ONS: Unemployment reaches four-year high
New figures from the Office for National Statistics (ONS) have shown unemployment levels to reach a four-year high.
As redundancies hit record highs, the UK’s unemployment level has jumped to 4.8% in the three months to September – the highest level since 2016.
The ONS said:
“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 the same period, 314,000 people were made redundant.
“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 314,000m,” said the ONS.
“The annual increase was the largest since February to April 2009.”
The sharpest fall was among part-time and self-employed workers. the ONS explained:
“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.”
Suren Thiru, the British Chambers of Commerce head of economics, said: “The rise in the unemployment rate and redundancies is further evidence that the damage being done to the UK jobs market by the coronavirus pandemic is intensifying.”
“The extension to the furlough scheme will safeguard a significant number of jobs in the near term. However, with firms facing another wave of severely diminished cashflow and revenue and with gaps in government support persisting, further substantial rises in unemployment remain likely in the coming months.”
Premier Foods raises profit outlook on strong demand
Premier Foods (LON: PFD) has raised its profit outlook for the full year as it expects higher demand amid new restrictions.
The food manufacturer, which owns brands including Mr Kipling and Bisto, reported a pre-tax profit of 35.5% to £50.5m and a 15% increase in revenue. to £421.5m.
The jump in profits in revenue was due to the stronger demand for products as more people are eating at home. The higher demand is expected to continue over the next four weeks and the group has raised its profit outlook.
Premier Foods is also driving new products and television marketing.
Chief executive Alex Whitehouse said: “We have seen many more meal occasions being consumed at home, particularly in the first quarter, followed by a transition towards more normal levels of demand through quarter two. During this entire time, we have continued to drive our branded growth model, launching insightful new products and supporting our three biggest brands with above the line advertising.
“Consequently, we have continued to grow faster than all our categories, increasing market share in each one; a reflection not only of our strong brands but also the amazing performance of our supply chain colleagues to ensure product availability.
“Looking to the second half of the financial year, we expect to see continued revenue growth driven by further new product innovation, strong commercial plans and increased marketing investment for our brands, with six major brands planned to be advertised on TV. We also now expect to see an increase in demand for our brands due to the impact of recently increased government restrictions on eating out. The longevity of this increased demand is likely to be linked to the duration of these new measures, and although we have tougher comparatives in the fourth quarter, we anticipate that Trading profit for the full year will be ahead of current market expectations.”
Premier Foods shares (LON: PFD) are trading at 102,73 (0833GMT).
UK house sales enquiries dropped by 32% in 2020
A new report by WeBuyAnyHome has outlined the impact of the coronavirus pandemic on the UK housing market, revealing that house sales enquiries have plummeted by 32% on average compared to 2019 as widespread lockdowns and market turbulence dampen appetites to buy.
The data compares house sales enquiries from January to September 2019 to the same period in 2020, as well as analysing the fluctuation in sales demand during the pandemic by comparing figures from Q1 to Q2 across this year.
According to the report, house sales enquiries in Scotland have also dropped by a whopping 48% in Q2 2020, although the few UK regions which have actually seen an increase in enquiries over recent months were all located in Scotland: Edinburgh (+53.50%), Clackmannanshire (+40.00%) and Dunbartonshire (+11.80%).
In the North, however, the housing market has essentially stagnated due to the pandemic. Lancashire saw enquiries plunge by 38.4% compared to last year, while North Yorkshire suffered a 39.2% blow as predominantly low-income families have struggled to sell.
As could be expected, London appears to have performed better than the rest of the UK, with sales enquiries down a meagre – but still significant – 14.2% in the last year.
Some of the capital’s surrounding counties have seen a major drop in demand, however, with enquiries down 32.7% in Essex and 25.5% in Kent.
Despite the apparent apprehension to buy, mortgage approvals reportedly hit a new 13-year high in September – with banks signing off on 91,500 mortgages – and the Bank of England citing the stamp duty holiday and the demand for more space during lockdown as driving the desire to move.
Strict lockdown measures which came into force in the Spring essentially ground the housing market to a halt, but in recent months a “housing boom” has made up for lost time, although some are sceptical that the trend has much longevity.
Andrew Montlake, managing director of mortgage broker Coreco, warned last month that the market boom is likely to lose steam:
“The post-lockdown bull run is already over. Lenders have been pulling down the shutters due to ongoing struggles with capacity and concerns over rising unemployment levels, specifically the impact on house price growth”.
So the figures are confusing. Sales enquiries have clearly taken a hit this year – particularly in the North of England – and even with a couple of months of new-found growth in the sector, investors would be right to view the recent trend with some caution.
Once the stamp duty holiday comes to an end in March next year, and with a Brexit decision (deal or no-deal style) on the horizon leaving markets suspended in a seemingly permanent state of confusion, the momentum may well drain from the housing market on the other side of the New Year – or possibly even before.
Sunak announces ‘green gilts’ to bolster government’s low-carbon investment
Chancellor Rishi Sunak is set to announce the launch of the UK governments first ‘green gilts’, which will be used to boost its low-carbon investment capabilities.
These targeted bond mechanisms follow the lead of 16 other countries, including Sweden and Germany, and will aid in government efforts to invest in green infrastructure projects – including the Boris administration’s commitment to scaling up Britain’s offshore wind capabilities.
The move towards green gilts, or ‘green sovereign bonds’, also follows moves by the Bank of England and European Central Bank, to adjust their respective asset-purchasing strategies towards being geared more specifically towards low-carbon emitting companies. It likely also pre-empts a change in tone over the pond, with president-elect, Joe Biden, being vocal about his intentions to put his weight behind a low-carbon shift in US energy.
It will also follow a move by the Financial Conduct Authority, which, from January 1 2021, will require all ‘premium listed companies’ to make ‘better’ disclosures about how climate change will impact their business – with the potential for these climate risk disclosures to be extended to cover asset managers, life insurers and pension providers.
Commenting on Sunak’s green gilts, and what is at the very least a symbolic next stage in the green transition, Fran Boait, executive director of Positive Money, said:
“Markets are currently rife with ‘greenwashing’, and we’ve seen the farce of high-carbon corporations such as oil companies and airports issuing supposedly ‘green’ bonds. We need to make sure that these green government bonds are actually used for ambitious investment in a just green transition.”
“The Bank of England could also help support a fair green recovery by buying up green gilts through its quantitative easing programme, which is currently skewed towards high-carbon companies, including the likes of Shell and BP. Although there is high demand from private investors for sovereign green bonds, the Bank could divest from polluting companies and reinvest funds in these new green government bonds.”
Bounce Back Loan contributes to Financial Ombudsman complaints rising 20%
Posting its figures for the Q2, between July and September, the Financial Ombudsman Service revealed that complaint volumes were up 20% on the same period last year, following the introduction of business loans such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan.
The Financial Ombudsman said that it had seen a ‘significant’ increase in complaints about travel insurance, business protection insurance and complaints from SMEs relating to the government’s business interruption and bounce back loan schemes.
The latest figures show that the service had received more than 68,700 complaints during the three month period, which it said was up 19% on the previous quarter, and around 20% higher than Q2 2019.
The Financial Ombudsman added that consumer enquiries were up 10% on the previous quarter, at more than 119,200, while referrals were up 17%, to over 9,200. The service added that PPI claims lost their top spot as the most complained-about financial product, and was replaced by complaints about guarantor loans, which had a notably high uphold rate of 88%.
Similarly, credit card-related complaints increased by 26% quarter-on-quarter, and up by 66% year-on-year for the second quarter.
With the introduction of new schemes such as the bounce back loan, the Financial Ombudsman urged businesses to ‘preserve humanness and compassion’, and to ensure customers get the right care during these difficult times. It added that customer support staff, along with technology, should work together to provide a faster and more empathetic customer experience.
Speaking on the data, Mamta Rodrigues, finance expert and Divisional President at Teleperformance comments:
“Banks now have an opportunity to support their customers by creating solutions for the troubled economic times. Better known as workout specialists or remediation managers, these individuals can work with customers to find better payment solutions and alternatives which drive results for the bank whilst also appeasing the immediate strains from credit card, mortgage and loan bills.”
“New payment solutions are “worked out” as the customer comes first and providing an extended payment scheme results in higher repayment overall. This has the benefit of reducing collection costs and increasing much needed revenues while increasing customer loyalty.”
Who are the winners & losers on latest Pfizer vaccine news?
Pfizer and BioNTech have announced that their coronavirus vaccine was 90% effective in tests, which has caused global shares to surge.
The drug companies have said that the vaccine was “found to be more than 90% effective in preventing Covid-19 in participants without evidence of prior Sars-CoV-2 infection in the first interim efficacy analysis.”
The FTSE 100 surged 5.5% to 6,242 points – its highest levels since August, as investors are reassured that the economy will soon return to normal.
The blue-chip index already started off the week to a positive start after Joe Biden won the Presidential election. It continued to soar after the drug companies made the announcement at midday.
Craig Erlam, senior market analyst at OANDA Europe, commented on how the vaccine news has bumped up global markets:
“With Covid wreaking havoc across Europe and the US once again, the Pfizer announcement has provided the lift we’ve all craved. The company announced that the Pfizer, BioNTech experimental vaccine is over 90% effective in preventing Covid-19, sending US future sky rocketing.
“This is the news we’ve all been waiting for. The company plans to use emergency use authorization after the safety milestone is reached in late November, with no serious safety concerns having been identified in the interim analysis. Pfizer will then be able to produce 50 million doses in 2020.
“We’ve been waiting for this moment for a long time and hopefully others will soon join Pfizer and BioNTech and enable us to break this vicious cycle of lockdowns and cautious reopenings that’s killing businesses, causing rising unemployment and massively adding to the debt load around the world.
“This is the light at the end of the tunnel moment and just look at the reaction in the markets. One of incredible relief,” he added.
On the FTSE 100, International Airlines Group saw shares climb 39%, Rolls-Royce surged 33%, whilst events company Informa soared 44%.
Adam Vettese, analyst at multi-asset investment platform eToro, said:
“The vaccine news has injected optimism into travel stocks in particular. The sector has been among the hardest hit by COVID-19 restrictions and EasyJet and IAG moved strongly on the back of the announcement. Oil stocks jumped too as any sign of a recovery in the travel sector would stimulate demand.
“However, while this is obviously a positive step forward there is still a way to go. Pfizer will only be able to submit its vaccine for emergency use once two months of data has been collected. All eyes will be on the third week of November then as we wait to see if the numbers show the vaccine can be approved.”
Whilst there has been a surge in many travel and events companies, not all shares have seen a growth. Shares in zoom crashed 12% to $460 on Monday during pre-trading after seeing shares rise from $70 in February to over $560 over the last nine months during the pandemic.
Just Eat and Ocado, which have also been winners amid the pandemic, saw shares fall 11% and 7% respectively.
Shares on Wall Street also surged on opening. S&P 500 futures rose by 3.78%, and Dow contracts increased 4.69%
In Europe, Germany’s DAX index up 5.8% and France’s CAC gaining around 7%.
Andrea Cicione, Head of Strategy at TS Lombard, said: “This is very very important (news) because it validates the market view that the economy and earnings can receive that growth path that they had before the (COVID-19) crisis struck.”
The price of oil also surged by 8% and is now $42.64 per barrel.
One Media IP Group shares up thanks to “strong performance”
One Media IP Group shares (LON: OMIP) opened 15% higher on Monday morning.
The group said in a trading update that it will continue to trade in line with expectations.
One Media IP Group expects to report revenues for the year of around £4mn and earnings of £1.4mn, which is an increase of 14% and 30% respectively year-on-year.
“Based on the group’s strong performance to date and the continued growth in music streaming, the board is confident in the outlook for the business as we remain focused on exploring further acquisition opportunities,” said Michael Infante, the chief executive.
“We are also encouraged to observe that the sector continues to attract significant investment from outside of the industry, which we believe will help to build further interest in our business and strategy. We look forward to keeping the market updated as we continue to deliver on our growth strategy,” he added.
The company’s full-year results will be released in March 2021.
One Media IP Group has also said it that it has incorporated a new subsidiary, TCAT Limited.
“After four years of developing and growing TCAT’s capabilities in-house, the board has identified the need for TCAT to operate as an independent entity within the group in order to realise its full potential. With a number of major record labels already subscribing to TCAT’s services on a retained basis, we are confident that, with the provision of additional resource and technical expertise to expand the software’s capabilities and usages, there is significant opportunity to gain new traction within the industry”, said Infante.
“Our intention is for TCAT to become a mobile anti-piracy and audit tool for composers and artists as we build the portal to allow for future application access. Under the direction of a highly experienced and motivated management team, the Board has every confidence in TCAT’s growth trajectory as it enters the next phase of its development. We look forward to providing further updates in due course.”
One Media IP Group shares (LON: OMIP) are trading +18.67% at 6,70 (1115GMT).
Dignity plc reports increase in revenue amid pandemic
Dignity Plc (LON: DTY) has reported a 4% increase in revenue this year amid the Coronavirus pandemic.
In the 39 weeks to the end of September, the funeral provider saw revenue grow from £225.4m to £234.5m.
The increase in revenue reflects the higher number of deaths amid the pandemic.
In the first three-quarters of 2019, the London-listed company conducted 52,100 funerals – compared to the 61,700 funerals for the same period this year.
“2020 is proving to be a unique and challenging year, with the impact of COVID-19 on our daily lives likely to continue for many months to come,” said Dignity in a statement.
“Following the terrible impact of COVID-19 in the second quarter this year, the number of deaths in the third quarter was broadly flat on the prior year. The final quarter of 2019 witnessed 152,000 deaths and deaths in October were broadly flat on the prior year. The Group will not speculate on the most likely outcome for the remainder of the year, however it is possible that the tragic events of 2020 may mean 2021 and 2022 could experience a lower number of deaths than in 2019.”
Executive chairman Clive Whiley said: “We have played a crucial role in the country’s fight against Covid-19, whilst simultaneously challenging ourselves to do things better, collaborate constructively in the CMA’s market investigation, deal with continued fierce competition and finally start the work that will see our long held call for pre-need regulation become a reality.”
“Ultimately it will take a combination of the serious pricing and product trials, alongside competitor reactions and the CMA final outcome, to define a strategy that harnesses the full capacity and bandwidth of our business, where we remain determined to grow market share without further dilution for shareholders.”
Dignity shares (LON: DTY) have recovered following the fall across March – June this year as the pandemic hit. Shares in the group are trading 0.54% higher on Monday at 558,00 (0951GMT).
Countrywide shares rally amid takeover talks
Countrywide shares (LON: CWD) jumped 42% on Monday as the group enters talks with rival estate agency Connells for a takeover bid.
The company said on Monday that Connells had made an offer of 250p per share – an increase of last week’s closing price of 140p.
Countrywide has given Connells a deadline of 7 December to make or withdraw the offer.
The offer is well above last week’s closing share price, however, Countrywide has seen its share price plummet from this year’s highs of 399,29.
“There can be no certainty that an offer will be made, nor as to the terms of any such offer, should one be made,” said the company in a statement.
“In the light of recent discussions with shareholders, the Board has taken the decision to postpone the general meeting to approve the shareholder resolutions pursuant to the proposed transaction announced on 22 October 2020 until further notice.”
“Connells also believes that significant and sustained investment is required in Countrywide’s technology, network and people to put the business back on a solid footing in a challenging market.”
Countrywide shares (LON: CWD) surged 42% on Monday morning and are currently +46.63% at 212,62 (0932GMT).
Taylor Wimpey shares surge amid “resilient” demand
Taylor Wimpey (LON: TW) shares surged on Monday morning as the housing market continues to be resilient after reopening after the second quarter shutdown.
The FTSE 100 housebuilder has said that it expects this year’s financial results to be at the upper end of expectations and remains confident about next year.
Since the lockdown in March, the housing market has boomed amid the short term extension to the current phase of the Government’s Help to Buy scheme and the Stamp Duty Land Tax holiday.
Pete Redfern, chief executive of the group, commented: “The trading backdrop remains resilient and the quick recovery of the housing market is testament to the underlying strength of demand and supportive lending backdrop.
“We have made good progress in the second half of the year to date, maintaining a robust sales rate and building a strong forward order book. Looking ahead, we are on track to deliver full year 2020 results towards the upper end of market expectations and with strong operational momentum and positive forward indicators, our confidence in 2021 has increased. As a result, assuming the market remains broadly stable, we expect to deliver 2021 operating profit materially above the top end of the current consensus range.”
Taylor Wimpey has sold an average of 0.76 homes per site per week since July, which is compared to the 0.93 homes in the same period a year earlier.
The group’s order book stands at £3.0bn, compared to £2.7bn in July. This is an increase of 11%, with the private average selling price in the order book ahead of 2019 levels.
“Looking ahead, we expect the market to support robust sales rates and for prices of new build homes to remain supportive. We are pleased to note the Government’s ongoing support for the housing market, home ownership and, specifically, first time buyers,” said the housebuilder in a trading update.
Taylor Wimpey (LON: TW) shares opened 11.68% higher and are currently trading 11.28% up to 137,21(0901GMT). This year to date, shares in the group have fallen from highs of 237,70.