ING’s chief international economist James Knightly cautions that despite the relative drop in US jobless claims, further hiring will be constrained by social distancing restrictions.

Social distancing will limit the ability of many retail, restaurant and leisure firms to open properly and they may find it isn’t economically viable to do so with the constraints currently being placed on them – such as limiting customer numbers.

Other businesses in various sectors may find that demand doesn’t return as quickly as hoped and may need to adjust employment levels in the months ahead.

Knightly also claims the government’s own support efforts could also hinder hiring, as some businesses won’t pay prospective employees as much as they are getting through emergency unemployment benefits.

The national average weekly unemployment payment for recipients is nearly $1,000 and there are many industries in which this is substantially above what an employee could ordinarily receive in wages. In fact a paper from the University of Chicago estimates that 68% of benefit recipients are actually receiving a higher income as a result.

Many businesses will not be able to pay enough to compete with this, so while this additional payment is good news for individual incomes and cash flow, it may have the negative effect of hampering small businesses re-opening/recovery effort.

America cities and towns are dealing with some of the highest unemployment rates since the Great Depression.

Our team has put together a photo gallery capturing the reality on the ground:

US GDP for Q1 may have been revised down to -5%, but like most economies hit by the virus, the worst is yet to come.

The staggering job losses mark a grim milestone in the economic crisis that has gripped the US since the coronavirus triggered widespread shutdowns and stay-at-home orders in an effort to halt the spread of the deadly pandemic, my colleague Lauren Aratani writes.

The latest figures from the Department of Labor show that the rate of new unemployment claims has continued to fall over the last few weeks, down from its peak in early April, when 6.6 million Americans filed for unemployment in a single week.

Earlier this month, the department reported that more than 20 million Americans lost their jobs in April, bringing the unemployment rate to 14.7%, up from 4.4% in March.

While the growth of unemployment claims has slowed, millions more have continued to file for unemployment each week, bringing the total number of unemployed to a disastrous rate not seen since the Great Depression.

Job losses have hit virtually every industry, though some harder than others.

Figures from the Department of Labor earlier this month showed the leisure and hospitality industry was the hardest-hit, with 4.8 million jobs lost – nearly a 40% unemployment rate – as traveling came to a halt with shutdown measures.

Millions of education and health services, retail and manufacturing jobs were also cut.

S&P 500 futures have extended their gains after the release of the GDP and jobless figures.

• S&P 500 futures are up 0.14%
• Dow Jones futures are up 0.67%
• However, Nasdaq futures are down 0.99%

There seems to be a slight sense of relief that this is the lowest number of weekly claims since early March 14 when claims rose by 282,000.

While US jobless figures are incredibly high, the number of claims are starting to ease compared to a few weeks ago, as Bloomberg highlights on this handy chart:

ING economist Carsten Brzeski says German inflation is likely to fall further over the coming months:

The drop in prices for consumer goods witnessed in many regional states suggests that a lack of demand, as well as an attempt to get rid of the goods piled up during the lockdown, have put downward pressure on inflation.

Looking ahead, there could be a more structural problem for inflation statistics. If consumer behaviour were to change structurally after an end to the lockdown measures, at least for a while, the basket measuring consumer price inflation might have to be adjusted, or at least taken with a pinch of salt.

In short, with low oil prices and deflationary forces stemming from the economic damage of Covid-19, German headline inflation will, in our view, continue moving in one direction in the coming months: down.

Holger Zschaeitz, reporter for Germany’s Welt, points out that inflation is now at its lowest level in four years:

Nissan has confirmed it will not close its Sunderland manufacturing plant, instead shutting a factory in Barcelona as the Japanese carmaker seeks to cut £2.3bn in costs worldwide.

The decision puts 2,800 jobs at risk in Spain but removed a short-term threat to most of the 6,700 jobs at Britain’s biggest car plant in Sunderland. However, the carmaker said it would seek to “improve efficiency” at the factory in the north-east of England as it revealed a plan to reduce annual spending by ¥300bn (£2.3bn) worldwide.

The cost-cutting programme the coronavirus pandemic pushed Nissan to its first annual loss in 11 years. Revenues fell by 14% year on year in the 12 months to 31 March, pushing it to a net loss of £5.1bn.

A Nissan spokesman declined to comment on employment levels at Sunderland but said“Europe will remain an important part of Nissan’s global business”, even though the Barcelona plant closure will leave the Japanese carmaker with no EU car factories.

Production in Sunderland, which produces the Qashqai and Juke SUVs and the Leaf electric car, is scheduled to restart in early June.

Virgin Media is to disappear from the high street after deciding its network of more than 50 retail stores will stay shut once the coronavirus pandemic lockdown ends.

The cable and TV company, which operates 53 stores in the UK, is offering the 341 affected staff the opportunity to move to newly created roles.

About 300 of those posts will be in customer care, the majority of those based permanently at home, a decision Virgin Media has taken because of the success of its call centre staff moving to a working-from-home environment during the lockdown. Another 50 newly created roles relate mostly to field sales roles.

Rob Orr, an executive director for sales at Virgin Media, said:

We are focused on delivering the service customers want, in the ways they want it and at a time and place that suits them.

By creating new jobs in our most popular care and sales channels, we will be better able to provide our customers with the top service and support they rightly expect while retaining our talented workforce.

The coronavirus pandemic has hastened a strategic shift the company was already making – moving away from the high street as more and more sales and customer inquiries were taking place online or over the phone. Virgin Media has already whittled down the number of stores and kiosks it operates in the UK from 140 in 2016.

Read more here:

EasyJet has been pushed out of the top 10 performers on London’s blue chip index, as pharma stocks like Hikma and AstraZeneca push ahead. It comes as AstraZeneca tests one of its diabetes drugs as a treatment for Covid-19.

However, the budget airline is still trading higher by over 3%, as investors seem to welcome its cost cutting measures given the coronavirus crisis.

William Ryder, an equity analyst at Hargreaves Lansdown explains:

One possible silver lining for shareholders is that the crisis provides airlines with a chance to reset their costs structures.

Airlines can renegotiate with airports and other suppliers, as well as reducing headcount and agreeing reductions in staff pay. That would make the surviving airlines leaner and more efficient than they were previously, even if social distancing measures prevent them from exploiting this in the near term.

Either way, shareholders would have preferred none of this had happened in the first place. Whether the new cost reductions ever make it through to ticket prices is another question though, and will depend on the market structure once everything settles down.

If you have all but given up using cash over the crisis, you are not alone. Mastercard has found that two thirds of all transactions and now being made using contactless payments.

The increase of the payment threshold from £30 to £45 and health concerns over the handling of cash has boosted its use to the point that 22% of Brits have said they have given up using cash completely.

Mastercard said 43% of people in the UK have used contactless payments more often since the Covid-19 pandemic hit. Almost 10% of card users started to use contactless for the first time as a result of the crisis.

Mastercard’s Marcia Clay said three quarters of Brits say they are very likely to continue using contactless payments after the pandemic ends, with 66% saying they are now their preferred way to pay.

Over 20% of contactless payments are now being conducted via a mobile phone.

Clay said:

The shift to contactless has been accelerating over the past few years in the UK and it is clear that this rate of adoption has increased in recent months.

More on Debenhams:

Reuters cites one source as saying that 160 jobs have been axed from Debenhams’ merchandising department and a similar number from its buying division. Others have been axed from design and HR.

The cuts are part of efforts to slim down its administrative workforce, as its prepares to support a smaller business in the future, the report explains.

Time for a market update.

All major stock markets across Europe are continuing to trade in positive territory, though not as strongly as earlier this week.

Meanwhile, Wall Street looks set for a mixed open, bucking the upward trend on the other side of the Atlantic.

Here’s how futures are faring:

• Dow Jones futures are up +0.3%
• S&P 500 futures are flat
• Nasdaq futures are down -0.5%

Newsflash: RBS is to refund customers £2.2m after failing to alert new adult account holders that they were about to dip into unauthorised overdrafts.

The Competition and Markets Authority said there were effectively two breaches:

• RBS failed to enrol about 179,000 youth account holders into the alert programme within 10 days of migrating them to adult accounts

• As a result, RBS charged around 36,000 customers for going into (or attempting to go into) unarranged overdraft without first sending an alert

In a letter to RBS (published here) the CMA expresses its “disappointment” in the bank for the mistake. However, the lender will now refund customers for unfair treatment, with 8% interest. RBS will also “consider any reasonable claims for extra costs suffered as a result of the charges,” the CMA said.

Separately, the CMA announced that a Santander had put aside £17m for six previously disclosed breached of the retail banking order.

It brings the total customer refunds secured through the CMA for overdraft alert breaches over the past two years to £47m.

Dataflash: Eurozone consumer confidence somewhat improved in May (though it’s all relative at this point).

The European Commission said consumer sentiment came in at -18.8 this month, slightly better than the -22 reading in April.

Economic sentiment also rose to 67.5 from 64.9 a month earlier.

Pret a Manger will reopen a further 204 of its shops for takeaway and delivery on 1 June, taking the number its has reopened to 300.

The coffee and sandwich chain is reopening branches in towns and cities including Bath, Bournemouth, Newcastle, Exeter and Liverpool, for the first time since they temporarily closed in March.

When the shops reopen, they will offer a limited menu of sandwiches, salads and hot and cold drinks.

The company says it will restrict the number of customers entering each shop at any time, and that it has introduced social distancing measures its kitchens and has installed perspex screens at the till counter.

Expecting more people to continue working from home, Pret has brought out a retail range of coffee to make and drink at home, as well as son “heat me at home” soups for customers to take-away with them.

Pano Christou, Pret’s chief executive said:

It’s going to continue to be tough for Pret in the months ahead, and I’d like to thank our team members who are returning to work and making reopening possible.

The owner of the Daily Mail, the i and Metro said that its portfolio of titles saw print advertising revenues plunge by 70% in April and May as the coronavirus lockdown hammers the newspaper industry.

Daily Mail & General Trust, which also owns Mail Online and the Mail on Sunday, said that total revenues across its consumer media division were down a third in April.

In April, DMGT said that circulation revenues fell 17% with total advertising revenue down 46% – with print ads down 69% and digital advertising falling 16%.

The first four weeks of this month, to 24th May, have fared little better with total revenues down 30%. The decline in circulation revenues has improved to a 9% fall, with total advertising revenue down 45%. Print advertising remains down 70% with digital advertising falling 17%.

Newspaper publishers have benefited from record digital audiences as readers crave news on the coronavirus. But with businesses shutdown and many advertisers keen to steer clear of running promotions around content relating to the health pandemic, publishers have failed to reap the benefits of an ad boost.

More news from the travel sector this morning, this time from Stagecoach.

The bus and train operator has set its earnings guidance for the year to 2 May 2020 to between 12.5p and 14.0p. (We’ve asked for the previous guidance but are waiting for confirmation)

It came as the group revealed that sales as its regional bus hubs are just 17% of what they were a year ago.

The publication of full year results will now be delayed until late July.

Stagecoach said it had tapped UK assistance programmes and issued £300m of commercial paper through the government and Bank of England’s COVID-19 Corporate Financing Facility (CCFF). It said its financial cushion had grown, with available cash and undrawn loans now worth £800m.

Stagecoach chief executive Martin Griffiths said:

We see a lasting effect of the COVID-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education. We anticipate that it will be some time before demand for our public transport services returns to pre-COVID levels and we are planning for a number of scenarios.

On top of job cuts, EasyJet intends to reduce costs by revising its contracts with airports and ground handling, reassessing what it spends on maintenance, as well as renegotiating what it spends on marketing, my colleague Joanna Partridge writes.

The airline also gave details of new onboard safety measures ahead of flights resuming on 15 June, including the mandatory wearing of face masks. The company’s fleet has been grounded since 30 March.

You can read the full story here:

EasyJet chief executive Johan Lundgren has been speaking to journalists this morning to explain the rationale behind its Covid-19 strategy.

He said the budget airline has no plans to raise equity today, but will keep that option on the table if needed.

Lundgren also warned that EasyJet could be forced to close some of its bases, but is currently in talks with airports to optimise its network, Reuters reports.

In a statement released earlier this morning, the chief executive said:

We realise that these are very difficult times and we are having to consider very difficult decisions which will impact our people, but we want to protect as many jobs as we can for the long-term.

We remain focused on doing what is right for the company and its long-term health and success, following the swift action we have taken over the last three months to meet the challenges of the virus. Although we will restart flying on 15 June, we expect demand to build slowly, only returning to 2019 levels in about three years’ time.

Against this backdrop, we are planning to reduce the size of our fleet and to optimise the network and our bases. As a result, we anticipate reducing staff numbers by up to 30% across the business and we will continue to remove cost and non-critical expenditure at every level. We will be launching an employee consultation over the coming days.

We want to ensure that we emerge from the pandemic an even more competitive business than before, so that easyJet can thrive in the future.

Investors in Europe are again shrugging off tensions in Hong Kong, extending an upward run on stocks since Tuesday.

Here’s now major indices have opened:

• FTSE 100 up 0.8%
• FTSE 250 up 0.9%
• France’s CAC 40 up 0.6%
• Spain’s IBEX up 0.6%
• Germany’s DAX up 0.7%