Pound rallies amid US stimulus hopes; US jobless claims dip – as it happened

Some late news. Airbus has trimmed its plans to increase aircraft production, due to the impact of the pandemic.

The aerospace group says production rates will remain lower for longer, with a smaller increase in output of single-aisle planes, and no increase in production of widebody jets yet.

Airbus says:

The new average production rates for the A320 Family will now lead to a gradual increase in production from the current rate of 40 per month to 43 in Q3 and 45 in Q4 2021. This latest production plan represents a slower ramp up than the previously anticipated 47 aircraft per month from July.

The A220 monthly production rate will increase from four to five aircraft per month from the end of Q1 2021 as previously foreseen.

Widebody production is expected to remain stable at current levels, with monthly production rates of around five and two for the A350 and A330, respectively. This decision postpones a potential rate increase for the A350 to a later stage.

CEO Guillaume Faury tweets:

The FTSE 100 index has closed lower tonight, with the stronger pound weighing on multinational companies.

The Footsie closed 24 points lower at 6715, a drop of 0.37%, as this morning’s bounce faded.

Oil companies BP (-3.1%) and Royal Dutch Shell (-2.9%) were among the fallers, along with airline group IAG (-3%), medical devices firm Smith & Nephew (-2.6%).

Property firms British Land (-2.5%) and Land Securities (-2.3%) also dropped, amid concerns that the current lockdown in England could last longer than the government initially hoped.

Over in Frankfurt, ECB president Christine Lagarde has warned that the latest wave of Covid-19 infections, and lockdown restrictions, will hit the recovery at the start of this year.

Lagarde told reporters:

“The resurgence of the pandemic and the associated intensification of containment measures have likely led to a decline in activity in the fourth quarter of 2020 and are also expected to weigh on activity in the first quarter of this year.”

The big picture, as this chart shows, is that America is suffering an unemployment emergency that dwarfs the impact of the financial crisis over a decade ago:

The persistently high US jobless claims total shows the challenge facing President Joe Biden and his team, as they try to fight the Covid-19 pandemic and strengthen the economy.

Glassdoor senior economist Daniel Zhao explains:

“Initial unemployment insurance (UI) claims fell slightly last week to 961,000. Although this is a dip from recent weeks, claims remain elevated at levels not seen in months. The recent surge was likely due to a combination of larger-than-expected seasonal and pandemic-induced layoffs, which are now slackening. Unemployment claims continue to show a job market unable to progress further as long as COVID-19 remains in the driver’s seat.

The current wave of the pandemic doesn’t appear to be receding yet and the prospect of new, more transmissible variants raise the risk of a prolonged third wave. While the vaccine offers a light at the end of the tunnel, we’re still far away from a complete reopening of the economy that could drive rehiring and stem further layoffs.

Today’s report comes as President Joe Biden takes office and sets the stage for the economic challenges that the new administration will face. On top of tackling the pandemic, an early hurdle facing the new administration will be the expiration of expanded UI programs in March. A major determinant for the economy’s trajectory in 2021 will be how the new administration navigates passing aid with only the slimmest of margins in the Senate.”

In New York, the stock market has opened at record levels, but trading is rather more muted than yesterday.

• Dow Jones Industrial Average: up 28 points or 0.09% at 31,216 points
• S&P 500: up 1.8 points or 0.05% at 3,853 points.
• Nasdaq: up 36 points or 0.27% at 13,493 points

Here’s more detail and reaction to the jobless figures, first from Dr Thomas Kevin Swift of the American Chemistry Council:

Greg Daco of Oxford Economics says claims are ‘alarmingly’ high:

Here’s economist John Eckstein on the fall in ‘continuing claims’ (people who have received benefits for at least two weeks):

Kathy Bostjancic of Oxford Economics says there is some good news in this week’s US jobless report, but the number of people seeking help overall is little changed:

The Washington Center for Equitable Growth have summarised the key points from today’s US jobless report: