Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
We’ve woken up to news that the UK’s unemployment rate rose to 5% in the three months to November – up from 4.9%, and the first time it’s been that high in more than four years, according to the the Office for National Statistics. Analysts had expected it to rise even further, to 5.1%.
The ONS said the number of payroll employees has fallen by 828,000 since February 2020; although the larger falls were seen at the start of the coronavirus pandemic.
Around 1.72 million people were out of work in the quarter, up 418,000 on the same period the previous year, and 202,000 higher than in the previous quarter.
Redundancies reached a record high of 14.2 per thousand between September and November, and equally worryingly, the recovery in vacancies slowed between October and December, and the numbers are still below the levels seen before the impact of the coronavirus pandemic.
The ONS head of economic statistics Sam Beckett says:
The latest monthly tax figures show that there were over 800,000 fewer employees on payroll in December than last February. More detailed data, published for the first time, show that parts of London have seen the steepest percentage falls, followed by North Eastern Scotland.
In the three months to November, on our survey data, the employment rate fell sharply again, while the unemployment rate rose to hit 5% for the first time in over four years.
The number of people saying they had been made redundant in the previous three months remains at a record high. Meanwhile vacancies, which were rising in summer and early autumn, have been falling in the last couple of months.
The chancellor of the exchequer, Rishi Sunak, has responded to the data thus:
This crisis has gone on far longer than any of us hoped – and every job lost as a result is a tragedy. Whilst the NHS is working hard to protect people with the vaccine we’re throwing everything we’ve got at supporting businesses, individuals and families.
Our Plan for Jobs includes grants and loans so that firms can keep employees on, the furlough scheme to help protect jobs, and programmes like Kickstart alongside record investment in skills so that people can find their first job, their next job or a new job if needed.
European markets had a disappointing start to the week as investors worried about the threat of tighter Covid-19 restrictions for longer across Europe and a slow vaccine rollout. France warned of a third national lockdown if border controls and the 12-hour curfew fail to curb the spread of new Covid-19 variants.
Asian markets are also in the red, with Japan’s Nikkei down 0.96% and Hong Kong’s Hang Seng losing 2.4%, amid uncertainty over the size and the timing of a new stimulus package in the US.
Michael Hewson, chief market analyst a CMC Markets UK, says:
US markets, on the other hand, have continued to defy gravity after another choppy session, with the Nasdaq once again helping to underpin sentiment with another record close, helped by optimism over the start of earnings season for big tech starting today with Microsoft, and tomorrow with Apple.
The main focus this week is still focussed on the conclusion of this week’s Fed meeting, against a backdrop of renewed partisan bickering over the size of the next stimulus bill, which may well come in below the initial $1.9trn headline numbers of a couple of weeks ago.
This uncertainty around the timing, as well as the amount of a new package appears to driving an element of uncertainty amongst investors, with Asia markets slipping back, while European stocks look set for a mixed open, following on from yesterday’s negative session, as partisan bickering once again returns to the fore.
Digital Davos got under way yesterday. In normal times, thousands of the world’s richest and most influential people – political and business leaders, central bankers and celebrities, along with their aides and media – descend on the slopes of the Swiss mountain village for the annual meeting of the World Economic Forum. This year, the meeting is taking place virtually due to the Covid-19 pandemic.
This afternoon, the International Monetary Fund will release its world economic outlook at the meeting, which runs until Friday. More than 2,000 global leaders are expected to attend this time under the theme “A crucial year to rebuild trust.”
Twenty-five heads of state and government – including the Chinese president Xi Jinping, German chancellor Angela Merkel and European Commission President Ursula von der Leyen – will discuss how coronavirus has reshaped society and what policies are needed, along with 600 chief executives, as well as heads of international organisations and NGOs, academics and artists. 140 sessions will be live-streamed to the public.
A list of participants can be found here.
- 1pm GMT: IMF World Economic Outlook
- 2pm GMT: US House price index for November
- 3pm GMT: US Conference Board consumer confidence for January (forecast: 89)