US initial jobless claims fall below 1m; oil demand cut - as it happened

Graeme Wearden

from on 2020-08-13 15:44 (#56VJH)

Rolling coverage of the latest economic and financial news, as latest weekly jobless figures beat forecasts

4.44pm BST

And finally, Europe's stock markets have ended the day lower, with a chunky selloff in London.

The Stoxx 600 index dropped by 0.5% today, with small losses in Paris, Frankfurt, Milan and Madrid.

4.16pm BST

Back on Wall Street, stocks are slowly drifting higher.

This has pushed the S&P 500 index up to 3,385.12 point, a gain of 4.7 points (+0.14%) today, and closer to February's record highs

The S&P 500 is less than 0.5% away from making new all-time highs.

It has ended higher in 8 of the last 9 sessions, gaining 3.1% this month.

Get your S&P 3,400 hats out $SPY $SPX

4.04pm BST

Here's our energy correspondent Jillian Ambrose on the IEA's downgraded oil demand forecasts:

The world's demand for oil will fall further than expected through this year and in 2021 following a surge in new coronavirus cases, according to the International Energy Agency (IEA).

The oil watchdog wiped almost a quarter of a million barrels of oil a day (bpd) from its forecasts for next year after warning that the rising number of Covid-19 cases could mean a slower recovery for the global aviation industry and lower demand for transport fuels.

3.18pm BST

While millions of people are struggling during the pandemic, the rich are splashing out on expensive new watches.

The UK has been driven by continued strong ecommerce sales and domestic demand in regional stores, partly offsetting greater declines in London (due to reduced tourism) and our airport stores.

With global travel still frozen and high-end leisure spending in the doldrums, rich consumers are spending their money on luxury watches, boosting the retailer Watches of Switzerland.

Shares in the group jumped 18 per cent on Thursday after it reported that increased demand from well-heeled UK consumers had partly offset a lack of tourists.

3.07pm BST

Back in London, shares in engineering group Renishaw are down 10% after it posted a 97% drop in profits due to the pandemic.

Renishaw, which makes coordinate-measuring machines and machine tool products, posted earnings of just 3.2m compared with 109.9m last year.

2.48pm BST

Here's Bloomberg on the Wall Street open:

Technology shares rose while the broader U.S. equity market was mostly lower as investors mulled the stalemate in stimulus negotiations and signs of an economic recovery.

The Nasdaq Composite gained and the S&P 500 opened in the red a day after briefly surpassing the record closing high reached before the coronavirus pandemic. Adding to optimism was a report showing that weekly jobless claims dropped below 1 million for the first time since March.

U.S. stocks open lower https://t.co/PxObvEogtI pic.twitter.com/j5gfQ5Elmg

2.37pm BST

The drop in US unemployment claims hasn't cheered Wall Street too much.

The Dow Jones industrial average and the S&P 500 have both opened in the red, while the Nasdaq has pushed higher as investors move into tech stocks again.

2.32pm BST

The US labor market may have strengthened slightly, but as Steve Liesman of CNBC tweets, there's plenty of work to do:

If jobless claims running just under a million in the fifth month of the recession is your benchmark for an economy being in good shape, may i suggest you've set the bar too low? That's still 4x the pre-recession level and about 300k above the worst level of 08.

2.27pm BST

Our US business editor, Dominic Rushe, points out that unemployed Americans are suffering while Congress struggles to agree a new stimulus package.

Here's his take on today's jobless data:

The number of Americans who filed new claims for unemployment benefits last week dipped below 1 million for the first time in 21 weeks but signs of the coronavirus pandemic's devastating impact on the US jobs market remain.

The latest figures from the labor department showed 963,000 people filing claims after 20 weeks of claims above 1m. Claims still remain historically high. Before the pandemic claims were averaging around 200,000 a week and the previous record for claims was 695,000, set in 1982.

2.02pm BST

Daniel Zhao, senior economist at jobs search site Glassdoor, warns that the US recovery is still unsteady, despite the drop in new unemployment benefit claims:

Seeing initial claims dip below 1 million is a positive sign that layoffs are easing, but we're far from celebrating a steady recovery. Tens of millions of people are still collecting unemployment benefits at a level far above the worst points of the Great Recession.

We've not yet seen the light at the end of the tunnel for millions of workers. With no sign yet of a new relief package, the question is whether sheer momentum can keep pushing the economic recovery forward in this historically deep crisis."

1.59pm BST

Despite falling last week, more Americans are losing their jobs each week than at any time in the last recession.

During the 2008 crisis, the initial claims total jumped to 665,000 in a single week as companies laid off staff after the collapse of Lehman Brothers.

Initial jobless claims were below one million for the first time in 21 weeks. It may be two or three more weeks before the 4-week average gets there. The next "milestone" might be when claims fall below 665k, their peak in the last recession. pic.twitter.com/QoX5M4RYvP

1.47pm BST

The US jobless claims total is lower if you don't include seasonal adjustments.

Unadjusted, the initial claims figure is 831,856 - further below the one million mark.

The bad part about today's claims data is that we still saw 831,856 (unadj.)new people file for benefits.Thats after reopenings and lots of time to adjust to the post-covid new normal. 831K is still a staggering number and hints at how companies will be smaller on the other side

1.45pm BST

Business Insider's Carmen Reinicke has calculated that US jobless claims have fallen to their lowest level in 21 weeks:

Weekly jobless claims below 1 million for the first time in *21 weeks* https://t.co/jKB3rdbOS0

Jobless claims: improving relative to current crisis but still quite elevated relative to any other period in in which they have been measured in the past. https://t.co/eGuu7N6BU4

Another beat for US economic data:
Weekly jobless claims fell to 0.96 million, below the 1.1 mm consensus expectation;
15.48 million for continuing claims compared to 15.8 million.
Less positive:
Absolute levels remain historically-high;
Won't help resolve relief bill deadlock. pic.twitter.com/vGXUga4eHr

1.41pm BST

The US Department of Labor says:

In the week ending August 8, the advance figure for seasonally adjusted initial claims was 963,000, a decrease of 228,000 from the previous week's revised level.

The previous week's level was revised up by 5,000 from 1,186,000 to 1,191,000. The 4-week moving average was 1,252,750, a decrease of 86,250 from the previous week's revised average. The previous week's average was revised up by 1,250 from 1,337,750 to 1,339,000.

1.34pm BST

Newsflash: The number of Americans filing new claims for unemployment benefits has fallen below one million, for the first time since the Covid-19 lockdown.

The closely-watched initial claims total, just released, fell to 963,000 for the week to Saturday 8th August. That's down from 1.19m in the previous week, and a bigger fall than expected.

U.S. JOBLESS CLAIMS RISE BY 963,000 LAST WEEK, EST. 1.120 MILLION pic.twitter.com/urjMkz2CEC

US initial jobless claims dropped below one million last week for the first time since the outbreak began, and both initial and continuing claims were lower than consensus expectations (albeit still extraordinarily high) pic.twitter.com/8GvEdt1ylf

US Weekly Jobless Claims rise 963k, exp: 1.1m, prev: 1.18m

US Continuing Claims rise 15.5m, exp: 15.8m, prev: 16.1m

1.21pm BST

The Labour party is worried that Washington's intransigence on some tariffs will cost jobs in Britain.

Here's Emily Thornberry MP, Shadow Secretary of State for International Trade:

We welcome the withdrawal of tariffs on shortbread as well as the temporary reprieve for exports of gin, salmon and blended whisky, but that good news makes it all the more disappointing that punitive tariffs are being maintained on single malt whisky, knitwear, cheese and other key exports.

Coming on the back of this week's disastrous growth figures, the maintenance of those tariffs represents a double blow for hundreds of vital British businesses, especially in Scotland, and the tens of thousands of workers they employ.

1.00pm BST

Here's our Scotland editor, Severin Carrell, on America's refusal to drop tariffs on single malts:

The Scotch whisky industry has attacked the UK government for its inexplicably slow" action against hefty tariffs imposed on whisky imports by the US government.

In an unusually critical statement, the Scotch Whisky Association accused UK ministers of prioritising post-Brexit trade talks with the US rather than fight against the 25% tariffs imposed on Scotch whisky and other goods by the US last October, in a dispute over European subsidies for the planemaker Airbus.

12.59pm BST

The summer lull has certainly arrived in the markets (I just poked my Reuters terminal to make sure it was still on!).

Europe's main bourses are still slightly lower, with the FTSE 100 still down around 1%.

Markets fairly muted for jobless claims at 1330:

US Opening Calls:#DOW 27912 -0.21%#SPX 3371 -0.21%#NASDAQ 11152 -0.01%#RUSSELL 1577 -0.33%#FANG 4880 +0.58%#IGOpeningCall

12.41pm BST

Over in the US, former Treasury secretary Jack Lew is warning that America's recovery will falter unless a new stimulus package is agreed, fast:

"We are in a moment of crisis and the stalemate is playing with fire," says Jack Lew. "It's clear to me that the things we need to do are first-- start with dealing with the disease effectively...until we get our hands around it the economic crisis will continue." pic.twitter.com/BuTYxgDpLR

"We are facing a Fall where we are very likely to have a health crisis driving the economy in the wrong direction," says Former Treasury Secretary Jack Lew. "We need to put the policies out there to keep the economy from crashing." pic.twitter.com/Fpx072XA7M

"We're not at the end of this ... this delay is so dangerous is that it means all the things that have been propping up the economy will go away," says former Treasury Secretary Jack Lew. "Anyone who thinks trying to save money now is a good idea will pay for it later." pic.twitter.com/b0fjNaWmBg

12.17pm BST

The pound has nudged back over $1.31 today, after Britain's Brexit negotiator tweeted that a deal on the UK-EU future relationship could be reached next month.

Sterling has gained three quarters of a cent today, to $1.311, back towards the five-month highs seen earlier in August:

1/4 Looking forward to going to Brussels next week for Round 7 (sic) of the UK/EU negotiations with @EU_Commission @MichelBarnier
Here is the timetable.https://t.co/IPkSNgubDf

2/4 As always, we go in good faith to talk constructively about all the issues. Our assessment is that agreement can be reached in September and we will work to achieve this if we can.

3/4 As we keep saying, we are not looking for a special or unique agreement. We want a deal with, at its core, an FTA like those the EU has agreed with other friendly countries, like Canada.

4/4 The UK's sovereignty, over our laws, our courts, or our fishing waters, is of course not up for discussion and we will not accept anything which compromises it - just as we aren't looking for anything which threatens the integrity of the EU's single market.

11.39am BST

TUI's travails appear to support the IEA's forecast that jet fuel demand will remain weak while the pandemic continues.

Julie Palmer, partner at Begbies Traynor, fears that the holiday firm will be forced to cut jobs to survive the downturn:

The latest trading update from TUI highlights the extent of the damage that Covid-19 has had on the business, and as countries across the globe continue to restrict people's movement, it will be a difficult path to recovery for the company and the sector as a whole.

The travel giant has been forced to put its hand out for a bailout from the German government to help stay afloat, but it will need to address the concerns that consumers will have when travelling again, while trying to offer a unique experience amidst social distancing measures if it's going to stand any chance of recovery. Costs reductions must be a focus for the board over the next few months if the business is to have any chance of survival, which will likely add to the growing number of redundancies being made by UK firms."

11.32am BST

The pandemic has also driven holiday firm TUI into a steep loss, as my colleague Joanna Partridge explains:

Tui, Europe's biggest holiday company, made a loss of 1.1bn (994m) between April and June after the pandemic put a stop to travel and triggered a 98% fall in revenues.

The group, which began to take people on holiday again in mid-June, said the revival in demand was encouraging" but that summer bookings were 80% lower than last year and that it did not expect demand return to normal until 2022.

10.55am BST

This chart shows how the IEA have lowered their forecasts for oil demand for the rest of the year:

IEA cuts oil demand estimates for 3rd and 4th quarter as growth and travel estimates worsen.#OOTT pic.twitter.com/xHTuXQTkBP

10.42am BST

Transport group National Express has also warned that the pandemic is hurting demand.

National Express, which runs urban and long haul bus routes and more than 20,000 school buses in North America, has reported that passenger numbers plunged by 80% during the lockdown.

The year started extremely well with outstanding results in January and February. Covid-19 then had an immediate and unprecedented impact on all of our businesses from March onwards.

10.05am BST

The International Energy Agency has also cut its oil demand forecast for 2021, as the FT's David Sheppard explains:

The IEA's 2021 demand forecast was lowered by 240,000 b/d to 97.1m b/d, a level still some 3m b/d below the pre-crisis peak.

The IEA said it was the first downgrade in several months, reflecting the stalling of mobility as the number of Covid-19 cases remains high, and weakness in the aviation sector", in its monthly report.

9.47am BST

The IEA is now predicting that oil demand will plunge 8% this year, due to the pandemic.

Its new forecasts show that 91.9 million barrels will be needed every day in 2020, a fall of 8.1m bpd compared with 2019.

9.32am BST

Here's Bloomberg's Javier Blas on the IEA's new, lowe, oil demand forecasts:

OIL MARKET: @IEA says on its monthly oil market report that its balances show "that in June demand exceeded supply, and for the rest of the year there is an implied stock draw" | #OOTT pic.twitter.com/PVYuQP0m9r

The @IEA added that the "oil market's re-balancing remains delicate", with demand struggling (particularly for jet-fuel) due to new covid-19 outbreaks, while OPEC+ output increases (with a very notable over production from the UAE) #OOTT

9.26am BST

Newsflash: Demand for oil this year will be even weaker than thought, as the recent rise in Covid-19 cases hits economic demand.

So warns the International Energy Agency, which has cut its 2020 outlook by 140,000 barrels per day to 91.9m bpd.

After steadily rising since late May, new confirmed Covid-19 cases appear to be stabilising around 280 000 daily, the highest rate since the early days of the pandemic. Easing of the first wave of confinement measures was bound to lead to a resurgence of cases as normal activity resumed. In many countries, social distancing measures are being re-introduced along with some localised lockdowns. It remains to be seen if the increase in cases heralds a second wave or it is merely a regular fluctuation that we will see over time.

Recent mobility data suggest the recovery has plateaued in many regions, although Europe, for now, remains on an upward trend.

Revised data show that in April the number of aviation kilometres travelled was nearly 80% down on last year and in July the deficit was still 67%. With few signs that the picture will improve significantly soon, we have downgraded our estimate for global jet fuel and kerosene demand.

In 2020, demand will be 4.8 million barrels a day (mb/d), or 39%, below the 2019 level, and in 2021 the year-on-year recovery will be just below 1 mb/d.

9.04am BST

European stock markets have made an underwhelming start, with the Airbus tariff row lingering.

In London, the FTSE 100 is down around 1%, handing back half of yesterday's gains. That's partly because several stocks have gone ex-dividend' (meaning new shareholders are too late for the next payout).

FTSE -58pts but -22.3 is due to ex divis so not lagging that much

8.51am BST

Although America hasn't cut the tariffs on European goods, it has adjusted the goods affected.

And that means French and German jam makers face new levies when selling to the US, while tariffs on Greek cheese and UK sweet biscuits are lifted.

.@USTradeRep announces modest' changes to its @airbus retaliatiatory regime:

New tariffs on , jam.

Ends tariffs on & .

No new tariffs for Gin & .

Maintains 25% duties on whisky, liqueurs & cordials from , , , , . https://t.co/wQEgduVGND pic.twitter.com/GPdutz01MC

The US has shuffled some of the trade taxes around. Thus, users of German meat mincing knives are to be taxed, as are consumers of French jams. US consumers of French jams may be unaware of the looming taxation, owing to their habit of calling jam jelly".

8.48am BST

Neil Wilson of Market.com fears we could see fresh trade war tensions in the coming weeks, between Washington and both Brussels and Beijing.

US-China tensions are rearing their head again. Officials meet this Saturday to review progress of the phase one deal. White House economic adviser Larry Kudlow the deal was fine right now'.

Sticking with trade, the US is maintaining 15% tariffs on Airbus aircraft and 25% tariffs on an array of European goods, including food and wine, despite moves by the EU to end the trade dispute.

8.35am BST

The UK government is vowing to step up demands for the United States to drop tariffs on goods such as single malt Scotch whisky

British Trade Secretary Liz Truss has welcomed Washington's decision to resist new tariffs, but is disappointed that the existing levies haven't been ditched.

These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody's interests.

I am therefore stepping up talks with the U.S. to remove them as soon as possible."

I welcome decision not to impose tariffs on gin and blended whisky, and to remove tariffs on shortbread.

But there are still tariffs on goods like single malt Scotch. These tariffs are in no-one's interests.

I am in further talks with USTR to remove them asap.

8.10am BST

Shares in Airbus have fallen 3% at the start of trading in Paris, on disappointment that the US hasn't lifted its 15% tariff on its planes.

8.09am BST

The BBC's Douglas Fraser points out that the US have lifted one tariff, on sweet biscuits - a boost for Scotland's shortbread producers.

Airbus trade dispute update: US 25% tariffs continue on $7.5bn of EU + UK exports, including single malt #Scotch #whisky and knitwear.
@USTradeRep has withdrawn 25% tariff from shortbread, included in UK sweet biscuits'. Welcome news for Walker's of Aberlour and others...

There had been a threat to extend tariffs to further $3.1bn worth of exports from EU/UK to USA. Potential target list included UK salmon and blended #Scotch #whisky. Those threats not carried out, this time. @USTradeRep says it's seeking resolution of #Airbus subsidy dispute

8.08am BST

Karen Betts, chief executive of the Scotch Whisky Association, is urging the UK government to take a more active role in the dispute.

Betts says exports of single malts to the US have slumped by a third (blended whiskys aren't affected by the tariffs), which puts jobs at risk:

It's deeply disappointing to see that the 25% tariff on Single Malt Scotch Whisky exports to the US has been retained by the US government.

The tariff is inflicting huge damage on the Scotch Whisky sector, with exports to the US down 30% since the tariff came into effect and the industry grappling with losses now totalling around 300 million. These losses relate only to tariffs - the impact of Covid-19 has been serious and has compounded what is now a very serious situation for Scotch Whisky, with some brands forced out of the market and jobs in the industry and our supply chain now at risk.

7.58am BST

France's wine and spirit federation, FEVS, is also disappointed.

FEVS President Cesar Giron says:

We regret this decision which will continue to heavily penalise French exporters.

7.55am BST

Airbus is understandably disappointed that its planes still face tariffs at the US border, after it took steps to end the subsidy row.

It is urging European politicians to take a hard line with America, with spokesman Clay McConnell saying.

Airbus profoundly regrets that, despite Europe's recent actions to achieve full compliance, USTR has decided to maintain tariffs on Airbus aircraft - especially at a time when aviation and other sectors are going through an unprecedented crisis.

Airbus trusts that Europe will respond appropriately to defend its interests and the interests of all the European companies and sectors, including Airbus, targeted by these tariffs."

7.31am BST

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

U.S. Trade Representative Robert Lighthizer said the EU had not taken actions necessary to come into compliance with World Trade Organization decisions, and Washington would initiate a new process to try to reach a long-term solution.

Lighthizer's office said it would modify its list of $7.5 billion of affected European products to remove certain goods from Greece and Britain, adding an equivalent amount of goods from Germany and France.

The EU and member states have not taken the actions necessary to come into compliance with WTO decisions.

The United States, however, is committed to obtaining a long-term resolution to this dispute.

The Commission acknowledges the decision of the US not to exacerbate the ongoing aircraft dispute by increasing tariffs on European products."

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