FTSE 100 racks up eighth day of gains despite rising insolvencies and unemployment – as it happened

Time to wrap up… here are today’s main stories.

First on today’s jobless figures….

… the cost of living squeeze….

…The clampdown on energy firms…

….The latest economic data…

…and also:

In the City, the FTSE 100 shares index has closed 30 points higher at 7909 points, its eighth daily rise in a row.

That’s its joint-best run since December 2020, when it also rose for eight days in a row.

Mining stocks were lifted by China’s forecast-beating growth of 4.5% in the first quarter of this year, while gambling company Entain gained 7.2% after reporting a rise in gaming revenue this morning.

Hopes that the UK economy might avoid recession this year have also boosted markets in recent weeks, while the panic in the US and European banking sector has eased.

The boss of easyJet has said the travel industry is much better prepared for this summer than last year, when staff shortages led to chaos at airports – but passengers are likely to pay significantly more to get away.

The budget airline lifted its profit outlook for this year after summer bookings rose and passenger numbers over Easter returned to pre-pandemic levels. Fares have risen sharply, although Johan Lundgren, the easyJet chief executive, defended the increase as being largely driven by fuel and comparable to wider cost-of-living rises in supermarkets.

Revenue per seat, which is mainly fares, rose by 31% in the last quarter and is expected to be 20% higher than 2022 until the end of June, although it “remains to be seen” where demand would push fares in summer.

Lundgren said the £12 average increase in the last few months was “a couple of coffees and a snack in an airport”.

He said the airline had completed its largest ever crew recruitment drive, after hiring around 3,000 people in the last year.

He said:

“We are fully recruited in terms of cabin crew and pilots but of course the difficulty is that you will see weaknesses across the industry in other parts of the chain – but everybody is significantly better prepared than they were at this point last year".”

More here:

Liontrust Asset Management is exploring a takeover of GAM Holding, its struggling Zurich-listed peer.

Liontrust Asset Management says it is in talks with GAM over a potential buyout of the Zurich-based company, but did not disclose any terms of the offer.

The London-listed fund manager said the proposed deal intends to combine GAM’s investment management business with its unit, Reuters adds.

The news comes after Sky News reported that Liontrust was among a number of parties which have been actively considering a bid for GAM.

GAM’s share price has jumped 15% today, to 0.69 Swiss francs, but is down 95% over the last five years.

GAM has been engulfed in turmoil linked to the collapse of Greensill Capital, the controversial supply chain finance group advised by former PM David Cameron.

In 2018 GAM surprisingly fired its former top fund manager, Tim Haywood. Haywood, a star performer at GAM, had invested in bonds issued by Greensill.

The UK’s FCA later fined GAM and Haywood, £9.1m and £230,000 respectively, over failings including not reporting a dinner at Buckingham Palace, a £15,000 private jet trip to Sardinia, or secret fees and share options offered to his company by Greensill.

Andy Haldane, the ever-quotable former Bank of England chief economist, is joining the group of experts advising chancellor Jeremy Hunt how to run the economy.

The Treasury has announced that Haldane, productivity and growth expert Dr Anna Valero and Sir Jonathan Symonds, the chair of pharmaceuticals firm GSK, are joining Hunt’s Economic Advisory Council.

The Council was announced last October, when Hunt was trying to rebuild confidence in the government after the mini-budget shambles. It already includes Rupert Harrison, a former advisor to George Osborne, Karen Ward of JP Morgan Asset Management, and former Bank of England policymakers Sushil Wadhwani and Gertjan Vlieghe

Today, Hunt says:

“I am delighted to announce three new members of the Economic Advisory Council who collectively have decades of economic experience across the private and public sector.

“Economic growth is essential to our long-term prospects and in the face of global headwinds, this council plays a critical role in helping our economy meet these challenges.”

Haldane left the BoE in the summer of 2021, with a prescient warning that the ‘beast of inflation’ was prowling in the UK economy.

During his time at the Bank, he rattled out some rather decent speeches.

This included comparing curbing financial crises to a dog chasing a frisbee (the trick, apparently, is to peg along at a speed where the angle of gaze to the frisbee remains roughly constant), and explaining monetary policy in the context of cricket shots (playing off the back foot works best when there are reasons to be fearful).

And last summer, Haldane warned that Britain’s serious economic problems won’t be solved by massive tax cuts, telling The Guardian:

“The solution to the growth conundrum and the solution to the cost of living crisis both lie squarely on the supply side of the economy.”

Back in the financial markets, European stock markets have hit their highest level since February 2022.

The pan-European Stoxx 600 has gained 0.5%, lifted by the stronger-than-forecast Chinese growth data this morning.

It’s trading at 469.32, a 14-month high.

Investors are hopeful that China’s recovery is on track, after GDP rose by a better-than-expected 4.5% per year in Q1, as we learned overnight.

Raffi Boyadjian, lead investment analyst at XM, says:

The economic recovery in China appears to be gaining tract as GDP expanded by a stronger-than-expected 4.5% in the first quarter of 2023, beating forecasts of 4.0%. At a quarterly level, growth quickened to 2.2% from an upwardly revised 0.6% in the prior period.

However, the upbeat data didn’t offer everything the markets wanted to hear as the reopening rebound was led mainly by consumers and private investment remained weak, raising question marks about the sustainability of the recovery. Property investment was one of the soft spots as, despite a pickup in sales, new developments slumped in the three months to March.

The withdrawal of government support for companies is pushing insolvencies higher in England and Wales, warns Nick O’Reilly, director of restructuring and recovery at accountancy firm MHA:

O’Reilly fears administrations will to continue to climb this year as businesses face a very challenging environment with “meagre” government support:

He says:

“After recent warnings, UK business administrations have now risen to pre-pandemic levels.

As businesses continue to face a perfect storm of high energy bills, increasing interest rates and detrimental inflation, alongside little to no government support, we should expect administrations to continue to rise in the months ahead.

“The government should want to avoid administrations increasing in the short term because of the impact this could have on markets and business confidence. However, given how underwhelming the Chancellor’s spring budget was in terms of business support, we have to conclude it’s a sad reality that high insolvency numbers are acceptable for the government who want to clear out the zombie companies and allow the fittest to survive.”

“Fortunately, there are a lot of vacancies in the labour market which will limit the impact of job losses, keeping unemployment down and preventing a spike in demand for welfare payments.”

The number of firms collapsing into insolvency across England and Wales jumped last month, as companies were hit by economic headwinds such as soaring costs and weak consumer spending.

There were 2,457 company insolvencies in March, government data shows, which is a 16% increase on the same month a year ago.

Compulsory liquidations more than doubled, to 288.

The Insolvency Service explains:

Numbers of compulsory liquidations have increased from historical lows seen during the coronavirus pandemic, partly as a result of an increase in winding-up petitions presented by HMRC.

There was also a 9% increase in Creditors’ Voluntary Liquidations (CVLs), to 2,011, in which directors decide to put their company into liquidation because it is insolvent.

Experts say this jump in insolvencies shows the economic pressures facing UK companies.

Gareth Harris, partner at RSM UK Restructuring Advisory, explains:

‘It is clear from these latest numbers and our increasing workloads that while we may not be in a technical recession, the economic headwinds are continuing to bite.

Although some confidence is returning in the wider economy those companies that are struggling are clearly seeing less options available to them than in the last four years. The majority of the current insolvency figures remain “shut-down” style liquidations of smaller companies which we expect to peak soon before falling in the second half of the year.

David Hudson, restructuring advisory partner at FRP, warns that high energy bills could force more companies to close down:

“More and more firms are at risk of tipping from ‘danger’ to ‘distress’. And with trading conditions still punishing, we can anticipate higher than-usual levels of insolvency for some time to come.

“Energy is one factor that will continue to pose a significant threat to businesses’ stability. While wholesale prices have been falling, the new government support scheme provides businesses with less protection from future volatility. As just one example of the impact this could have, as many as a fifth of retailers we recently polled were not confident in trading through the next year with this degree of reduced support.

“Additionally, nearly all Covid-19-era support measures have now closed to businesses, with many now having to service repayments on Covid support debt – only adding to the pressures they face.”

The real value of UK workers’ pay has continued to fall at the fastest rate for more than a decade, as wage increases in February were outstripped by high inflation.

The Office for National Statistics said annual growth in average pay, excluding bonuses, held steady at 6.6% in the three months to February despite a small rise in unemployment and decline in the number of job vacancies.

Fuelled by bumper pay for bankers and accountants in the City of London, wage growth including bonuses rose by 5.9%. Economists had forecast weaker rates of pay growth, in a potential dilemma for the Bank of England as it considers whether to raise interest rates for a 12th consecutive time in May.

However, the ONS said total pay fell by 4.1% on the year after taking inflation into account – among the largest falls since 2009.

Reflecting softer conditions in the jobs market as Britain’s economy struggles for growth momentum, the unemployment rate unexpectedly rose to 3.8%. The number of job vacancies also fell for a ninth consecutive month, although remained high at more than 1.1m as companies struggle to recruit staff.

The chancellor Jeremy Hunt said:

“While unemployment remains close to historic lows, rising prices continue to eat into pay cheques which is why halving inflation this year is one of our top economic priorities.”

More here.

The head of Britain’s energy regulator has warned suppliers that their reputations are “on the line”, as it announces its new code of practice today.

Jonathan Brearley, the chief executive of Ofgem, told Radio 4’s Today programme that energy companies need to “up their game” in the way they look after vulnerable customers.

Ofgem, he says, doesn’t want to see repeats of the unacceptable behaviour that has surfaced in recent months – such as debt agents ignoring signs that customers were vulnerable when force-fitting meters.

Under Ofgem’s new code of conduct, energy companies need to make at least 10 attempts to communicate with a customer to understand their circumstances before fitting a pre-payment meter. They must also conduct a site welfare visit, Brearley says, alongside “tighter monitoring” including through body-worn video camera.

Brearley also confirmed there will be an outright ban on installing pre-payment meters for customers over-85, and customers with serious health conditions, as we reported last night.

And he warns that suppliers must do everything they can to understand a customer’s circumstances if they have fallen behind on their bills, including through a home visit.

Brearley says he has a message for the suppliers themselves:

Your reputation is on the line.

“There has been deep concern raised about the practices that have been seen over the past few months and indeed going back into history.

“And if you do not improve what you do, quite frankly, there will be further rules and regulations which will be against your commercial interest.

On top of that Ofgem will have close monitoring of what’s happening, and that’s why it’s really critical we have the video camera evidence so we can see what people are doing and we can pull that in and have a look at it if we need to.

“But, equally, we have smart meters installed so we can see that if you’ve installed a prepayment meter, particularly for that second group of customers who need that deep welfare check and they are consistently coming off the supply, then you have not done your job properly and we will respond to that.”

Shares have opened higher in London, as investors welcome the news that China’s economy grew faster than forecast at the start of this year.

The blue-chip FTSE 100 index is up 20 points, or 0.25%, at 7900 points. It’s on track for its eighth rise in a row, a run that not been seen since December 2020.

Mining companies are leading the rally, with Fresnillo up 3%, and Antofagasta and Anglo American both gaining 1.9%.

This morning’s Chinese GDP data, showing the economy expanded by 4.5% per year in Q1, is bolstering hopes that Beijing’s lifting of Covid-19 restrictions and stimulus efforts are paying off.

But the outlook for the global economy this year is still uncertain.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, explains:

As consumer confidence has grown and production has got back on track, retail sales have jumped to a two year high and industrial output has picked up a pace not seen for 5 months. The numbers helped put a spring in the step of miners as trading got underway in London.

However, this rosier health check of the Chinese economy won’t be enough to fully assuage investors’ concerns about the prospects for the global economy. To some extent this uplift in output will have been partly down to a clearing of pandemic backlog orders. There will be worries that if the US heads into recession, and other economies contract or stagnate, few international orders will be flying into Chinese factories, so weakness is still being detected ahead.”

Gambling firm Entain is also rallying, up 2.4% after reporting higher quarterly net gaming revenues on Tuesday.

Victoria Scholar, Head of Investment at interactive investor, says:

“Entain reported online first quarter net gaming revenue (NGR) up 16%, in line with expectations. It enjoyed a strong performance in retail with first quarter NGR up 14%. The betting and gaming giant said it achieved record levels of active customers in the first quarter up 19% year-on-year.

Sports betting platform BetMGM had a successful quarter partly thanks to the Super Bowl. Entain said earlier in the year it plans to end financial support for BetMGM, its joint venture with MGM Resorts.

The parent company of Ladbrokes and Coral is trading higher today but remains modestly lower year-to-date. An upbeat financial update with an improvement in online net gaming revenue has helped to extend optimism after Entain raised its profit outlook in February.

Today’s jobs market report rather highlights the dilemma facing the Bank of England.

On the one hand, rising unemployment is a reason to hold off raising interest rates again, when policymakers meet in May.

But, the 6.6% rise in basic earnings will worry the BoE, which is already concerned about a wage-price spiral breaking out (although wages aren’t even keeping up with inflation).

This faster UK wage growth is unwelcome news for the Bank of England, says James Smith, developed markets economist at ING.

The surprise pick-up in UK wage growth casts doubt over recent indications that pay pressures have started to ease.

We should caution that one month doesn’t make a trend, though a similar surprise blowout in services inflation due on Wednesday would inevitably move the dial in favour of a 25bp rate from the Bank of England next month.

The big picture is that 123,000 fewer people are in employment in the UK than before the Covid-19 pandemic.

Unemployment is lower too, but 422,000 more people are economically inactive (see chart below).

Progress in repairing the UK’s labour market since the pandemic is “painfully slow”, warns Tony Wilson, director at the Institute for Employment Studies:

While in every other major economy, employment is at least as high and often much higher than it was before the pandemic, in the UK there are still over a hundred thousand fewer people in work and over three hundred thousand more people out of work.

Three years on from the start of the pandemic, it’s clearer than ever that we are being left behind by other major economies.

“The main reasons for this appear to be a mix of weak growth, more people out of work with long-term ill health, and fewer older people in work, Wilson explains.

He adds:

We need to do far better on all three of these issues, particularly with more than three million people who want to work and still over a million unfilled jobs. Figures for long-term ill health are particularly worrying, rising again in the latest data to a new peak of over 2.5 million.

This is being driven in particular by people staying out of work longer, rather than more people leaving work now. So we need to focus in particular on how we help those who want to work to get back in – with specialist employment support, faster access to health services and more inclusive recruitment and workplace support.”

Chancellor the Exchequer, Jeremy Hunt, points out that the UK jobless rate is still low in historic terms.

Hunt add that lowering inflation this year will help workers, after today’s data showed a another fall in real pay.

“While unemployment remains close to historic lows, rising prices continue to eat into pay cheques which is why halving inflation this year is one of our top economic priorities.

“To help families in the meantime, we are making work pay with a record increase in the National Living Wage, while providing cost of living support worth an average of £3,300 per household this year and last, funded through windfall taxes on energy profits.”

Another way of raising real wages would be to agree inflation-matching pay rises for public sector workers, of course, as strikes continue to grip parts of the public sector.

There were 348,000 working days lost because of labour disputes in February 2023, up from 210,000 in January 2023.

Over three-fifths of the strikes in February were in the education sector, the ONS says.

Strikes by teachers, and civil servants, were one reason why the UK economy failed to grow during the month.

UK workers continued to suffer from falling real wages at the start of this year, as the cost of living squeeze continued to bite.

The ONS reports that regular pay (excluding bonuses) rose by 6.6% per year in December-February, while total pay (including bonuses) was up 5.9%.

That pay growth is stronger than economists had expected (basic earnings were forecast to rise by 6.2%).

But, wage growth is still lagging behind inflation. In real terms, total pay fell by 3% while regular pay was down 2.3%.

The ONS says:

A larger fall on the year for real total pay was last seen in February to April 2009 when it fell by 4.5%, but it still remains among the largest falls in growth since comparable records began in 2001.

UK firms have cut the number of vacancies on offer over the last quarter, the ONS says.

In January to March 2023, the estimated number of vacancies fell by 47,000, to 1,105,000.

That’s the ninth consecutive fall in a row, going back to May to July 2022.

Although vacancies are still high in historic terms, it suggests firms are more cautious about hiring as economic growth has stumbled.

The UK unemployment rate has risen, new figures from the Office for National Statistics show.

The UK unemployment rate for December 2022 to February 2023 increased by 0.1 percentage points on the quarter to 3.8%.

The increase in unemployment, the ONS says, was driven by people unemployed for up to six months.

But, the UK employment rate also rose in the quarter, by 0.2 percentage points to 75.8%, lifted by more part-time employees and self-employed workers.

Both employment and unemployment rose, because more people re-entered the labour market in the last quarter in the search for work.

This pulled down the UK’s economic inactivity rate by 0.4 percentage points, to 21.1% from 21.5%.

The ONS says:

The decrease in economic inactivity during the latest three-month period was largely driven by people aged 16 to 24 years. Looking at economic inactivity by reason, the quarterly decrease was largely driven by people inactive because they are students.

And in March, the number of staff on payrolls rose by 31,000, to 30.0 million.

China’s forecast-beating growth in the last quarter shows that businesses and consumers have been energing from the crippling pandemic disruption of last year.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, says:

“Economic recovery is well on track. The bright spot is consumption, which is strengthening as household confidence improves.

“The strong export growth in March also likely helped to boost GDP growth in Q1.”

Elsa Lignos, RBC’s global head of FX strategy, confirms that China’s Q1 GDP growth surprised to the upside at 4.5% y/y.

The March key growth indicators showed consumption leading China’s post-Covid economic rebound again.

March industrial output and fixed asset investment were both slightly weaker than expected, but the sharp rise in retail sales more than made up for their shortfall.

GDP growth is easily on track to hit Beijing’s “around 5%” growth target for the year (and Q2 will have much easier comps), still, the government’s moderate growth target and wariness of debt-fuelled stimulus, along with weak external demand, suggest that China’s growth pick-up will likely plateau by around mid-year.

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

China’s economy has beaten forecasts this morning, as the relaxation of Covid-19 restrictions at the end of last year boosted growth.

China’s GDP grew by 4.5% in the January-to-March period, compared with a year ago. It’s the strongest growth recorded by China in a year, in a boost for the global economy.

China’s National Bureau of Statistics says the economy “made a good start in the first quarter” of 2023, despite facing a “grave and complex international environment”.

Growth was driven by consumption, with China’s retail sales 10.6% stronger than a year ago, following the ending of pandemic restrictions at the start of the year.

Industrial production grew by 3.9% per year, while fixed asset investment was 5.1% higher than a year ago.

On a quarter-by-quarter basis, GDP grew 2.2% in January-March, up from 0.6% in the final quarter of last year.

The GDP report is better than expected, says Iris Pang, ING’s chief economist for Greater China. She predicts it will encourage Beijing’s government to hold back extra stimulus plans.

Pang says:

Such rapid retail sales growth has not been seen since June 2021, when it grew 12.1%YoY. The growth in retail sales was mainly boosted by catering.

China’s currency, the yuan, should benefit from the report, Pang predicts.

When comparing the fundamentals of the US and China, China’s economy is strengthening and will get stronger over the rest of the year. In contrast, the US economy will likely continue to slow.

Also coming up today

UK energy regulators will be banned from forcibly installing prepayment energy meters in the homes of customers aged over-85 in Britain, as part of a new code of conduct.

Energy firm representatives will also wear body cameras as part of a new code of conduct, my colleague Alex Lawson explains:

Suppliers have agreed to fresh guidelines for putting in the devices when households have run up energy debt after an outcry over agents using court-approved entry warrants to break in to install them.

As a result, energy firms will now have to make at least 10 attempts to contact a customer and conduct a “site welfare visit” before a prepayment meter is installed.

The latest UK unemployment report, due this morning, will show the state of the labour market.

And the Treasury Committee will gather expert views on the Bank of England’s quantitative tightening strategy – the sale of the government bonds it bought to stimulate the UK economy.

MPs will look at the costs to the taxpayer, and the impact of quantitative easing on inflation…..

The agenda

• 7am BST: UK labour market report

• 10am BST: ZEW Economic Sentiment Index (APR)

• 10.15am BST: UK Treasury committee holds hearing into Bank of England’s quantitative tightening programme

• 1.30pm BST: US building permits and housing starts