AUS
NZ
UK
CA
USA
IND
Summary
- The lower-income group witnesses a huge slump in the number of vacancies
- The Hospitality and the Leisure sector sees the highest decline in vacancies due to the chaotic condition of the sector
- There have been job cuts across the businesses
The British government, earlier this week had announced the reopening of non-essential shops from 15th June, which has led to positivity for non-essential retail businesses across the country. There has been a serious catastrophe caused by the pandemic, resulting in millions of job losses. According to the Office of National Statistics (ONS), vacancy estimates in the UK, from February to April 2020 stood at 637,000. These estimated vacancies were down by 170,000 quarter on quarter. Also, the estimated vacancies were down by 210,000 year-on-year. The year-on-year decline of 210,000 is the largest annual plunge since the financial crisis of 2008-09.
The Hospitality and the Leisure sector the businesses like restaurants, hotels and pubs, which are involved in food and accommodation services witnessed a decrease of 36.4 per cent which meant 32,000 lesser vacancies quarter on quarter from February to April 2020. This sector in general generates the largest number of employment opportunities. The vacancy rate suddenly came down to 1.4 in this sector during the quarter from 2.4 per 100 employees.
Due to lockdown induced by the novel coronavirus, people were asked to stay away from mass gatherings and practice social distancing. This translated into a severe impact leading to the closure of these businesses. As the economic activity came to a screeching halt due to the catastrophe caused by the pandemic, the motor vehicles sales & service businesses, also recorded a quarterly decline of 31,000 vacancies.
The arts, entertainment and recreation sector witnessed the second-largest quarterly fall in vacancies of 29.3 per cent quarter-on-quarter due to the closure of amusement parks and fitness facilities along with postponement of sporting events. The human health and social work activities such as childcare businesses and dental practices witnessed an estimated decline of 11,000 vacancies quarter on a quarter.
From February to April 2020, the number of vacancies per hundred employees was down by 0.6 to 2.1 in comparison to the previous quarter. The Home construction sector was also severely affected as it had the lowest vacancy rate of 1.4 job vacancies per 100 employees during the quarter. However, the human health and social work activities sector witnessed the highest vacancy rate of 3.1 vacancies per 100 employee jobs.
In addition, despite several schemes being launched by the government, the UK manufacturers, are expecting a huge slump in orders and would be left with no choice to axe jobs in the sector. In the UK, the search volumes for jobs has gone down. This implies that potential employees have chosen to stay at home or are being furloughed. Though, the UK supermarkets went on a hiring spree to cater to the surge in demand for the essentials.
Let us discuss some of the businesses from the most affected sectors.
- InterContinental Hotels Group Plc (LON:IHG)
United Kingdom-based, InterContinental Hotels Group Plc is into the hotel business with an international presence. The Group delivered a robust business performance in the first 2 months of 2020. However, as the social distancing measures and travel restrictions came into effect in March and April, the occupancy levels dropped to historic lows.
The group’s integrated cash conservation and cost reduction measures across its System Fund and Fee Business remained on track to reduce capex by around USD 100 million and costs by USD 150 million. The available liquidity of the company stood at around USD 2 billion, and it also secured an extension for syndicated RCF of USD 1.275 billion until 2023 September.
(Source: Thomson Reuters)
On 29th May 2020, at the time of writing (before market close, GMT 2:49 PM), InterContinental Hotels Group Plc shares were down by 4.52 per cent against its previous day closing price, trading at GBX 3,895. The pandemic struck the markets in the last week of February, and the IHG shares created a new bottom at GBX 2,161 on 19th March. Since then the stock has returned a price return of 88.25 per cent.
- EasyJet Plc (LON:EZJ)
EasyJet Plc is a low-cost airline. The Group has announced to lay-off nearly 5,000 people due to lessened demand by the pandemic outbreak. In addition, the group plans to cut its fleet size to around 300. The airline company had earlier announced to operate on smaller routes with increased safety measures. The Group’s reported revenue per seat was down by 9.6 per cent to GBP 55.60 in the first half of the financial year 2020.
(Source: Thomson Reuters)
On 29th May 2020, at the time of writing (before market close, GMT 3:02 PM), EasyJet Plc shares were down by 7.08 per cent against its previous day closing price, trading at GBX 688.20. The pandemic struck the markets in the last week of February, and the EZJ shares created a new bottom at GBX 410 on 19th March. Since then the stock has returned a price return of 80.49 per cent. The annual dividend of the stock is 5.93 per cent.
- Persimmon Plc (LON:PSN)
Persimmon Plc is a home construction company based out of UK. In accordance with the new guidance issued by the UK Government, the company has reopened its sales offices in England effective from 15th May. The company recommenced operations in phases, started work on its construction sites in England in the last week of April. Presently, the production capacity has been restored to 65 per cent.
(Source: Thomson Reuters)
On 29th May 2020, at the time of writing (before market close, GMT 3:15 PM), Persimmon Plc shares were down by 1.54 per cent against its previous day closing price, trading at GBX 2,307.00. The pandemic struck the markets in the last week of February, and the PSN shares created a new bottom at GBX 1,367.50 on 19th March. Since then the stock has returned a price return of 71.12 per cent.
- Cineworld Group Plc (LON:CINE)
Cineworld Group Plc is a cinema chain based in the UK. The Group seeks additional liquidity to wither the storm-induced by the lockdown and anticipates cinemas to remain closed until the end of the year. Though, the company is hopeful that the government would ease restrictions on cinemas by July. The Group currently seeks a capital infusion of $110 million through RCF (revolving credit facility). In addition, the group plans to apply for an additional loan of $45 million under the CBILS scheme launched by the British government. The company has also suspended the fourth quarter dividend for 2019.
(Source: Thomson Reuters)
On 29th May 2020, at the time of writing (before market close, GMT 3:15 PM), Cineworld Group Plc shares were down by 8.08 per cent against its previous day closing price, trading at GBX 85.88. The pandemic struck the markets in the last week of February, and the CINE shares created a new bottom at GBX 18.29 on 17th March. Since then the stock has returned a price return of 413.07 per cent.
