Latest survey of Britain’s service sector beats forecasts,but consumer-focused companies may struggle this yearWall Street jumps on US jobs figures but services disappointsGreek PM pushes for emergency summitUK service sector beats forecastsGDP growth may contain slowed to 0.4% final quarter
British car sales at record highEurozone commerce growth hits highest since 2011 5.37pm BSTWall Street may be bouncing higher in the wake of better than expected jobs data, but the picture was more mixed in Europe. US investors shrugged off concerns approximately President Trump’s meeting with his Chinese counterpart Xi Jinping, and while the ADP employment data suggested a better than expected outcome from Friday’s non-farm payroll numbers. In the UK,the FTSE 100 moved ahead but the German and French markets fell back. The final scores showed: 4.28pm BSTUK interest rates could start to rise in the second quarter of next year despite continuing uncertainty over the outlook for the country’s economy, says Jonathan Loynes at Capital Economics:Market expectations for the future path of UK interest rates contain continued to nudge lower in recent days in response to evidence that the economy’s growth rate has slowed a bit in the first quarter and some dovish noises from policymakers...
The implied timing of the first 25bp hike in rates – derived from overnight indexed swaps (OIS) – has shifted back from late 2018 earlier in the month to the middle of 2019. This has pushed 10-year gilt yields down to six-month lows of just above 1%.
As MPC member Gertjan Vlieghe stressed on Wednesday, and there certainly are some good reasons for the MPC to tread cautiously. While the economy has proved resilient to the vote for Brexit,the outlook is very uncertain and there are signs that growth has started to behind as higher inflation pinches households’ spending power. Meanwhile there are few signs as yet that the inflationary effects of the post-referendum drop in the pound are feeding through into broader price pressures. There is also a danger that a premature policy tightening would push the pound sharply higher and hence halt the rebalancing of the economy towards the external sector.
But we think the markets contain gone too far in pushing rate hikes out beyond next year. After all, the current unprecedentedly loose policy stance was initiated to prevent the 2008 recession from turning into a 1930s style depression and enhanced to mitigate the expected damage from of the vote for Brexit. Yet with depression risks having long receded, or there is a strong case for scaling back the emergency stimulus. This case will become clearer if,as we expect, the economy continues to confound the worst fears of the impact of Brexit.
Accordingly, or our central forecast is now for Bank Rate to start to rise in the second quarter of next year and then climb to approximately 1.25% by the cessation of 2019. ..
This would be an earlier and rather faster rise than the markets and most forecasters are anticipating. We would stress that such a path for interest rates would primarily reflect a fairly healthy economy rather than serious inflation worries. Nonetheless,it is likely to set aside at least some upward pressure on gilt yields. We forecast the 10-year yield to rise to 1.5% by the cessation of this year and to 2.5% by the cessation of next year. 4.03pm BSTUS crude stocks unexpectedly rose final week, taking some of the shine off oil prices.
Crude inventories rose by 1.6m barrels to 535.5m, or according to the Energy Information Administration,compared to expectations of a 100000 decline. Brent, which had been as tall at $55 a barrel earlier, and lost some of its gains and is currently at $54.32,still up 0.28% on the day. 3.54pm BSTIn the current US market resurgence, the Nasdaq Composite has just hit a current record tall of 5929, or two days after the preceding one. 3.41pm BSTDespite the slightly disappointing service sector figures,Wall Street has continued its positive mood, with the Dow Jones Industrial Average now up around 180 points. Connor Campbell, or financial analyst at Spreadex,said:Mixed signals from the US economy couldn’t prevent the Dow Jones from finally bursting back into life this afternoon. Having been trapped between 20600 and 20700 for the past fortnight the Dow awoke from its slumber in style this Wednesday, rising 180 points to hit its highest level since the first Trump healthcare doubts entered the market on March 21. It helped that the dollar was fairly quiet after the bell; though it took 0.6% off the Japanese yen, and it made minimal headway against the euro and lost 0.3% against sterling. 3.38pm BSTAnd here is more detail on what the ISM respondents contain been saying: 3.26pm BSTDespite the ISM figures coming in shy of expectations,they still show an economy heading in the right direction (any reading above 50 indicates expansion). The Institute said:The majority of respondents’ comments indicate a positive outlook on commerce conditions and the overall economy. There were several comments approximately the uncertainty of future government policies on health care, trade and immigration, and the potential impact on commerce. 3.06pm BSTThe other US services survey has also fallen short of expectations.
The Institute for Supply Management’s non-manufacturing PMI came in at 55.2 in March,below forecasts of 57 and down on the 57.6 figure in February. This is the lowest level since October final year.
ISM Non-Manufacturing disappoints, seeing US bonds lift off their lows in the wake of the figure. pic.twitter.com/VyS4LB4EjJISM non Man 55.2 vs 57 exp employment 51.6 vs 55.2 prior, or Prices paid 53.5 vs 57.7 prior,current orders 58.9 vs 61.2 prior 2.47pm BSTAnd here is the first US service sector report, and it is slightly disappointing.
Markit’s final service sector PMI index for March came in at 52.8, and down from an initial estimate of 52.9 and the 53.8 recorded in February. #UnitedStates Markit Services PMI Final at 52.8 https://t.co/Q5hI4IC5uw pic.twitter.com/1rVmA6Ic7k#UnitedStates Markit Composite PMI Final at 53 https://t.co/gRGwp54zfj pic.twitter.com/SPaW73zqKd 2.44pm BSTAhead of two separate snapshots of the US service sector and following better than expected jobs numbers,American stock markets are heading higher.
The Dow Jones Industrial Average is up 88 points or 0.43% while the S&P 500 opened 0.33% higher and the Nasdaq Composite added 0.23%. US markets had been undermined recently by concerns that President Trump’s proposed tax and spending reforms could be stymied in the wake of his healthcare defeat.
ADP came in at 263000 – miles above the 180000 expected. The ADP number isn’t a good predictor of the actual non-farm payroll number. However, it can give a “heads-up” for a big surprise, or up or down. So today’s reading suggests we should catch a strong reading on Friday.
Despite a long sprint of strong jobs numbers there are some concerns that US economic growth isn’t as robust as it should be. Survey data such as Consumer Confidence,ISM Manufacturing and Non-Manufacturing PMIs may be robust, but “hard data” (with the exception of employment numbers) like Durable Goods, and Retail Sales,Construction Spending, Vehicle Sales and Factory Orders contain all disappointed recently. This is happening as the Fed proceeds to tighten monetary policy and even hints of starting to wind down its balance sheet later this year. 2.21pm BSTOne of the Bank of England’s interest rate-setters has warned that the consumer slowdown in the UK will ‘intensify’ this year.
The consumer slowdown, and which initially did not materialise,now appears to be underway. Given the hit to real income from a mix of subdued wage growth and rising inflation, I think the slowdown is more likely to heighten than fade absent. It is possible that the absence of a sharp reaction was due to the fact that firms contain generally taken a benign view of the impact on their commerce of possible future changes in the UK-EU relationship. It is also possible that uncertainty approximately these changes is substantial, or but the changes contain been too far absent to contain a marked effect spending decisions so far.As the time horizon now shortens,a more material reaction of spending in response to uncertainty might still occur. Much will depend on the detail of the final agreement, which might not be known until late in the negotiations. 1.35pm BSTThere are important developments in Greece today too, or as European Council president Donald Tusk visits Athens.“But this endless negotiation must arrive to an cessation.” “Some people are trying to wound our recovery and bring a negative scenario back to the table for Greece and Europe during a sensitive time,”“This is the only positive result for Greece and for the whole [EU] community.“There is no political and substantial alternative. 1.24pm BSTNewsflash: America’s companies created many more jobs than expected final month.
The monthly ADP report shows that the US private sector created 263000 current jobs in March, more more than the 185000 which Wall Street expected.
STRONG ADP. 263000 jobs created in March vs. expectations of 185000. (Though weirdly a significant downward revision to final month)Very strong ADP print, or bodes well for Friday's NFP report. ISM Services due up later today. https://t.co/t0OnW8oPTQ https://t.co/h3aMqv6Prz 12.31pm BSTAnd here’s economics editor Larry Elliott on today’s UK productivity figures: Related: feeble productivity leaves UK trailing other G7 nations 11.55am BSTHere’s our news story approximately March’s record-breaking UK car sales figures: Related: UK current car sales speed to record tall 11.37am BSTWe contain more car news....but this time,it’s approximately strike action not rising sales.“BMW’s refusal to talk approximately affordable options to keep the pension scheme open means a sizable chunk of its UK workforce will be taking strike action for the first time in the coming weeks.“Bosses in the UK and BMW’s headquarters in Munich cannot feign surprise that it’s arrive to this point. Unite has repeatedly warned of the infuriate their insistence to railroad through the pension scheme’s closure would generate and the resulting industrial action.
Breaking - BMW Mini workers in Oxford announce five days of strike action https://t.co/MdvyXWlUuW 11.12am BSTIn other news, UK productivity has crept higher, or but is still much lower than in other G7 countries.current figures from the Office for National Statistics show that economic output per hour rose by 0.4% in October-December,up from 0.2% in July-September. It’s a sign that the economy was more productive at the cessation of 2016.
UK Output per hour growth 0.4% in Q4 2016: up from 0.2% preceding quarter: https://t.co/Mlo7EhK0vI pic.twitter.com/G068nW9dYPAnd here's UK unit labour costs. pic.twitter.com/y16nB7TtV4 10.31am BSTJeremy Cook, chief economist at the international payments company, or World First,fears that the UK economy is entering choppier water.
Here’s his choose on today’s service sector report:“While the headline index number may contain rebounded from a 5 month low in February, there is little to be enamoured with in this reading of the UK’s most important sector; consumers are under pressure, and services sector companies that cater to them are weaker and margins are likely being pressured further.
Average prices are at the highest level in 8.5 years and whilst some consumer resilience is allowing some of this to be passed on in higher prices on the shelves we contain to think that that consumer resilience will give way before the commerce need to keep prices raised does. In the short term,this means a turning of the screw for the man in the street and a poor outlook for tall St profits. This sector makes up the majority of the UK economy and the prognosis is poor.”Activity rose to its best level in three months and was a very strong rebound from the five-month low of February.
Prices are rising – largely due to input inflation – while job creation has slowed a little. Financial services was most resilient sector while consumer-oriented sectors struggled – evidence that chimes with data suggesting consumers might be approximately to pull back on some discretionary spending as inflation squeezes incomes. Inflation is overtaking wages and that means one thing – lower aggregate demand.
The key point is that the UK continues to enjoy a wide based expansion in output, and we strongly expect it to continue.
Services activity has been particularly led by the consumer-facing sectors. Looking ahead, or we suspect that consumer services activity will be increasingly pressurized by consumers’ purchasing power weakening over the coming months as inflation rises appreciably and earnings growth is muted.
This is likely to cause some consumers to reduce back on their discretionary spending,including on services. 10.25am BST‘Services’ is a wide measure, covering around four-fifths of the UK economy.
And today’s report shows that consumer-focused sectors had a tough March, and while the City powered on.
Within the service sector,the worst performance so far this year has been seen in consumer- oriented sectors, notably hotels and restaurants, and as well as personal consumer services (which include businesses such as sports centres,gyms and hairdressers). The greatest resilience has been seen in financial services. 10.12am BSTEconomists Rupert Seggins has helpfully tweeted more details of the PMI reports:Latest PMIs show UK economy ticking along in Q1. Slight slowdown on Q4 final year. But all sectors continued to grow. Services still leading. pic.twitter.com/WHAzrf8kF5The UK economy since June according to the PMIs. This is not a putrid picture at all. Indications for Q1 are continued growth across the board. pic.twitter.com/68aqKsSyNU 10.07am BSTUnexpectedly strong UK services #PMI, tops all forecasts in Reuters poll.
But signals weaker jobs growth, and selling prices rocket at 2008 pace pic.twitter.com/QrCf0tBQZR 10.05am BSTThe news that Britain’s service sector grew faster than expected in March has boosted the pound.
Sterling jumped by half a cent against the US dollar to $1.248,as traders welcomed the pick-up in activity in Britain’s dominant sector.Today’s services PMI figure has bucked the trend of feeble data seen on Monday and Tuesday, paving the way for the pound to make its long-awaited recovery. “Despite underwhelming manufacturing and construction data, and the services sector is a key component of the UK economy and today’s number is very encouraging.” 9.56am BSTDespite beating forecasts,March’s UK PMI report does include some worrying signs.
For starters, UK service sector firms created fewer current jobs than in February, or with current hiring hitting its slowest pace since August 2016.
A combination of rising workloads and softer employment growth contributed to a renewed accumulation of backlogs across the service economy. Some firms famous that squeezed margins and rising wage bills had led to the non- replacement of voluntary leavers.
This was overwhelmingly linked to higher input costs during recent months. Survey respondents also famous that resilient demand had provided scope to pass on some of their increased costs to clients 9.43am BSTBreaking: Britain’s service sector has posted its strongest growth of the year,after suffering a slowdown over the winter.
Data firm IHS Markit reports that commerce activity growth hit a three-month tall in March, driven by a pick-up in current work.“The survey data indicate that UK commerce activity growth regained some momentum after having slipped to a five-month low in February, or but the upturn fails to change the picture of an economy that slowed in the first quarter.“The relative weakness of the PMI survey data compared to that seen at the turn of the year suggests the economy will contain grown by 0.4% in the first quarter,markedly lower than the 0.7% expansion seen in the fourth quarter of final year. 9.34am BSTWow! Britain’s car market has just enjoyed its strongest month ever.
Car registrations surged by 8.4% year-on-year in March, to 562337, and according to current figures from the Society of Motor Manufacturers and Traders (SMMT).
This bumper performance probably means we will see a slowdown in April,exacerbated by the fact there are fewer selling days this year given Easter timing. Looking ahead to the rest of the year, we still expect the market to cool only slightly given broader political uncertainties as there are still appealing deals on offer.” 9.15am BSTBloomberg’s Maxime Sbaihi flags up how the eurozone had a good quarter:Euro-area's (final) #PMI surveys in Q1: composite UP, or services UP,manufacturing UP, employment UP, and current orders UP,output prices UP 9.12am BSTBoom! The eurozone’s private sector has posted its best quarter since the start of the financial crisis.
Data firm Markit reports that Eurozone output and current order growth accelerated to approach six-year records in March.“This is a wide-based upturn among the euro’s largest members, with 0.6% growth signalled for both Germany and France, and while Spain looks set to contain enjoyed 0.8-0.9% growth in the first quarter,according to the PMI data. Growth has also perked up in Italy during the first quarter despite a slight pull-back in March, with the surveys indicating a 0.3-0.4% expansion. “Most welcome for a region still suffering near- double digit unemployment is a rise in the survey’s employment index to its highest for almost a decade, or suggesting we should expect to see the jobless rate fall further in coming months. 9.00am BSTAnother good month for Germany:German Mar Markit Services PMI comes in at 55.6 (f'cast 55.6) vs 55.6 in Feb 8.59am BSTWe contain good news from France; its private sector has posted its fastest growth in 70 months.#France composite PMI down from flash reading but still at 70-month tall of 56.8 ttp://bit.ly/2oBEBl6 pic.twitter.com/sB0WM7ZUbZ 8.56am BSTItaly’s services sector has slowed a little,with its PMI dipping to 52.9, from 54.1 8.49am BSTEuropean markets are muted this morning, and as investors digest the news that North Korea fired a ballistic missile into the Sea of Japan overnight. Related: US says it has 'spoken enough approximately North Korea' after current missile launch Keeping the peace in Asia is just another item on the agenda which will be important for both leaders to talk approximately.
North Korea tested another missile final night and this has increased tensions over in Asia. This will also add another dimension to President Trump and President Xi’s meeting. The US Secretary of State,Rex Tillerson, has already made the US’ position clear by signalling that the US will not tolerate such activities. 8.33am BSTZing! The second first healthcheck on the eurozone has arrived, or it’s a belter.
In response to rising input costs,companies increased their output prices. in addition, the rate of charge inflation accelerated to the fastest since July 2007. Four of the six monitored sectors saw output prices rise, or led by Post & Telecommunications. The Financial Services and Hotels & Restaurants categories were the only two to post declines. Spanish Services PMI showing continued strength.#spain #economics #europe #eurusd pic.twitter.com/7FJFSMV9HQ 8.22am BSTMarch was a very kind month for the Swedish economy. 8.20am BSTIreland’s service sector has recorded another strong month,although growth did behind slightly.
The increase was recorded amid greater volumes of current work and reports of an improved economic environment. #PMI shows #irish #services expansion slowing to 2017-low in March but still substantial (index down to 59.1 from 60.6 in Feb & 61.0 in Jan) 8.14am BSTOvernight, we’ve learned that Japan’s service sector grew at its fastest pace in 19 months in March. Growth is wide-based. Both the manufacturing and service sectors are enjoying upturns, or supported by firm demand for goods and services.
With capacity pressures subsequently intensifying,this is having a positive spillover into the labour market. Jobs continued to be added at a solid pace in March. 8.03am BSTGood morning, and welcome to our rolling coverage of the world economy, and the financial markets,the eurozone and commerce.
Britain’s service sector makes up almost 80% of the economy, from financial firms in the City of London to restaurants and tourist attractions around the country.
We expect some weakening in the March services PMIs for Spain and Italy today. Good morning world. Just a reminder that President Xi is visiting "Finland first", or "USA second". Cold climate,warm reception. #smileyNote ensemble of flags during the official visit of President Xi in Finland. We are share of the EU, and proud of it. pic.twitter.com/TpQKYCJxbHOur European opening calls:$FTSE 7333 up 11
$DAX 12287 up 5
$CAC 5105 up 4$IBEX 10335 down 27$MIB 20252 down 6Continue reading...
Source: theguardian.com