US jobless claims total falls
Newsflash: the number of Americans filing new claims for unemployment support has dropped, which may calm fears of an imminent US recession.
There were 233,000 fresh ‘initial claims’ for unemployment support last week – a proxy for the number of workers laid off.
That’s down on the previous seven days, when there were 250,000 initial claims, close to a one-year high.
Encouragingly, that’s also lower than feared – as economists had predicted 240,000 initial claims for last week.
As every Thursday, we just received jobless claim data. Here below is a summary of the data just released
👍Initial Jobless Claims came in at 233K versus the consensus forecast of 240K.
👎The Jobless Claims 4-week Average came in at 237K versus the consensus forecast of 237K.… pic.twitter.com/53KzOyQkwT
— Andrea Lisi, CFA (@Andrea_Texas_82) August 8, 2024
Joseph Brusuelas, chief economist at RSM US, says this suggests the US jobs market is fairly healthy:
Big drop in initial jobless claims to 233K. Anything in that range tends to suggest a fairly healthy labor market. Non seasonally adjusted down to 203K. Large drop in Texas of 7K. This tends to suggest the skepticism that weather played a role in the July jobs report especially…
— Joseph Brusuelas (@joebrusuelas) August 8, 2024
Key events
Wall Street futures rally after jobless claims fall
The New York stock exchange likes today’s fall in jobless claims!
Wall Street futures have pushed higher, as investors digest the drop in new unemployment claims last week.
The S&P 500 is now expected to jump 0.75% at the open, with Nasdaq futures up 1%.
BREAKING NEWS: INITIAL JOBLESS CLAIMS JUST CAME IN AT 233K BELOW EXPECTATIONS OF 240K, Markets soaring off the news 🔥
— ImBeneficial (@ImBeneficial) August 8, 2024
Michael Brown, senior research strategist at brokerage Pepperstone, says the US jobless claims figures appear to have steadied some market nerves.
Stocks have popped in reaction, as dip buyers emerge for a third straight day, though the rapid nature by which gains fizzled out yesterday may be some cause for concern, particularly with the S&P remaining below its 100-day moving average.
Nevertheless, the rather sizeable equity, and Treasury, reaction to what is usually a glossed-over data release speaks to how the market continues to hang on the ‘growth scare’ narrative, with next week’s retail sales print the next jigsaw piece in further allaying concerns over an imminent US economic slowdown, which were sparked by last week’s poorer-than-expected labour market report.
Today’s jobless claims report shows the US economy is ‘solid’, says Heather Long of the Washington Post:
Good news: Initial jobless claims came in LOWER than expected last week. This is another sign the economy is solid.
Initial claims were 233,000, which is a decline of -17,000 from the week before. About half that decrease came from Texas.
Bottom line: Temporary layoffs in… pic.twitter.com/bWcT8VTql8
— Heather Long (@byHeatherLong) August 8, 2024
US jobless claims total falls
Newsflash: the number of Americans filing new claims for unemployment support has dropped, which may calm fears of an imminent US recession.
There were 233,000 fresh ‘initial claims’ for unemployment support last week – a proxy for the number of workers laid off.
That’s down on the previous seven days, when there were 250,000 initial claims, close to a one-year high.
Encouragingly, that’s also lower than feared – as economists had predicted 240,000 initial claims for last week.
As every Thursday, we just received jobless claim data. Here below is a summary of the data just released
👍Initial Jobless Claims came in at 233K versus the consensus forecast of 240K.
👎The Jobless Claims 4-week Average came in at 237K versus the consensus forecast of 237K.… pic.twitter.com/53KzOyQkwT
— Andrea Lisi, CFA (@Andrea_Texas_82) August 8, 2024
Joseph Brusuelas, chief economist at RSM US, says this suggests the US jobs market is fairly healthy:
Big drop in initial jobless claims to 233K. Anything in that range tends to suggest a fairly healthy labor market. Non seasonally adjusted down to 203K. Large drop in Texas of 7K. This tends to suggest the skepticism that weather played a role in the July jobs report especially…
— Joseph Brusuelas (@joebrusuelas) August 8, 2024
More competition news: the UK’s CMA has kicked off a formal merger inquiry into Amazon’s investment in the high-profile artificial intelligence start-up Anthropic.
The move by the UK’s competition watchdog comes as regulators take a closer look at the AI sector, and moves by Big Tech companies.
The CMA will look into whether Amazon’s partnership with Anthropic – which develops the Claude LLM and chatbot- has resulted in the creation of a relevant merger situation, and if it could lead to a substantial lessening of competition in the UK.
That partnership saw Amazon take a $4bn stake in Anthropic and sign a deal to become one of the startup’s cloud computing providers.
Last month, the CMA began a preliminary investigation into Google’s partnership with Anthropic.
British Airways to pause flights to Beijing
In the travel sector, British Airways is to halt flights to the Chinese capital.
BA says it will pause its route to Beijing from 26 October, but continue daily flights to Shanghai and Hong Kong.
It’s a surprise, as BA had only resumed flights to Beijing in June 2023, four times a week, after pausing early in the Covid-19 pandemic.
British Airways first flew to China in 1980, and last year described Beijing and Shanghai as “important routes”.
More landlords launched efforts to evict tenants in the second quarter of the year.
The Ministry of Justice reports that repossessions by landlords increased by 16%, compared with Q2 2023, from 5,950 to 6,927.
That was riven by an increase in landlord possession claims; they rose 9% year-on-year from 22,526 to 24,495.
The highest private landlord possession claim rates were found in London, with 7 of the 10 highest rates occurring in this region.
The MoJ reports:
Barking and Dagenham had the highest rate for private landlord claims (850 per 100,000 households owned by a private landlord), followed by Newham, and Redbridge, with 823 and 652 claims per 100,000 households owned by a private landlord respectively.
Within the landlord possession actions, claims have increased across all procedures:
Accelerated claims ⬆️ 9%
Private landlord claims ⬆️ 5%
Social landlord claims ⬆️ 12% compared to the same quarter in 2023.This was largely concentrated in London, with 8,488 landlords making… pic.twitter.com/Kc0nvlutN8
— Emma Fildes (@emmafildes) August 8, 2024
Charles Roe, director of mortgages at UK Finance, say lenders offer a range of support, so any mortgage-holders worried about their finances should get in touch:
“If you are worried about your finances, please reach out to your lender as soon as possible to discuss the support options available.
“Doing so won’t affect your credit score.”
Mortgage possession claims, warrants and repossession volumes continue to rise but remain 14%, 38% and 32% below the Q2 2019 volume.
In the most recent quarter, Q2 2024, Claims were ⬆️ 34% to 5,343
orders ⬆️ 34% to 3,395
warrants ⬆️ 9% to 2,918 when compared with the same… pic.twitter.com/KQfd1Fk8G2— Emma Fildes (@emmafildes) August 8, 2024
UK Finance’s latest data also shows a 31% year-on-year jump in homeowner properties being repossessed.
It says 980 homeowner mortgaged properties were taken into possession in the second quarter of 2024, 8 per cent greater than in the previous quarter and 31% more than in Q2 2023.
In addition, 710 buy-to-let (BTL) mortgaged properties were also repossessed, which was 13% higher than in the previous quarter and a 51% annual jump.
Aza Teeuwen, portfolio manager at TwentyFour Income Fund, points out that repossessions are still low in historical terms:
“As expected, arrears are slowly increasing, but the actual repossessions are still very low compared to historical standards, which is mostly the result of active servicing done by the banks who are now, more than historically, working with their borrowers to bring them back on track.
After having enjoyed low mortgage rates for well over a decade, borrowers should not necessarily fear the new rate environment, as banks will have stress tested them on higher rates already. Many borrowers have already refinanced their mortgages in the recent 2 years at higher rates, and many of these should be expecting cheaper mortgages again.
Since the recent rate cut from the Bank of England, the popular 2- and 5-year fixed rates are over 2% cheaper than they were in 2022, with an increasing number of banks now offering 5 year fixed rate mortgages inside 4% again, improving affordability.”
Separate data from trade body UK Finance show that 96,070 homeowner mortgages were in arrears of at least 2.5% of their outstanding balance in April-June.
That’s a 17% increase on a year ago.
The number of buy-to-let mortgages in arrears jumped by 51% year-on-year, to 13,570.
Within homeowners, there were 34,420 in arrears of between 2.5% and 5% (the lighest arrears band) – 11% more than a year ago.
The number in arrears over 10% of their balance has risen 14% compared with Q2 2023, to 32,810.
This chart shows the process by which a mortgage possession claim can result in a property being repossessed:
UK mortgage possession claims hit five-year high
Claims by mortgage lenders to repossess a property have reached their highest level in five years, as households struggle to handle the impact of high interest rates.
New government data shows that mortgage possession claims increased by 34%, year-on-year, in the second quarter of 2024 – up from 3,991 to 5,343.
Mortgage possession claims occur when banks or lenders take homeowners to court before repossessing their home, because they have fallen behind on their repayments.
If granted by the courts, the defendant must vacate the property – although courts can grant a suspended order or no order at all.
The jump follows the increase in UK interest rates to a 16-year high of 5.25% last summer, where they remained until being trimmed to 5% this month.
That created a ‘mortgage timebomb’, as borrowers faced steep increases in mortgage payments when their old fixed-rate deals ended.
The Ministry of Justice says:
Both mortgage and landlord possessions actions have continued to rise in the current quarter. Mortgage claims have reached their highest volume since Q2 2019 and are now close to pre-Covid volumes.
However, repossessions are still sharply below their peak after the 2008 financial crisis – they hit 26,419 in April to June 2009, as global turmoil led to many families losing their homes.
The MoJ also reports that warrants – which allow a mortgage lender to regain possession of a property from a homeowner or tenant – are up 9% year-on-year, while repossessions by county court bailiffs jumped 29% from 660 to 854.
Gloom about global growth is weighing on the copper price again.
The most-traded September copper contract on the Shanghai Futures Exchange has closed down 1.1% today at 70,680 yuan (£7,769) a ton.
Three-month copper on the London Metal Exchange dropped by 0.5% in early trading, and has lost 5.4% so far this month.
JPMorgan sees 35% risk of US recession by end of this year
There’s a one in three chance of a US recession by the end of this year, JP Morgan analysts fear.
JPMorgan Chase & Co now sees a 35% chance that the US economy tips into a recession by the end of 2024, Bloomberg reports.
That’s up from 25% as of the start of last month, before weak data from the US industrial sector and a hiring slowdown worried economists.
JPMorgan economists led by Bruce Kasman told clients:
[Recent news] hints at a sharper-than-expected weakening in labor demand and early signs of labor shedding,”
The team kept the odds of a recession by the second half of 2025 at 45%.
Post a Comment