UK housing market ‘on fire’; record US job vacancies; German factory output drops – as it happened

Graeme Wearden

from on 2021-06-08 17:58 (#5JSHY)

Rolling coverage of the latest economic and financial news

Latest: Bank of England chief economist says housing market on fire
Haldane: Housing boom will widen wealth inequality
US job vacancies hit record 9.3m
Massive internet outage hits websites including Amazon, gov.uk and Guardian
London's metal trading outcry Ring to reopen
German industrial output down 1% in April

6.57pm BST

Time for a recap

The Bank of England's chief economist has warned that Britain's housing market is on fire".

As things stand, the housing market in the UK is on fire,"

There's a significant imbalance between incipient demand and available supply of houses, and because the laws of economic gravity have not been suspended, the result is pretty punchy rises in house prices."

6.23pm BST

It's been a tough day for cryptoassets.

Bitcoin has fallen back to around $32,000, down around 7% today, meaning it's lost over 10% in the last two days. That's now 50% off its all-time high in April.

Bitcoin, it just seems like a scam.

I don't like it because it's another currency competing against the dollar."

Outflows from #Bitcoin investments hit highest weekly record of $141 million, according to CoinShares https://t.co/sNHdL50eAG pic.twitter.com/s3M5etncn4

I've expounded on this too many times to add anything new, but suffice to say it's not a currency - no one is spending it; it's just monstrous speculation.

Donald Trump's fears about Bitcoin threatening the dollar are unfounded. In almost every single use case - except in the world of criminals, terrorists and non-fungible token collectors - you have to convert it back into fiat to use it (even to buy your Tesla), so I fail to see it as anything but a kind of pointless digital gold.

5.52pm BST

The global economy is set for the fastest recovery from recession for more than 80 years, but poor nations are at risk of falling further behind wealthy countries amid slow progress with the Covid-19 vaccine, the World Bank has said.

In its half-yearly outlook report, the Washington-based institution said the world economy was forecast to grow at 5.6% this year, in a sharp upgrade from previous estimates it made in January for growth of 4.1%.

Global GDP will expand 5.6% this year, up from 4.1% forecast in January, the World Bank said in its semi-annual Global Economic Prospects report - Bloomberg
*That will be fueled largely by a 6.8% expansion in the U.S. and 8.5% in China. pic.twitter.com/kU0v2QYV2g

Global Economic Prospects report of the World Bank: Global GDP will expand 5.6% this year, up from 4.1% forecast in January. That will be fueled largely by a 6.8% expansion in the U.S. and 8.5% in China.

5.29pm BST

Back on Wall Street, shares in Fastly have actually rallied despite the cloud computing service causing today's Internet outage.

Fastly stock is up 5%, after its content delivery network (CDN) was identified as the problem behind the problems that afflicted major web site and media outlets today.

The real story here, Fastly's share price goes up because investors realize how important the clients it supports are. https://t.co/Q6QIQsigpy

This incident highlights the reliance of many of the world's biggest websites on content delivery networks (CDNs) such as Fastly. As there are so few of these CDN services, these outages can occur from time-to-time.

The cloud computing service hasn't clarified what caused the issue but there will be undoubtedly be a lot of questions flying around from clients that lost money. So many eggs in so few baskets doesn't make for a great recipe.

Fastly $FSLY shares reverse course, last up 3.4%

~ They might want to think about having more outages.. pic.twitter.com/3rfIeN6XP8

5.18pm BST

Another day, another record high for Europe's stock markets.

The pan-European Stoxx 600 index has ended 0.1% higher at 454.01, a new closing high.

4.50pm BST

In the City, the FTSE 100 has closed 18 points higher at 7095, up 0.25% today.

Thungela Resources, the South African coal business spun out of Anglo American this week, led the London risers - surging by almost 30%.

4.21pm BST

Andy Haldane also told Tuesday's seminar that uncertainty about the prospects for Britain's labour market remained high even though employment and vacancies had bounced back quickly from the COVID crisis.

Reuters explains:

We've still got more than 3 million workers on furlough across the UK, and that means that uncertainties about the future jobs market remain pretty acute," he said.

While government figures last week showed 3.4 million jobs were on furlough at the end of April, more timely survey data from the Office for National Statistics suggested the number had dropped to 2.1 million by mid-May.

Bank of England's Haldane says UK housing market is on fire https://t.co/aqH2DuP0dJ pic.twitter.com/JBiEkio9UG

4.15pm BST

The Bank is going to miss Andy Haldane. https://t.co/K3YeWDV3u9

4.15pm BST

One solution to the UK's red-hot housing market is to build more houses -- and address the imbalance between supply and demand.

Otherwise, the boom is going to create deeper economic inequality, hurting those - particularly younger people - who aren't able to afford a mortgage to get onto the housing ladder.

BOE Chief Economist Andy Haldane says the UK housing market is on fire' and feeds inequalityhttps://t.co/0QHFQo3Ad7 via @lizzzburden pic.twitter.com/reWJLOQQot

4.06pm BST

Andy Haldane's warning that the UK housing market is on fire is backed up by the facts.

Yesterday, Halifax reported that the average cost of a home rose by 1.3% in May alone - lifting the average selling price to a record 261,743. That's a rise of 9.5% in the last year, far outstripping wage growth.

There is a risk that demand gets ahead of supply and that will lead to a more generalised pick-up in inflationary pressure. That's something we are absolutely going to guard against. We are looking carefully at the housing market and a raft of real-term indicators.

3.33pm BST

The number of job vacancies in the US has hit a record peak, as demand for labor surges as America's economy recovers.

The US Bureau of Labor Statistics has reported there were 9.28m job vacancies in the US in April, up from 8.2m in March, and the most since the survey began in December 2000.

There were 9.3 million job openings in April, by far the most on record (data back to 2001). #JOLTS https://t.co/gRAJfT6CuF pic.twitter.com/XgjGu77SWv

Voluntary quits also hit a record, at nearly 4 million. A sign that workers are feeling confident leaving jobs to find better (and better-paying?) opportunities. pic.twitter.com/nrdOZ8Zx05

Job openings increased in a number of industries with the largest increases in accommodation and food services (+349,000), other services (+115,000), and durable goods manufacturing (+78,000).

The number of job openings decreased in educational services (-23,000) and in mining and logging (-8,000). The number of job openings increased in all four regions.

#JOLTS
All-time high quit rate 2.7%
9.3M open jobs

Demand https://t.co/R0LEFVDJio

Job Openings in April soared to a new record high, with 9.3 Million Vacancies coming as the #economy rapidly recovered from its #pandemic depths. #Economics #Economic https://t.co/iQgkWF0tLh

2.59pm BST

Bank of England chief economist Andy Haldane has said the UK's housing market is on fire".

This is due to government incentives for buyers, more demand from households that have accumulated greater savings during the pandemic, and a shortage of homes for sale, Haldane says.

As things stand, the housing market in the UK is on fire.

2.39pm BST

The opening bell has rung on Wall Street, and stocks have inched higher, with the Nasdaq getting a boost from a rise in Tesla shares.

2.19pm BST

The Football Association has appointed the first female chair in its 157-year history, with the business executive Debbie Hewitt expected to take up the position in January.

1.52pm BST

The US trade deficit has narrowed slightly from its record high.

The trade deficit dropped 8.2% to $68.9bn in April, the Commerce Department reports, thanks to a 1.1% rise in exports and a 1.4% drop in imports.

The US trade deficit in goods and services narrowed to $68.9 billion in April, coming in at the low end of Econoday's consensus range of $67.0 billion to $76.2 billion. pic.twitter.com/BxwktfInEZ

Trade Balance improves. Hope for demand increasing from ROW. pic.twitter.com/cGq8b3aRa0

1.33pm BST

Small US firms are also planning to raise prices, in response to surging costs, the NFIB adds:

#inflation is #transitory: #NFIB Small Business edition:- pic.twitter.com/xbxh0dQdfw

1.33pm BST

In the US, small-business confidence has edged lower last month as inflation worries and hiring problems worry bosses.

The National Federation of Independent Business (NFIB) Optimism Index has dipped by 0.2 points to a reading of 99.6 in May, ending a three-month run of increases.

If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels"

In addition, inflation on Main Street is rampant and small business owners are uncertain about future business conditions."

NFIB survey shows the labor shortages are pinching small business: jobs hard to fill at +48% vs. those expect better economy -26% pic.twitter.com/v5CMZZTWhJ

This chart seems to have freaked a lot of people out recently. NFIB survey: jobs hard to fill. Labour shortages, right?

It's less freaky when you realise it's just a function of the pace of hiring. pic.twitter.com/53YjWLk7UX

According to NFIB, the share is rising quickly. So hopefully bizs will bite the bullet. The problem for many is that raises for new hires mean raises for incumbents and that means lower profits.https://t.co/HCmcf90Sz2

1.08pm BST

The property website OnTheMarket has reported its first annual profit since being launched by a group of estate agents six years ago.

It comes as the UK housing market enjoyed a boom fuelled by working from home relocations and the stamp duty holiday, with prices up around 10% over the last year.

1.06pm BST

While we were away...my colleague Rob Davies wrote about BAT's surge in sales of alternatives to cigarettes:

British American Tobacco recruited 1.4 million new users of vapes, heated tobacco and nicotine pouches in the first quarter, as it seeks to make cigarette alternatives profitable by 2025.

Shares in the London-headquartered tobacco company gained more than 2% in early stock market trading, after it reported a strong performance in both cigarettes and non-combustible" products such as Vype, its flagship vapour brand.

12.48pm BST

Britain's cabinet office is urgently investigating the internet outage which affected the government's website today, Prime Minister Boris Johnson's spokesman said on Tuesday (Reuters reports).

The spokesman said:

It appears to be a wider issue, a global issue, affecting a number of non-government sites, and as you would expect Cabinet Office are investigating it as a matter of urgency,"

Following the outage earlier, most information and services on https://t.co/uLPSBt4jdQ are now back online. We are working to resolve any remaining issues and continue to monitor the situation.

12.17pm BST

Fastly, the content delivery firm at the heart of the global web outages, has tweeted that it's disabled the service configuration' responsible for this huge disruption.

Its global network is now coming back online', Fastly adds.

We identified a service configuration that triggered disruptions across our POPs globally and have disabled that configuration. Our global network is coming back online. Continued status is available at https://t.co/RIQWX0LWwl

Our https://t.co/OuRsirGK5E page is currently down. If you need to contact the AGO you can email us at AGO.Correspondence@attorneygeneral.gov.uk

12.06pm BST

A massive internet outage, affecting websites including the Guardian, the UK government's website Gov.uk, Amazon, and Reddit has been traced to a failure in a content delivery network (CDN) run by Fastly.

The outage, which began around 11am UK time, saw visitors to a vast array of sites receive error messages including, Error 503 service unavailable" and a terse connection failure".

12.00pm BST

A massive internet outage has hit social media, government and news websites today -- including The Guardian (but if you're reading this, we're back...)

Major sites including Amazon, Reddit and Twitch were affected, along with parts of the BBC and a host of other media outlets including the New York Times, CNN and Bloomberg News

We are aware of the issues with https://t.co/uLPSBt4jdQ which means that users may not be able to access the site. This is a wider issue affecting a number of other non-government sites. We are investigating this as a matter of urgency.

The Guardian's website is down entirely, so this thread is now our formal liveblog for the Fastly outage.

Beginning with where we are now: A massive internet outage, affecting websites including The Guardian, https://t.co/m4BpHUT5yb, Amazon, and Reddit has been traced to a failure in a content delivery network (CDN) run by Fastly.

The outage, which began shortly before 11am UK time, saw visitors to a vast array of sites receive error messages including "Error 503 Service Unavailable" and a terse "connection failure".

As well as bringing down some websites entirely, the failure also broke specific sections of other services, such as the servers for Twitter that host the social network's emoji.

Fastly, a cloud computing services provider, has been identified as the cause of the problem. The company runs an "edge cloud", which is designed to speed up loading times for websites, protect them from denial-of-service attacks, and help them deal with bursts of traffic.

That technology inherently requires Fastly to sit between most of its clients and their users, meaning that if the service suffers a catastrophic failure, it can prevent those companies from operating on the net at all.

In an error message posted at 10:58 UK time, Fastly said: "We're currently investigating potential impact to performance with our CDN services." The company has not yet not responded to a request for comment from the Guardian.

Some sites, including BBC, have managed to restore services in the past few minutes by switching their systems away from Fastly's network. Others have had patchy uptime.

(The increasing centralisation of internet infrastructure in the hands of a few large companies means that single points of failure can result in sweeping outages)

( A 2017 problem at Amazon's AWS hosting business, for instance, took out some of the world's biggest websites for several hours across the entire US East Coast)

(A 2020 problem with Cloudflare, another CDN company, led to a half-hour outage for most of the internet in major cities across Europe and the Americas.)

Fastly's status page is not a happy read pic.twitter.com/zWJ8gvwaHI

If you don't know what's happening, the outages are localised. Last time something like this happened, with Cloudflare's 2020 outage, it only affected specific cities across Europe and the Americas. This time, eg, Berlin seems to have got away unharmed https://t.co/PUIFOB8DAD

The Guardian isn't the only site that's had to resort to... unconventional means to get the news out. Tech site @verge has used a Google Doc to share the story. It went well for a bit but they... forgot to turn off editing for a while https://t.co/fAtzBo5GUD

GOOD NEWS pic.twitter.com/vLus9WIitv

Ah OK it turns out that in some places, Twitter is broken and not showing images. https://t.co/GMMHUoexdp This is a screenshot of Fastly's status page saying "Identified: The issue has been identified and a fix is being implemented"

And the Guardian is back online - for me, at least: https://t.co/oNhAUNT7iK. Thus ends my uncomfortable 50 minute period of being the only person in the entire newspaper capable of publishing content

Fastly said it was investigating the potential impact to performance with our CDN services," according to its website.

Most of Fastly's coverage areas were facing Degraded Performance", the website showed.

11.36am BST

The eurozone's recession was much shallower than feared.

Statistics body Eurostat has revised up its estimate of GDP in the first quarter of 2021; now estimating the eurozone economy only shrank by 0.3% in January-March, not the 0.6% contraction first reported.

So Eurostat has halved its estimate of the decline in GDP during the first quarter, although the figures confirm the eurozone was in recession. But of the big four, only France experienced a recession, with Italy growing in 1Q, and Germany and Spain avoiding a 4Q contraction https://t.co/Lq4O1ZIBJD

After a better-than-expected first quarter, combined with easing pandemic restrictions, improving vaccine numbers, and an upbeat outlook for the coming months, there is a good chance that European bourses could continue pressing higher to fresh record levels.

11.01am BST

UK banks will for the first time be forced to reveal their exposure to the climate crisis, highlighting the risks that rising temperatures and sea levels could pose for the financial system, as part of the Bank of England's climate stress tests this year.

The stress tests will put 19 banks and insurers through three climate scenarios, according to an update released Tuesday, including one where governments fail to take further steps to curb greenhouse gas emissions, resulting in average temperature increases of 3.3C and a 3.9m rise in sea levels.

It is concerning that the Bank of England appears to be ruling out using climate stress tests to help inform changes to capital requirements. Climate capital rules that reflect the high risk of fossil fuel investments are a necessary inevitability to ensure financial stability and alignment with the government's climate plans, and the Bank needs to be introducing such policies without delay.

By delaying the implementation of climate capital rules, the Bank is undermining its duty to protect financial stability and support net-zero."

10.42am BST

Investor sentiment in Germany has fallen, but hopes of a strong economic recovery this year are still on track.

That's according to the ZEW Economic Research institute. Its poll of investors' economic sentiment has fallen to 79.8 points this month, from 84.4 in the previous month, and lower than expected

Germany ZEW Economic Sentiment (Jun) announced.

Forecast: 86.0

Actual: 79.8#eurusd #dax #Germany pic.twitter.com/e5ZyxcxDTC

The economic recovery is progressing,"

The decline in expectations is probably largely due to the considerably better assessment of the economic situation, which is now back at pre-crisis levels."

German ZEW for June a fairly large miss on the headline (79.8 vs Exp. 86.0) but well within the range (low 75.0) and in context the previous reading was a multi-decade high pic.twitter.com/xezaOaJECB

10.25am BST

The City of London's last open outcry" trading floor is to reopen, after opposition to plans to move to all-electronic trading.

The divergent views in response to the Discussion Paper were particularly apparent between traditional participants and some smaller physical clients on the one hand, and our larger merchant trader and financial participants on the other.

However, respondents were constructive in proposing approaches to reconcile these differences, respecting the differing needs of the LME community, and preserving the unique and mutually beneficial blend of physical and financial market liquidity, which makes our market so special.

LME takes very LME decision and goes for both options

- Closing prices to move to electronic trading
- Ring trading will re-open & continue for official prices pic.twitter.com/TsJlXvywo4

The LME's open outcry trading venue 'The Ring' survives but the direction of travel is clear. Some uncharitably say it is a fudge. pic.twitter.com/KHvzJ6ZgKY

10.02am BST

Global stock markets hit a fresh record high overnight too, with the MSCI All-Country World Index touching a new peak.

Investors are waiting for key events and data releases this week, such as inflation data from China (Wednesday), the next US inflation report (Thursday), and the European Central Bank's monetary policy meeting (Thursday).

The start of a new week has not seen much by way of price action across all asset classes.

It's hard to avoid the sense the global markets are for the most part now simply lurching from one big event risk to the next with not a lot to see in-between.

JPMORGAN: The next leg higher is likely upon us, following the sideways move in markets and bond yields over the past two months .. the market is likely to get comfortable that growth will remain significantly above trend in 2H, supported by both consumer and capex." pic.twitter.com/HLXnRdZBlv

9.54am BST

It's another quiet day in Europe's stock markets, as investors take a breather after some lively sessions this year.

I think it says more about the supply constraints. The big question is how long will these remain,"

Markets are in a wait-and-see mode. Valuations are high, and they need new catalysts to justify further buying."

9.38am BST

Back on Germany....Capital Economics' Andrew Kenningham says its factory slowdown means the economy was under par in April.

But he's still hopeful that Germany return to growth in the current quarter, having shrunk in January-March.

The decline in German industrial production in April underlines that the German economy was performing well below normal at the start of the second quarter.

But things should have improved since then, so we still expect GDP to rebound after its sharp decline in Q1.

The decline in German industrial production in April underlines that the German economy was performing well below normal at the start of the second quarter. But things should have improved since then... https://t.co/j0SSA6vw1z pic.twitter.com/SHn2B1TooW

#Germany's industrial production down 1.% in April, marking the third decline in the last four months. pic.twitter.com/PZ3Q4sJ78L

9.28am BST

British American Tobacco (+1.6%) are also in the risers, after raising revenue forecasts on the back of higher demand for non-tobacco' products (such as vaping kits and nicotine pouches).

BAT now expects revenue growth guidance of above 5% for 2021, as it pushes these new category' products such as Vuse, Velo and Glo.

We added +1.4 million non-combustible product consumers in Q1, to reach a total of 14.9 million.

We are growing New Categories at pace, encouraging more smokers to switch to scientifically substantiated reduced-risk alternatives."

Critics say that such viral videos, even if they aren't paid-for adverts, are the consequence of a global marketing push designed to offset dwindling cigarette consumption by recruiting the nicotine consumers of the future.

BAT has embarked on a 1bn campaign that harnesses the popular appeal of social media influencers, pop stars and sporting events.

9.09am BST

Shares in UK insurance firm Aviva have jumped 3.6%, after activist investor Cevian took a 5% stake - and started pressing for change.

Aviva has been poorly managed for many years, and its high-quality core businesses have been held back by high costs and a series of bad strategic decisions."

Aviva has promised substantial returns and cost reductions as central planks of its strategy shift under Blanc, who has told investors that her mantra is to move quickly.

However, Cevian wants a specific return of 5bn in dividends or buybacks of capital that the insurer has in excess of regulatory requirements

8.46am BST

In London, stocks have opened a little higher, with the FTSE 100 up 15 points or 0.2% to 7092 points.

Asset manager Intermediate Capital Group are the top riser, surging 6.7%, after reporting record profits, and a 19% jump in third-party assets under management amid the recovery in markets over the last year.

Chinese oil imports at a five-month low ... would tend to confirm weakness in the Asia market."

8.32am BST

On a brighter note, Japan's economy shrank by less than first feared in the January-March quarter.

Q1 GDP was revised up today, to show an annualised contraction of 3.9% (so almost 1% smaller on a quarterly basis).

Slight upgrade to Japan's Q1 GDP print. Partly higher medical costs plus some (probably involuntary) stockbuilding. So, not a structural upgrade, Q2 contraction still on cards.

Japan's 1st qtr GDP fall upgraded to 3.9% on more public demand - The Mainichi https://t.co/R5NgdK9rAK

8.27am BST

#Economy
The German industrial output was down 1% mom in April and March was revised slightly downwards from 2.5% to 2.2%.The fall was mainly due to consumer goods and construction, while energy was strong (+6%) due to bad weather conditions.https://t.co/6uczq8wcH6 pic.twitter.com/kTrB3ST393

8.20am BST

A lack of semiconductors, timber and other intermediate goods weighed on German industrial output, says Reuters:

The weaker than expected industrial figures suggest that the German economy will have to rely on household spending to support a still-fragile recovery from the coronavirus crisis.

Such a combination is unparalleled: Order books in industry are well filled and production is falling," VP Bank economist Thomas Gitzel said, adding that the supply problems with semiconductors were pushing down output in the car industry.

8.17am BST

The week-long blockage of the Suez Canal by the Ever Given in March contributed to the supply chain problems hitting German firms in April, suggests Carsten Brzeski of ING.

He writes that April's disappointing drop in industrial production suggests the rebound of the German economy in Q2 has started with shaky knees':

The disappointing start to the second quarter suggests that supply chain disruptions, like the blockage of the Suez Canal in April or the ongoing semiconductor delivery problems, have not left German industry unscathed.

However despite today's disappointment, the industrial outlook remains bright.

Germany: First disappointments | Snap | ING Think - Disappointing industrial production data in April suggests a delayed rebound of the German economy https://t.co/e4xdKC41R4

8.07am BST

Destatis also reports that German construction output fell by 4.3% in April -- suggesting that shortages of building materials might be weighing on the sector.

Energy production jumped by 6.0%.

7.48am BST

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

Output at German factories has fallen unexpectedly, as supply chain bottlenecks and shortages of key parts and materials such as computer chips threaten to undermine the recovery.

Disappointing German industrial production. Down 1.0% in April after an increase of 2.2% in March. Significantly below consensus.

OOPS! In April, German Industrial Production drops by 1.0% MoM, misses estimates of +0.4%, due to chip crisis and construction timber shortages. pic.twitter.com/9T7qm7kxLB

The only way to get out of [the recent crisis] is to have a different level of commitment"

Money needs to be put on the table and actually parts have to be bought.

The commitment needs to be rock solid that those parts will be bought. It can't be: Maybe I [will] buy them, prepare for it, and maybe not.' This doesn't work."

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