UK vacancies halve and pay falls as Covid-19 lockdown hits economy - business live

Graeme Wearden

from on 2020-05-19 16:33 (#53MS9)

Rolling coverage of the latest economic and financial news, as new data shows the UK claimant count jumped over 2m in April

5.33pm BST

Time for a quick recap:

Britain's labour market has deteriorated sharply as the Covid-19 pandemic, and lockdown, pushes the economy into recession.

5.10pm BST

Back in Washington, US treasury secretary Steven Mnuchin has declared that people who refuse to return to work during the Covid-19 pandemic should lose the right to unemployment benefit.

Mnuchin on PPP loans and unemployment insurance: "If you offer back a worker and they don't take that job, you will be required to notify the local unemployment insurance agency because that person will no longer be eligible for unemployment."

DJ MNUCHIN: WORKERS WHO REFUSE TO COME BACK TO WORK WILL NO LONGER QUALIFY FOR JOBLESS BENEFITS

United Airlines is getting $5b in federal aid from Treasury, but still plans to cut 3,800 jobs in October -- right when Congress' restrictions on maintaining payrolls lift

We believe right now that they're in compliance with the program," Mnuchin says

To provide an illustration of the policy tension Warren is addressing, consider the example of LMI Aerospace. They've laid off more than a quarter of their workforce. If they get a loan, it makes it more likely they'll be able to keep more workers employed https://t.co/KGPJYnNVIz

It's an open question whether they'd take the loan, however, if they had to guarantee to keep employment at current levels.

5.00pm BST

After a mixed days trading, European stock markets have closed lower - mostly.

The EU-wide Stoxx 600 dipped by 0.5%, handing back a small chunk of yesterday's rally. Utility firms, energy companies, and telecoms operators led the fallers.

Stock markets in Europe are in the red as traders' book some of their profits from yesterday's massive gains. In the past 24 hours the outlook hasn't really changed, but equities have handed back some of the ground that was made yesterday. Economies around the global are still being reopened, and hopes remain high for a potential Covid-19 vaccine, but it seems like the bulls have decided to take a breather today. It might transpire that today's negative move was just a slight retracement before the next leg higher.

France and Germany are backing a 500 billion rescue plan for Europe - which would hand out grants to regions struggling with the Covid-19 crisis. A number of Northern European countries, like the Netherlands, are not keen on the scheme as they would prefer to see loans being issued. While the divisions over the plan continues, sentiment is unlikely to be positive.

4.40pm BST

Our economics editor, Larry Elliott, warns that the jump in UK unemployment in April is just the start...there could be much worse times ahead.

Crunch time for the labour market will come between the start of August, when the government wants employers to start paying a portion of wage subsidies, and the end of October, when the furlough scheme is due to end completely.

At present, many companies are not laying off staff because the Treasury is picking up the tab for 80% of monthly pay up to a limit of 2,500. If severe lockdown restrictions are still in place, Rishi Sunak will have a tough choice: extend the scheme or see the UK suffer a second wave of job losses. The pressure on the chancellor to at least keep furloughing for sectors most affected by social distancing - hospitality, leisure and retailing - will be considerable.

4.37pm BST

UK fund manager Schroders has warned today that the economic impact of Covid-19 pandemic could last for many years, long after the outbreak has passed.

In a new report, chief economist Keith Wade examines how previous pandemics often lasted for many years -- leaving deep scars" on those who survive. Those households and businesses will be more cautious, keener to save and more cautious about spending.

Studies of the economic effects of pandemics point to significant long run effects. Growth and returns on assets are depressed for a considerable period of time, up to 40 years after the pandemic has passed. Those studies cover outbreaks stretching back to the Black Death of the 14^th century up to the H1N1 (swine flu) pandemic of 2009.

Covid-19 is most frequently compared with the Spanish flu of 1918-19, an outbreak that claimed 40 million lives, or 2% of the world population implying 150 million deaths when applied to today's population.

3.48pm BST

Back in the City, the FTSE 100 is once again struggling to hold onto the 6,000-point mark.

The blue-chip index is now down 80 point, or 1.3%, at 5966. Tobacco firm Imperial Brands is the top faller, down 7%, with utility firms also dropping.

3.33pm BST

Over in Westminster, UK chancellor Rishi Sunak is warning that the UK faces a steep recession due to the Covid-19 pandemic, and probably a slow recovery too.

He told the House of lords economic committee that:

It is not obvious that there will be an immediate bounce back. It takes time to get back to the habits that they had. There are still restrictions in place. Even if we can re-open retail, which I would very much like to be able to do on 1 June, there will still be restrictions on how people can shop, which will have an impact likely on how much they spend.

Rishi Sunak says "It's not obvious there will be an immediate bounce back" for the economy as lockdown measures are lifted.

"In all cases it will take a little bit of time for things to get back to normal, even once we've reopened currently closed sectors"

Rishi Sunak signals the Treasury is moving away from the OBR's V-shaped recovery: "It is not obvious there will be an immediate bounce back. It takes time for people to get back to the habits they had". (V was dismissed by City economists at the time as too optimistic).

Sunak now explicit about what he wouldn't quite say last week - "We're likely to face a severe recession the likes of which we have not seen, & of course that will have an impact on unemployment."

UK coronavirus live: country facing 'severe recession likes of which we haven't seen', says Rishi Sunak https://t.co/fSAze1oCLv

2.43pm BST

The US stock market has opened a little lower, after Monday's monster rally.

The Dow Jones industrial average has dipped by 143 points or 0.5% to 24,454, after leaping by over 900 points on Monday.

2.40pm BST

Much to my surprise, economic confidence in Germany has jumped to a five-year high.

At least, that's what ZEW, the economic think tank, has found. Its index of economic sentiment has rocketed to 51.0 in May from 28.2 in April, indicating confidence that things will get better later this year.

ZEW Economic Sentiment a survey of about 350 German institutional investors and analysts at a 5 year high.

To me this indicates that the markets has priced in a v-shaped recovery, leaving markets vunrable to sharp sell-offs pic.twitter.com/Zch1gshLuO

#ZEW signal heads further into upswing territory in May, adding to some rays of light in high frequency data lately. Question will be if Friday's #PMI will follow this positive cue. pic.twitter.com/QAzAHSln8S

The German ZEW at a 5-year high tells you everything you should know about the German ZEW. It's useless.

2.34pm BST

Ben Chu of the Independent shows how vacancies in the UK, and claims for unemployment benefit, both moved dramatically last month:

No lockdown impact visible in the latest headline UK unemployment figures.

Why? Because they only cover the three months to March 2020 & lockdown only imposed on 23 March.

But looking under the hood - at vacancies and claimant count data - you get a taste of what's to come: pic.twitter.com/xBinjFXjE9

2.18pm BST

The World Bank president David Malpass has expressed his frustration that the private sector creditors of poor countries have failed to join the governments of richer nations in providing emergency debt relief.

This will increase the confidence in the investment climate and encourage more beneficial debt and investment in the future."

1.53pm BST

Over in Washington, US treasury secretary Steven Mnuchin has predicted that America's economy will recover in the second half of 2020.

But in testimony to the Senate, Mnuchin also predicts large unemployment numbers and other negative economic indicators during the second quarter.

Working closely with governors, we are beginning to open the economy in a way that minimizes risks to workers and customers.

We expect economic conditions to improve in the third and fourth quarters."

US Treasury's Mnuchin: Expects US Economic Conditions To Improve In Q3, Q4 As Businesses Return To Work

U.S. TREASURY'S MNUCHIN SAYS WE ARE CONTINUING TO SEE LARGE UNEMPLOYMENT AND OTHER NEGATIVE ECONOMIC INDICATORS IN SECOND QUARTER-SENATE TESTIMONY

1.37pm BST

The Covid-19 lockdown is buffeting troubled high street chain French Connection.

French Connection, which closed all its 68 stores and concessions in March, says it will run out of cash within the next few months unless it secures a cash injection or sees an improvement in sales soon.

1.34pm BST

Compass Group, the world's biggest catering firm,has unveiled plans to raise 2bn from investors to shore up its finances, as the schools, offices and sporting venues it previously supplied with food remain largely closed.

1.18pm BST

After soaring yesterday, European stock markets are a more mixed picture today.

The UK's FTSE 100 has dropped by about 0.5% to 6020 points, having surged over 4% on Monday. Italy and Spain's markets have dropped by around 2%

What the agreement is.... is a commitment by France and Germany to allocate the European Union budget in the form of grants to the worst-hit regions and sectors." What 500bnn of budget looks like - is a significant underspend.

If the US is spending upwards of $3 trillion, then the years of austerity damage to Europe's soft underbelly require a similar, if not greater amount."

1.00pm BST

Chris Giles of the Financial Times has picked out the key warning signs in today's UK unemployment report - namely the drop in vacancies and hours worked.

Vacancies have fallen off a cliff. The most visible sign of the crisis in today's jobs figures, which are largely out of date pic.twitter.com/Emwoz4vcFo

Not so dramatic on the annual change in hours in the first quarter. But these are big changes since lockdown was only the last week in March pic.twitter.com/IdFVuj8rc8

12.33pm BST

Housing and homelessness charity Shelter has warned that the huge jump in unemployment benefit claims in April will be followed by a spike in evictions.

With a huge surge in people applying for benefits and early warning signs of major job losses to come, it's clear that Covid-19 is going to send shockwaves through our economy like never before.

We know from our services that thousands of renters are suddenly scrambling to stay afloat, and for those who've become unemployed, the furlough scheme is no help at all. Many are turning to Universal Credit in a desperate bid to pay their rent but are quickly finding out housing benefit levels are too low to break their fall.

12.02pm BST

Newsflash: Budget airline easyJet has suffered a cyber attack affecting nine million of its customers.

There is no evidence that any personal information of any nature has been misused, however, on the recommendation of the ICO [Information Commissioner's Office], we are communicating with the approximately 9 million customers whose travel details were accessed to advise them of protective steps to minimise any risk of potential phishing. We are advising customers to continue to be alert as they would normally be, especially should they receive any unsolicited communications. We also advise customers to be cautious of any communications purporting to come from easyJet or easyJet Holidays.

We're sorry that this has happened, and we would like to reassure customers that we take the safety and security of their information very seriously.

11.39am BST

NIESR, the think tank, has predicted that UK pay packets will fall in the months ahead as the Covid-19 pandemic continues, particularly in the private sector.

They've analysed this morning's unemployment data, and found signs that the government's furlough scheme is limiting job losses, but leading to pay cuts:

In the final week of March, the total number of hours worked was around 25% smaller than in other weeks within the quarter. This reflects the large number of people being furloughed. Furloughing has helped to limit the rise in unemployment. The unemployment claimant count rose by 850,000 to 2.10 million in April. The number of vacancies fell to 351,000 in April, from 750,000 in March.

By early May a quarter of paid employees had been furloughed, with 80 per cent of their pay (up to 2,500 per month) being met by the government. This will mean that measured average earnings will fall in the short term, reflecting the lower pay of those who have been furloughed. An early sign of this was that median monthly pay fell by 55 in April to 1789 per month.

The extent of the economic fallout from Covid-19 is becoming clearer. Many businesses are under severe financial pressure and are only able to retain staff because of the government's furlough scheme which is currently supporting 7 million jobs.

Despite this, claimant unemployment rose above two million in April, the highest level since 1996, and it is very likely that we will see falls in pay in the months ahead."

11.01am BST

UK luggage brand Antler has fallen into administration, making it the latest corporate victim of the Covid-19 crisis.

Although the business was trading well prior to the virus outbreak, restrictions imposed at the start of the lockdown period prompted the closure of Antler's retail and wholesale outlets, while the impact on international travel has also significantly affected sales," said

With uncertainty over the lifting of travel restrictions placing further financial strain on the business, the directors concluded that they had no option but to appoint administrators."

Antler luggage, founded 106 years ago, based Bury and London, put in administration: 199 staff furloughed, of whom 164 made redundant. Holiday and international travel market has been hard hit, obvs.

10.30am BST

The UK's unemployment problems have deepened this morning with Ovo Energy, Britain's second biggest energy supplier, announcing 2,600 job cuts and several office closures around the UK.

The decision comes just four months after Ovo bought SSE's retail division for 500m, instantly increasing its customer base from 1.5m to 5m homes.

Announcing the cuts on Tuesday, Ovo said the Covid-19 pandemic had accelerated a shift in customer behaviour, with more people going online, which had permanently reduced the need for some functions and roles.

10.05am BST

Peter Briffett, CEO of the income streaming provider Wagestream, fears the UK is heading for seventies-style unemployment", with vacancies vanishing just as more people seek work.

Not only are people losing their existing jobs, but the prospect of finding a new job is decreasing sharply as employers dig in for a turbulent few years ahead.

The claimant count soaring to over 2m suggests a new generation are facing a potentially long time without work or, as people during the latter stages of the 20th Century referred to it, on the dole.

10.03am BST

Resolution Foundation have tweeted a handy thread of the key charts from today's UK labour market report, including the drop in employees, the rise in the claimant count, the plunge in vacancies, and the drop in pay last month.

They also flag up that younger workers have been hit hard by the downturn:

Starting with the employee count - HMC's PAYE includes all employees being paid through PAYE, which will include furloughed workers. Even so, it shows a big drop, down 450k from March to April. (Data points are whole-month averages). pic.twitter.com/gdvWGpdlcW

The second big move is vacancies. Using the single-month data (which are more timely but less reliable) shows that total vacancies in April were down 400k (or, by 50 per cent) on March. April data was collected on the 3rd April. pic.twitter.com/mJLw7wbLY9

The effects are, unsurprisingly, much bigger in some sectors than others. Looking at the March to April change shows huge (+70 per cent) drops offs in Motor Trades, Hospitality and Retail and other sectors. pic.twitter.com/BfFWbzZGVx

The third big move is in the claimant count, which comes from data collected on the 9th April. The overall count is up 850k on March, taking it to 2.1 million, about a third higher than the levels seen after the financial crisis. pic.twitter.com/VjLjsB5oBk

We have an age breakdown of the claimant count and it backs up our research by @gustafmaja published today showing that under-25s have borne the brunt of job losses: https://t.co/ulXzUuXhyd pic.twitter.com/oJ2Mkt7rIl

There were big disparities between sectors. For example, pay in the hospitality sector - one of those hardest hit by coronavirus - fell by 2.1% in real terms, whereas earnings in the other services' sector rose by 7.2% year on year. pic.twitter.com/NG5pvgbPGn

9.57am BST

Here's our economics correspondent Richard Partington on today's UK unemployment report:

The number of people claiming unemployment benefits increased by the most since records began in April to reach almost 2.1 million, according to official figures capturing the onset of the coronavirus crisis.

The Office for National Statistics said about 856,500 people signed up for universal credit and jobseeker's allowance benefits in April, driving up the overall UK claimant count by 69% in a single month.

9.53am BST

Amid all the gloom, we shouldn't forget that the UK unemployment rate did dip to 3.9% in January-March (nearly its lowest levels since the 1970s).

The employment rate hit at a joint-record high of 76.6% in the first quarter of 2020 too, the ONS reports.

Clearly these figures are behind on our current struggle but the impact of this global health emergency is now starting to show - and we're doing everything we can to protect jobs and livelihoods.

What these statistics do highlight is that heading into the pandemic, we had built strong foundations in our economy, which will be crucial as we gradually move forward as the lockdown eases and look to bounce back."

"As we stay alert over the coming weeks, we can also look ahead. Because once we beat this virus, we all want to get our country back up and running, at full speed. Together, we can."

@ONS has published the latest employment figures for January to March 2020. pic.twitter.com/fVrEQFl9kG

9.36am BST

You can read more about the drop in vacancies here on the ONS website [Figure 2 shows how they halved in April].

The drop in pay in April is covered here [in the Median monthly pay" section]

9.22am BST

Early estimates suggest the number of hours worked in Britain collapsed in the last two weeks of March, with the amount of time spent working collapsing to around 25% below normal levels.

Jonathan Athow, deputy national statistician at the ONS, said:

This is a huge fall, and evidence of employers either putting staff on furlough and/or cutting the hours of those still working."

9.15am BST

More bad news (sorry): The number of vacancies in the UK appears to have halved in April.

Today's preliminary labour market data shows there were probably roughly 350,000 unfilled positions across the economy last month.

Whilst the experimental single-month estimates should not be considered accurate estimates of vacancies in the reported months, it does indicate a decrease of approximately 50% of vacancies compared with the estimate in March 2020.

Today's figures highlight the speed and scale of Britain's job crisis. Employee numbers have fallen by nearly half a million in just one month, while the number of vacancies has halved.

These shocking figures would be far worse were it not the Job Retention Scheme, which has so far protected 7.5 million jobs.

9.01am BST

The poorer parts of the UK are being hurt particularly badly by the spike in unemployment.

The Institute for Employment Studies has crunched through this morning's data, and found that in Blackpool, one in nine residents (11%) are now claimant unemployed, up from 7% in March. One in eleven residents are claimant unemployed in Middlesbrough, South Tyneside, Birmingham, Wolverhampton and Thanet.

Confirmation that the most disadv areas have seen largest impacts of crisis. Should be only story today. I've shown % point increase in claimant unemployment by decile of u/e pre crisis. 10=highest unemployment areas. Up by 2.5ppts compared with just 1.4 points for lowest. pic.twitter.com/o7tvnHMNNN

These figures give us the first official confirmation of what we've known for some time, which is that unemployment is rising faster now than at any point in our lifetimes.

But they also paint a deeply worrying picture about how the crisis is playing out across the country - with clear evidence now emerging that those areas that were worst off before the crisis have seen the biggest rises in unemployment. If anything, today's data underplays the depth of the crisis that we're in, as it only counts those who had successfully claimed benefits for unemployment as at 9 April, so excluding many young unemployed and more recent claimants. In reality, unemployment today is likely to already be close to three million.

8.51am BST

With millions of UK workers now furloughed, it's no surprise that the number of hours worked has dropped - by the most in a decade.

The ONS explains:

Between January to March 2019 and January to March 2020, total actual weekly hours worked in the UK decreased by 12.4 million, or 1.2%, to 1.04 billion hours.

This was the largest annual decrease since November 2009 to January 2010. The decrease in total actual weekly hours worked over the year was mainly driven by the decrease in men's total hours worked (down 16.0 million hours).

8.43am BST

Jonathan Reynolds MP, Labour's Shadow Work and Pensions Secretary, says the surge in the claimant count shows the severity of the UK's economic crisis.

He warns:

Unfortunately these claimants will now discover the UK has one of the weakest out of work safety nets in the developed world.

We support the changes the Government has made so far during the outbreak, but they do not match the scale of the crisis.

8.39am BST

The UK government has warned that unemployment will rise sharply in the months ahead.

Reuters has the details:

Britain said on Tuesday that people should be prepared for unemployment to increase significantly after the number of people claiming unemployment benefits in Britain soared to its highest level since 1996.

The claimant count rose by 856,500 - the biggest ever month-on-month leap - to 2.097 million, a 69% increase, the Office for National Statistics said.

8.35am BST

In another blow, pay also fell in April.

The ONS estimates that median monthly pay in April fell to 1,789 - down from 1,844 in March. That's a drop of almost 3% month-on-month.

8.29am BST

The number of job vacancies in the UK has tumbled, in another sign that the labour market is weakening fast.

The ONS estimates there were 637,000 vacancies in the UK in February to April 2020 -- 170,000 fewer than the previous quarter.

8.23am BST

The Claimant Count increased dramatically in the South West - where claims almost doubled during April.

The West Midlands had the smallest increase, but even here the number of people receiving people receiving universal credit and jobseekers allowance rose by over 50%

7.47am BST

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

We start with some bad economic news: the number of people claiming unemployment benefits in the UK jumped sharply last month, and the number in work fell, as the Covid-19 lockdown hit the economy

The single month jump in the UK claimant count unemployment rate (from 3.5% to 5.8% is the largest monthly increase since comparable records began in 1971. You need to go back to February of 1947 (on older administrative data) to find a bigger single month increase. pic.twitter.com/9iGcQ7BnXC

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