US jobless claims fall to lowest since March; UK factory slump abates – as it happened

Graeme Wearden

from on 2020-10-22 15:51 (#59CAJ)

Rolling coverage of the latest economic and financial news

Latest: US initial jobless claims fell to 787k last week
Smallest weekly rise since March

Earlier:

4.50pm BST

US jobless claims have hit their lowest level since the Covid-19 pandemic hit America - but remain worryingly high.

Around 787,000 Americans filed fresh initial claims for unemployment support last week, with another 345,000 freelancers and self-employed workers applying for help through the pandemic assistance programme.

While today's decrease in initial jobless claims is a positive sign for markets, companies are announcing major layoffs due to lack of demand, so claims are likely to remain at historically elevated levels in absence of further fiscal stimulus.

As we enter the final quarter of the year, economic momentum has slowed from its summer peak. Some pockets of the economy have continued to hold up well-such as housing and retail sales, boosted by persistently-low rates and government aid, respectively. Yet other areas, such as restaurants and travel, have not given any indication yet of a pickup in growth.

Our latest Industrial Trends Survey show that conditions remain tough in the manufacturing sector, with output and orders still down compared to last quarter, albeit to a lesser degree.

Read more https://t.co/kJExaXacvH

4.46pm BST

After a very weak start, Britain's stock market has ended the day slightly higher.

The FTSE 100 index has closed 9 points higher at 5785, a gain of 0.16%, having earlier hit its lowest level since mid-May.

4.06pm BST

With half an hour of trading to go, European stock markets are on track for their lowest closing point almost four weeks.

The Stoxx 600 index is currently down 0.5% at 358.8, which would be the weakest close since 25th September.

3.47pm BST

Professor Costas Milas of Liverpool University is pleased to hear the Bank of England chief economist's coolness towards negative interest rates (see earlier post on Andy Haldane).

He reports that students on his economic/finance courses can find the concept tricky -- so how can the public grasp it?

These very students can use fairly well positive interest rates within a standard mathematical formula to value correctly government or corporate bonds. On the other hand, a significant number of the very same students fails to use negative interest rates correctly in the very same formula of bond valuation!

Which raises the following unpleasant question: If students, with a reasonable good knowledge of economics, cannot always grasp the functioning of negative interest rates how on earth can we be confident that these negative numbers will be understood by the public and therefore find their way in reviving the economy?

3.42pm BST

Markets have now taken a turn south, with the Dow now down 123 points or 0.4% to 28,087.

2.40pm BST

Wall Street trading has begun without much fanfare.

The Dow Jones industrial average has risen by 0.05%, or 15 points, to 28,225, while rising tech stocks have pushed the Nasdaq up by 0.35%.

We're on a good path..... We're coming closer."

Pelosi on MSNBC on talks with Mnuchin:
"We're pretty soon ready to put pen to paper ... the administration has agreed to a strategic plan, science-based, well-funded, to take on the virus ... we have other issues we need to deal with but we're on a good path."

Deal before election?
Pelosi: "That would be my hope. We could do it in the House. You hear what the leader of the Senate is saying but that's really up to the president ... we've made progress in this regard but we're still not there. But we can be."

Pelosi: "I'm still optimistic because I think both sides want to come to agreement. Otherwise why would we even be talking to each other? I mean this is not, shall we say, an enjoyable conversation. But in any event it's necessary to have."

2.22pm BST

Glassdoor senior economist Daniel Zhao is concerned that the US labor market is weak, as the economy enters the winter months:

The latest unemployment claims show signals that the economic recovery is skating on thin ice. Despite a swift rebound this summer in hiring as businesses and the economy reopened, that progress has now stalled heading into the cooler fall and winter months. UI claims have remained unchanged over the last three months, languishing near the same level since early August. On Glassdoor, job openings were 16% lower in September, from a year earlier.

The sluggish decline in UI claims is a stark reminder of what is at stake as stimulus negotiations drag on. Seven months into this crisis, millions of Americans still rely on unemployment benefits and millions more are exhausting benefits without another safety net. As millions are left treading water, all eyes are on Congress."

2.00pm BST

Shawn Donnan of Bloomberg puts the latest jobless figures into context:

Last week 1.1m Americans filed initial claims for unemployment. That's akin to everyone in Las Vegas and Tucson losing their jobs in a single week...

23m Americans have either applied for or are receiving some kind of jobless benefits. 3.3m of them are on long-term benefits. pic.twitter.com/wTIYWITftb

Initial #unemployment claims -55k to 787k (SA) in w-e Oct17 & -73k to 757k (NSA)

> PUA claims (NSA): 345k (+8k) but careful w/ data (FL +22k)

> Still very high 1.1 million new jobless benefits claimants!

> With fiscal relief package hopes dimming, this situation is worrisome pic.twitter.com/I8go3XnVPd

1.55pm BST

The big picture is that there are currently over 23 million Americans receiving some level of unemployment support.

That includes nearly 9m on the regular unemployment programme, 10m on the PUA support, and over 3m on the Pandemic Emergency Unemployment Compensation package (for those who have already received the maximum regular unemployment support).

Jobless claims better as
initial claims 787K (-55K)
continuing claims 8.373mln (-1.024mln).
Initial regular (NSA) + PUA down 64.9K, but still very high at 1.102mln. Some of the runoff of regular continuing claims rolling into extended benefits (EB) and (PEUC) +600K to 3.741mn pic.twitter.com/cCEG0AwF4p

1.47pm BST

Neil Birrell, Chief Investment Officer at Premier Miton, agrees that today's US jobless report is encouraging...but there's still a lot of work to do.

He points out that California has begun filing initial claims data again - after sitting out for several weeks with a data problem:

Initial jobless claims were quite a bit better than the median expectation, in fact they were better than the best expectation as California is back in.

However, the continuing claims were also good. But it is worth remembering that unemployment is way above any normal level for an expanding economy, four times higher than it was at the start of the year and well above the worst of the global financial crisis. That is a bit more sobering."

BREAKING! Strong beat on labor market numbers. US initial jobless claims fell to 787K last week, almost 100K below expectations. pic.twitter.com/RfFNnUbpjw

State unemployment claims dropped slightly last week to a still-high 787,000. Claims under the federal program for gig workers, etc. rose slightly to 345,440. The week of Oct. 3, half-a-million people exhausted their regular, 26-week benefits and claimed extended federal help.

Total initial claims (non seasonally adjusted) come in at 1.1 million today. A welcome drop compared to mid-Sept when initial claims hovered around 1.45 million. pic.twitter.com/YRCnc7JQRP

1.44pm BST

As well as the 787,000 fresh initial claims' for jobless support, another 345,000 Americans applied for help through the Pandemic Unemployment Assistance (PUA) plan.

That's around 8,000 more than last week.

1.41pm BST

This chart from Bloomberg shows how the number of new weekly US jobless claims is at a pandemic-era low....

1.36pm BST

Newsflash: The number of Americans filing new claims for unemployment benefit has fallen to its lowest level since the Covid-19 crisis began.

Around 787,000 new initial claims' for jobless support were filed last week. That's the smallest increase since March, when the US economy began to lock down.

#BREAKING
US Weekly Initial Jobless Claims: 787K Vs 860K Est.,
Previous No. 898K Revised down to 842K.#Jobless

BREAKING:

*U.S. JOBLESS CLAIMS RISE BY 787,000 LAST WEEK, EST. 860,000 pic.twitter.com/BvG3iZ5I4w

1.14pm BST

Sales of thermal clothing have boomed in recent weeks, as Britons gear up for a winter of socialising outdoors.

Whilst we would expect to see an increase in demand for our thermal products at this time of year, last week's figures far exceeded that of which we have ever before seen, with customers telling us they're investing in order to be able to spend more time outdoors, not just walking and enjoying the countryside but, where restrictions allow, socialising alfresco with family and friends."

12.30pm BST

After that shaky start, European stock markets have now clawed back their earlier losses.

The FTSE 100 is now flat on the day, having lurched to a five-month low in early trading. European markets have bounced back from their one-month low.

V big change to Job Support Scheme.

To keep employees in jobs firms now need to pay 20% for time they work plus 5% on top, with govt covering 75%. Under scheme announced last month govt covered just 45%

This changes incentives to keep people on a lot.

Again, though, it is very odd to have such a big announcement without, so far as I can see, any information on expected cost.

Nothing at all yet on HMT website https://t.co/bX42at65bH

AstraZeneca's Oxford COVID-19 vaccine accurately follows the genetic instructions programmed into it by its developers to successfully provoke a strong immune response, according to a detailed analysis carried out by independent UK scientists.

The vaccine is doing everything we expected and that is only good news in our fight against the illness," said David Matthews, an expert in virology from Bristol University, who led the research.

12.10pm BST

Over in parliament, chancellor Rishi Sunak has unveiled his new Covid-19 support package (the latest in a series of multi-billion schemes).

The key measures are

11.48am BST

Many of us may have imagined escaping the daily grind for a new life in the movies.

On landing it will be handed over to the airport which will preserve the aircraft for use as a commercial film set and training facility. The aircraft which will keep its Chatham Dockyard livery will be stored in public view on the airfield.

In time the aircraft will be opened up as an exhibition for visitors to experience up close the size and scale of the Queen of the Skies.

11.35am BST

CBI senior Martin Sartorius tweets that UK manufacturers are less downbeat than in July:

Our latest quarterly #ITS is noticeably less gloomy than it was in July (when we saw multiple survey-record low figures). Firms expect output to grow next quarter, but risks remain due to the resurgence in COVID cases across Europe and Brexit uncertainty https://t.co/gog8X3G5tN

11.26am BST

Rain Newton-Smith, CBI Chief Economist, warns that conditions remain tough in the manufacturing sector, even though output and orders are improving.

The government must stay on the front foot when it comes to providing support for the sector and wider economy.

It is more crucial than ever for the government to listen to the experiences and concerns of businesses and ensure support matches the tightness of local lockdowns. Additionally, signing a trade deal with the EU would help create some clarity that firms so badly need during this fraught period."

11.22am BST

Just in: The slump in UK manufacturing appears to be bottoming out.

The CBI's latest healthcheck on Britain's factories found that total new orders were broadly flat in the three months to October.

10.52am BST

My colleague Richard Partington has the latest details of the government's new support package for UK firms struggling in the pandemic:

Rishi Sunak is expected to announce a significant expansion of the furlough replacement scheme with the government paying a larger share of workers' wages to protect companies struggling with Covid-19 restrictions.

Sources in business and industry said the chancellor would cut the level of employer contribution companies must make to receive wage subsidies for their workers on the job support scheme (JSS).

10.39am BST

The Bank of England's chief economist has poured some chilly water of the idea that UK interest rates could be cut below zero imminently.

Andy Haldane said the Bank has been working on the possibility of negative rates, but that didn't mean they were close.

We at the Bank are doing work to ensure that that tool is in the toolbox.

That is not remotely the same as saying that we are about to deploy that tool. That will depend on the balance of costs and benefits,"

10.26am BST

After surging yesterday, sterling is losing some ground this morning.

The pound had dipped by half a cent against the US dollar to $1.3098, down from Wednesday's six-week high.

News that post-Brexit trade talks between the UK and European Union will resume is likely to encourage a continuation of the volatile Sterling trading patterns we have seen on the back of recent news headline flow.

Over the past weeks Sterling buying has emerged on the merest hint of progress as traders keep their ear to the ground for any signs of a breakthrough. With a sense of optimism in the air, the market does not want to miss out on the anticipated Sterling rally on a last minute deal."

10.07am BST

Here's AJ Bell investment director Russ Mould on this morning's market moves:

The chances of a stimulus plan being approved in the US ahead of the Presidential election looks increasingly slim and this is putting pressure on equity markets.

A fall in the US was matched in Asia, which was also hit by a downgrade from the International Monetary Fund, and Europe has also opened in the red,"

10.03am BST

The Covid-19 crisis has forced Shaftesbury, the West End landlord, to launch an emergency 300m fundraising plan.

In common with many city centres across the world, the Covid-19 pandemic and the measures to contain it have had a significant impact on London and the West End. The continuing restrictions implemented by the Government, and the uncertainty regarding their duration and extent, has had, and continues to have, a material adverse effect on normal patterns of activity and business in the West End.

The Group has seen a material deterioration in domestic and international footfall and trading conditions faced by its food, beverage and retail occupiers. Office occupiers, particularly those with direct or indirect exposure to consumer-facing businesses, and residential tenants have also been affected, but to a lesser extent.

9.49am BST

Newsflash: One in six UK hospitality companies face a severe risk of insolvency' as the Covid-19 crisis hammers the sector.

That's according to the latest survey of the UK economy from the Office for National Statistics.

9.21am BST

Consumer goods giant Unilever continues to perform well through the pandemic, thanks to strong demand for hand cleaners, home hygiene products and ice-cream.

In North America, market growth continued to be driven by elevated demand for foods consumed at home. European markets saw a mixed picture on growth and a challenging pricing environment. In China, growth improved slightly compared to the second quarter.

After a strict lock-down earlier in the year, India saw a pick-up in economic activity, even though cases of Covid-19 continued to increase. In Indonesia and Latin America markets contracted in the third quarter.

Our retail foods business grew double digit and tea saw mid-single digit growth as in home eating occasions continued at elevated levels. Hellmann's grew mid-teens, with Hellmann's Vegan now available in 30 markets.

Sales of ice cream grew, driven by both volume and price. Mid-teens growth of in home ice cream, led by brands including Ben & Jerry's and Magnum , more than offset the decline in out of home ice cream sales.

8.55am BST

The FTSE 100 has now fallen by almost 5% over the last five weeks, as fears of a second wave of Covid-19 cases have risen.

As the chart below shows, it fell sharply back on September 21. That was the day that the UK's Covid-19 alert level was raised, and the government's chief scientific and medical advisers warned that the country had turned a corner" for the worse.

8.39am BST

There's a rather gloomy mood in the City today, as investors watch the FTSE 100 fall to levels not seen since the UK economy was emerging from lockdown.

Fiona Cincotta of City Index points out that the economic pain of the pandemic is rising, as new restrictions are imposed.

Covid cases in the UK and across Europe continue to surge. More areas of the UK are moving into the strictest Tier 3 lockdown, in a move to stem the spread of the virus but will also derail the fragile economic recovery of those areas and potentially the UK as a whole.

The tighter restrictions come as the FCA warns that around 12 million Britain's are likely to struggle with bills and in repayments as the covid pandemic continues.

With the pandemic firmly in everybody's life again and the major macro event of the year just weeks away from its final decision, markets will probably trend more volatile and tack in a defensive manner.

FTSE down in a new 5-month low. Watch descending channel for potential support down below pic.twitter.com/7Wpgl9TOWg

At 8.05am - FTSE 100 - 5,742.72 -33.78 (-0.58%) - IAG down 4.95% at 95.48p - Unilever +0.64% - The mood is turgid - Covid19, global debt, US stimulus package delayed, earnings mixed and market has "a monkey on its back!"

8.32am BST

The latest rise in Covid-19 cases, and the lack of a US stimulus breakthrough, are both weighing on markets across Europe.

The Stoxx 600 index, which tracks the largest European companies, has fallen by 1% to its lowest level since late September.

8.25am BST

Newsflash: Britain's FTSE 100 index has slumped to its lowest level since early May, hit by worries over the economic cost of Covid-19.

The blue-chip index has fallen by 50 points, or nearly 1%, to 5723 points - a five-month low.

8.18am BST

The Covid-19 crisis has dragged airline group IAG, the owner of British Airways, deep into the red - and forced the group to cut capacity over the next few months.
IAG told the City this morning that it made a 1.2bn loss in the last quarter - worse than expected - as the pandemic continues to hammer the air travel industry.

Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of COVID-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travellers from an increasing number of countries.

At the same time, initiatives designed to replace quarantine periods and increase customer confidence to book and travel, such as pre-departure testing and air corridor arrangements, have not been adopted by governments as quickly as anticipated.

British Airways' parent company IAG has announced its flight capacity between October and December will be "no more than 30%" of what it was during the same period in 2019.

NEW: BA owner IAG reports loss of 1.3 billion in July to September

Revenue 83% to 1.2bn from 7.3bn last year

Loss was swing from 1.4bn profit last year

Passengers 88% on last year

Capacity for October to December will now be just 30% of last year

7.53am BST

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

Stop me if you've heard this one before, but fears over the Covid-19 pandemic and anxiety over the economic recovery are weighing on the markets today.

European Opening Calls:#FTSE 5750 -0.46%#DAX 12491 -0.53%#CAC 4821 -0.69%#AEX 555 -0.45%#MIB 18961 -0.66%#IBEX 6781 -2.12%#OMX 1811 -1.65%#STOXX 3164 -0.53%#IGOpeningCall

On the coronavirus, new records in cases were set across Europe yesterday as governments continue to re-impose restrictions on their citizens.

Here in the UK, a record 26,707 cases were confirmed, while the number of hospitalisations in England rose above 6k for the first time since late May. Elsewhere, both Italy (15,199) and the Netherlands (8,789) also reported new highs, and Spain has become the first nation in Western Europe to record 1 million coronavirus cases in total.

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