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You can find the current article at its original source at https://www.theguardian.com/business/live/2020/oct/01/stimulus-hopes-markets-rolls-royce-factories-us-jobless-claims-business-live
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| UK factories keep cutting jobs; Rolls-Royce launches rights issue – business live | UK factories keep cutting jobs; Rolls-Royce launches rights issue – business live |
| (32 minutes later) | |
| Rolling coverage of the latest economic and financial news, as UK manufacturing recovery continues....but headcounts are still cut | Rolling coverage of the latest economic and financial news, as UK manufacturing recovery continues....but headcounts are still cut |
| Ocado’s shares are down nearly 4% after a Norwegian rival accused the company of stealing the technology behind its robot-powered grocery picking warehouses. | |
| AutoStore has filed patent infringement lawsuits in America and the UK against the FTSE 100-listed online grocery company. | |
| The company wants to stop Ocado selling the so-called Ocado Smart Platform (OSP) to other retailers (this is the hi-tech system uses robots to swarm over a 3D frame called the “grid” to pick shoppers’ orders). | |
| Ocado’s share price has soared over the last three years after it struck its first deal to supply the technology overseas chains. The first deal, with Groupe Casino in France, has been followed by eight others, ranging from Kroger in the US to Aeon in Japan – and hopes of further deal have put the company’s worth on a par with Tesco, the UK’s biggest retailers. | |
| AutoStore is seeking orders barring Ocado from manufacturing, importing, using and selling the OSP which it claims is based on its own robotic platform. | |
| AutoStore is also seeking financial damages. AutoStore chief executive Karl Johan Lier said its “ownership of the technology at the heart of Ocado’s warehousing system is clear”, adding: | |
| The pound has just dramatically recovered those early losses, after the FT’s Sebastian Payne tweeted that negotiations on a Brexit free trade deal are making progress. | The pound has just dramatically recovered those early losses, after the FT’s Sebastian Payne tweeted that negotiations on a Brexit free trade deal are making progress. |
| Sterling has jumped back to $1.2940, on the prospect of a “landing zone” to resolve differences on state aid. Fishing rights, though, seem to be the sticking point..... | Sterling has jumped back to $1.2940, on the prospect of a “landing zone” to resolve differences on state aid. Fishing rights, though, seem to be the sticking point..... |
| (the tunnel is the point at which intensified negotiations take place, once a deal is close) | (the tunnel is the point at which intensified negotiations take place, once a deal is close) |
| Getting back to Rolls-Royce... the UK government is playing a vital role in its rescue fundraising, argues Edward Cropley of Reuters Breakingviews. | Getting back to Rolls-Royce... the UK government is playing a vital role in its rescue fundraising, argues Edward Cropley of Reuters Breakingviews. |
| The pledge, in principle, for an extra £1bn loan from the taxpayer underpins today’s £5bn package - and recognises just how important Rolls-Royce is to the UK economy today. | The pledge, in principle, for an extra £1bn loan from the taxpayer underpins today’s £5bn package - and recognises just how important Rolls-Royce is to the UK economy today. |
| Cropley writes: | Cropley writes: |
| More here. | More here. |
| Halfords has raised its profit guidance for the rest of the year after a surge in bike sales during the pandemic. | Halfords has raised its profit guidance for the rest of the year after a surge in bike sales during the pandemic. |
| The retailer said demand for bikes and cycling products had continued following the end of the peak cycling and summer staycation season, and sales were growing again for its car products and services. | The retailer said demand for bikes and cycling products had continued following the end of the peak cycling and summer staycation season, and sales were growing again for its car products and services. |
| As a result, it now expects half-year profits to top £55m, compared with the £35m to £40m it was predicting last month. Shares jumped 21% after the trading update was published on Thursday morning. | As a result, it now expects half-year profits to top £55m, compared with the £35m to £40m it was predicting last month. Shares jumped 21% after the trading update was published on Thursday morning. |
| Back in the markets, the pound has weakened after the EU launched legal action against the UK for planning to breach the Brexit withdrawal agreement. | Back in the markets, the pound has weakened after the EU launched legal action against the UK for planning to breach the Brexit withdrawal agreement. |
| Brussels took action after Boris Johnson failed to respond to demands that he drop elements of the UK’s draft internal market bill that would break international law. | Brussels took action after Boris Johnson failed to respond to demands that he drop elements of the UK’s draft internal market bill that would break international law. |
| Announcing the move, EC president Ursula von der Leyen said the UK had already failed to live up to its obligations to act in “good faith” (the bill was passed by the House of Commons yesterday, and will now be scrutinised by the Lords). | Announcing the move, EC president Ursula von der Leyen said the UK had already failed to live up to its obligations to act in “good faith” (the bill was passed by the House of Commons yesterday, and will now be scrutinised by the Lords). |
| Brussels’ move knocked the pound down by three-quarters of a cent against the US dollar, to $1.284. It has also lost almost one eurocent, falling to €1.093. | Brussels’ move knocked the pound down by three-quarters of a cent against the US dollar, to $1.284. It has also lost almost one eurocent, falling to €1.093. |
| Sterling had rallied earlier this weeks, on hopes of a breakthrough in the free trade talks. This legal action may hurt those talks...although the Telegraph’s James Crisp argues that Europe’s legal wheels turn slowly. | Sterling had rallied earlier this weeks, on hopes of a breakthrough in the free trade talks. This legal action may hurt those talks...although the Telegraph’s James Crisp argues that Europe’s legal wheels turn slowly. |
| But still, being hauled up for breaking international law isn’t a great look, especially when trying to cut new trade deals across the world. Even leading Brexiteer Nigel Farage thinks the EU have a point! | But still, being hauled up for breaking international law isn’t a great look, especially when trying to cut new trade deals across the world. Even leading Brexiteer Nigel Farage thinks the EU have a point! |
| The Office of National Statistics has reported that 11% of the UK workforce were on furlough as of mid-September, with 85% of businesses currently trading. | The Office of National Statistics has reported that 11% of the UK workforce were on furlough as of mid-September, with 85% of businesses currently trading. |
| That suggests that millions of jobs are vulnerable, as the furlough scheme (in which the government currently pays 70% of wages) ends at the end of October | That suggests that millions of jobs are vulnerable, as the furlough scheme (in which the government currently pays 70% of wages) ends at the end of October |
| It will be replaced by a subsidy scheme for workers on reduced hours, in which the government only pays 22% of wages, and employers pay at least 55%. | It will be replaced by a subsidy scheme for workers on reduced hours, in which the government only pays 22% of wages, and employers pay at least 55%. |
| The Bank of England has reported that UK businesses are expecting to cut their workforces, and slash investment. | The Bank of England has reported that UK businesses are expecting to cut their workforces, and slash investment. |
| The BoE’s latest survey of chief financial officers from small, medium and large UK businesses, conduced this month, found that sales are expected to remain weak for many months: | The BoE’s latest survey of chief financial officers from small, medium and large UK businesses, conduced this month, found that sales are expected to remain weak for many months: |
| Businesses estimated that their sales in 2020 Q3 would be 14% lower than they would otherwise have been because of Covid-19. That represents a significant improvement from -30% in Q2. But less recovery was expected over the next two quarters. The impact of Covid-19 on sales was expected to be -14% in 2020 Q4 and -12% in 2021 Q1. | Businesses estimated that their sales in 2020 Q3 would be 14% lower than they would otherwise have been because of Covid-19. That represents a significant improvement from -30% in Q2. But less recovery was expected over the next two quarters. The impact of Covid-19 on sales was expected to be -14% in 2020 Q4 and -12% in 2021 Q1. |
| Covid-19 was expected to lower employment by 8% in 2020 Q3 and 9% in 2020 Q4, relative to what it would have been. After that, the effect on employment was expected to start to fall back to -6% by 2021 Q2. Investment was expected to be 21% lower in 2020 Q3 and to recover gradually after that. | Covid-19 was expected to lower employment by 8% in 2020 Q3 and 9% in 2020 Q4, relative to what it would have been. After that, the effect on employment was expected to start to fall back to -6% by 2021 Q2. Investment was expected to be 21% lower in 2020 Q3 and to recover gradually after that. |
| The Decision Maker Panel also found that fewer workers are on furlough this month (firms now have to pay a greater share of the wages, as the scheme winds up this month) | The Decision Maker Panel also found that fewer workers are on furlough this month (firms now have to pay a greater share of the wages, as the scheme winds up this month) |
| The percentage of employees on furlough (still employed but not required to work any hours) continued to fall in September. Businesses reported that 7% of employees were on furlough in September down from 12% in August and a peak of 36% in April. | The percentage of employees on furlough (still employed but not required to work any hours) continued to fall in September. Businesses reported that 7% of employees were on furlough in September down from 12% in August and a peak of 36% in April. |
| Overall uncertainty remained high. 71% of firms viewed overall economic uncertainty as high or very high in September. That was similar to 70% in the August survey. | Overall uncertainty remained high. 71% of firms viewed overall economic uncertainty as high or very high in September. That was similar to 70% in the August survey. |
| Anxiety about Britain’s exit from the EU has also shot up the list of worries: | Anxiety about Britain’s exit from the EU has also shot up the list of worries: |
| The percentage of businesses reporting that Brexit was in their top-three sources of uncertainty increased from 47% in August to 52% in September. That was the highest level since last December. | The percentage of businesses reporting that Brexit was in their top-three sources of uncertainty increased from 47% in August to 52% in September. That was the highest level since last December. |
| The September survey also asked businesses how ready they were for potential extra requirements of trading with the EU when the current transition period comes to an end. 4% of businesses reported that they were fully prepared, 43% were ‘as ready as they can be’, 28% said that they were partially prepared, 3% were not at all prepared and 21% did not trade with the EU. | The September survey also asked businesses how ready they were for potential extra requirements of trading with the EU when the current transition period comes to an end. 4% of businesses reported that they were fully prepared, 43% were ‘as ready as they can be’, 28% said that they were partially prepared, 3% were not at all prepared and 21% did not trade with the EU. |
| The Covid-19 pandemic has also driven up unemployment in the euro area. | The Covid-19 pandemic has also driven up unemployment in the euro area. |
| Figures just released show that the jobless rate in the euro area rose to 8.1% in August, the fifth monthly rise in a row, up from 8.0% in July. | Figures just released show that the jobless rate in the euro area rose to 8.1% in August, the fifth monthly rise in a row, up from 8.0% in July. |
| It also rose in the wider EU, to 7.4% from 7.3%. | It also rose in the wider EU, to 7.4% from 7.3%. |
| Statistics body Eurostat estimates that the unemployment total in the eurozone jumped by 251,000 during August, lifting the total out of work to 13.188m. | Statistics body Eurostat estimates that the unemployment total in the eurozone jumped by 251,000 during August, lifting the total out of work to 13.188m. |
| Young people are suffering particularly badly from job losses, as companies are forced to shut during the pandemic or see sales slide. | Young people are suffering particularly badly from job losses, as companies are forced to shut during the pandemic or see sales slide. |
| Eurostat says the youth unemployment rate jumped in August: | Eurostat says the youth unemployment rate jumped in August: |
| Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, says the employment picture at UK factories has ‘darkened’ - despite manufacturers reporting that activity picked up again last month. | Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, says the employment picture at UK factories has ‘darkened’ - despite manufacturers reporting that activity picked up again last month. |
| These job cuts are putting strain on supply chains, Brock warned, and could even push up prices in the shops. | These job cuts are putting strain on supply chains, Brock warned, and could even push up prices in the shops. |
| Rob Dobson, Director at IHS Markit, fears that more manufacturing jobs will be lost once the furlough scheme ends this month, even though companies say activity is rising. | Rob Dobson, Director at IHS Markit, fears that more manufacturing jobs will be lost once the furlough scheme ends this month, even though companies say activity is rising. |
| Here’s his take on today’s UK manufacturing PMI report: | Here’s his take on today’s UK manufacturing PMI report: |
| Here’s the UK factory PMI report: | Here’s the UK factory PMI report: |
| UK factories posted solid growth in September too, although not quite as fast as in August. | UK factories posted solid growth in September too, although not quite as fast as in August. |
| The UK manufacturing PMI has dipped to 54.1 in September, down from August’s two-and-a-half year high of 55.2. That’s still over the 50 point mark showing stagnation, for the fourth month in a row. | The UK manufacturing PMI has dipped to 54.1 in September, down from August’s two-and-a-half year high of 55.2. That’s still over the 50 point mark showing stagnation, for the fourth month in a row. |
| Purchasing managers interviewed for IHS Markit’s survey report that new work rose, as companies reopened their operations and welcomed staff back. | Purchasing managers interviewed for IHS Markit’s survey report that new work rose, as companies reopened their operations and welcomed staff back. |
| Markit explains that the reopening of the economy over the summer boosted demand: | Markit explains that the reopening of the economy over the summer boosted demand: |
| But worryingly, firms also continued to cut their workforce - even though the government’s furlough scheme was still running. | But worryingly, firms also continued to cut their workforce - even though the government’s furlough scheme was still running. |