European markets edge lower
With Wall Street falling back after several days of rises, investors were pausing for breath a week after Donald Trump’s shock victory in the US election.
The mixed picture from the UK employment data - jobless rate down, claimant count up - added to the uncertainty. But the pound held firm against the euro although it edged lower against a resurgent dollar. The US currency was boosted by the growing belief that the Federal Reserve is almost certain to raise interest rates next month, as well as the continuing expectation of a Trump spending boom. Chris Beauchamp, chief market analyst at IG, said:
The mood across most equity markets remains subdued, with modest losses being posted. Investors are evidently still cautious about the new [American] administration, with the steady drip of news relating to appointments and the like keeping the market in check. About the only thing still surging is the US dollar.
The final scores in Europe showed:
- The FTSE 100 finished down 43.02 points or 0.63% at 6749.72
- Germany’s Dax dropped 0.66% to 10,663.87
- France’s Cac closed down 0.78% at 4501.14
- Italy’s FTSE MIB fell 0.73% to 16,559.84
- Spain’s Ibex ended 0.56% lower at 8638.5
- But in Greece, the Athens market added 2.44% to 592.26
On Wall Street, the Dow Jones Industrial Average is currently down 73 points or 0.39%.
On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.
Ahead of Italy’s referendum next month, there is some unwelcome analysis from S&P, which paints a fairly uninspiring picture of the prospects for the country’s economy. It said:
The Italian economy is likely to achieve only slow growth of less than 1% of GDP per year over 2016-2018, say S&P Global Ratings economists in a report published today (“Only A Modest Recovery In Sight For Italy”).
“We don’t expect the Italian economy to return to its pre-crisis output peak before the middle of the next decade because productivity remains very depressed. Italy is the only European country not to have recorded any productivity gains since 2000,” said Jean-Michel Six, Chief Economist for EMEA at S&P Global Ratings.
Despite a significant fall of the euro rate in 2014 and early 2015, Italy’s real export performance has been lackluster and is lagging behind other eurozone countries. Italian real exports were 4% above their pre-crisis peak in the second quarter of 2016, which is still very modest compared to euro area partners that are 15%-25% above the pre-crisis peak.
The lack of dynamism in productivity that could have lifted overall potential growth and boosted foreign competitiveness, remains Italy’s major weakness, the report says. Competitiveness has suffered from a misalignment between stagnating productivity and rising wages, leading to a gradual appreciation of unit labor costs and of the real effective exchange rate. Labor market reform and attempts to address the high rate of nonperforming loans have yet to make significant progress in lifting growth.
“In the short term, the uncertainty surrounding the referendum on the senate reform in early December is likely to weigh on the business climate, said Mr. Six. “Looking ahead, the slow improvement in the labor market will support a modest rise in household consumption, while we expect investment to pick up gradually, albeit remaining highly vulnerable to setbacks.”
Oil volatile after stocks reports and Russian comments
Oil prices continue to be volatile, coming under pressure after more evidence of growing stockpiles but then recovering.
After the American Petroleum Institute reported a higher than expected stock build last week, comes a similar tale from the US Energy Information Administration.
The EIA said crude stocks rose by 5.27m barrels last week to 490.28m, compared to forecasts of a 1.5m increase.
Gasoline and distillate stocks - which were both forecast to fall - also rose.
But after falling further on these figures, crude recovered after Russia’s energy minister said he saw a big chance of Opec agreeing an output deal at its meeting at the end of the month.
So Brent crude, which had fallen as low as $46.25 a barrel, is currently up 0.6% at $47.17.
Updated
Germany's Schäuble dismisses Greek debt relief talk
US president Barack Obama might be pushing for debt relief for Greece, but unsurprisingly Germany disagrees (which should make Obama’s upcoming meeting with Angela Merkel interesting). Reuters reports:
Germany on Wednesday opposed calls for debt relief for Greece after U.S. President Barack Obama offered support for such a mechanism for the recession-hit euro zone state during a trip to Athens.
German Finance Minister Wolfgang Schäuble said late on Tuesday granting Greece debt relief would do it a disservice.
“Whoever says ‘we will relieve your debts’ is doing Greece a disservice,” the finance ministry confirmed Schäuble as saying after the Passauer Neue Presse daily reported it.
Schäuble’s comments were not made directly in response to Obama, a finance ministry spokesman added.
Athens signed up to a third economic bailout package of up to 86 billion euros last year but wants long-term debt restructuring to exit its crisis.
Germany, which has long said there is no immediate need for debt relief for Greece as it would discourage much-needed structural reforms, said it noted the comments from Obama, who flies to Berlin later on Wednesday.
“We have noted that President Obama has pointed to the importance of debt relief. The euro group agreed in May on a timetable on exactly that subject .. regarding measures for the short term, and later in 2018 for mid-term measures,” said government spokesman Steffen Seibert at a news conference.
In May, euro zone governments offered Greece debt relief in 2018 but left key details to be decided later in a compromise between Germany’s tough stance and the International Monetary Fund’s call for decisions immediately.
A finance ministry spokesman said there was nothing new to say. “Our position is unchanged. Obama’s visit has not changed anything,” he said at the government news conference.
Wall Street opens lower
The prospect of higher US interest rates has brought an end to the rally which has seen leading US shares hit new heights.
After rising for seven straight trading sessions in the run up and aftermath of Donald Trump’s shock US presidential election victory, the Dow Jones Industrial Average is currently down 55 points or 0.3%. The S&P 500 opened down 0.25% while Nasdaq was 0.4% lower.
The same sterling weakness that was made worse by the Bank Rate cut and QE of Jon Cunliffe #BoE #OpenMouthOperations https://t.co/V1lp1t9sqt
— Shaun Richards (@notayesmansecon) November 16, 2016
Back with the UK, and the Bank of England’s Jon Cunliffe has said recent currency movements had made setting interest rates move difficult. Reuters reports:
Sterling’s sharp fall since Britain voted to leave the European Union has made it harder to set monetary policy, BoE Deputy Governor Jon Cunliffe said on Wednesday.
Cunliffe said he fully backed the central bank’s neutral stance regarding its next move in interest rates, as announced earlier this month, and its latest quarterly set of forecasts which see a modest slowdown next year.
The British economy probably still needed interest rates to be negative in ‘real’ or inflation-adjusted terms, but the fall in sterling meant the BoE would not necessarily be able to stick to this, Cunliffe said in the text of a speech to be delivered at the University of Manchester.
US industrial production figures have come in slightly worse than expected.
It was unchanged in October compared to forecasts of a 0.2% increase. The September figure was revised down from a 0.1% rise to a 0.2% fall.
#UnitedStates Industrial Production month-on-month at 0.0% https://t.co/if5ZbL1j2Y pic.twitter.com/UdJ8Ll5Hba
— Trading Economics (@tEconomics) November 16, 2016
Updated
On his final day in Greece, US president Barack Obama repeated his belief that debt relief was vital for the country. The Athens News Agency - Macedonian Press Agency reports:
Speaking at the Stavros Niarchos Foundation on Wednesday, U.S. President Barack Obama once again highlighted the need for Greece’s creditors to agree to debt relief, in accordance with the advice of the International Monetary Fund (IMF), noting that the country, and especially its young people, needed to see hope and a future.
“The IMF has said that debt relief will be crucial to get Greece back to growth. They are right. It is important because if reforms here are to be sustained, people here need to see hope and they need to see progress.”
Young people, in particular, needed to know there is a future, there is an education, and jobs that were worthy of their potential, he added.
Obama giving his farewell speech lauding the virtues of #democracy in Athens 2day pic.twitter.com/bqyTgHU3G3
— Helena Smith (@HelenaSmithGDN) November 16, 2016
Obama also had time for a tour of the Acropolis:
Obama at the Acropolis pic.twitter.com/KTwsMuRIGH
— Josh Lederman (@joshledermanAP) November 16, 2016
At one point in his Acropolis tour, Pres Obama was heard to ask his guide "So, how is this all financed?" The response was not heard. pic.twitter.com/iGXM6Jly6o
— Mark Knoller (@markknoller) November 16, 2016
Obama tours the Acropolis Museum in Athens pic.twitter.com/4lSJckXs7S
— Josh Lederman (@joshledermanAP) November 16, 2016
And then it was off. Next stop: Berlin.
Back to reality. #Obama leaves for Berlin. #obama_athens pic.twitter.com/sUwCYDKW04
— Damian Mac Con Uladh (@damomac) November 16, 2016
Here’s IHS Markit on the UK employment data:
#UK #unemployment rate falls to 11-year low, but uncertainty about the future continues to restrain hiring https://t.co/dA2yCG5BU3 pic.twitter.com/vbE0lCEHUO
— Markit Economics (@MarkitEconomics) November 16, 2016
Over in Europe, and the latest on the draft budgets put forward by member states. Reuters reports:
Italy and five other countries are at risk of breaking European Union budget discipline rules with their 2017 draft budgets, the European Commission said in a statement on Wednesday.
The five other countries are Belgium, Cyprus, Lithuania, Slovenia and Finland.
“The Draft Budgetary Plans of these Member States might result in a significant deviation from the adjustment paths toward the respective medium-term objective,” the Commission said.
The medium-term objective is a budget balanced in structural terms, which means excluding one-off spending and revenue and the effects of the business cycle.
Italy’s structural deficit, which excludes one-off items and economic cycle swings in income and spending, has been rising every year since 2014 and is to jump to 2.2 percent in 2017 from 1.6 percent in 2016 and then further to 2.4 percent in 2018, according to Commission forecasts last week.
This goes clearly against EU rules which say that countries have to cut their structural deficit by at least 0.5 percent of GDP every year until they reach balance or surplus.
Italy says the higher structural deficit is due to extraordinary spending on migration and post-earthquake reconstruction. But the structural deficit indicator does not take into account such one-off items and the Commission called the explanation “not constructive”.
On Wednesday, European Commissioner for Economic and Financial Affairs Pierre Moscovici sounded more accommodating.
“The significant part of the deviation is due to the cost of the seismic activity in the country, very serious this year and to migration inflows,” Moscovici told a news conference.
“We will take that into account,” he said.
The pound’s renewed dip came after an early gain in the immediate aftermath of the UK unemployment figures. Chris Saint, Senior Analyst at Hargreaves Lansdown Currency Service, said:
Sterling has drifted lower against the euro and US dollar during European trading hours this morning, finding itself back around the €1.16 and US$1.24 levels by midday. There was some tentative support for the pound after today’s UK labour market figures, but the gains were short-lived...On the face of it the headline numbers suggest the jobs market has remained buoyant in the first few months since the EU referendum, although the data probably does little to alter the Bank of England’s future policy path at this stage as pay growth is still relatively contained.
The stronger dollar has helped send the oil price lower, after a surge in crude on Tuesday.
Talk of an informal meeting on Friday in Doha between oil producers to prepare plans for an output agreement later this month had sent crude soaring around 5% on Tuesday.
But the dollar strength, along with news from the American Petroleum Institute that US crude stocks jumped by 3.6m barrels last week rather than showing the expected 1.5m rise, has send crude slipping lower again.
Brent is down 1.13% at $46.42 a barrel while West Texas Intermediate is 1.2% lower at $45.23.
Dollar index hits 14 year high on rate expectations
The dollar continues to strengthen as the odds of a US interest rate rise next month continue to shorten.
Federal Reserve board member James Bullard is the latest to back an increase, saying that unless there are any major shocks, rates will be hiked. Given how the market has reacted to Donald Trump’s unexpected victory in the US election, it is hard to know what major shock would upset the market at this point.
But Bullard, who was in London as a UBS banking conference, added that a single rate rise might be enough to move monetary policy to a neutral setting.
So the dollar index - against a basket of currencies - has hit a 14 year high of 100.52, while the pound is down 0.17% to $1.2431.
Naeem Aslam at Think Markets said:
The strength in the dollar index does represent a risk for the emerging markets and it can also eat into corporate profit for the US firms. The current move is also massively backed by bets that the Fed is going to raise the interest rate and odds are standing at 94%. It is important to keep in mind that come in December, it is the tone of the Fed for the future trajectory of the interest rate hike which is going to impact the dollar.
Updated
And here’s our economics editor Larry Elliott’s take on the figures:
All things considered, the government will be happy with how the labour market performed in the first three months after the EU referendum.
Unemployment has continued to fall and at 4.8% of the workforce is at its lowest level for 11 years. Employment has continued to rise and there are plenty of jobs to be had. Ministers would not have expected anything better than that in the turbulent post-Brexit weeks and would have feared a much worse outcome.
That said, the tone of next week’s autumn statement will be that big challenges for the economy remain, and there are hints of possible trouble ahead from the latest labour market data from the Office for National Statistics.
UK unemployment falls to 11-year low Read more
One warning sign is the 49,000 increase in the number of economically inactive people – those who have dropped out of the workforce – in the latest quarter. Another is the rise of almost 10,000 in the claimant count measure of unemployment in October.
Here’s our report on the UK jobs data. Phillip Inman writes:
Unemployment dropped to its lowest level in 11 years in September in a further indication that Britain’s employers have largely shrugged off the June Brexit vote.
In the first health check of the labour market covering the three months since the referendum, official figures show the unemployment rate was 4.8%, the lowest since September 2005 and down from 4.9% in August and 5.3% a year earlier.
Employment remained at a record high of 74.5% and annual wages rises, excluding bonuses, also nudged higher to 2.4% from 2.3% in August and 2.1% in July, according to the Office for National Statistics.
But the claimant count in October jumped by its highest number since May, and analysts warned that the rate at which employers were taking on new workers had slowed dramatically.
The full story is here:
Updated
FSB: We need more support for self-employed
The government has asked Matthew Taylor, a former top advisor to Tony Blair, to investigate the whole issue.
These figures are another signal that more needs to be done to support the self-employed, including on developing a clear legal definition of self-employment and on issues like access to mortgages and income protection, and addressing the discrepancies between the self-employed and employees in the social security system, such as on maternity pay. FSB is pleased with the announcement of the Taylor Review and we are looking forward to inputting into this.”
Updated
Over in parliament, Theresa May has hailed today’s unemployment figures, at Prime Minister’s Questions.
May argues:
The unemployment figures show the strength of the fundamental of our economy
The employment rate has never been higher, and the unemployment rate is at its lowest in a decade.
May also reminded the Commons that search giant Google has just announced it will create 3,000 new jobs, as it builds a new HQ in Kings Cross.
Our Politics Live blog has full coverage:
Fears over real wage squeeze
Several economists are concerned that British pay packets will be gnawed by inflation next year.
Today’s labour market report shows that total pay rose by 2.3% over the last year, unchanged on a month earlier. That’s more than inflation, which fell to 0.9% in October.
But inflation is likely to jump to 2.7% in 2017, according to the Bank of England’s latest forecasts, which would erode earnings growth.
Martin Beck, senior economic advisor to the EY ITEM Club, fears that bosses won’t be able to provide inflation-busting pay rises:
“Annual pay growth remained at 2.3% on a three-month average basis, suggesting that workers are in a weak position to offset what is likely to be a sizeable rise in inflation over the next year.
Indeed, the capacity of employers to pay more will not be supported by continued weak productivity growth. Overall, prospects of the labour market taking a turn for the worse in the not-too distant future are looking more likely.”
TUC General Secretary Frances O’Grady is also worried that real pay growth is stalling, as inflation picks up
“Real pay growth is the slowest it’s been since early 2015. Wages are not growing fast enough to withstand the rise in inflation expected next year.
Without swift action from the government, working people could soon by paying the price for Brexit with another fall in living standards.
The jobless rate in Wales has inched up to 4.4%, from 4.3% a month ago, due to a 3,000 increase in unemployment.
But more encouragingly, 19,000 more people were in work than three months earlier.
Welsh First Minister Carwyn Jones argues that the principality is outperforming the rest of the country.
“Year on year, Wales has outperformed the rest of the UK when it comes to improvements in employment, unemployment and economic inactivity.
“Unemployment in Wales, at 4.4%, is lower than in England, Scotland or Northern Ireland and remains well below the UK average. Meanwhile the employment rate remains close to its record high, with 41,000 more people in work across Wales than at this same time last year. Unemployment amongst 18 to 24 year-olds in Wales is down 9.1% on the year and there are also 19,000 fewer people economically inactive than a year ago.
This graph, from the BBC, shows how Wales jobless rate dipped to just 4.1% over the summer:
Updated
Professor Geraint Johnes, director of research at The Work Foundation, has delved into the labour market report to find some interesting details:
The labour market statistics indicate that the labour market remains remarkably stable. The rolling three month measure of unemployment shows a fall of some 37,000 over the most recent quarter, with the rate of unemployment now at 4.8%.
The unemployment fall has been widely distributed across the country, though there were increases in both the North West and the East. For the UK as a whole, both full-time and part-time employee numbers increased by 31000.
The large gains in employment have all been in the service sector – notably in the retail, hospitality and professional/scientific/technical areas.
Britain’s public sector has continued to shrink, to its smallest size in at least 17 years.
Today’s figures show that there were 5.33 million people employed in the public sector in June, 13,000 fewer than in March. That’s the lowest since comparable records began in 1999
John Hawksworth, chief economist at PwC, also fears that unemployment will rise in 2017, even though there’s no sign of a Brexit shock yet:
“Unemployment tends to be a lagging indicator, and we could yet see a modest rise in the jobless total next year as uncertainty around the Brexit negotiations dampens business investment and slows overall economic growth.
But we do not expect the UK economy to go into recession, so would not expect any large increases in unemployment.
Claimant count rise spooks the City
Several City experts are concerned that the number of Britons signing on for unemployment benefit jumped by almost 10,000 last month.
Duncan Weldon of Resolution Group says it’s an ‘early warning sign’ of problems ahead.
Headline unemployment number is v good. But backward looking.
— Duncan Weldon (@DuncanWeldon) November 16, 2016
Claimant count and tax receipts are both good early warning signs for UK outlook and neither looks good.
— Duncan Weldon (@DuncanWeldon) November 16, 2016
I'd read slowing jobs growth as "UK near full employment" not "Brexit impact". Claimant count more concerning.
— Duncan Weldon (@DuncanWeldon) November 16, 2016
Ben Brettell, senior economist at Hargreaves Lansdown, fears that UK unemployment will rise in the next few months:
The UK’s labour market continues to surprise with its resilience to the Brexit shock. The unemployment rate fell unexpectedly to a new 11-year low of 4.8% in the three months to September. This is yet more evidence that the labour market and the wider economy have fared better than expected since June’s referendum.
However, there could be storm clouds gathering on the horizon. The claimant count – which in a quirk of the data is a more recent figure than the unemployment rate – jumped by 9,800 in October, with September’s figure revised upwards from 700 to 5,600. All in all, it does seem likely that unemployment could tick up somewhat during the coming months, though dire predictions made in the immediate aftermath of the vote appear wide of the mark.
David Cheetham of trading firm XTB.com is also concerned:
The rise in the claimant count change - which is a fairer representation of the current environment as this data point covers the period until the end of last month - takes the shine off the good news at the very least and possibly even usurps it.
In rising to 9.8k, this indicator came in at its highest level since November 2012 and when you also consider the upward revision of the prior print (to 5.6k from 0.7k) this could be taken as a warning sign that everything may not be quite as rosy as it appears for the labour market.”
Updated
ONS: No reduction in EU workers since Brexit vote
ONS statistician David Freeman has sounded an important note of caution.
He points out that employment growth is slowing; just 49,000 people found work in the July-September quarter, which is the slowest rate since March.
“Unemployment is at its lowest for more than ten years, and the employment rate remains at a record high. Nonetheless, there are signs that the labour market might be cooling, with employment growth slowing.
Freedman also points out that there’s no sign that the Brexit vote has cut the number of EU workers in Britain:
”The Labour Force Survey also includes information on the nationality and country of birth of workers. That limited evidence suggests the referendum outcome and subsequent devaluation of sterling has had little impact so far on the number of EU workers in the UK labour force.
As this chart shows, the number of workers from other EU countries in Britain rose by 221,000 in the last year, to 2.26m, while the number of nationals from non-EU nations rose by 20,000 to 1.23 million.
Government welcomes unemployment figures
Employment minister Damian Hinds has hailed the news that Britain’s unemployment rate has hit its lowest rate since July to September 2005.
Hinds says:
“Yet again we have a strong set of figures, with employment continuing to run at a record high and unemployment falling to an 11-year low.
“Growth is being fuelled by full-time professional jobs while wages are continuing to perform strongly, which underlines the resilience of the UK labour market.
“The measures we have taken have put our economy in a position of strength, and we will work to ensure more people can benefit from these opportunities as we build a country that works for everyone.”
Unemployment: the key points
New independent stats show the employment rate is the highest since records began in 1971 pic.twitter.com/H3AnLLk2oj
— DWP Press Office (@dwppressoffice) November 16, 2016
Today’s unemployment report shows that the number of people in work rose in the last quarter, and the number of people out of work fell.
That kept the employment rate at a record high, but
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There were 31.80 million people in work, 49,000 more than for April to June 2016 and 461,000 more than for a year earlier.
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There were 23.24 million people working full-time, 350,000 more than for a year earlier. There were 8.56 million people working part-time, 110,000 more than for a year earlier.
- The employment rate was 74.5%, the joint highest since comparable records began in 1971.
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There were 1.60 million unemployed people, 37,000 fewer than for April to June 2016 and 146,000 fewer than for a year earlier.
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The unemployment rate was 4.8%, down from 5.3% for a year earlier and the lowest since July to September 2005.
- There were 803,300 people claiming unemployment-related benefits in October, up from 793,00 in September.
Both men and women benefitted from the drop in unemployment, as this chart shows:
There are now 876,000 men classed as unemployed men, 15,000 fewer than for April to June 2016 and 82,000 fewer than for a year earlier.
And there are 728,000 unemployed women, 22,000 fewer than for April to June 2016 and 64,000 fewer than for a year earlier.
We have a small, and welcome, rise in average earnings too.
Average pay, excluding bonuses, rose by 2.4% annually in the July-September quarter, up from 2.3%.
But pay including bonuses rose by 2.3%, matching last month’s figures.
For Jul-Sep 2016 wages up 2.3% on a year including bonuses and 2.4% on a year excluding bonuses https://t.co/akklsvf2Wc pic.twitter.com/b8Rj7WcLGZ
— ONS (@ONS) November 16, 2016
Claimant count jumps
The number of people signing on for unemployment benefit has jumped, by much more than economists expected.
The claimant count rose by 9,800 in October, the ONS reports.
And September’s number has been revised up too; 5,600 people signed on for benefits, not the 700 first reported.
UK unemployment rate falls to 4.8%
Breaking: Britain’s unemployment rate has fallen to 4.8% in the three months to September.
That’s a new 11-year low, down from 4.9% a month earlier.
More to follow...
Barratt Development have sent a shiver through the UK property market this morning by revealing it has cut the price of some high-end London properties, worth over £1m.
Barratt CEO David Thomas told shareholders that.
“Market conditions in London at higher selling prices remain more challenging.
To mitigate these risks we have taken pricing action on a number of our sites in London.”
Thomas explains that prices have been cut by 5% to 10% on a few of its most expensive, centrally located London sites in zones one and two.
The company has 385 sites in the UK, about 20 of which are in London, with six or seven classed as higher-end in the capital.
The wider market, though, is still performing well since the Brexit vote, Barratt said, with “consumer demand is strong supported by good mortgage availability”
But the City isn’t impressed; Barratt shares have fallen over 2% this morning, with rival builders Persimmon and Taylor Wimpey shedding over 1%.
Updated
UBS: No plans to leave London
One of the big threats facing Britain’s labour market is the risk that City banks start to shift operations across to Europe, following the EU referendum.
So it’s encouraging that Swiss bank UBS isn’t poised to flee London.
Chairman Axel Weber told a conference this morning that:
“We are not planning to change anything any time soon and we will wait and see where the dust settles”
Weber (who used to run Germany’s central bank) also predicted that the Brexit process will be volatile, with the key decisions only made at the climax of negotiations.
Over in Athens, they’re getting ready to welcome US president Barack Obama to the historic Acropolis site - by imposing a massive security clampdown in the area.
#Athens #Acropolis: site now closed off in preparation for tour by #obama on second day of visit to #Greece by @POTUS
— Helena Smith (@HelenaSmithGDN) November 16, 2016
Obama will in one hour visit Acropolis. City center of Athens getting ready #obama_athens #ObamaGR #Greece #Grčija pic.twitter.com/CtyUoYqQE9
— Katja Lihtenvalner (@Lihtenvalner) November 16, 2016
Obama will then give a speech to the Greek people, which will probably cover Europe’s migration crisis, and Greece’s own financial crisis.
Last night, there were clashes in Athens as groups of protestors demonstrated against Obama’s visit:
Ocado’s share price is getting an early morning drubbing, down almost 5%.
The online supermarket is suffering because Morrisons have just announced a new deal with Amazon, to deliver shopping to its Prime customers within two hours (in parts of London and Hertfordshire anyway).
Morrisons’ shares jumped over 1% at the open, with ETX analyst Neil Wilson calling it a “potential game-changing tie-up”.
It’s pure profit for the supermarket - the scheme is “capital light” and will contribute to a £50m-£100m incremental profit opportunity outlined in the 2015/16 preliminary results.
This is a big money-spinner for Morrisons and gives it a massive edge over Tesco and Sainsbury in the home delivery market. With prices being slashed and competition fierce, this is the kind of deal that will make a big difference to the bottom line.
Retail analyst Mark Brumby says the service could be another blow to Ocado (which also has a delivery deal with Morrisons).
Morrison’s has launched a service at Amazon. Orders will delivered same day by Amazon. What role Ocado
— Mark Brumby (@brumbymark) November 16, 2016
There’s no drama in the financial markets this morning.
The pound is bobbing around the $1.247 mark this morning, up a measly 0.1%, while the FTSE 100 index has dipped by just 7 points to 6785.
Everyone’s waiting for the jobs report at 9.30am, says Conner Campbell of Spreadex, even though it may not be too dramatic
Both the unemployment rate and wage growth readings are forecast to remain unchanged at 2.3% (though it could creep a bit higher to 2.4%) and 4.9% respectively; the jobless claims figure, on the other hand, is set to see a bit more movement, rising to 1,900 from the 700 seen the month previous.
UK unemployment: What the City expects
RBC Capital Markets believe Britain’s unemployment rate may have actually fallen in the July-September quarter to 4.8%, a new 11-year low.
That would cause much celebration on Downing Street, I’m sure. But it doesn’t mean that next year won’t be tough, RBC say:
The unemployment rate could actually fall this month to 4.8% from 4.9%. The headline rate is the average of the last three single-month estimates and with the last two months both printing at 4.7% it looks highly likely that we see a tick down by one-tenth.
This does though feel more like a short-term quirk than reflective of the outlook where a more challenging macroeconomic outlook in 2017 should put some modest upward pressure on unemployment. Accordingly our expectation for the range of employment gains over the last three months is 60-100k as a central case.
Kit Juckes of Societe Generale doesn’t expect many fireworks at 9.30am, though, predicting that:
We’re looking for unemployment and wage growth both to be pretty unchanged, which wouldn’t provide any obvious support for the pound.
The Agenda: UK unemployment report; Obama in Athens
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britain’s labour market has been surprisingly resilient to the shock of the EU referendum, with the unemployment rate remaining low but wage growth somewhat modest.
So the big news this morning should be the latest jobs report, due at 9.30am. It will show if this trend continued into the Autumn, or if there are signs that Brexit is now hurting
Economists predict that the unemployment rate remained at 4.9% in the three months to September. That would match last month’s 11-year low, and reassure the City about the state of the UK economy.
The more timely claimant count report is expected to show that 2,000 more people signed on for unemployment benefit in October; any rise might indicate that firms are starting to cut jobs.
But the real story could come in the earnings figures. Average wages over the last year may have risen by 2.4% (both including and excluding bonuses), up from 2.3%.
We saw yesterday that inflation has dipped to 0.9%, but economists still expect it to rise over 2% in 2017. If wages don’t keep pace, households face another real wage squeeze soon.
Also coming up....
Barack Obama is due to give a speech in Athens, and tour the Acropolis, as his final tour of Europe continues.
Yesterday, the outgoing US president put more pressure on Greece’s creditors to offer meaningful debt relief -- an issue which may not be top of his successor’s agenda.
And in the corporate world, we’re getting results from housebuilder Barratt, engine-maker Rolls-Royce, commercial property firm British Land and City broker ICAP.
Updated
