Coronavirus economic impact updates
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Covid cases and vaccinations
Total global cases: 210m
Total doses given: 4.9bn
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The US has extended a ban on non-essential travel along the borders with Canada and Mexico to slow the spread of Covid-19
The reproduction value and growth rate of Covid-19 have risen again in England after reversing their upward trend last week
US tractor maker Deere has raised its full-year outlook as the global economic recovery fuels demand for its farm and construction equipment
For up-to-the-minute coronavirus updates, visit our live blog
The first profit upgrade from UK bellwether Marks and Spencer this century capped a week of positive announcements from both British and US retailers.
The company cited “an element of pent-up demand” as it said pre-tax profits for 2020-21 would be above previous guidance of £300m to £350m, lifting its shares more than 10 per cent on Friday morning. Some analysts believe the company will do even better as returning office workers boost sales at its food stores in stations and business districts.
In the US, Walmart, the world’s biggest bricks-and-mortar retailer, earlier this week also raised its outlook for the full year for the second time in three months. Home Depot reported its highest quarterly revenues ever, even as the pandemic-fuelled boom for DIY began to wane. Department store chain Macy’s raised forecasts too, after second-quarter sales jumped by more than half as stores reopened after pandemic closures.
Despite the flurry of bullish statements from big stores, official data in the UK and US shows a fall in overall retail sales, clouding the vision of a consumer-led recovery from the pandemic.
In the UK, the decline has been blamed on shoppers spending more on going out than on groceries, as well as poor weather and supply chain problems. In the US, the fall has been attributed chiefly to the spread of the Delta variant of coronavirus, as Americans fretted about the possible effect on their finances.
This more pessimistic view from US consumers is borne out by OECD data and — most strikingly — in the closely watched University of Michigan consumer sentiment report, where a “stunning loss of confidence” has driven the index to its lowest level in nine years.
Economists are starting to pare back US growth forecasts as the Delta variant of coronavirus continues to spread. Goldman Sachs has cut its third-quarter GDP outlook from 9 per cent to 5.5 per cent and reduced its 2021 full-year forecast by 0.4 percentage points to 6 per cent.
The UK’s public finances are in much better shape than expected thanks to a strong economic bounceback, according to official data that show net borrowing in July was £10.4bn — half the level in the same month last year. However, borrowing still remains historically high.
Central Europe correspondent James Shotter reports on the knock-on effects of Prague’s tourism revenues plunging 80 per cent during the pandemic. Some believe that the collapse gives the city an opportunity to reset the balance between residents and visitors, which had become seriously lopsided, with plenty of venues for stag dos but few places for locals to buy groceries.
The Mipim conference in Cannes, the property world’s glitzy annual dealmaking event, will only operate in a minimal capacity next month after being pushed back by six months and halved in length. Many big names have decided not to attend the gathering, which some UK attendees have nicknamed the “Massive International Piss-up In March”.
The semiconductor shortage hitting the world’s carmakers is worsening, as coronavirus cases rise at factories across south-east Asia. Toyota said it would cut production by 40 per cent in September, while Ford and General Motors have also reported problems.
The main reason Wall Street bosses are urging a return to the office is to have better oversight of how their employees handle regulatory and legal hazards, writes US financial editor Gary Silverman. One expert said: “You are much more casual at home than you might be at an office — there is no one to watch you except your dog.”
Columnist John Plender says there is no reason for central banks to continue quantitative easing programmes now that vaccines have delivered a jolt to national economies and asset prices are at all-time highs. Officials at the Federal Reserve are divided over when to start winding down US efforts.
Antofagasta is the latest miner to report a surge in profits thanks to rising commodity prices as economies reopen. The Chilean company said that it would increase its interim dividend nearly fourfold from the same period last year, after copper prices rose 19 per cent in the first six months of 2021.
Gold miners on the other hand are experiencing a more difficult period, as a strengthening dollar and a rise in bond yields hit the price of the precious metal. Mark Bristow, chief executive of Barrick Gold, the world’s second-largest miner, said this month that the industry needed to focus on growth rather than returning cash to shareholders. “[The] chronic tendency to harvest the gold price instead of investing in the future has resulted in declining reserves and a shortage of high-quality development projects,” he said.
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Have your say
Kid from Cleveland comments on Chip shortage deepens supply problems at global carmakers:
This is a major issue not just with the automotive industry, but with most manufacturing in general. Almost every major manufactured consumer good is chock full of chips for purposes ranging from simple temperature control to complex mechanical functions. Until supply chains are diversified in a way that mitigates the ongoing Covid disruptions (and geopolitical roadblocks), it isn’t going to change.
“The more you speak, think, dream in another tongue, the more you can morph into someone else.” Work and careers editor Isabel Berwick writes about the transformative experience of learning a new language during lockdown.
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