Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The number of people in employment in Britain has fallen again, as the coronavirus pandemic forces companies to cut jobs.
Figures just released by the Office for National Statistics show that there were 730,000 fewer people on company payrolls in July compared to March, before the Covid-19 lockdown.
That’s up from nearly 650,000 a month ago, and shows that the jobs market continues to weaken even though the economy continues to reopen.
The ONS reports that the UK’s labour market has suffered its worst quarter for the labour market since the aftermath of the financial crisis.
Survey data show employment is weakening and unemployment is largely unchanged because of increases in economic inactivity, with people out of work but not currently looking for work.
The decrease in employment on the quarter was the largest quarterly decrease since May to July 2009 with both men and women seeing decreases on the quarter. The quarterly decrease in employment was also driven by workers aged 65 years and over, the self-employed and part-time workers. Meanwhile full-time employees largely offset the decrease.
Here are the key points from the latest labour market report (online here):
- The number of paid employees in the UK in June 2020 fell by 1.8%, compared with the same period of the previous year.
- Early estimates for July 2020 indicate that the number of paid employees fell by 2.2% compared with July 2019.
- In July 2020, 114,000 fewer people were in paid employment when compared with June 2020 and 730,000 fewer people were in paid employment when compared with March 2020.
But… the headline unemployment rate remained low, as 3.9%. That suggests that many people who have lost their jobs are not actively looking for work.
More details and reaction to follow….
Also coming up today
European stock markets are expected to rally today, adding to Monday’s gains, as optimism grows that a new US stimulus package will be agreed. The FTSE 100 is being called up 40 points, or 0.6%, to 6090 points.
Donald Trump’s surprise pledge last weekend to suspend payroll tax and extend unemployment benefits has raised hopes that Congress will agree a fresh deal, as Stephen Innes of AxiCorp explains:
The clouds of uncertainly are starting to part, and a ray of optimism is breaking through that additions to the US stimulus package are looking more promising as both sides are set to rejoin the negotiating table.
It seems that Trump’s executive orders have indeed put pressure on Congress to agree to a broader fiscal package and to at all cost to avoid the political backlash and get the deal done before executive order deadlines around the end of the month expire. I suspect the last thing Congress wants to do is deal with another cliff-edge scenario during an election year as many votes are probably riding on this package.
Last night the Dow Jones industrial average hit its highest level since February, even though the pandemic continues to rage across the globe. The total number of recorded cases has now hit 20m, with the death toll approaching 750,000
On the economic front, Russia will become the latest country to report a slump in activity during the pandemic. Economists predict its GDP shrank by 9% in April-June.
We also find out whether investors in Germany are any more optimistic, and whether US factories are hiking their prices:
- 7am BST: UK unemployment report
- 10am BST: ZEW survey of economic sentiment in Germany and the eurozone
- 1.30pm BST: US producer price inflation (PPI) for July
- 2pm BST: Russian GDP for Q2 2020