiefly this seems to have been a run on stops triggering margin calls in the wake of China's regulatory crackdown, which followed a period of steady losses seemingly brought about by a toppy market chart pattern and Elon Musk somewhat walking back his prior enthusiasm for the crypto.

Institutional options activity seems to have further accelerated some of the moves as strikes were hit. As of this morning, the rout had stabilised, with Bitcoin trading around 30% off yesterday's low, above $40,000.

For true crypto believers, every decline is a buying opportunity - and, indeed, there was a late rally to limit losses. For the rest of us, though, the hallmarks of speculative excess have been present for a while. A trivial but telling example is the posters one can still see in London and other major UK cities that read: If you're seeing bitcoin on the underground/side of a bus/a billboard, it's time to buy." No, it's time to think the party is over and the smart money is heading home.

The challenge in viewing a cryptocurrency as an asset" or hedge against inflation" is that there's no internal income, or rate of return, to use as a valuation yardstick. That is also true of gold, the crypto crew's preferred comparator, but gold has been prized as a store of value for a few thousand years, which is a critical difference. In the longevity stakes, strings of computer code are barely out of the blocks.

Meanwhile, bitcoin's usefulness as a currency evaporates if the price can yo-yo wildly within a single day. And, in the background, there's the worry that central banks simply won't allow their monetary systems to be usurped by free-wheeling anonymous payments systems, a point China would seem to have confirmed. Even if the underlying blockchain technology is brilliant, regulators matter.

12.37pm BST

German manufacturers are also lifting their prices.

Producer prices (the cost at the factory gate) jumped 5.2% in April year-on-year, and were 0.8% higher than March.

Good Morning from #Germany where inflationary pressures continue to rise. Producer price growth surpasses estimates. On a yearly basis, PPI rose 5.2% in Apr, exceeding expectations of a 5.1% increase after a 3.7% annual rise in the previous month. pic.twitter.com/sIBS0PsROb

#Germany PPI in Apr: +0.8%M, +5.2%Y, #energy prices: +10.6%, prices for mineral #oil products: +30.9%, re: base effect, chart @destatis https://t.co/HRoPj6TWFD pic.twitter.com/KIkpucfyf7

12.25pm BST

Samuel Tombs, economist at Pantheon Macroeconomics, says UK factories are still being hurt by Brexit, despite the pick-up in growth and orders reported by the CBI.

He points out that export orders are lagging behind domestic demand, even though world trade is recovering.

Manufacturing output might already be back to its 2018 peak, according to May's CBI Industrial Trends Survey.

Yet there are still signs of Brexit damage: unlike for total orders, the export orders balance was merely in line with its 20-yr average, despite soaring global trade pic.twitter.com/ubMVawLDaP

12.11pm BST

The jump in orders and output at UK factories this month shows the economy is recovering from its contraction during the latest lockdown.

Howard Archer, chief economic advisor to the EY ITEM Club, says:

The CBI industrial trends survey for May was healthy, and supported the view that the economy is heading towards a robust second quarter rebound as it benefits from the easing of restrictions."

11.54am BST

Anna Leach, CBI Deputy Chief Economist, says:

Manufacturing activity rebounded this month, with strong improvements seen across total order books and output volumes. But firms are still feeling the chill as supply shortages fuel cost pressures, reflected in expectations for strong output price inflation in the coming quarter.

Continued progress on the government's reopening roadmap is hugely welcome, and gives cause for optimism. But manufacturers need clarity on future social distancing requirements and the future of workplace testing to smooth the route to recovery. This will also go some way to easing supply chain pressures, and thus partly ease the cost and pricing pressure."

11.53am BST

The CBI survey found that many UK manufacturers are expecting to lift their prices over the next quarter (to clarify that last post, which is now updated).

That would mean they'll be charging more for their goods at the factory gate, which could add to inflationary pressures.

The deterioration in stock adequacy (weakest since July 2017) chimes with anecdotes of continued supply chain pressures, which, in addition to higher commodity prices, are feeding into the strongest expectations for price growth since January 2018.

Price growth is expected to pick up rapidly in the coming three months, with expectations at their strongest since January 2018 pic.twitter.com/ico7lK5Qs1

11.24am BST

Britain's factories have racked up their fastest growth since the end of 2018... but also fear that supply chain bottlenecks will drive prices higher.

Manufacturing output grew in May at the fastest rate since December 2018 - the first material growth reported in almost two years. That's according to the CBI's latest monthly Industrial Trends Survey.

Manufacturing activity bounced back strongly in our latest #ITS. Output grew at its fastest pace since Dec 2018, while total order books were at their strongest since Dec 2017 https://t.co/ZSYcAcG51N

Present stocks of finished goods (-6 from +5 in April) fell to their weakest position since July 2017. This was also the first time since July 2017 that stocks were considered less than adequate".

Manufacturers reported the weakest stock adequacy since July 2017 pic.twitter.com/C3te6TzwZQ

Price growth is expected to pick up rapidly in the coming three months, with expectations at their strongest since January 2018 pic.twitter.com/ico7lK5Qs1

These latest figures are very positive, and it is great to see the sector bounce back from the bleak situation we saw last year. While this progress is welcome, firms continue to face several supply challenges and cost pressures as the UK moves along the roadmap.

Manufacturing can be an engine for the UK's economic growth and renewal over the long-term but, for this to be a reality, it will first be important for government to continue listening to firms to address short term barriers to recovery."

11.05am BST

The number of online job vacancies in the UK has also risen again, as shops and hospitality businesses reopen, and transport and logistics firms keep hiring.

Last Friday, UK online job adverts rose to 114% of their February 2020 average level, up from 106% a week ago, data from Adzuna released by the Office for National Statistics shows.

This continues its recent upward trend and is an increase of 57 percentage points since 9 April 2021, just before the first easing of hospitality restrictions when pubs and restaurants reopened in England.

Data from @Adzuna show the volume of online job adverts on 14 May 2021 had risen across each category compared with 7 May 2021.

The proportion of total online job adverts on 14 May 2021 was 114% of its February 2020 average https://t.co/OvJxWciOJG pic.twitter.com/Yu0QSgaUFW

10.50am BST

The Office for National Statistics has also reported a steep rise in restaurant bookings since people were allowed to eat indoors.

Figures from booking website OpenTable show that reservations in the week to May 17 - which included just one day of the new relaxed rules - rose to 73% of their level two years ago, before the pandemic. That's up from 60% the previous week.

In the week to 17 May 2021, the 7-day average estimate of UK seated diners increased 13 percentage points from the previous week to 73% of its level the same week of 2019.

This coincides with some reopening of indoor dining in the UK on 17 May 2021 https://t.co/CUaIm8SQIS pic.twitter.com/9BGeT4YB75

10.46am BST

Spending at British pubs and restaurants has jumped since coronavirus rules were relaxed on Monday to allow people to eat and drink indoors for the first time in months.

Barclaycard Payments has reported that face-to-face takings at UK pubs and bars are up 171% so far this week, compared with the previous week when only beer gardens were open. These in-store revenues" at restaurants are up 95% week-on-week.

The re-opening of indoor hospitality venues has brought the welcome sound of ringing tills to restaurants, pubs and bars across the country.

I'm delighted to see that transaction values have even risen above 2019 levels, thanks to our pent-up demand for going out to spend time with friends and family."

10.30am BST

Britain hasn't lost its taste for posh tonic.

Our Off-Trade performance has remained strong in the first four months of the year.

While we would expect some of this demand to switch to the On-Trade as restrictions ease further, it is clear that at-home consumption of long mixed drinks is becoming increasingly established, supported by both the retailers and spirit companies.

The On-Trade remains materially impacted in many markets, but confidence is improving as it's anticipated that restrictions will ease over the coming months. Recovery in Europe is likely to lag the UK and US, however....

10.01am BST

Shares in ticketing firm Trainline have taken a shunt this morning, after the government pledged to streamline and simplify rail fares as part of its reform of the sector.

Trainline, which floated in summer 2019, sells rail and coach tickets and railcards through its website and app, for the UK and Europe.

Great British Railways will simplify the current mass of confusing tickets with new flexible season tickets and a significant roll-out of more convenient Pay As You Go, contactless and digital ticketing on smartphones.

A new GBR website will sell tickets and a single compensation system for operators in England will provide a simple system for passengers to access information and apply for refunds.

Some of the rules and regulations that were introduced fit and worked in an offline world - things like peak and off-peak - but they don't necessarily translate into an online or even a mobile world."

9.06am BST

DIY chain Kingfisher has warned that the product shortages and supply chain problems hitting the global economy could last another six months, as it lifts its profit outlook as the DIY boom continues.

The key risks around stock availability continue to be driven by polarised demand within some of our categories, where our suppliers have been challenged in keeping up with high order levels. This has been exacerbated by challenges around the supply of certain raw materials. In addition, the pandemic (together with events such as the Suez Canal container ship blockage) continue to place a considerable strain, industry-wide, on the international logistics infrastructure (in particular, the cost and availability of shipping containers). We expect these challenges to continue for at least the next six months.

Despite these significant challenges, our overall stock availability is gradually improving. To date, we have been able to manage our supply and logistics needs adequately, and will continue to focus on availability as we progress through the key trading season.

8.43am BST

EasyJet has said it can get almost its entire fleet in the air to take holidaymakers to green list" destinations this summer, as the airline reported a 700m loss and 90% plunge in passenger numbers in the six months to the end of March.

With leisure travel taking off in the UK again earlier this week where we are the largest operator to green list countries... With so many European governments easing restrictions to open up travel again, we are ready to significantly ramp up our flying for the summer with a view to maximising the opportunities we see in Europe.

We have the ability to flex up quickly to operate 90% of our current fleet over the peak summer period to match demand. We know there is pent-up demand.

8.34am BST

Shares in Royal Mail have dipped 1.5% in early trading, despite reporting such a surge in profits last year.

The lack of revenue guidance for the current year may be worrying some investors (although with so much uncertainty right now, RM's reticence is understandable).

Royal Mail withholds forecast as parcel demand tapers after strong year https://t.co/iD0PDhFtwX pic.twitter.com/6b74BxDpnV

8.24am BST

John Moore, senior investment manager at Brewin Dolphin, says Royal Mail's results are very strong" - but the key is whether it can maintain this performance.

Royal Mail has delivered a very strong set of results, buoyed, in particular, by parcel growth and the strength of its GLS business. The benefits of its transformation programme are beginning to come through as well, with references to some of the changes and innovations it has implemented in today's statement.

The one-off dividend and recent share price performance are rewards for shareholders who have stuck with Royal Mail after a challenging period between 2018 and 2020. The defined dividend policy - backed up by a strong balance sheet providing rare clarity on income - is something that many other UK companies have been unable to do. The group looks well placed to make a return to the FTSE 100; but, key to Royal Mail retaining that status will be maintaining the volume growth and innovation that have so heavily influenced today's results."

Although the past year has been phenomenal for Royal Mail, it still faces competition from the likes of Hermes and DPD. As this is only the start of its transformation, which has included delays to set up new infrastructure, it will need to continue to evolve to keep up with competitors. Amazon, for example, has quickly established an effective delivery service for the online age, while Royal Mail's development has been slower as it seeks to change a company first set up hundreds of years ago.

As shoppers start to return to the high street this could affect online demand, so it will be down to Royal Mail to offer a tight service to keep their customers interested. Automation is high on the company's list to implement agile working and cost savings needed to stay competitive.

8.13am BST

Royal Mail's chairman Keith Williams says it is difficult to provide specific guidance for the current financial year, due to significant short-term uncertainty" over public health, and the economic outlook.

This significant short-term uncertainty means that we will not be issuing revenue guidance for 2021-22 at this stage. Changes in consumer behaviour as lockdown restrictions are progressively eased, and economic factors such as GDP growth and unemployment will impact on revenue development. The evolution of international volumes and the success of our commercial initiatives will also have an impact. In letters the underlying rate of e-substitution as we emerge from lockdown restrictions will also be an important driver.

That said, we expect that the COVID-19 crisis will have accelerated the long-term structural shifts in both parcel volume growth and letter volume decline. On parcels, the changes experienced in 2020-21 were extreme. A proportion of the growth will start to unwind as the lockdown restrictions are removed, although it also seems certain that a significant proportion will stick, as consumer behaviour and buying preferences switch online permanently.

7.51am BST

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

Profits at Royal Mail have soared, as the pandemic drove a surge in demand for parcel deliveries from households during the lockdown.

Royal Mail Annual Profit More Than Doubles On Strong Parcel Volume - RTRS https://t.co/OzTjHW2NOI

April 2021 trading: Royal Mail revenue up 24.1%, GLS up 22.3% year on year. Royal Mail parcel volumes down 2% and addressed letters (excluding elections) volume up 25%. Parcel volume growth at GLS remained strong until mid-April, with a subsequent slowdown given the high volumes observed last year.

Parcels now represent 72% of Group revenue. The pandemic has accelerated trends we have been seeing for years in our markets. Parcels, rather than letters, provided Royal Mail with the majority of its revenue for the first time in its five-century history.

Similarly, in GLS over half of our volume came from B2C, while only five years ago two-thirds came from B2B. GLS has managed this shift successfully, delivering its highest margin in thirteen years.

However, we incurred significant additional costs associated with COVID-19 across Royal Mail and GLS.

In the UK, we also incurred additional costs associated with delivering more parcels and fewer letters and our UK management restructure.

We have announced our Full Year results for 2020-21. Read more about our performance here: https://t.co/PQNy2aUO5L pic.twitter.com/yuSWLutg6w

We go through soul-searching times like this and scrape the models and, yes, our conviction is just as high,.

I think we're in a capitulation phase. That's a really great time to buy, no matter what the asset is."

Tesla has

European Opening Calls:#FTSE 6997 +0.67%#DAX 15202 +0.58%#CAC 6296 +0.54%#AEX 697 +0.54%#MIB 24605 +0.48%#IBEX 9108 +0.41%#OMX 2212 +0.49%#STOXX 3959 +0.58%#IGOpeningCall

The rail industry will be simplified but still substantially privatised as a rebranded Great British Railways, the government will pledge when it publishes long-awaited overhaul on Thursday.

A white paper will place control of rail infrastructure and services under the new arm's-length public body, with franchises replaced by contracts that will incentivise private firms on punctuality and efficiency rather than raising revenue.

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