Closing summary: US jobs data lower than expected; UK housebuilders gain from planning easing
The number of job openings in the US was 600,000 lower than expected in July, in a possible sign that the Federal Reserve’s monetary policy tightening may be feeding through to the broader economy.
The job openings and labour turnover survey (Jolts) showed that there were 8.8m job openings for the month, down from 9.2m the month before, and well below the 9.5m expected by economists polled by Reuters.
US JOLTS Job Openings Jul: 8827K (est 9500K; prevR 9165K)
— LiveSquawk (@LiveSquawk) August 29, 2023
A slowing economy could make the Fed under chair Jerome Powell (seen below at the Jackson Hole resort, if not actually in fishing gear, then at least adjacent to fishing gear) consider letting up the pressure on the economy through higher interest rates.
That appeared to be the reaction of financial markets: US benchmark bond yields dropped by 0.056 percentage points, a sign that investors see the stable revenue stream offered by bonds as more attractive if interest rates remain lower than previously thought. The US dollar dropped back into negative territory for the day.
In the UK, stock markets caught up on some gains missed during the bank holiday weekend. The FTSE 100 had gained 1.6% with about 75 minutes of trading remaining on Tuesday.
Housebuilders Persimmon, Barratt Developments and Taylor Wimpey were among the biggest gainers on the FTSE 100, thanks in part to a planned easing of planning rules that required new construction to ensure it did not harm local water.
Persimmon gained 5.2%, while Barratt gained 3.9% and Taylor Wimpey rose by 3.6%.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, an investment platform, said housebuilders had likely been helped by expectations of easing inflation, but also by the proposed liberalisation in the planning rules:
The easing of the planning rules has helped power housebuilders higher today. Given the housing shortages in populous parts of the UK, it’s hoped that making housing construction exempt from requirements designed to limit harmful chemicals being discharged into waterways, will mean plans for new estates will be waved through more quickly.
However, larger developers are still likely to have to contribute to the nutrient nitigation scheme set up to stop the environmental impact of waste water discharges from housebuilding although the structure of these payments is yet to be thrashed out.
In other business news on Tuesday:
The introduction of post-Brexit checks on food, plant and animal produce arriving in Britain has been delayed for the fifth time, the government has confirmed, meaning they will not begin until the end of January next year.
Plans for redundancies and store closures at Wilko have been put on hold as administrators consider two potential last-ditch rescue bids that emerged over the bank holiday weekend.
Shares in Evergrande fell a further 14% on Tuesday after more than $2bn was wiped off the Chinese property developer’s market value when it resumed trading for the first time in almost 18 months on Monday.
The UK’s Network Rail has withheld annual bonuses from its union members who took part in strikes, in a move that threatens to further sour industrial relations.
Amazon’s CEO has told workers “it’s probably not going to work out” for them at the tech company unless they are prepared to come into the office at least three days a week.
Airline passengers have been warned that flight disruption could persist for days, after a technical meltdown in UK air traffic control left hundreds of thousands of passengers stranded or delayed on the summer bank holiday.
You can continue to follow the Guardian’s live coverage from around the world:
In the UK, Rishi Sunak took a helicopter to a housebuilding visit where he defended the government’s “green credentials”
In the US, the first of Donald Trump’s co-defendants pleads not guilty in Georgia election case
In our coverage of Russia’s war on Ukraine, Vladimir Putin won’t attend Prigozhin’s funeral, says Kremlin
Thank you for following our live coverage today. Please do join me again tomorrow morning for more of the same. JJ
It is looking like an uneventful morning on Wall Street, as the US braces for jobs data. Here are the opening snaps for the stock markets via Reuters:
NASDAQ DOWN 13.48 POINTS, OR 0.10%, AT 13,691.65
S&P 500 UP 1.36 POINTS, OR 0.03%, AT 4,434.67
DOW JONES UP 4.42 POINTS, OR 0.01%%, AT 34,564.40
Network Rail has withheld annual bonuses from its union members who took part in strikes, in a move that threatens to further sour industrial relations.
The state-owned railway infrastructure manager settled the pay dispute with its workforce in March this year, after RMT members voted to accept a rise worth 9% over two years.
However, Network Rail has told staff that those who took part in any of the strikes from June 2022 onwards that they will not receive a bonus.
The RMT called the move “disgraceful” and an attempt to divide workers in the union.
The bonus is understood to have been much lower than usual this year owning to Network Rail’s performance, which was heavily affected by the strikes. However, those who did not strike will receive about £300.
Housebuilders top the FTSE 100
At the top of the FTSE 100 index in lunchtime trading we have housebuilder Persimmon, up 4.5%. It is joined by Barratt Developments and Taylor Wimpey in the top 10 risers.
It is unclear exactly what has pushed them to the top of the table – and analysts have so far not offered any clues to me (tweet at me if you have some ideas).
But one story this morning that will likely affect all of those companies is the government decision to scrap nutrient neutrality rules for construction. Here is the latest from Guardian environment correspondent Helena Horton:
Taxpayers will pick up the bill for pollution by housebuilders, government officials have admitted, as rules on chemical releases into waterways are scrapped.
If an amendment in the House of Lords tabled on Tuesday passes, developers will no longer have to offset the nutrient pollution caused by sewage from new homes. The government has said it will double Natural England’s wetland funding to £280m in order to show it is trying to meet the requirements of its legally binding Environment Act.
This extra £140m will come from the public purse, the government confirmed. When asked by the Guardian whether this meant the taxpayer was now picking up the bill for pollution caused by developers, a government official responded “yes”, adding that while “the polluter pays principle is very important”, it was having too many adverse impacts on small- and medium-sized housebuilders.
Stewart Baseley, executive chair of the Home Builders Federation, the lobby group for the sector, said:
Today’s very welcome announcement has the potential to unlock housing delivery across the country, from Cornwall to the Tees Valley, where housebuilding has been blocked despite wide acknowledgment that occupants of new homes are responsible for only a tiny fraction of the wastewater finding its ways into rivers and streams.
You can read the full story here:
3M is probably best known for making Post-It Notes, but that is a side hustle for its role as a major conglomerate making a huge array of chemicals, healthcare products and protective equipment.
The latter business has landed it in difficulty, with a long-running dispute over accusations that it sold defective combat earplugs to the US military. The company on Tuesday said it will pay $6bn (£4.8bn) to settle 260,000 lawsuits.
The earplugs were made by a company 3M bought in 2008, and were used between 2003 and 2015, including by soldiers in Iraq and Afghanistan.
The settlement comes after the subsidiary unsuccessfully applied for bankruptcy protection, in an effort to limit the liabilities to $1bn. A judge rejected the bankruptcy in June, pointing out that the subsidiary was doing just fine, considering it had the backing of one of the US’s 100 biggest listed companies.
Despite the enormous payout, 3M said it stands by the products:
This agreement is not an admission of liability. The products at issue in this litigation are safe and effective when used properly. 3M is prepared to continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled.
M2 has written to administrators questioning whether the bid process was “fair and transparent” as it was given a deadline to provide details of its funding on a UK bank holiday.
However, a source close to the process questioned the credibility of the M2 bid, which was put forward very late on the final day for offers, and whether the finance group had the required funds available.
Andy Prendergast, the national secretary of the GMB union, which represents thousands of Wilko staff, said: “There appears to be a glimmer of hope but there is still a long way to go,” he said.
We don’t want to get carried away as our members deserve certainty, but we are hopeful that jobs can be protected.”
You can read the full report here:
Wilko redundancies suspended while bids considered - union
Redundancies at Wilko will not be proceeding while administrators consider further bids for the struggling retailer, the GMB union has said.
The union met with administrators on Tuesday morning to discuss the bids which have been made for the discount retailer, including one from Canadian entrepreneur Dough Putman and another from M2, a private equity firm.
Andy Prendergast, GMB national secretary, said:
All redundancies at Wilko have been suspended while the administrator considers further bids.
Whilst this is a positive development, Wilko is not out of the woods by any means and this is a time of incredible stress and worry for the 12,500 workers who face losing their jobs.
London mayor drops proposal for zero emissions zone - FT
London mayor Sadiq Khan will not go ahead with proposals for a zero-emissions zone that would have added charges for drivers of petrol and diesel vehicles in the centre of the capital, the Financial Times has reported.
Transport for London on Tuesday launched its expanded ultra-low emission zone (Ulez), which will charge the most polluting cars £12.50 a day for driving in the Greater London area in an effort to cut air pollution.
About 90% of cars in London will not be affected by the Ulez charge because they fall under emissions limits. However, the expansion has become politically contentious, with the Conservative party and other parties further to the right in particular protesting against the move because it affects areas with less public transport than the centre of the city.
A zero emissions zone would affect a much larger proportion of London car owners, although sales of electric cars – which produce no exhaust emissions – are rising very quickly ahead of the UK’s 2030 ban on new petrol and diesel sales.
A spokesperson for the mayor’s office, quoted by the FT (£), said:
TfL continues to support boroughs who wish to implement zero emission zones in their local areas.
The mayor is rolling out some of the most ambitious policies of any city in the world to clean up London’s air, including the expansion of the ultra low emission zone, bringing cleaner air to 5m more Londoners.
The government claims the new checks will “create the most effective border in the world”. It has certainly been a long time coming: the UK left the EU on 31 January 2020.
Since then there has been a pandemic and an energy crisis. That led to the cost of living crisis, and it is thought that the government added the latest delay because of concerns that new checks could fuel inflation further.
The government noted that it is “bringing in controls on imports from the EU for the first time” but also taking away some controls on imports from non-EU countries, which it says is an example of “using Brexit freedoms”.
Yet as ever with a new, complicated system, there were concerns whether the big changes would be ready in time.
As Jo Partridge reported last week:
Businesses in the food industry and hauliers had also expressed their concern that uncertainty about the government’s final border strategy left little time for them to adapt to the new rules.
The government has said that the UK will have a “world-class border system” – once the long-delayed checks have actually been brought in, that is.
Baroness Neville-Rolfe, a minister of state at the Cabinet Office, said:
Our border target operating model will ensure more efficient trading for businesses, protect against biosecurity threats and further crack down on illegal imports such as firearms and drugs.
By making maximum use of data and new technologies, our innovative yet risk-based approach is key to delivering a world-class border system. Once fully implemented, these important post-Brexit measures will, I believe, bring considerable benefits to the UK economy and to UK trade, and the government stands ready to support businesses through this transition.
The UK’s chief veterinary officer, Christine Middlemiss, also claimed that the new border checks will better protect the country against growing animal disease threats. She said:
The threat from imported animal and plant diseases, such as African Swine Fever & Xylella fastidiosa, continues to grow.
There will also be further delays on checks on riskier items – which need more detailed inspection – such as some plants and foods.
The government said:
To give stakeholders additional time to prepare for the new checks, further controls have a revised timetable. These include checks on medium risk animal products, plants, plant products and high risk food (and feed) of non-animal origin from the EU, implemented in April 2024, and safety and Security declarations for EU imports, implemented in October 2024.
It is the fifth delay, reckons the Guardian’s Joanna Partridge:
The UK government’s introduction of post-Brexit border checks has been delayed for the 5th time, it’s been confirmed.
— Joanna Partridge (@JoannaPartridge) August 29, 2023
As widely reported in recent days, the phased start of controls has been pushed back by 3 months to Jan 2024. pic.twitter.com/62ECewC04n
UK government confirms another delay to post-Brexit food checks
The UK government has confirmed that it will delay the introduction of post-Brexit checks on food by another three months, after warnings the long-promised new regime would not be ready in time.
The UK’s Cabinet Office said that “remaining sanitary and phytosanitary controls, as well as full customs controls for non-qualifying Northern Ireland goods, […] will now be introduced from January 2024.
The government had said in April that new checks would come into force on Halloween, 31 October.
We’ll have more details here shortly…
FTSE 100 gains after China adds stimulus to support markets
The FTSE 100 has gained a bit more ground: it’s up by 1.4% now. Analysts are crediting Chinese government stimulus for boosting global markets.
The FTSE 250, measuring the performance of the mid-sized companies on London’s main market, has also gained 1.4%.
China’s economy is struggling. There is a long-running property crisis, and the economy recently started on a bout of consumer price deflation, by some measures. Shares in Evergrande, once China’s largest property developer, have tumbled.
So why are European markets rising? China’s government has shown that it is willing to take some steps to prevent the situation from spiralling.
Reuters reported:
China halved the stamp duty on stock trading effective Monday in the latest attempt to boost the struggling market as a recovery sputters in the world’s second-biggest economy.
The finance ministry said in a brief statement on Sunday it was reducing the 0.1% duty on stock trades “in order to invigorate the capital market and boost investor confidence”.
The signal has proven positive for global stock markets, many of whose companies rely on China as a big buyer of products.
Russ Mould, investment director at AJ Bell, an investment platform, said:
The market may have been underwhelmed by China’s initial efforts to restore confidence, but that doesn’t seem to be the case with the latest measures, which have given Chinese and global stocks a real boost.
Whether the medicine Beijing is doling out will deal with the causes rather than just the symptoms of its economic challenges is debatable, but for the time being it is at least doing enough to restore sentiment.
The lack of any big shocks in US Federal Reserve chair Jerome Powell’s Jackson Hole speech also seems to have helped create the conditions for a late summer rally.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, another investment platform, said:
Fresh evidence that inflation is going in the right direction and fresh stimulus for industries in China have given the FTSE 100 a big spring in its step in early trade. Commodity giants have jumped higher as metals prices have risen after Beijing introduced support for transport, property and infrastructure projects. For now this extra help has boosted sentiment but underlying questions still remain over the fragility of China’s economy.
For anyone affected by disruption today, the advice for passengers is evergreen: if your flight is cancelled you are due a refund or a trip on the next flight.
But there is no compensation for people, because the delays were not the fault of the airlines, writes the Guardian’s (very busy) transport correspondent, Gwyn Topham:
What do airlines have to do for passengers if a flight is delayed or cancelled?
Generally, a passenger booked on a cancelled flight with an EU or UK carrier has a right to a full refund or to be rebooked on to the next available flight, including on a rival airline.
If the outbound leg of a return flight is cancelled, you have the right to a refund on both legs, should for example the timings leave a short bank holiday getaway ruined. If you get stuck abroad, the airline should provide refreshments and accommodation – if you can’t contact them, keep receipts and claim back.
Can I claim compensation?
Afraid not. Lisa Webb, a consumer law expert at Which?, says: “Air traffic control issues are classified as ‘extraordinary circumstances’ and passengers will not be entitled to compensation.” However, she says airlines should be “doing all that they can to keep their passengers up to date on the situation, supporting them on the ground with food and accommodation and doing their best to get them to their destination as soon as possible”.
Some travel insurance policies may fill in the gaps. Check the small print: many will offer some payout for prepaid hotels or excursions where no refund is available, should delays mean you miss out on part of the trip.
Eight of the airports with the most cancellations worldwide for yesterday were in the UK, according to FlightAware, another flight data provider.
The UK’s flight cancellations on Tuesday are not, for the most part, yet showing up on FlightAware’s website (e.g., it counts three cancellations for Manchester airport, when the airport itself shows 18 cancellations). However, other places have already taken over: e.g., Tampa airport in Florida has cancelled every flight in anticipation of a storm.
The Hill reports:
Tampa International Airport (TPA) announced it will close Tuesday ahead of Tropical Storm Idalia, which is forecasted to strengthen into a Category 3 hurricane by Wednesday as it threatens Florida with dangerous rains, winds and storm surge.
Airport delays improving, but Heathrow still 'excessive'
There are still significant delays at UK airports, but things appear to be improving, according to data website Flightstats.
It shows London Heathrow’s delay status as “excessive” – the highest level for the UK’s main airport hub.
London Gatwick and London Stansted are “significant and descreasing”.
Manchester is “excessive and decreasing”.
Glasgow and Edinburgh are “moderate and decreasing”.
Belfast International is “significant”.
Everywhere else in the UK appears to be low or very low, so most flights from regional airports – which are generally much less dependent on complicated schedules – now appear to be running as normal.
Here is the latest on the UK air travel situation from the Guardian’s Jamie Grierson:
Major UK airlines including Tui and BA warned of “significant delays” for passengers amid changes to schedules. Passengers were urged by airlines to check before they leave for the airport as their flight times may have changed.
Heathrow airport tweeted on Monday night: “We apologise for any inconvenience as a result of the Nats technical issues today. The issue has been resolved however schedules remain significantly disrupted. If you are travelling on 29th August, please ensure you contact your airline before travelling to the airport.”
You can read the full report on transport minister Mark Harper’s comments here:
Here are the snap readings at the European stock market open:
EUROPE’S STOXX 600 UP 0.6%
BRITAIN’S FTSE 100 UP 1.2%
FRANCE’S CAC 40 UP 0.3%, SPAIN’S IBEX UP 0.5%
EURO STOXX INDEX UP 0.4%; EURO ZONE BLUE CHIPS UP 0.3%
GERMANY’S DAX UP 0.3%
You can see from this that the FTSE 100 is still a bit of an outlier. That’s mainly because markets gained ground on Monday around the world in the aftermath of a speech on Friday by Federal Reserve chair Jerome Powell. Powell did not rock the boat too hard in the speech, which hinted that there are probably higher rates ahead.
It was given at the central bankers’ summit at the Jackson Hole resort in Wyoming, which gives us an opportunity to look at central bankers’ summer gear: suits with no ties for the men, according to this family photo.
The UK’s FTSE 100 stock index has jumped at the opening bell after returning from the bank holiday, in a catch-up move following strong gains in Asia and Wall Street.
In fact, the share prices of every single company in the benchmark index have risen in the opening trades – a relatively rare occurence. The index was up 1.3% in the first 10 minutes of trading.
The top gainer is packaging company Bunzl, which is up 3.5% after upgrading its profit forecast.
UK minister: airport disruption to continue
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
Mark Harper, the UK’s transport secretary, has said analysis by the UK’s cyber security authorities suggested that yesterday’s air traffic control systems failure was not caused by a computer hack, amid continued disruption.
The number of planes in UK airspace was severely limited for hours on Monday after the flight planning system at National Air Traffic Services, the private company that manages flights in the UK, suffered a technical issue.
Speaking this morning to BBC radio’s Today programme, Harper said cyber authorities had ruled out external actors as a cause, although he declined to give details of what caused the failure beyond saying there was a “technical issue yesterday morning with the flight planning system”. He said:
Those people in government who look at these things have looked at it and they are clear it wasn’t a cyber attack.
Harper apologised to people affected by the disruption, which he said will continue through Tuesday as airlines try to get people back to where they were scheduled to be.
The problem was fixed yesterday afternoon, but the impact of it will continue today. There are some flights obviously not where they should be, and airlines are working very hard now to get their customers back in the position they should be.
Airlines do have a responsibility, either to get people back on a flight to get them home, or to pay for them to be accommodated and to sort out food and drink as well. If they don’t do it then people can claim for reasonable costs themselves and then claim them back from the airlines.
Despite @NATS resolving the technical issue behind today’s air traffic control issues, flights are still unfortunately affected.
— Mark Harper (@Mark_J_Harper) August 28, 2023
I’d encourage all passengers to read @UK_CAA’s guidance & be aware of their rights when flights are delayed or cancelled 👇 https://t.co/K4coeXbUCX
It is a busy day on the UK’s transport agenda, as London’s ultra-low emission zone (Ulez) comes into force today. Owners of older and more polluting cars will have to pay £12.50 per day if they want to drive within the expanded zone.
The introduction of the zone has been fought furiously by some people who do not want to pay more, but the capital’s mayor, Sadiq Khan, has said the zone is necessary to reduce deadly air pollution.
The agenda
2pm BST: US S&P/Case-Shiller house price index (June; previous: -1.7% year-on-year; consensus: -1.3%)
3pm BST: US job opening and labor turnover (July; prev.: 9.582m openings; cons.: 9.465m)
