Companies filled jobs at a record pace in the month before omicron hit, piling further pressure on the Bank of England ahead of its key meeting this week.
Employers added 257,000 workers to their payrolls in November – the biggest jump since records began in 2014. Meanwhile, unemployment fell to 4.2pc in the three months to October, down from 4.3pc in the previous period.
The figures mean the labour market has recovered to above pre-pandemic levels in all regions and suggests companies weathered the end of the furlough scheme.
The Bank of England has said it will look closely at labour figures to track the economic recovery and impact of inflation. However, the emergence of omicron has prompted investors to scale back bets on an interest rate increase on Thursday.
British Airways sets date to restart Gatwick short-haul flights
British Airways has said its short-haul operations at Gatwick will start up again in March, with tickets to 35 destinations back on sale from today.
Flights operated by the new subsidiary – dubbed BA Euroflyer – will operate to destinations including Ibiza, Faro, Malaga and Tenerife.
The flights, which will still be branded British Airways, will begin with three aircraft, with plans to ramp up to 18 by the end of May.
It follows a battle with unions over plans to resume short-haul flights at Gatwick, which were suspended at the start of the pandemic.
Pilots ultimately voted in favour of the new subsidiary after BA, which is owned by IAG, said it would scrap European operations at Gatwick altogether if it couldn’t cut costs.
Gas prices rise again as crisis risks lasting into next winter
Another day, another rise in gas prices, with traders now fearing the crisis could spill over into next winter.
Supplies from Russia, which were already tight, are under further threat amid a geopolitical crisis as the country builds troops at the border with Ukraine.
If the tensions spill over into conflict, it could delay the start of the controversial Nord Stream 2 pipeline and risk other supplies.
EU leaders will meet on Thursday to discuss ways to respond to the energy crisis, including a potential deadline to end long-term gas supply deals that are favoured by Russia.
It comes on top of existing pressures on the market, with the weather turning cold while gas inventories have slumped to the lowest level on record for this time of year.
Benchmark European gas prices jumped as much as 5.9pc this morning, while the UK equivalent gained 2.5pc.
Apple and Google have ‘vice-like’ grip on consumers, watchdog finds
Apple and Google have a “vice-like” grip on how consumers use mobile phones, stripping any meaningful choice out of the system.
That’s according to the competition watchdog, whose preliminary investigation concluded the two companies were able to leverage their market power to create largely self-contained ecosystems. It also warned an ability to determine which apps are available on their systems could lead to higher prices.
Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA), said: “Apple and Google have developed a vice-like grip over how we use mobile phones and we’re concerned that it’s causing millions of people across the UK to lose out.”
The CMA’s report set out a range of options that could address the issues it has identified, including making it easier for users to switch between Apple’s iOS and Google’s Android phones without losing functionality or data.
It is also looking at whether users could install apps through methods other than Apple’s App Store or Google’s Play Store.
The regulator is welcoming responses to its initial findings by 7 Feb and plans to publish a final report by June next year.
Pfizer jab gives 70pc protection against omicron hospitalisation
Two doses of Pfizer’s Covid vaccine gives 70pc protection against hospitalisation with the omicron variant, according to a major new real-world study.
Sarah Newey has more:
The research, which comes amid mounting concern about the spread of the highly contagious variant worldwide, was based on more than 211,000 positive coronavirus test results in the three weeks leading to December 7 – including 78,000 thought to be omicron. In total, 41 per cent of those testing positive had received two Pfizer-BioNTech shots.
It found that the effectiveness of two Pfizer shots at preventing severe disease – defined as hospitalisation – has dropped to 70 per cent, substantially lower than the 93 per cent protection offered during South Africa’s delta wave.
This figure remains far higher than the original benchmark of 50 per cent set by the World Health Organization, and is much better than many hoped in the face of omicron, which has a high number of mutations on the spike protein which vaccines target.
PureGym raises £300m from private equity firm KKR
PureGym says it’s secured £300m of investment from buyout group KKR as the gym group looks to ramp up its expansion plans.
The cash injection will see KKR become a significant minority investor in the business alongside management ad Leonard Green & Partners, who retain a majority stake.
It comes as PureGym looks to expand its portfolio of sites amid a rebound from the pandemic, when lockdown closure hammered revenues.
Humphrey Cobbold, chief executive of PureGym, said:
We are simply delighted to welcome today an investment firm of KKR’s stature – a firm I have known and respected for many years – as our new strategic partner.
To have investors of the calibre of KKR and LGP supporting our business is a testament to the extraordinary efforts of every single colleague across our enterprise.
Pound steadies after strong jobs data
Sterling steadied this morning as investors weighed up buoyant jobs data and the omicron variant ahead of the Bank of England meeting later this week.
New figures showed employment rose at a record rate in November, suggesting the labour market held up well despite the end of the furlough scheme.
This would likely have prompted an interest rate rise by the Bank of England, but the emergence of omicron and risk to economic growth have thrown those plans into doubt.
The pound, which dropped on Monday amid virus fears, gained 0.08pc against the dollar to trade at $1.3224. Against the euro it was little change at 85.45p.
National Express to buy Stagecoach in all-share deal
National Express and Stagecoach have finalised the terms of a merger that will create a major new player in the UK bus market.
The all-share deal will see Stagecoach investors receive 0.36 new National Express shares in exchange for each Stagecoach share.
The firms said the combined company, which will control around 30pc of the UK bus market, will be able to make cost savings of at least £45m and pave the way for growth in revenue and scale.
Following the completion of the deal, Stagecoach chairman Ray O’Toole will lead the board of the combined group. National Express’s chief executive Ignacio Garat and chief financial officer Chris Davies will retain their respective roles.
Shares in National Express rose 0.2pc, while Stagecoach leapt 7.3pc.
Mr Garat said:
The proposed combination of National Express and Stagecoach, and the unique strengths of both companies and their teams, will create a leading multi-modal passenger transport business in the UK, aiming to deliver superb services to customers and forging the way to a carbon free future with a new generation of zero-emission buses and coaches.
The combined group will also benefit from the significant growth and cost synergies and a stronger balance sheet to significantly accelerate growth investment across our diversified international portfolio, aiming to deliver attractive sustainable returns to shareholders.
Joules slumps as supply challenges hit profits
Shares in Joules have plummeted this morning after it warned on the impact of supply chain challenges and cost inflation.
The clothing brand posted a 35pc rise in revenue in the first half to £128m, which it said was helped by an increase in customer numbers and strong online trading.
But the company said pre-tax profit was expected to come in at between £2m and £2.5m, down from £3.7m last year.
It said: “The well-documented global supply chain issues have resulted in some higher costs and stock delays during the period.
“In addition, labour shortages in our third-party operated distribution centre have resulted in extended product delivery times to online customers, stores and wholesale partners.”
Shares in Joules slumped by as much as a third, before recovering to a fall of 22pc.
Rentokil inks £5bn pest control deal
Rentokil has inked a $6.7bn (£5bn) deal to buy Terminix Global as it eyes up expansion in the US pest control market.
The cash and share deal gives Terminix an implied price of $55 per share – a 47pc premium on its last closing price. Both boards backed the deal, which is Rentokil’s largest ever acquisition.
Terminix specialises in pest control ranging from rats and cockroaches to scorpions. The companies said the deal will allow Rentokil to scale and cut costs and will start boosting profits a year after completion.
Terminix shareholders will own just over a quarter of the enlarged company, which will trade in London and New York. They can elect to receive cash or shares in the transaction. Rentokil plans to pay 20pc of the overall purchase price in stock.
Shares in Rentokil jumped as much as 6pc in early trading, before reversing course to drop 3pc.
Ocado jumps on US court victory
Ocado is leading the FTSE 100 this morning thanks to victory in a key patent infringement court case in the US, which helped distract investors from a fall in sales.
The online grocer was cleared of patent infringement following multiple claims by Norwegian robotic warehouse company AutoStore.
The company, which is a joint venture with Marks & Spencer, said sales in the 13 weeks to November 28 fell 3.9pc to £5478m, which it blamed on cost pressures, staff shortages and more workers returning to the office.
However, sales remain well above pre-pandemic levels – up 31.6pc – and bosses said they are mitigating rising prices and shortages of dry ice to ensure they have the “best-ever” Christmas period.
Ocado also issued a bullish outlook for 2022, forecasting revenue growth of between 10pc and 15pc as it adds capacity. Shares jump 6.7pc.
Melanie Smith, chief executive of Ocado Retail, said:
The investments we have made over the past year mean we have significant capacity for growth in 2022 and we will continue to invest in facilities, systems and people in the year ahead to deliver on our long-term growth potential.
We are working hard to manage current industry challenges, and Ocado Retail has great momentum as we get ready for another record Christmas and further strong progress next year.
FTSE risers and fallers
The FTSE 100 has rebounded strongly this morning thanks to some strong jobs data showing the employment market weathered the end of the furlough scheme.
The blue-chip index is now up 0.7pc and on track to break a four-session losing run.
Ocado is the biggest gainer, up 4.2pc after revealing it had won a patent infringement lawsuit against Norwegian robotics company AutoStore Holdings.
Miners including BHP and Antofagasta also provided a boost, tracking a rise in aluminium prices amid tight supply.
Rentokil initially jumped to the top of the index after announcing a $6.7bn (£5bn) deal to buy US rival Terminix Global, before reversing gains to drop 3.5pc. BT dropped more than 5pc after Patrick Drahi ramped up his stake.
The domestically-focused FTSE 250 is up 0.5pc, led by gains for outsourcer Capita.
Government monitoring BT situation
Patrick Drahi’s move is likely to have sent further shockwaves through BT, which has been braced for a potential takeover bid ever since the French billionaire emerged as its biggest shareholder in June.
In a brief statement acknowledging the stake increase this morning, BT said it will “continue to operate the business in the interest of all shareholders and remains focussed on the successful execution of its strategy and building on recent performance momentum”.
Ministers have been somewhat more robust in their reaction. Shortly after the share purchase was announced, the Government said it was “monitoring the situation carefully” and would “not hesitate to act if required to protect our critical telecoms infrastructure”.
Foreign takeovers have been a contentious issue in recent months, and any bid for BT would likely be scrutinised under the recently-passed National Security and Investment Act, which comes into force in January.
French tycoon ups stake in BT
There’s some major corporate news out this morning, with French billionaire Patrick Drahi revealing he’s increased his stake in BT.
The tycoon rattled the telecoms giant in June by taking a 12pc stake, sparking speculation he could be preparing a takeover bid.
Mr Drahi, who’s swooped on BT through his telecoms group Altice, has now ramped up his shareholding to 18pc by buying another 585m shares. His stake is now worth more than £3bn.
It’s the first move since a six-month moratorium on further share purchases expired on Saturday, though Mr Drahi reiterated his previous claim that he doesn’t intend to make a takeover bid.
FTSE 100 rises after strong jobs data
The FTSE 100 has pushed higher at the open after new statistics showed the UK jobs market had proved resilient after the end of the furlough scheme.
The blue-chip index is trading 0.6pc higher at 7,276 points.
Vacancies hit record high
One of the key areas to look at in this morning’s data is vacancies.
They’ve risen to a record high of 1.22m, suggesting the UK market is still grappling with a chronic shortage of workers.
This will force firms to push up wages and prices, fuelling inflation concerns.
More expert reaction: BoE may regret interest rate decision
Hugh Gimber at JP Morgan Asset Management says:
Without the recent emergence of the omicron variant, today’s UK labour market report would likely have been enough to convince the Bank of England to hike interest rates at Thursday’s meeting […]
Sadly, Covid-19 is yet again confusing matters. With Omicron posing near-term risks to the growth outlook, and still much to learn about the real-world efficacy of vaccines, we expect policymakers to instead opt to keep rates on hold this week in the hope that the outlook has become clearer by February.
In hindsight this was always the risk with leaving rates unchanged last month. With a 15 basis point interest rate hike already fully priced by markets ahead of the November meeting, the Monetary Policy Committee may now regret not having taken its earlier opportunity to hit lift off.
Expert reaction: ‘Little doubt’ labour market is tightening
Kitty Ussher, chief economist at the Institute of Directors, says:
This is the data that the Monetary Policy Committee has been eagerly awaiting to see if the end of the furlough scheme in September would cause a rise in unemployment. Instead, it shows unemployment continuing its downward march, including an encouraging fall among younger people who were particularly badly affected by the pandemic.
With the number of payrolled employees – and vacancies – also continuing to rise, there is now little doubt in anybody’s mind that the labour market is becoming ever tighter.
More concerning is the slight rise in economic inactivity among people of working age. Since the summer this appears to have been more to do with increased long-term sickness than from early retirement.
Early in the pandemic we had also seen a fall in the number of people citing ‘looking after family/home’ as a reason for economic inactivity, perhaps as homeworking became easier, but that trend is now less clear as the economy settles.
In figures: UK jobs market
- The number of employees on payroll rose 257,278 in November – the biggest jump on record
- The unemployment rate fell to 4.2pc in the three months to October, down from 4.3pc in the three months to September. In October, the rate rose to 4.2pc from 3.9pc the previous month.
- Vacancies rose to a record 1.22m between September and November.
- Overall pay growth slowed in the three months to October to 4.9pc, from 5.9pc in the previous quarter.
- Claims for unemployment benefits fell by 49,800 in November.
Mims Davies, minister for employment, said:
With the number of people on payrolls now above pre-pandemic levels across every region and age group, including the biggest monthly increase on record in November, it’s clear our Plan for Jobs is working.
As we look ahead to next year, we remain wholeheartedly committed to helping employers recruit for the record number of opportunities out there and to giving people – at any age and any career stage – the support and skills they need to confidently land their next role.
Jobs market buoyant
With the Bank of England’s meeting in focus this week, there’s been a further muddying of the waters.
New statistics show a record jump in employment in November, suggesting the end of the furlough scheme has done little to ease the huge shortage of workers.
The Bank has previously said it will keep a close eye on labour market figures, with the continued growth suggesting that inflationary pressures are growing.
But an interest rate increase this week is far from guaranteed. MPC members will need to weigh up the risk of inflation with the new threat to the economic recovery sparked by omicron.
5 things to start your day
1) Europe’s biggest battery storage system to be built in Teesside Singapore-based Sembcorp Industries is planning a new facility to help Britain manage intermittent flows of renewable power
2) Purplebricks kept bill for paperwork bungle from auditors Shares in online estate agent plunge by a fifth after admitting it faces a multi-million pound liability for tenancy law breaches
3) Plan B keeps shoppers away from the high street as Dyson tells staff to keep going to work Sir James Dyson’s company becomes the latest to push back against government advice to work from home
4) Bank of England opens the door to bigger mortgages Threadneedle Street to launch consultation on reforming lending rules next year that may let thousands of borrowers to take out bigger loans
5) Ocado sees off legal threat from rival robot retailer The judgement will still have to be confirmed by the US International Trade Commission over the next few months
What happened overnight
Asian markets were broadly down in morning trade on Tuesday, as investors watched the Omicron coronavirus variant and looming central bank moves to curb rising inflation. Tokyo was down in morning trade, as were Seoul and Sydney. Taipei and Jakarta were slightly up.
Coming up today
- Corporate: Chemring (Full-year results); Begbies Traynor, Bmo Global Smaller Companies (Interims); Ocado, Joules (Trading update)
- Economics: Unemployment (UK), average earnings (UK), industrial production (EU), producer prices (US)