US economy sheds jobs for first time since 2010 as coronavirus hits – as it happened

Kalyeena Makortoff (earlier) and Jasper Jolly

from on 2020-04-03 16:24 (#51N86)

Live coverage as American payrolls data shows big rise in unemployment, after composite PMI data shows UK business activity sunk to a record low in March following the Covid-19 lockdown

5.24pm BST

It is obvious that the coronavirus lockdowns around the world will cause damage to the global economy. Today's data suggest that damage could be bigger than the financial crisis a decade ago.

In the UK and Europe, purchasing managers' indices (PMIs) suggest a deep recession, while the record run of job creation in the US economy finally came to a halt.

5.08pm BST

British manufacturers are stepping up to the mark with efforts to cover a shortfall in ventilators, a key piece of equipment to battle Covid-19. But doubts are emerging on whether it will be enough.

5.00pm BST

There is a major row brewing in the insurance industry. Legal & General has just confirmed that it intends to pay out its dividend as planned, despite a stern warning from the Bank of England that insurers should consider the payments to shareholders carefully.

European regulators have also urged companies to reconsider making the payouts; it isn't the best look at a time when people are losing their jobs and hoping their insurance policies will give them some protection.

The Board continues to pay close attention to the need to protect its customers and employees at this difficult time. The Board has carefully considered the need to act prudently in maintaining safety and soundness, and in so doing ensure that Legal & General plays its full part in supporting the real economy. It also recognises the importance of dividend income to many institutional and retail shareholders, particularly in the current environment.

The Board observes that, notwithstanding significant market volatility, the Group's Solvency position remains robust.

4.52pm BST

The FTSE 100 loss has been finalised at 1.2%, closing at 5,415.5 points.

For the week the FTSE 100 has lost less than 2% - it could almost have been a normal week.

Evercore: best equity strategy for past couple of weeks has just been to do the opposite of the previous day. If market was up, sell. If down, buy. Every day. But warning: Evercore describes it as an insane strategy.

4.38pm BST

On a provisional reading the FTSE 100 has closed down by 1.4% to 5,406 points.

France's Cac 40 lost 1.6%, while Spain's Ibex gained 2.2%. Germany's Dax edged down by 0.5%.

4.29pm BST

Here is the full report on Debenhams, which is preparing to call in administrators after it was forced to close all its outlets under the coronavirus lockdown.

The company, which has 22,000 staff and was rescued by its lenders after collapsing into administration only a year ago, is understood to be considering filing a formal notice of intention to appoint administrators next week, writes the Guardian's Sarah Butler.

4.27pm BST

Approaching the close in Europe the FTSE 100 is down by 1.4%, with something of a late selloff gaining pace.

Legal & General is the biggest faller, down 10.7% after EU calls for insurers to abandon dividend payments were backed by the Bank of England.

4.15pm BST

The move to online video conferencing has been one of the defining features of the crisis so far.

Barclays and Royal Bank of Scotland are among the latest to jump on the trend, with decisions to hold "virtual" annual meetings for the banks.

3.57pm BST

A fair few executives appear to have learned the lesson of the last decade that huge pay packets are not acceptable when workers are struggling. It appears that message has now filtered through to the Premier League, which is closed for lockdown.

3.40pm BST

It's choppy trading on US stock markets today: all three of the major indices have now lost more than 1%.

Shares had appeared to shrug off a historically bad non-farm payrolls number, but they have reversed their gains.

3.39pm BST

The boss of one of the world's biggest makers of personal protective equipment (PPE) has hit back at Donald Trump after the president warned the manufacturer "will have a big price to pay" and invoked the Defence Production Act to force the manufacturing giant to produce more protective N95 protective masks for the US coronavirus fight.

I know how the narrative that is propagated broadly, and it's just not true. [...] The employees of 3M around the world are working around the clock and in the United States to deliver and continue to increase production.

The narrative that we are not doing everything we can to maximize delivery is delivery of respirators in our own country " nothing could be further from the truth. We are doing everything we can to maximise our efforts against Covid-19 and support healthcare workers here in the US.

3.33pm BST

Train operator Grand Central, which runs services between Sunderland and Kings Cross, has announced it will suspend running, writes transport correspondent Gwyn Topham.

3.20pm BST

The coronavirus pandemic is shuttering large parts of our economy, but some companies are benefiting.

Spending on PlayStation more than doubled in March, while local convenience stores such as Nisa and Costcutter recorded a surge in sales, according to the online bank Revolut.

3.16pm BST

There's some actual good news in some US economic data just released.

The US non-manufacturing purchasing managers' index (PMI) from the Institute of Supply Management has performed much better than economists expected, with a reading of 52.5. That was well above the 44 points expected by economists polled by Reuters. It was the 122nd consecutive month of growth in output.

3.04pm BST

Oil prices are not quite matching yesterday's record-breaking gains, but those betting prices will rise are not doing too badly either.

Investors are betting that oil producers will agree production cuts that will push prices higher. (Whether higher oil prices is good for anyone but the oil companies is another matter - although higher prices are at least correlated with lower carbon emissions.)

OPEC and its allies are working on a deal for an unprecedented production cut equivalent to about 10% of global supply, an OPEC source said. (Full Story)

Oil prices slumped 65% in the first quarter on a demand slump caused by the global coronavirus outbreak and moves by Russia and Saudi Arabia to flood the market after their failure last month to extend much smaller OPEC+ supply cuts.

2.44pm BST

The British car industry has only weeks, not months, before many companies run out of money, the sector's lobby group boss has warned.

"The supply chain are really concerned about how quickly they can access finance because they need it now," the chief executive of the Society of Motor Manufacturers and Traders Mike Hawes told Reuters.

"They won't have weeks upon weeks of funding to sustain them," he said.

2.35pm BST

US stock markets have opened lower in the wake of the non-farm payrolls data. (Indeed, it's difficult to know what kind of reading could have been taken positively given what we know is coming in terms of unemployment numbers.)

The benchmark S&P 500 fell 8.36 points, 0.33%, to 2,518.54. The Nasdaq dropped 26 points, or 0.35%, and the Dow Jones industrial average fell 84 points or 0.39% to 21,329 points.

2.22pm BST

Debenhams' owners are preparing to place the venerable department store in administration to protect it from creditors during the coronavirus lockdown, according to Sky News.

The retailer, which employs about 22,000 people, could file a notice of intention to appoint administrators as early as next week.

KPMG, the accountancy firm, is understood to be among those on standby to handle the process. [...]

2.04pm BST

Justin Wolfers, an economist at the University of Michigan, estimates that US unemployment may already have reached an astonishing 13%.

It may be jarring to see in the official numbers that the unemployment rate has risen from 3.5% to 4.4%

But the reality is much worse: My calculations suggest that in the ensuing three weeks since these numbers were collected, the unemployment rate has risen to 13%.

The increase in unemployment from February to March represents the largest monthly increase since January 1975.

A history of US unemployment - to now... pic.twitter.com/3SHICf19zV

1.57pm BST

Some reactions to the data are coming in now.

The non-farm payrolls number is, unusually, a lagging indicator this month, said James Ingram, investment manager at MB Capital. We know that almost 10m more Americans have filed claims for unemployment benefits since the data were collected. He said:

Due to the cutoff point, it was expected the number would have largely missed the amount of Americans starting to be laid off or out of work from the corona virus outbreak but this figure of minus 701,000 alongside the jump in the unemployment rate to 4.4% was much worse than had been expected.

This brings a brutal end to the 9 year and 5 month run of positive numbers but we expect today's numbers to be overshadowed by next month's report by the fact that 10m US workers have made unemployment claims in the last three weeks meaning this could be just the tip of the iceberg.

The US jobs report just confirms what we all know. It's much worse than expected. The economy is hurting and will be for a while, but markets are maybe getting attuned to the bad data. The key issue is how long it goes on for, rather than just how bad it is in the short term.

1.52pm BST

America's decade-long record of continual job growth came to a shuddering halt on Frida.

Forecasting firm Oxford Economics is predicting a 16% unemployment rate by May with the loss of 27.9m jobs, more than double the 8.7m jobs cut during the 2007-2009 recession and its aftermath. Those jobs were lost over more than two years.

1.49pm BST

US stock market futures are still in the red following the non-farm payrolls data.

While it was not quite as bad as expected by the most bearish economists, the big negative reading certainly gives little room for near-term optimism.

1.33pm BST

The US economy shed 701,000 jobs according to March data, far more than the 100,000 fall expected on average by economists.

The unemployment rate rose to 4.4%, up from 3.5% in February.

1.24pm BST

Let's have a quick checkup on markets ahead of the non-farm payrolls number:

1.09pm BST

The travel and tourism industry has stepped up calls for the government to relax rules on consumer refunds, warning that firms risk bankruptcy and the taxpayer will pick up the tab without more flexibility.

Customers whose holidays are postponed or cancelled are entitled to refunds within 14 days - and many will urgently want the money back, with their own jobs affected and livelihoods at risk. However, travel agencies say they have not had that money returned from hotels or airlines, and without revenues from new bookings simply do not have the cash.

12.57pm BST

Over in media and telecoms news, companies are rushing to assure that they've got the crisis under control.

Firstly, ITV has been added to the list of execs eschewing pay in light of the lockdown. My colleague Mark Sweney has the details:

New: ITV chief executive Carolyn McCall and her top team will not take a cash bonus this year (hard to see how market would make one possible...) and a 20% salary cut for the duration of the government nationwide lockdown. https://t.co/RuU6PyyXIh

BT has said that a "new normal" has emerged in terms of the weight of broadband usage under the coronavirus lockdown. Weekday traffic has doubled and is up by a fifth in the evenings. BT: "It is comfortably within the network's maximum capacity."

12.45pm BST

The countdown is on for the US non-farm payrolls report.

At 1.30pm BST, Bureau of Labor Statistics will release its first monthly jobs report since the Covid crisis hit the US, which is expected to show the first net decline in more than nine years.

We're waiting for the data to confirm what we already know. The record one hundred-month plus stretch of jobs growth in the US has come to screeching halt.

The non-farm payroll figure for March is expected to turn negative. Because the data was collected in the first half of the month, its unlikely to capture the full damage from forced lockdowns and stay home advice.

12.21pm BST

In our full write up of UK and eurozone PMI's, Claus Vistesen captures most people's reaction to the bloc's business activity figures:

In one line: horrid, hideous, harrowing " you get the picture.

We are struggling to come up with words to describe these numbers, which are now so far out of any reasonable range that they are difficult to interpret.

11.58am BST

"The likelihood of a global recession is now a given." That's according to Duncan Brock, group director at the Chartered Institute of Procurement & Supply which publishes the PMI market data.

Commenting on the latest UK services figures, Brock said:

The services sector was sucked into a black hole and flung into the unknown by the forceful impact of the COVID-19 coronavirus, affecting every area of supply chains from transport to purchasing levels and job creation.

The abrupt drop in new orders was the sharpest since the survey began in 1996 according to the PMI data. Export orders were hit particularly hard and, in some cases, dissolved into nothing as border closures and travel restrictions resulted in the immediate cessation of normal business activities.

It's increasingly difficult to find the words to describe the devastation as every region in the world fights to save human life as the first priority. The likelihood of a global recession is now a given, though its duration and severity has yet to reveal itself.

One thing is for certain, with the lowest business optimism for over 20 years, the immediate outlook for the services sector is beyond grim.

11.17am BST

And in case you'd like a visual representation of what's been going on between Moscow and Riyadh:

Global oil producers pic.twitter.com/kDV441EodI

11.13am BST

More on the oil price moves amid reports that Opec+ (the cartel led by Saudi Arabia and Russia) is set to hold a virtual meeting on Monday.

Here is the latest from our energy correspondent Jillian Ambrose:

11.01am BST

Unsurprisingly, European stocks have fallen even further since the disappointing PMI data this morning.

Italy's FTSE MIB has suffered the worst decline amongst its blue chip peers, down -1.5%.

10.44am BST

Newsflash: China is slashing the amount of cash that small and medium sized banks have to hold as reserves, to help pump more liquidity into the economy.

The People's Bank of China is expected to cut the reserve requirement ratio by a total of 100 basis points, split between April and May.

10.24am BST

Senior management at Primark's parent group Associated British Food have agreed to cut their pay in half during the coronavirus crisis, our colleague and retail Sarah Butler explains.

George Weston, the chief executive, John Bason, finance director, and Paul Marchant, the boss of Primark, are all cutting pay by 50%. Bonuses relating to the current financial year will also not be paid to the executive directors on ABF's board.

The group's non-executive directors, including the chairman Michael McLintock, have reduced their pay by 25%. The company said that the pay cuts were appropriate as they now expected full year earnings to be "much lower than envisaged at the start of the financial year."

10.18am BST

While all of the decline in business activity across the UK and eurozone aren't necessarily be surprising given the coronavirus lockdown, the falls are proving even worse than initial estimates and are causing a re-think about how severe the contraction will actually be.

Europe's economy's in free fall due to Coronacrisis. PMI's all registered record declines in activity, w/Italy and Spain experiencing the sharpest reductions. Pointing to massive recessions in the countries. https://t.co/wuoM9Efay5 pic.twitter.com/4VfLq2fzBU

10.09am BST

The beleaguered airline industry may have at least one rescue package on the horizon.

9.52am BST

Taken alone, the UK services sector suffered its steepest decline for more than two decades.

The reading came in at 34.5 for March, below flash readings of 35.7 and down from 53.2 in February.

The slump in activity was almost exclusively linked by survey respondents to business shutdowns and cancelled orders in response to the coronavirus disease 2019 (COVID-19) pandemic.

9.44am BST

There's been no relief for the UK either.

UK composite PMI came in at 36.0 in March, which is even lower than flash estimates of 37.1.

9.35am BST

The Eurozone economy endured its worst downturn on record in March, PMI data showed (Output Index at 29.7), stronger than anything during the financial crisis, as the big four countries all saw unprecedented contractions due to COVID-19. More: https://t.co/HSUEeIDWkm pic.twitter.com/dWIupfUNTM

9.14am BST

Commenting on the shocking drop in Eurozone business activity, IHS Markit's chief business economist Chris Williamson says:

The data indicate that the eurozone economy is already contracting at an annualised rate approaching 10%, with worse inevitably to come in the near future.

The service sector is currently seeing an especially severe impact from the COVID-19 outbreak, with travel, tourism, restaurants and other leisure activities all hit hard by virus containment measures.

9.09am BST

A combined reading of the Eurozone's manufacturing and services sectors shows the biggest ever single monthly fall in March.

The composite PMI reading was the lowest ever recorded as part of the survey, at 29.7.

9.02am BST

More PMI data makes for grim reading of Europe's economic outlook:

Sharp drop in #French activity in March as final #PMI shows #services & #manufacturing output fell at record rate; composite index sank to 28.9 (flash 30.2: 51.9 in Feb). Services suffered hugely: PMI at record low of 27.4 (52.6); manufacturing PMI at 86-month low of 43.2 (49.7)

Final #PMI indicates #German #manufacturing & #services activity contracted most in series history in March as #coronavirus impacted; composite output index at 35.0 (flash: 37.2; 50.7 in Feb). Services PMI slumped to record low of 31.7 (52.5); manufacturing PMI at 45.4 (48.0)

8.58am BST

Correction: In my intro, I've corrected the Caixin services sector data which came out this morning. The reading was 43.0, signalling a contraction, but at a slower rate than February when the reading was 26.5.

8.51am BST

Italy, which is has suffered most from the Covid-19 outbreak in Europe, experienced a sharp contraction across its services industry last month.

Italy's services PMI came in at 17.4 compared to a Reuters poll forecasting a reading of 22.0. That's a significant fall from February when it was still in expansion territory at 52.1.

8.44am BST

With minutes to go until our next PMI reading (next up: Italy), time to check in on oil prices.

Despite slipping overnight, Brent prices are back up over the 30-dollar mark, rising more than 1.7% on the session to $30.52.

8.26am BST

And in the first of a string of PMI data out this morning, Spain's services sector performed worse than expected in March.

Economists had been expecting a reading of 25.5, according to a Reuters poll. But even that wasn't pessimistic enough, with the actual figure coming in at 23.0, down from 52.1 a month earlier.

8.11am BST

It's a bit of a mixed bag of companies that are making up the biggest fallers on the FTSE 100 this morning:

8.05am BST

European stock markets are open and have followed Asia's lead into negative territory:

8.01am BST

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

Despite a positive end to trading on Wall Street, new services PMI data out of China has hit sentiment and sent Asian stocks and US futures back into the red.

Stocks in Tokyo, Shanghai, Hong Kong and Sydney traded in the red, as all three US majors were pulled lower. The Caixin services PMI confirmed a slower contraction in the Chinese activity, but the number also illustrated that life in China has certainly not gotten to a normal pace just yet, with the manufacturing being an exception to this.

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