LONDON BRIEFING: UK jobs worry as lockdown extended but not furlough

(Alliance News) - The UK unemployment rate edged down again as data pointed to a continued ...

Alliance News 15 June, 2021 | 8:18AM
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(Alliance News) - The UK unemployment rate edged down again as data pointed to a continued recovery in the labour market, the Office for National Statistics said on Tuesday.

However, concerns have been raised that the furlough scheme that has kept large numbers of UK workers in jobs wasn't extended alongside a delay in the ending in lockdown restrictions.

The unemployment rate for the three months to April was 4.7%, down from 4.8% for the three months to March. This was in line with market expectations, according to FXStreet. The jobless rate started 2021 at 5%.

Meanwhile, redundancies returned to pre-pandemic levels. The redundancy rate decreased by a record 7.1 per thousand employees on the quarter to 4.0 per thousand employees, similar to pre-virus levels.

This labour market recovery appears to have extended into May. The number of payrolled employees has increased for the sixth consecutive month, the ONS said, up by 197,000 in May to 28.5 million. However, this remains 553,000 below pre-virus levels.

The number of job vacancies in the three months to May was 758,000, only 27,000 below its pre-pandemic level. The ONS noted that most industries have recovered to show vacancies above pre-virus levels, with the strongest quarterly increase in accommodation and food services.

"The number of employees on payroll grew strongly in May, up by almost 200,000, although it is still over half a million down since the pandemic struck," said Sam Beckett, ONS head of economic statistics.

"Job vacancies continued to recover in the spring, and our early estimates suggest that by May the total had surpassed its pre-pandemic level, with strong growth in sectors such as hospitality," Beckett added. "Meanwhile the redundancy rate remains subdued, while the number of employees on furlough has continued to decline."

The positive jobs figures came just after UK Prime Minister Boris Johnson set a new "terminus date" of July 19 for the end of England's coronavirus restrictions, but didn't extent the furlough scheme.

Johnson ordered a delay of up to a month to the final phase of his road map to end the lockdown due to concerns over the rapidly spreading Delta variant first identified in India.

The news was described as a "devastating blow" for the night-time industry, while hospitality businesses will also see trading impacted by continued social distancing. For now, limits on numbers for sports events, theatres and cinemas will remain in place, nightclubs will stay shuttered and people will be asked to continue working from home where possible.

Commenting on the UK employment figures, Paul Craig, portfolio manager at Quilter Investors said: "What's important now is the proportion of those workers still furloughed that are eventually let go once the once the government support draws to a close. Strong vacancy numbers suggests this may only be a small amount but it may come as a shock to some businesses to see the lockdown easing plan delayed, without an extension to the furlough scheme."

Furlough support currently allows businesses impacted by the pandemic the ability to keep workers on with an 80% wage subsidy from the UK government. This is due to taper off from the end of this month, moving to a 70% state subsidy supported by a 10% employer contribution in July, tapering further before ending completely in September.

Quilter's Craig added: "This will be the first time the scheme and the lockdown easing plan have been disjointed since the start of the pandemic, and this could have consequences. Companies face the prospect of increased costs in July even though many will not legally be able to reopen or trade fully."

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.3% at 7,165.77

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Hang Seng: down 0.7% at 28,653.89

Nikkei 225: closed up 1.0% at 29,441.30

DJIA: closed down 85.85 points, or 0.3%, at 34,393.75

S&P 500: closed up 7.71 points, or 0.2%, at 4,255.15

Nasdaq Composite: closed up 104.72 points, or 0.7%, at 14,174.14

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EUR: up at USD1.2137 (USD1.2124)

GBP: flat at USD1.4113 (USD1.4112)

USD: up at JPY110.05 (JPY109.99)

Gold: up at USD1,868.61 per ounce (USD1,863.20)

Oil (Brent): soft at USD73.21 a barrel (USD73.28)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Tuesday's Key Economic Events still to come

US Federal Open Market Committee meeting starts

US President Joe Biden attends EU-US summit in Brussels

1100 BST Ireland goods exports and imports

0830 EDT US produce price index

0830 EDT US retail sales

0915 EDT US industrial production

1000 EDT US manufacturing & trade: inventories & sales

1000 EDT US NAHB housing market index

1630 EDT US API weekly statistical bulletin

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The details of the UK's first trade deal negotiated from scratch post-Brexit will be revealed on Tuesday, a senior Australian minister said. The two countries have reportedly agreed the broad terms of the pact, with Australian Agriculture Minister David Littleproud telling reporters in Canberra more information will presented in London at about 9am on Tuesday. "Both prime ministers will come together in London to make sure that they can announce it, but the details of that are being finalised now," Littleproud said. UK Prime Minister Johnson and his Australian counterpart, Scott Morrison, were said to have agreed the pact over dinner in Downing Street on Monday. Downing Street did not deny the reports and, if confirmed, the agreement would be the first trade deal negotiated fully since the UK's exit from the EU.

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Growing numbers of people in the UK expect house prices to increase in the next 12 months, according to an index. Half of those surveyed in early June predict house prices will climb higher in the next 12 months, the Building Societies Association found. This compares with a quarter of people who said this when the question was asked in December. With a stamp duty holiday deadline approaching at the end of this month, 30% of people surveyed think now is a good time to buy a property, down from 37% who thought so in March. Some 37% of people in Wales think now is a good time to buy, as do 33% in Scotland and Yorkshire and the Humber and 32% in the north west and south west of England.

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BROKER RATING CHANGES

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RBC CUTS ANGLO AMERICAN TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 3,400 (4,100) PENCE

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MORGAN STANLEY CUTS PAGEGROUP TO 'UNDERWEIGHT' ('EQUAL-WEIGHT') - TARGET 545 (525) PENCE

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HSBC CUTS JOHN LAING GROUP TO 'HOLD' ('BUY')

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COMPANIES - FTSE 100

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AstraZeneca said a study looking at its AZD7442 treatment in post-exposure prevention of symptomatic Covid-19 did not meet its primary endpoint, but it noted figures which showed its vaccine holds up well against the Delta variant. AstraZeneca said a trial studying its long-acting antibody combination to treat those recently exposed to the SARS-CoV-2 virus did not meet its primary endpoint. The primary endpoint was post-exposure prevention of symptomatic Covid-19 with AZD7442 compared to placebo. The 1,212 trial participants were unvaccinated adults with confirmed exposure to a person with a case of the SARS-CoV-2 virus within the past eight days. AZD7442 reduced the risk of developing symptomatic Covid-19 by a third compared to placebo, which was not statistically significant. Meanwhile, Astra noted new data from Public Health England demonstrating the Astra Covid-19 vaccine offers good protection against the Delta variant. Real world data from PHE, published as a pre-print, showed two doses of Astra's jab is 92% effective against hospitalisation from the Delta variant and showed no deaths among those vaccinated.

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Equipment rental firm Ashtead lifted its dividend as it ended its financial year on a strong note. Revenue for the financial year that ended April 30 was down 0.4% at GBP5.03 billion from GBP5.05 billion the year before, while pretax profit fell 4.8% to GBP936.0 million from GBP982.8 million. Ashtead noted that it had returned to growth in the fourth quarter, with rental revenue up 15% on a constant currency basis. The firm proposed a final dividend of 35 pence, taking the year's total to 42.15p, up 3.7% from 40.65p the year before. Ashtead said it enters the new financial year with "clear momentum" and is targeting rental revenue growth at constant exchange rates of 6% to 9%. This would compare with 1% for the recently ended year.

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COMPANIES - FTSE 250

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Housebuilder Bellway reported a "robust" forward sales position, with its order book rising by 21% to GBP1.89 billion as of early June, representing 6,763 homes. During the period from February 1 to June 6, an average of 239 reservations were made per week, up 51% from a year before.

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COMPANIES - GLOBAL

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Third Point, fronted by investor Daniel Loeb, has built a sizeable holding in Vivendi, Bloomberg reported, citing people familiar with the matter. Bloomberg said neither the size of Third Point's Vivendi stake, nor its reason for buying in, could be determined. It comes as the French media company plans to spin-out its Universal Music Group unit. Earlier in June, Paris-based Vivendi said it had entered talks with special purpose acquisition company Pershing Square Tontine Holdings over the possibility of selling a 10% stake in UMG. US-listed Pershing Square Tontine is a blank cheque company, and activist investor William Ackman is its chair & chief executive. London and New York-listed Pershing Square Holdings confirmed the discussions earlier this month.

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Tuesday's Shareholder Meetings

Andrews Sykes Group PLC - AGM

Bermele PLC - AGM

Concurrent Technologies PLC - AGM

Coro Energy PLC - AGM

Evraz PLC - AGM

Iconic Labs PLC - GM

London & Associated Properties PLC - AGM

LoopUp Group PLC - AGM

Northbridge Industrial Services PLC - AGM

Panther Metals PLC - AGM

Pelatro PLC - AGM

Property Franchise Group PLC - AGM

Silence Therapeutics PLC - AGM

Somero Enterprises Inc - AGM

Starwood European Real Estate Finance Ltd - AGM

Wentworth Resources PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Bellway PLC 3,282.00 GBX -0.61 -
PageGroup PLC 615.00 GBX -1.60 -
Anglo American PLC 3,190.50 GBX -3.11
John Laing Group PLC 401.00 GBX 0.30 -

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