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Omicron pushes UK services PMI to 10-month low

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© Reuters. FILE PHOTO: People walk through the Canary Wharf financial district of London, Britain, December 7, 2018. REUTERS/Simon Dawson

By David Milliken

LONDON (Reuters) -Britain’s services sector suffered its biggest loss of momentum last month since the country was last in lockdown, as the spread of the Omicron variant of coronavirus hammered hospitality and travel, a survey showed on Thursday.

The IHS Markit/CIPS services Purchasing Managers’ Index (PMI) fell to a 10-month low of 53.6 in December from 58.5 in November, according to final data, which was a fraction stronger than a preliminary “flash” reading of 53.2.

The composite PMI, which includes Tuesday’s more upbeat manufacturing PMI, showed a similar move.

“Mass cancellations of bookings in response to the Omicron variant led to a slump in consumer spending on travel, leisure and entertainment,” IHS Markit economist Tim Moore said.

Some 45% of hospitality businesses and 50% of firms such as beauticians and hairdressers reported increased cancellations in the run-up to Christmas, according to separate figures released by the Office for National Statistics on Thursday.

The last time the services PMI was lower was in February 2020 when the economy was still under lockdown, and restaurants and non-essential shops were closed to the public.

December’s data was above the 50 mark that normally separates growth from contraction, but economists said the scale of the fall increased the chances that official data due next month would show the economy shrank in December.

“Disruption from the current scale of infections risks worsening supply bottlenecks, particularly labour shortages. And combined with a deterioration in high-frequency indicators, the latest PMIs reinforce the likelihood that GDP fell in December,” said Martin Beck, chief economic adviser to EY ITEM Club.

Pantheon Economics forecasts a 0.6% fall in GDP for December and a 0.3% decline for January.

“That said, we can’t rule out a rise in GDP in January if consumers feel more confident to risk contracting COVID-19, now that Christmas is out of the way and people know that Omicron is less likely to result in serious illness than Delta,” said Gabriella Dickens, senior UK economist at Pantheon.

NO NEW LOCKDOWN

Unlike during the wave of COVID-19 cases last winter – when few Britons had been vaccinated – this year Prime Minister Boris Johnson has rejected new legal restrictions in England, although curbs on hospitality apply elsewhere in the United Kingdom.

Moreover, many Britons have also followed health advice to work from home where possible and limit social gatherings. Retail footfall in the week to Jan. 2 was 25% lower than its level in the equivalent week of 2019, the ONS said.

Services businesses were more upbeat for 2022 as a whole, however, with 55% expecting output to rise compared with 10% predicting a decline, IHS Markit said.

But many economists expect a big squeeze on consumer demand this year from sharply rising inflation, which the Bank of England forecasts will peak at a 30-year high of around 6% in April, just as the government raises taxes on workers.

The BoE also started last month to raise interest rates from their record-low 0.1% to tackle longer-term price pressures.

“Many businesses cited the need to pass on escalating costs to clients over the course of 2022,” Moore said, adding that firms faced pressure to raise pay in a competitive job market.

Both the ‘prices charged’ and the input costs components of the services PMI in December were well above their levels at the start of 2021, although down from peaks a few months earlier.

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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