By Powerscourt on 07/08/2020
The US Labor Department’s closely-watched employment report, due today, is expected to show that a resurgence of COVID-19 from June onwards has hit the economic recovery after the first wave earlier in the year.
According to a Reuters survey of economists, nonfarm payrolls are expected to have increased by 1.58 million jobs in July, which would be sharply lower than 4.8 million in June, when the economy started to reopen. That would leave payrolls 13.1 million below their pre-pandemic level. The data will be the most significant indicator of how the resurgence has hit the US and is likely to be problematic for President Trump, facing a November election. The administration has argued that the reopening of the US was proportionate and necessary against the advice of most of its medical and scientific advisers.
The onward march of the virus across America will already hit schools ahead of the new academic year, with nine of the 10 largest US school districts confirming they will start the year remotely and review their decision a few weeks in.
University of Washington data predicted that as many as 300,000 Americans could be dead from the virus by the end of the year if authorities across the country don’t remain vigilant.
In the UK, Prime Minister Boris Johnson has again been forced to defend the UK’s “test and trace” programme after renewed criticism. The latest results show that 72.4% of close contacts of people who have tested positive were reached in the week ending 29 July, lower than the previous week’s figure.
The long-awaited contact-tracing smartphone is due to be launched to a limited sample within days, the BBC reported. But the national test and trace programme is already behind the contact tracing app for Northern Ireland, which launched a week ago.
Preston, Lancashire, looks likely to be the next UK district to face a partial lockdown, after it emerged that infection rates there had doubled in the past week.
Meanwhile travel routes both within Europe and long-haul, continue to be hit by measures to contain the virus.
The government announced on Thursday that Belgium, Andorra and the Bahamas would be added to the list of countries from which returning travellers would be required to quarantine for 14 days.
WHAT ARE COMPANIES SAYING?
Retail & Consumer
Uber reported a jump in its Uber Eats customers but a 75% reduction in trip bookings on the ride-sharing front, in the first time that the food delivery service has generated more revenue than ride-sharing. CEO Dara Khosrowshahi said the delivery service had changed from a luxury to a utility and emphasised actions taken by the company: “While we would have all hoped that by now we would have a clear line of sight to the end of the pandemic, hope is not a strategy. The bottom line is we have taken swift action on everything that’s within our control.”
The financing company of the private healthcare provider stressed that its priority in the half was to focus on the welfare of its customers and play its part in government and public health responses to COVID-19. It said that disruption to healthcare provision and its aged care business offset the improved performance in its insurance businesses. The company said it is actively managing its financial position to continue to invest in growth, technology capabilities and operational resilience.
Financials & Real Estate
The property website reported revenues down year on year, but stressed that activity in June was up significantly on the same period last year. CEO Peter Brooks-Johnson said: “Following the reopening of the housing market on 13 May housing market activity is at record levels, with evidence of new home hunters coming into the market with changing needs as they reassess their priorities and further incentivised by the temporary stamp duty holiday. It’s quite incredible that 65 of our record days have been since 13 May.”
Standard Life Aberdeen
The investment group reported profit before tax for the half down 30%, which it said was largely due to lower revenue. The company said the impact of COVID-19 had mainly been seen in lower fee based revenue and impairment charges. CEO Keith Skeoch described a “resilient” performance despite “exceptional circumstances”. The company also highlighted its operational resilience, declining to use any government support schemes, honouring early recruitment and starting no new redundancy programmes.
The investment company reported net new business and growth in AUM, along with a 24% increase in profit before tax. The company used its results to stress that it did not furlough any employees, make any redundancies or seek government assistance. CEO Chris Hill said: “The acute challenges of this year have reinforced the importance of resilience for us all and we will continue to have a key role in helping our clients build resilience into their savings and investments to enable themselves to be confident to manage through difficult periods and events.”
The interdealer broker announced its half year results this morning, reporting increased revenues and profits. The company said it grew its customer base and geographic profile during the half. After an initial surge in activity, the company has seen reduced trading activity in July. During the period the company modernised its technology capabilities to enable employees to work remotely, which it says could lead to reduced property footprint in the future due to fewer recovery sites needed.
The global media company reported a $1.5bn loss with revenues falling at its UK and Australian newspapers. Revenues were down 11% with advertising revenues at its newspapers declining almost 30%. The exception was its Dow Jones financial newswire business which posted a 3% profit despite the crisis. The company is reducing shared functions and cutting costs to offset the impact.
The government regulator for gas and electricity announced this morning that the price cap for energy bills will fall to its lowest price as a result of COVID-19. Ofgem said that the crisis has depressed energy demand and the new cap takes account of this. The regulator does warn that should wholesale gas prices rise, the cap will be increased accordingly.
IN THE NEWS
Pressure grows on Sunak to extend UK furlough scheme – Financial Times
Banks ‘must lend or risk worse slump’ – The Times
PM aide Cummings damaged public confidence in UK COVID-19 response – Reuters