FTSE 100 ends at highest close since June
After another strong day’s trading, the UK’s FTSE 100 index has finished at its highest closing level since 23rd June.
The blue-chip index closed up 110 points at 6296 points - a jump of 1.79%.
Earlier in the session, it briefly traded over 6,300 points for the first time since July.
Today’s gains adds to Monday’s 4.67% jump, and extends a remarkable rally that began at the start of last week.
Today’s rally adds roughly £28bn to the FTSE 100’s value -- on top of the £70bn it gained on Monday. Quite a couple of days!
Telecoms firm BT ended the day as the top riser, up 12%, along with packaging firm DS Smith (+7.7%). Croda gained 7% after securing a contract to supply chemicals to package Pfizer’s Covid-19 vaccine.
Travel and transport companies also posted more gains, with jet engine maker Rolls-Royce up 7% at the close, and IAG rising 5.8%.
But investors shunned tech stocks again. Online grocery business Ocado fell 5%, while Scottish Mortgage Investment Trust (which holds stakes in several tech giants) slid 6.7%.
Eugene Barbaneagra, Portfolio Manager for the Traditional Strategies Group at SEI, explains this rotation:
“Reports about Pfizer’s vaccine has created a massive short covering. Travel stocks, value and small caps are rallying hard.
This is good news for a long-term investment view—but bad news for long-duration overpriced positions, such as growth without earnings.”
European markets also ended broadly higher, with France’s CAC jumping 1.5% and Germany’s DAX up 0.5%.
On that note, it’s time to wrap up. Here’s some of today’s main stories:
Goodnight. GW
Updated
Nearly 190 jobs are at risk at the Petroineos oil refinery in Grangemouth, Scotland, as its owners look to scale back operations at the site following the slump in demand for fuel.
The Herald newspaper has the details:
Bosses at the Petroineos plant, established almost a century ago, said they will restructure operations in the wake of falling demand for fuel.
Two production plants at the site, which have not been operational since the lockdown in March, are being mothballed, the company said.
It said the move will reduce future operating costs at the site.
Petroineos is a joint venture between Ineos Group, the petrochemicals giant controlled by billionaire tycoon Sir Jim Racliffe, and Chinese state oil firm PetroChina.
Petroineos Refining chief executive Franck Demay has said reconfiguring the plans will kept secure its future:
“We firmly believe that only by taking action now will we preserve one of Scotland’s last large manufacturing sites and a significant contributor to the Scottish economy.”
Another one bites the dust: PetroIneos, the owner of the 200,000 bpd Grangemouth refinery in Scotlan is shutting around 1/3 of the plant's capacity in response to the drop in demand due to #Covid_19 and bleak long-term outlook for #oil. #OOTT
— Ron Bousso (@ronbousso1) November 10, 2020
The Nasdaq has now dropped by more than 2% today, as vaccine optimism triggers a rotation out of tech stocks and into ‘value’ stocks like industrials and energy firms.
As Marketwatch puts it:
The Nasdaq, was under pressure as progress toward remedies and treatments for the coronavirus has investors selling some of the biggest pandemic-era winners and using the proceeds to buy assets that might benefit from the most from a successful vaccine.
U.S. stocks putting in mixed performance as vaccine progress sparks rotation https://t.co/ViTGq9xlKD
— MarketWatch (@MarketWatch) November 10, 2020
A look at the risers and fallers on the Dow Jones industrial average shows that vaccine optimism is driving a rotation in the markets today.
Aerospace manufacturer Boeing is the top riser, up 6%, followed by retail group Walgreen Boots (+5%). Conglomerates Honeywell (+2.7%) and 3M (+2.3%) and construction machinery maker Caterpillar (+2.2%) are gaining more ground.
Chemicals firm Dow Inc and oil producer Chevron are also up over 2%.
But enterprise software maker Salesforce.com (-4%) and tech giant Microsoft (-2.7%) are among the fallers.
Fawad Razaqzada, analyst at ThinkMarkets, says the Pfizer encouraging vaccine trial data is driving investors into ‘value’ companies (whose shares have been worst hit by the pandemic).
Today marks the second day that we are seeing the spread between momentum and value widened significantly. Investors finally seem happy to rotate out of the work-from-home plays in the tech sector, and into stocks that rely on economic growth, which had underperformed during the post lockdown melt-up.
Yesterday’s announcement from Pfizer on the progress made in coronavirus vaccine seems to have been a game changer, even if experts warn that production and distribution may take time. The markets always try and price in future outcomes, so the reaction makes some sense, even as the virus may not be ready until the middle of 2021.
Updated
But back in London, stocks are pushing higher in afternoon trading.
The UK’s FTSE 100 has now jumped over the 6,300 point mark for the first time since late July. That’s a gain of 114 points, or 1.85% for the day.
Other European markets are also strengthening, with France’s CAC up 1.8% and Germany’s DAX 0.9% higher.
Wall Street opens mixed
Trading has begin on Wall Street, but traders aren’t taking their cue from London.
Although the Dow Jones industrial average has risen a little, the S&P 500 and the Nasdaq are both in the red - with technology stocks among the fallers.
- Dow: up 78 points or 0.27% at 29,236
- S&P: down 21 points or 0.6% at 3,529
- Nasdaq: down 152 points or 1.3% at 11,561.
Wall Street hit record highs exactly 24 hours ago, after the good news from Pfizer’s vaccine trials. But shares dropped during the session, as traders pondered whether it reduced the chances of a major new US stimulus package.
Updated
Croda shares hit record high after Pfizer deal
Shares in specialty chemicals firm Croda have jumped to a record high in London, after it announced it has signed a contract to supply Pfizer with an “innovative delivery system” for its COVID-19 vaccine candidate.
Croda told the City that it will supply Pfizer with “four component excipients used in the production of the vaccine candidate”.
Excipients are the pharmaceutical inactive ingredients which treatments, such as vaccines, are combined with before being supplied (because a patient will only need a small amount of the active ingredient).
As Croda explains:
Excipients are substances that serve as the vehicle or medium for a drug or other active substance to be delivered.
Lipid systems provide a route to delivery of novel mRNA drugs and vaccines, by which a disease specific antigen can be coded into cells and recognised by the body’s immune system, as an alternative to conventional vaccine approaches.
Croda’s CEO, Steve Foots, says the company is :
“I’m very proud of Croda’s involvement in the battle to fight the most significant pandemic that we have seen in a generation.
The application of our innovative capabilities is testament to the strong progress we have made to create industry-leading drug delivery systems, focused on developing speciality excipients and adjuvants to improve the effectiveness and stability of complex drug actives and vaccines.
Shares in Croda have jumped 7% to £66.50, a new record high.
Croda shares soar by nearly 8% after it reveals a deal with Pfizer to supply novel excipients used in the manufacture of a COVID-19 vaccine candidate.
— Daniel Coatsworth (@Dan_Coatsworth) November 10, 2020
Back in August, Yorkshire-based Croda completed its acquisition of pharmaceutical firm Avanti, which develops and produces high-purity polar lipids used in the delivery system for complex drugs.
It adds:
The contribution from this contract is already included in Croda’s trading expectations for 2020, including in its guidance of the impact of the Avanti acquisition.
If Pfizer’s publicly indicated vaccine doses for 2021 were to be required, the sales value of Croda’s contract in 2021 could be of the order of $100 million.
Our economics correspondent Richard Partington has written about how the jump in UK unemployment shows Rishi Sunak should have moved faster to extend the furlough scheme:
Back in September, the chancellor was still hoping the summer reopening of the economy would be enough to kickstart the jobs market, as he steadily scaled back the support programme.
Despite repeat warnings from business leaders, Sunak insisted it was not right to endlessly extend furlough. Hard choices needed to be taken to help protect the public finances. “As the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough,” he said.
The words would come to haunt the chancellor on Halloween. Five hours before the scheme was due to end, it was clear the second Covid wave and tougher new restrictions would require a screeching U-turn.
The trouble now for Sunak is that his actions will be criticised for coming far too late for thousands of people.
Early figures from HMRC suggest 33,000 people were removed from company payrolls in October, at a time when Sunak still insisted furlough would close at the end of the month. The replacement programme – tossed from the drawing board last week after several rewrites – wasn’t enough for these workers.
Netflix has poached Anna Mallett, the chief executive of ITN, which produces news for ITV, Channel 4 and Channel 5, to run its international studio operations as the streaming giant pours billions into making its own TV shows and films.
Mallett, who will leave ITN after less than two years, was previously chief operating officer and managing director of productions at BBC Studios.
In an internal email to staff she said that the offer made by Netflix, which spends $18bn (£14bn) annually making and licensing TV shows and films watched by almost 200 million subscribers, was one that she couldn’t refuse.
“It is with very mixed emotions that I write this email,” Mallett said in an internal message to staff.
“My intention had always been to stay with ITN long-term, but I have been offered an opportunity to join one of our clients, Netflix, which in the end, I felt I simply couldn’t turn down.”
NEW: Netflix has poached Anna Mallett, the chief executive of ITN - maker of news for ITV, C4 and C5, to take a role running its studios operations (originals at Shepperton etc).
— Mark Sweney (@marksweney) November 10, 2020
Airline chief Michael O’Leary is also optimistic about a Covid-19 vaccine, predicting today that it could mean a less disrupted 2021 summer holiday season than feared.
Reuters reports that O’Leary, CEO of Ryanair, told the WTM Virtual travel conference that Pfizer’s vaccine news was the “first bit of sunshine we’ve had for the past 12 months”.
“There’s reasonable optimism now that summer 2021 will get back to some degree of normality.”
The Ryanair boss predicted that traffic could recover to 75% to 80% of pre-crisis levels by summer 2021 - compared to the broader 50%-80% range he’d suggested last week.
✈️ NEW: Ryanair expects traffic to get back to 75-80% of pre-crisis levels by summer next year
— Scott Beasley (@SkyScottBeasley) November 10, 2020
O’Leary added that Europe would see “an enormous snap-back” in intra-European beach holiday travel as soon as confidence returns.
And if so, his wife Anita could be near the front of the boarding queue.
Reuters explains:
“Mrs O’Leary is very keen to get back to the Algarve, and I suspect she’ll be there about 2.5 nanoseconds after the restrictions are lifted,” he said.
“Frankly I think she’s reflective of the overwhelming majority of Europe’s population.”
“Mrs O’Leary is very keen to get back to the Algarve, and I suspect she’ll be there about 2.5 nanoseconds after the restrictions are lifted," - Vaccine news lifts Ryanair's summer 2021 confidence w/@conorhumphries https://t.co/npy5XYGDQM
— Laurence Frost (@Laurence_Frost) November 10, 2020
Updated
Back on vaccines... Paul Dales of Capital Economics explains that a successful rollout would accelerate the recovery, and limit the jump in unemployment:
An effective COVID-19 vaccine would dramatically improve the economic outlook. It may allow GDP to rise to its pre-virus level a year earlier than otherwise and mean that the unemployment rate peaks at 7% next year instead of 9%.
But while this would reduce the need for more Quantitative Easing (QE) and/or negative interest rates, we doubt the Bank of England would reverse QE or raise rates for many years.
Executive Vice-President Margrethe Vestager, in charge of competition policy, says Amazon must not distort competition -- either by favouring its own products, or using data from independent vendors to sharpen its offering:
“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition. Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers.
The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services.
With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.”
EU hits Amazon with antitrust charges over merchant data
Over in Brussels, European regulators have charged Amazon with distorting competition in the online retail sector.
Following an investigation, the Commission has concluded that Amazon “systematically” uses data from independent vendors on its marketplace to boost its own retail business -- which competes directly.
Outlining its Statement of Objections, it says:
The Commission’s preliminary findings show that very large quantities of non-public seller data are available to employees of Amazon’s retail business and flow directly into the automated systems of that business, which aggregate these data and use them to calibrate Amazon’s retail offers and strategic business decisions to the detriment of the other marketplace sellers.
For example, it allows Amazon to focus its offers in the best-selling products across product categories and to adjust its offers in view of non-public data of competing sellers.
The Commission also opened a second formal antitrust investigation into Amazon’s business practices. It will probe whether Amazon gives preferential treatment to its own retail offers and those of marketplace sellers that use its logistics and delivery service.
It says:
In particular, the Commission will investigate whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users, under Amazon’s Prime loyalty programme, lead to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services.
Daniele Pinto, senior EU/UK competition paralegal, has tweeted the key points:
.@EU_Competition issues Statement of Objection against @Amazon for Abuse of Dominant Position in its use of #data relating to independent sellers. Commission also opens secondary investigation into Amazon e-commerce practices re the "Buy Box". #Antitrusthttps://t.co/hvlORxAVj6
— Daniele Pinto (@DanielePinto) November 10, 2020
"The Commission takes issue with @Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon's own retail business, which directly competes with those third party sellers."
— Daniele Pinto (@DanielePinto) November 10, 2020
Effectively @EU_Competition maintains that @Amazon uses the non-public data of independent sellers operating on its Amazon Marketplace platform in order to give an advantage to Amazon's direct sales to consumers, which compete with those independent sellers.
— Daniele Pinto (@DanielePinto) November 10, 2020
Updated
Across Europe, energy companies, banks and property firms are in demand again, while the tech sector remains out of favour.
That shows that investors are still anticipating a return to more normal economic conditions - rotating out of ‘stay at home’ stocks, into the ‘back to work’ trade.
Neil Wilson of Markets.com points out that the markets are a little more cautious today, but still hopeful that a Covid-19 vaccine will be a real game-changer
First the relief, now for a wee dose of reality. Stock markets are looking a little more cautious after yesterday’s massive surge on news that Pfizer and Biontech have a vaccine that is 90% effective – investors will now show a tad more caution that the kneejerk rally is out of the way. Markets have a habit of overshooting on the way down, and on the way back up. Nevertheless, an effective vaccine changes the game for investors, at the very least in terms of relative valuations and the premium we are willing to pay for growth.
We have a lot more clarity now than a week ago for two big reasons. Joe Biden is all but certain to become the next president of the United States. More importantly, a vaccine is coming. The worst fears - of enduring year after year of masks, of having semi-permanent lockdowns and restrictions on our liberties lasting for ever - should not come to pass. All we need now is a Brexit deal this week as the cherry on the cake. What we in Britain and Europe need more than anything is a confidence injection – and a working vaccine does that.
European stock market are more subdued today, having surged to eight-month highs on Monday in a share-buying scramble.
Germany’s DAX index is down 0.1%, while Italy’s FTSE MIB has dipped 0.4%.
The Paris market is strong, though, up another 0.9% - lifted by Unibail-Rodamco-Westfield. It has surged 25% after investors dramatically rejected a planned €3.5bn rights issue (details here) by Europe’s biggest shopping centre owner.
Travel companies are having another strong day, with cruise operator Carnival up 9.8% and holiday firm TUI gaining 11% this morning.
SSP, which runs Upper Crust and Caffè Ritazza branches across Britain’s railway stations and airports, are 15% higher - having surged 51% on Monday.
Cinema chain Cineworld has jumped by another 36%. Its screens are currently closed in the UK and US, with lockdown restrictions leading to a dearth of new releases.
Travel operator Firstgroup, which runs UK bus and train services plus Greyhound coaches and the famous yellow school buses in America, are up 10%.
Traders are clearly optimistic that effective Covid-19 vaccines will be rolled out soon, given that the Pfizer/BioNTech candidate has performed so well in medical trials.
Property group Land Securities is also in the risers, up 8.4%, after its latest financial results.
My colleague Julia Kollewe explains:
Land Securities, one of Britain’s biggest property companies, has written down the value of its portfolio by almost £1bn but said interest in the London office market remained strong, with a growing focus on health and wellbeing.
The pandemic has led to a surge in the number of people working from home, but Mark Allan, the Landsec chief executive, was confident that demand for office space would hold up.
“The investment market for high-quality London office assets, such as those owned by Landsec, has remained robust throughout the pandemic and there is little sign of that interest waning,” he said.
FTSE 100 jumps again amid vaccine hopes
The stock market rally is picking up pace again, as investors continue to cheer yesterday’s positive Covid-19 vaccine trial news from Pfizer and BioNTech.
Britain’s FTSE 100 index has now jumped by 1.7% today to 6292 points, a gain of 106 points today.
That’s its highest level since mid-August, adding to yesterday’s 4.6% surge (the best since March).
Today’s top risers are still Rolls-Royce (+18%) and airline group IAG (+9%), on optimism that the travel industry will recover in 2021.
Oil giants BP (+7.5%) and catering firm Compass (+5.5%) are also in the risers.
The FTSE has now risen by over 12% during November -- lifted first by relief over the US election, and then driven sharply higher yesterday as global markets hit record highs.
David Madden of CMC Market explains:
The FTSE 100 hit its highest level since mid-August as the bullish news with respect to a possible Covid-19 vaccine is still driving sentiment. Yesterday, it was revealed that a potential vaccine for the coronavirus achieved a success rate of more than 90% in its late stage trials.
The news promoted a huge round of buying, and sectors that underperformed on account of the pandemic – airlines, leisure, and transport – outperformed yesterday and again today. There is still a long way to go with respect to the drug in question being given regulatory approval, but traders clearly have high hopes for the medication.
Britain’s hospitality sector is urging the government to provide more support to help businesses through the crisis.
UKHospitality chief executive Kate Nicholls is concerned that the government will no longer pay a £1,000 Job Retention Bonus in February for taking back a furloughed employee (because the furlough scheme is extended to March instead).
Nicholls says this will hurt some companies, who had planned to bring staff back this autumn and qualify for the JRB early next year.
“The figures released by the ONS today underline the dreadful hit that hospitality has taken during this crisis and reinforces the urgent need for targeted support.
“Our sector has seen the highest fall in jobs of any. We are entering another period that is likely to be incredibly difficult for us. Businesses are in lockdown once again and when they do reopen, it will be back into a severely restrictive environment.
“Extension of the furlough scheme will provide some protection but scrapping the Job Retention Bonus Scheme is a major blow at a time when things could not be tighter – dramatically impacting on cashflow and potentially making businesses technically insolvent. Furlough will still mean that employers must pick up the cost of National Insurance Contributions (NICs), while receiving no revenue. The majority of businesses are operating at a loss, with little to no financial reserves and the prospect of a bleak winter ahead.
“Government support should recognise that hospitality is being asked to operate under the toughest restrictions of any sector and being given the highest mountain to climb in order to survive – we need a new approach from 3rd December.”
Policy is moving so fast it is difficult for companies to keep up but it is clear that last minute withdrawal of the CJRS bonus will see redundancies spike in hospitality as it is now too costly to use furlough https://t.co/oMBAYDKB6F
— Kate Nicholls (@UKHospKate) November 10, 2020
On this point, the government has said:
There are currently no employer contribution to wages for hours not worked. Employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. For an average claim, this accounts for just 5% of total employment costs or £70 per employee per month.
In Germany, economic morale has dropped as worried about a double-dip recession grew.
The Zew Institute’s gauge of investor sentiment, released this morning, dropped to 39 points from 56.1 in October. That shows that the new lockdown measures imposed to slow the spread of Covid-19 have increased uncertainty.
ZEW President Achim Wambach said the data suggests Europe’s largest economy is slowing:
“Financial experts are concerned about the economic impact of the second wave of COVID-19 and what this will entail.
“There is also the additional worry that the German economy could head back into recession.”
The survey took place before yesterday’s uplifting news from Pfizer and BioNTech, but it does still underline that the summer recovery has tailed off.
#Germany ZEW Economic Sentiment Index at 39 https://t.co/2TOP8G26fS pic.twitter.com/uEFtIB1zyR
— Trading Economics (@tEconomics) November 10, 2020
🇩🇪November #ZEW shows #German #economy edging closer to #recession territory again pic.twitter.com/LebkCAc3x9
— Aila Mihr (@aila_mihr) November 10, 2020
Here’s a neat chart from professor Costas Milas of Liverpool University, showing how redundancies have jumped even as the economy has recovered from the lockdown:
He explains:
I plot together UK GDP, claimant count and vacancies - all relative to the pre-pandemic period (October to December 2019 average value). Redundancies continue to rise exponentially even as GDP returns, slowly, to its pre-pandemic level.
Some slightly good news on the claimant front, however. This seems to have ‘stabilised’ to about 115% above its pre-pandemic level. The bad news, of course, is that this 115% is unacceptably high....
At 4.8%, the UK unemployment rate is still below its levels after the financial crisis (it rose over 8% in 2011).
It’s also lower than the eurozone (where it’s now 8.3%).
But, it’s early days. Economists expect joblessness to rise sharply in the coming months, as ITV’s Joel Hills points out (although the latest furlough extension should help).
The official rate of unemployment rose to 4.8% (July - September) on the back of a surge in redundancies. Bank of England thinks it will peak at 7.75% next year. OBR forecast of 11.9% is much gloomier. This crisis is moving fast and official data is lagging developments. pic.twitter.com/iYdkxqWrpT
— Joel Hills (@ITVJoel) November 10, 2020
Updated
Employment minister: We're taking action to save jobs
Minister for Employment Mims Davies MP has outlined the measures being taken by the government to protect jobs during the pandemic, and help people back into work.
“This remains a challenging time for families across the country and today’s figures show the impact the virus is having on our labour market.
“Through our Plan for Jobs we have a relentless focus on protecting, supporting and creating jobs and we continue to help people of all ages into work. We’re doubling the number of Work Coaches across our Jobcentres with 4,500 already taking up posts, our £2bn Kickstart scheme is under way with the first recruits starting last week, and our JETS programme is supporting those who have lost jobs due to the pandemic.
“We continue to take the necessary action to save jobs and protect livelihoods as our response to coronavirus evolves, which is why we have extended furlough and SEISS.”
Full story: UK redundancies hit record before second Covid lockdown
Here’s our economics editor Larry Elliott on the UK’s worsening unemployment situation:
The government’s furlough scheme and a recovering economy failed to prevent record redundancies in the period before tougher lockdown restrictions were imposed, according to the latest official data.
Figures from the Office for National Statistics showed that a record 314,000 people lost their job in the three months to September – a period in which the Treasury’s wage subsidy scheme became less generous.
The ONS said the 181,000 quarterly increase in redundancies was unprecedented and helped push up the UK unemployment rate from 4.1% to 4.8% between the second and third quarters of 2020. Between August and September, the unemployment rate jumped by 0.3 points.
Flash estimates of the state of the labour market in October suggested there was a further 33,000 drop in the number of employees on payrolls, leaving headcounts 782,000 lower than they were when the Covid-19 crisis began in March.
More here:
The Europe-wide Stoxx 600 has also nudged higher this morning, after hitting an eight-month high last night:
Vaccine hopes push FTSE 100 up again
Over in the City, shares have risen again amid optimism over Pfizer and BioNTech’s Covid-19 vaccine.
Rolls-Royce is leading the risers, surging by 26%, with IAG (British Airways’ parent company) up 5%. Banks and retailers are also posting gains, with Lloyds up 4% and Next up 3.8%.
Oil giants BP and Royal Dutch Shell have both gained 3.5%, after economic recovery hopes drove crude prices up by 8% yesterday (and another 1% today).
This has pushed the FTSE 100 index of blue-chip shares up by 57 points, or nearly 1%, in early trading to 6246.
That’s close to its highest level during Monday’s frenzied trading, and would be its highest closing level since August.
Yesterday the FTSE 100 jumped 4.67%, or £70bn, in its biggest one-day rally since March, after interim analysis showed Pfizer/BioNTech’s candidate was 90% effective in protecting people from transmission of the virus in global trials.
Among smaller companies, cinema chain Cineworld is up 15% and holiday firm TUI has gained 9.5%.
Updated
The TUC’s Frances O’Grady says the government must provide more targeted support to the sectors worst hit by the pandemic, and greater help to those who have lost their jobs:
“It‘s time to stop the government’s economic rollercoaster. Every day more job losses are announced – and every one is a tragedy for a family.
“Ministers must use the spending review to set out a plan to create millions of good new jobs. TUC research shows that we could create 1.2 million new jobs in the next two years in green transport and infrastructure, and another 600,000 by unlocking public sector vacancies.
“Hard-hit sectors like the arts, hospitality and aviation are really struggling. These industries have a long-term future – but ministers must step in and deliver targeted support to help them get through the months ahead.
“People who have lost their jobs must get the support they need to make ends meet. We need an urgent boost to universal credit or many risk being plunged into poverty.”
Here’s TUC policy officer Alex Collinson:
Today's new labour market data shows that the number of redundancies have hit a record high.
— Alex Collinson (@Alex__Collinson) November 10, 2020
There were 314,000 redundancies in Jul-Sep 2020: higher than any three-month period during the financial crisis. pic.twitter.com/F2eCUfCeSF
The number of people unemployed has risen to 1.62 million.
— Alex Collinson (@Alex__Collinson) November 10, 2020
This is a rise of 243,000 (18%) compared to the previous quarter.
This is, by a distance, the largest percentage rise in unemployment on record. pic.twitter.com/IbuykDxovm
Several more economists are also blaming the previous plan to wind back the furlough scheme for driving unemployment to a four-year high.
Here’s Nye Cominetti, senior economist at the Resolution Foundation:
“The summer saw record redundancies and an unemployment rise of nearly a quarter of a million, as the economy reopened but firms believed the furlough scheme was being wound down.
“As the crisis enter its ninth month and second lockdown, job losses will continue to mount. Crucially this is much about those out of work struggling to find new roles as it is about job losses.
“Given these headwinds, the Chancellor is right to have to extended the furlough scheme. But much more support is needed for unemployed workers – from strengthening our safety net to investing in new job creation.”
Record redundancies as unemployment rises by almost a quarter of a million over the summer - @nyecominetti on today's @ONS labour market statistics https://t.co/gsPrmQRYMR pic.twitter.com/hfpcbCrH46
— Resolution Foundation (@resfoundation) November 10, 2020
Howard Archer, chief economic advisor to the EY ITEM Club, fears that some employers will press on with redundancy plans, despite the furlough extension.
The latest labour market report is weaker overall, with a significant rise in the number of people without jobs and record redundancies. This suggests that that the original October end-date for the furlough scheme was prompting employers to make decisions about their workforces....
“Despite the Chancellor announcing a number of measures before last week to try and protect jobs, it had looked likely that the unemployment rate would rise from October as the furlough scheme was originally scheduled to finish at the end of the month.
“While the Chancellor’s extension of the furlough scheme and other measures should have a significant impact in reducing redundancies, the EY ITEM Club suspects that job losses will still be significant. Many companies who had already made redundancies or made plans to do so before the extension of the furlough scheme may still decide to go ahead due to the challenging conditions and uncertain outlook facing them.
CBI: UK labour market faces toxic mix
Today’s jobs report also shows that there are still much fewer vacancies than before the pandemic struck, despite a pick-up since the summer.
Matthew Percival, CBI Director for People and Skills, says this creates a ‘toxic’ problem -- much fewer opportunities for those who are being laid off.
“These figures show a toxic mix of a devastating rise in redundancies and very few people able to find alternative jobs, even before entering a second national lockdown. The recent extensions of the Job Retention Scheme and increased support through Universal Credit are important steps that recognise this difficult reality.
“The next couple of months will be crucial. The Government must use this time well to get ahead of the curve on the economy as well as the virus. The creation of an economic recovery commission uniting government, business and unions would be a vital step, as would rollout of mass testing and investment in job-creating projects, with a focus on digital skills and green jobs.”
Updated
Capital Economics: unwinding furlough scheme hurt labour market
Ruth Gregory of Capital Economics says the previous unwinding of the UK’s furlough scheme appears to have driven up unemployment levels.
The scheme initially covered 80% of wages of a furloughed worker, with the employer paying nothing. But from September, employers had to pay 10% of wages, rising to 20% in October.
That will have forced some companies worst hit by the pandemic to lay staff off, Gregory fears [before the scheme was extended to December, and then to next March].
September’s rise in the unemployment rate from 4.5% in August to 4.8% suggests that the previous scaling back of the furlough scheme took its toll. And with the second lockdown set to send the recovery into reverse, the unemployment rate may yet climb to about 9% next year.
In response to the government asking firms to shoulder a greater burden of the cost of their furloughed employees, firms reduced their staffing levels at a sharp pace in September.
Updated
Sunak: figures show scale of the challenge
UK chancellor Rishi Sunak has said that today’s jobless figures “underline the scale of the challenge we’re facing”.
Sunak says:
“I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected.”
But, the record surge in redundancies over July-September suggests firms were laying off swathes of staff because the UK’s furlough scheme had been due to end this autumn.
Sunak last week extended the scheme (in which the government pays the wages of staff) until the end of March 2021. But that u-turn will have come too late for some firms.
Economist Keith Church of 4most Europe points out layoffs accelerated in September:
Redundancies accelerated towards the end of September. That initial decision to end-furlough at the end of October will not have helped I suspect. pic.twitter.com/qECQFz0r9B
— Keith Church (@keithbchurch) November 10, 2020
The BBC’s Vishala Sri-Pathma agrees:
NEW: No. of people in work fell by 247,000 between July - Sept 👉🏽 @ONS
— Vishala Sri-Pathma (@BBCVishalaSP) November 10, 2020
Redundancies made because of firms planning for the end of #furlough (originally 31st Oct, now end of March) part of the reason. This is the largest decrease seen for this period in ten years.
Employment in the UK fell by 247,000 in July-September compared with the previous year, the Office for National Statistics reports, to 32.51m.
That’s the largest annual decrease since January to March 2010, another grim consequences of the pandemic.
Employment decreased by 164,000 on the quarter.
The ONS says there was a sharp fall in part-time and self-employed workers, while the number of women in full-time jobs saw a record increase.
Looking more closely at the quarterly decrease in employment, it can be seen that this is driven by decreases in the number of part-time workers (down 158,000 on the quarter to 8.11 million) and self-employed people (down 174,000 to 4.53 million, with a record 99,000 decrease for women).
The quarterly decrease was partly offset by an increase in full-time employees, up by 113,000 on the quarter to a record high of 21.17 million. The increase in full-time employees was driven by women (up a record 165,000 on the quarter to 8.72 million), while men decreased by 53,000 to 12.45 million, the first quarterly decrease since March to May 2019.
Unemployment: the key charts
Here are the key charts from today’s UK jobless report:
And here are the key points from the ONS:
- July to September 2020 estimates show a large increase in the unemployment rate and a record number of redundancies, while the employment rate continues to fall.
- Although decreasing over the year, total hours worked had a record increase from the low levels in the previous quarter, with the July to September period covering a time when a number of coronavirus (COVID-19) lockdown measures were eased.
- The UK employment rate was estimated at 75.3%, 0.8 percentage points lower than a year earlier and 0.6 percentage points lower than the previous quarter.
- The UK unemployment rate was estimated at 4.8%, 0.9 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter.
- The UK economic inactivity rate was estimated at 20.9%, 0.1 percentage points higher than the previous year but largely unchanged compared with the previous quarter.
- The total number of weekly hours worked was 925.0 million, down 127.6 million hours on the previous year but up a record 83.1 million hours compared with the previous quarter.
Introduction: UK unemployment rate hits 4.8%; record redundancies
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
A day after vaccine optimism sent global stock markets to record highs, the latest UK labour market report is showing the severe economic damage caused by the pandemic.
Figures just released by the Office for National Statistics show that the UK unemployment rate has jumped to 4.8% in the three months to September -- with over 1.6 million people now out of work.
It’s the highest level since late 2016, and a sharp increase -- up from 4.5% in June-August, and 0.9% higher than a year ago.
Mounting cost to livelihoods: Unemployment tops 1.6million in September, up by almost quarter of million over summer, as layoffs reach record as bosses brace for original furlough end, and those laid off earlier search for work again.
— Dharshini David (@DharshiniDavid) November 10, 2020
The ONS reports:
For July to September 2020, an estimated 1.62 million people were unemployed, up 318,000 on the year and up 243,000 on the quarter.
The annual increase was the largest since December 2009 to February 2010 and the quarterly increase was the largest since March to May 2009. The quarterly increase was mainly driven by men (up 178,000) and there were increases across all age groups.
In another blow, a record number of people were laid off during the quarter, as struggling firms were forced to cut staffing levels - or collapsed under the pandemic.
The ONS reports that 314,000 people were made redundant during the July-September quarter, a record high - and a record increase (of 181,000) compared with the previous quarter.
It explains:
Redundancies increased in July to September 2020 by 195,000 on the year, and a record 181,000 on the quarter, to a record high of 314,000.
The annual increase was the largest since February to April 2009.
The employment rate was down 0.6 percentage points on the previous three months, while unemployment was up 0.7 percentage points.
— Office for National Statistics (ONS) (@ONS) November 10, 2020
Economic inactivity (people not in work, looking for work, or starting work in the next month) was unchanged https://t.co/rshIK9TXD7 pic.twitter.com/GGDkMP40qx
The UK’s employment rate was estimated at 75.3%, 0.8 percentage points lower than a year earlier and 0.6 percentage points lower than the previous quarter, the ONS adds.
More details and reaction to follow....
Meanwhile, European stock markets may be a little calmer today, after surging dramatically to an eight-month highs after Pfizer and BioNTech reported their vaccine was 90% effective in trials.
Global stock rally peters out after vaccine euphoria. Shares pared gains in Japan, HK, & China stocks fell. US & European Futures decline on concerns about smaller US fiscal stimulus package & reality w/record corona cases. Bonds steady w/US 10y 0.91%. Gold $1883, Bitcoin $15.4k. pic.twitter.com/uaOxPl6VDl
— Holger Zschaepitz (@Schuldensuehner) November 10, 2020
The agenda
- 7am GMT: UK unemployment report
- 10am GMT: ZEW survey of eurozone economic sentiment
Updated
