Global Markets Rally, With Wall Street Set to Follow: Live Updates
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Even with a vast and costly government furlough program, the British labor market recorded its largest drop in employment since 2009 last quarter. Between April and June, when the country was under tight restrictions to control the spread of the coronavirus, the number of people with a job fell by 220,000 from the preceding quarter, official statistics showed on Tuesday.
The job losses hit those under 25 and over 65 disproportionately, according to the Office for National Statistics.
Though the unemployment rate held at 3.9 percent, that disguises the widespread impact of the pandemic. The jobless rate counts only people who are actively looking for another job, so it does not include those who are furloughed or don’t think they can find a job.
The statistics agency also said there was a record low number of hours worked in the quarter. The number of people who work with no minimum hours per week, on so-called zero-hour contracts, increased 17 percent compared with a year ago, to over a million. And pay fell, the first decline in pay not adjusted for inflation since records began in 2001.
The Office for National Statistics estimated that in June, 7.5 million people were temporarily not working, including furloughed employees.
There was a small increase in job vacancies among small businesses in July, but this positive sign could be dwarfed by a surge in layoffs as the furlough program is wound down. One-third of British businesses said they expected to cut jobs by the end of September, according to a survey by the Chartered Institute of Personnel and Development and the Adecco Group.
State officials on Monday said they didn’t know how President Trump’s plan to provide a $400 supplement to unemployment payments would work. Mr. Trump’s action called for most recipients to get an extra $300 a week from federal disaster funds, leaving the states to supply $100.
Funds to cover the state’s portion “simply does not exist,” said Gov. Gavin Newsom of California, a Democrat.
Gov. Tate Reeves of Mississippi, a Republican, said he had not decided whether to take part in the program because of concerns over the cost. “This is not as easy of an answer as some might think,” he said.
Companies had a similar reaction to the idea of deferring payroll taxes until the end of the year. Many companies and employees might be hesitant to opt into what the president called a tax holiday because it is not clear whether Congress will eventually forgive the deferred taxes, or if the full sum will be due at a later date.
“We’re awaiting guidance from the U.S. Treasury Department on the payroll tax deferral, and we’ll make decisions on implementation once that’s been provided,” said Randy Hargrove, a spokesman for Walmart, the country’s largest private employer, with 1.5 million workers.
One option some employers might consider is to continue withholding the tax and repay workers later if it is eventually forgiven. That option would, of course, defeat the purpose of stimulating the economy now when it could use the help.
Futures tracking the S&P 500 hit an all-time high on Tuesday, setting the benchmark index on track to open just about 0.5 percent below its peak, as investors bet on more federal measures to support the country’s economy.
Ultra-low interest rates, trillions of dollar in stimulus and, more recently, a better-than-feared second-quarter earnings season have fueled a rally in Wall Street’s three main indexes.
The tech-heavy Nasdaq was the first among the three to bounce back from the coronavirus-induced crash in March, boosted by “stay-at-home winners” Amazon, Netflix and Apple.
“You’ve got to admit that this is a market that wants to go up, despite tensions between U.S.-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.
“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”
President Vladimir Putin said Russia had become the first country in the world to grant regulatory approval to a ovid-19 vaccine after less than two months of human testing.
Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans.
Among early movers, Royal Caribbean Cruises advanced 4.4 percent as it said testing for the coronavirus was very likely going to be a part of new safety measures planned to get its ships to resume sailing after months of being docked.
Peers Norwegian Cruise Line and Carnival Corp rose about 6 percent and 4 percent, respectively.
The United States’ biggest mall owner, Simon Property Group, gained 2.3 percent despite posting disappointing second-quarter profit as its chief executive expressed some hope over a recovery in retail as lockdown measures in some regions eased.
Airline stocks such as American Airlines and United Airlines rose for the second day after the Transportation Security Administration on Monday flagged a pickup in the number of air travelers.
With the historic economic turmoil caused by the coronavirus comes the potential for even worse inequality. Major companies have created a new effort, accelerated by the pandemic, to work with universities, the city and other groups to create new curriculums and apprenticeships over the next decade, reports David Gelles:
A coalition of 28 major companies including Mastercard, Marriott and Verizon has pledged to hire 100,000 low-income and Black, Latino and Asian workers in New York City over the next 10 years, part of a broader push by corporate America to expand economic opportunities to marginalized communities.
The companies are funding the creation of a nonprofit organization, the New York Jobs C.E.O. Council, which they say will work with universities, the city government and other nonprofit groups to prepare a new generation of New Yorkers for high-paying jobs at some of the country’s biggest companies.
Details are scant, but the initiative has attracted the support of many of the most powerful chief executives in the country, including Jeff Bezos of Amazon, Laurence D. Fink of BlackRock, Satya Nadella of Microsoft and Sundar Pichai of Google.
Those involved with the new group say it will work to develop programs intended to prepare low-income and minority students for jobs at the companies.
“It might be that they help us create curriculum,” said Félix V. Matos Rodríguez, chancellor of the City University of New York. “It might be that they help us create apprenticeships.”
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Hertz Global Holdings reported on Monday that its global revenue plummeted 67 percent in the second quarter from the year before, a decline that contributed to an $847 million loss and the car rental company’s decision in May to file for bankruptcy. The company said business improved ahead of the Fourth of July holiday, but a rise in coronavirus cases across the South and West has since slowed demand again.
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WarnerMedia began a significant round of layoffs on Monday that will see its ranks decline by 600 people, according to two people with knowledge of the layoffs who were not authorized to speak publicly. The majority of the job losses were at Warner Bros. Entertainment. More layoffs are expected, the people said. The company has a global work force of 7,000. WarnerMedia’s new chief executive, Jason Kilar, is realigning WarnerMedia to put more emphasis on its new streaming service, HBO Max, which pulled in 4.1 million subscribers in its first month.
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Simon Property Group, the biggest mall operator in the United States, said on Monday that 91 percent of tenants across its U.S. properties were open and operating as of Aug. 7, but noted that it was still working to collect rent payments. The company said that it collected about 51 percent of contractual rent from U.S. retailers in April and May combined, 69 percent in June and 73 percent in July, including “some level of rent deferrals.” Simon has been rumored to be a potential bidder for J.C. Penney, which filed for bankruptcy in May, and to be negotiating with Amazon to transform some empty department store space into Amazon distribution hubs. It declined to “respond to market rumors or speculation” when asked about the deals on an earnings call.