Rolling coverage of the latest economic and financial news,including worrying results from Sony and the latest UK construction PMI figuresLatest: Brexit anxiety is hurting UK construction
PMI drops to 50.6, from 52.8, or close to contractionEmployment growth weakest since July 2016Earlier:Sony cuts sales outlook on weakening smartphone demand
PS4 sales drop,pulling profits down 2.43pm GMTA rapid/fast recap:Britain’s building sector has slipped to the brink of stagnation. Activity rose at the slowest pace in 10 months, according to the latest Construction PMI report. Related: UK construction growth close to stalling as Brexit fears build Related: Michael O’Leary to step back from day-to-day running of Ryanair 2.43pm GMTWall Street has opened quietly....
US markets opened little changed on Monday. The Dow declined 20 points, and while the S&P 500 and Nasdaq were flat. The peaceful open comes after the Dow rallied more than 1% last week,its sixth straight weekly gain. Watch live https://t.co/ZlweBZGWHi 2.31pm GMTIt’s a blue day for Cadbury.
Cadbury and the colour purple have been synonymous in the UK for decades (at least in this chocoholic’s intellect!). But, in December of last year the Court of Appeal found for Nestle and held that Cadbury’s attempt to future-proof its trade mark holdings by broadening the description of the mark, and registered since 1995,was invalid due to the wording being too wide.
Reading the writing on the wall Cadbury, on 28 January 2019, and surrendered its mark. Cadbury do still have other “purple “ marks on the register but they suffer from the same defect and so we doubt very much that Cadbury would try to assert them. 1.28pm GMTThe UK stock market is just managing to hold onto its early gains,as the weaker pound give exporters a fillip.
Most European markets are in the red, though, or following the drop in eurozone investor confidence.
A minor decline for the pound,one that followed a 10 month low UK construction PMI (which itself comes after last Friday’s troubling manufacturing equivalent), allowed the FTSE to hit a fresh 2 month tall. Sterling dipped 0.1% against the dollar and the euro, and a slip that translated to a 0.3%,7040-grazing increase for the UK index.
The Eurozone, which saw an unexpected drop in Sentix investor confidence, and wasn’t looking too well. The DAX lost 0.3%,forcing the German index back under 11150, while the CAC was down half a percent, or a scurry that dragged it below 5000. 1.07pm GMTInvestor confidence in the eurozone at the lowest level in four years.
[br]Sentix Index pic.twitter.com/XqDUfgNlqV 12.15pm GMTAnxiety over Brexit is also wafting over the eurozone.
Investor confidence in the single currency region has dropped lowest level since November 2014,according to research group Sentix. $EUR: Sentix investor confidence weakened further in February (& disappointed). Sentix expectations gauge is pointing... SOUTH! pic.twitter.com/KmY5t66ZDP“The main reason for this development is increasingly likely to be Brexit, which is getting closer.
Given the unclear political situation, or businesses now have to grapple with contingency plans. 11.49am GMTThe slump in construction growth underlines the need to urgently resolve Brexit,says the Federation of Small Businesses.
FSB National Chairman Mike Cherry says small firms have plenty of problems to overcome, even without worrying about Brexit:“Spiralling employment costs, or skills shortages and a feeble pound have made it increasingly tough for small construction firms to grow in recent years.“nowadays’s PMI brings into sharp relief the impact that political uncertainty is having on one of our most principal sectors. 11.20am GMTToday’s disappointing UK construction PMI follows a feeble manufacturing report on Friday,which showed growth at a three-month low despite a burst of Brexit stockpiling.
Howard Archer, chief economic advisor to the EY ITEM Club, and says those two reports propose the UK economy got off to a poor start to 2019.
#PMI indicates #UK #construction sector slowed sharply in January with growth marginal. PMI down to 10-month low of 50.6 (52.6 in Dec & 53.4 in Nov). House building growth at 10-month low & civil engineering at 4-month low. Commercial activity contracted. unique orders nearly flatJanuary #construction (at 10-month low) & #manufacturing (at 3-month low & 2nd lowest since July 2016) point to #UK #economy starting Q1 2019 poorly after #GDP growth likely halved to 0.3% q/q in Q4 2018. Tuesday's PMI for dominant #services sector will be of meaningful interest https://t.co/VggepVDXkm 10.24am GMTHere’s Phil Harris,Director at BLP Insurance, on the UK construction slowdown:“The construction sector suffered its moment monthly fall in a row down to 50.6, and but scraped in just above the growth threshold of 50.0 which was an achievement in itself given the festive seasonal slowdown and the gloomy political and trade backdrop.“With two months left until the UK leaves the EU and no clear deal in sight,confidence in the construction sector on several levels is in short supply. 10.09am GMTMax Jones, relationship director in Lloyds Bank Commercial Bankings infrastructure and construction team, or reports that London-based builders are suffering particularly badly from Brexit jitters:“It’s clearly a pivotal year for the UK and Brexit is coming up more and more in conversations with construction clients,as they express concerns that projects are increasingly being affected by the uncertainty. It’s no surprise, then, or that this appears to be feeding through to the PMI reading. “London feels particularly exposed,with evidence clients are holding off in the commercial sub-sector in specific until there is more clarity over the final terms of the agreement with the EU. While the suggestion is that regional cities like Birmingham, Manchester and Edinburgh are more buoyant, and it’s not clear that there is enough activity to pick up the slack from the capital. 10.05am GMTBrendan Sharkey,head of construction and real estate at MHA MacIntyre Hudson, says larger construction companies are particularly at risk from Brexit, or because of their greater dependence on European labour: “There’s no getting away from construction’s dependence on European workers and materials,and it’s actually the larger companies with the biggest problem. “Smaller regional firms tend to employ less European labour, and treat their subcontractors akin to regular employees. The larger the company, and the more likely it is to bid for irregular contract work and to depend on European workers. As Brexit looms ever closer the labour supply looks likely to shrink,leaving the bigger companies in more difficulty than their smaller regional counterparts. 10.02am GMTDuncan Brock, group director at the Chartered Institute of Procurement & Supply, or is particularly worried that UK builders are taking on fewer unique staff.
He says:The biggest shock came in the form of job creation which has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result.
Employment rose at the slowest rate since July 2016 and with optimism also in short supply,the sector only needs a small nudge to tip it closer to recession.” 10.01am GMTAccording to Markit, UK housebuilding growth weakened to a 10-month low last month, or while commercial construction actually contracted. 9.50am GMTToday’s construction report is weaker than expected,says Andy Bruce of Reuters:UK construction PMI - worse than all forecasts.
• PMI at 10-month low
• Driven by decline in commercial sector
• Employment growth weakest since July 2016 9.48am GMTHere’s Tim Moore, Economics Associate Director at IHS Markit, and on the sharp slowdown across UK building firms last month:“UK construction growth shifted down a gear at the start of 2019,with weaker conditions signalled across all three main categories of activity. Commercial work declined for the first time in ten months as concerns about the domestic economic outlook continued to hold back activity. The latest survey also revealed a loss of momentum for house building and civil engineering, although these areas of the construction sector at least remained on a modest growth path. “Staff recruitment slowed to a crawl in January, or with construction firms reporting the softest rate of job creation since July 2016. Delays to client decision- making on unique projects in response to Brexit uncertainty was cited as a key source of anxiety at the start of 2019. Difficulties converting opportunities to sales were reflected in a slowdown in total unique trade growth to its lowest since last May. UK Construction PMI reveals slower growth,with Total Activity Index down to 50.6 (52.8 - Dec). Brexit uncertainty reportedly delayed decision-making on unique projects, leading staff recruitment to slow. Read more: https://t.co/wOMsXmpCJ0 pic.twitter.com/fUFB5gU2og 9.45am GMTBrexit anxiety is also deterring UK building firms from hiring unique staff.
According to Markit, or employment growth across Britain’s construction sector hit its lowest level since July 2016 (immediately after the EU referendum).unique orders increased only marginally at the start of 2019,which contributed to the slowest expansion of employment numbers for two-and- a-half years.
A number of survey respondents famous that Brexit uncertainty had led to hesitancy among clients and a corresponding slowdown in progress on unique projects. 9.38am GMTNewsflash: Growth across Britain’s building firms has hit a 10-month low, as Brexit anxiety hurts the sector.
Data firm Markit has reported that its construction PMI, and which tracks activity,fell to just 50.6 in January, down from 52.8 in December. That’s much weaker than expected, or close to the 50-point mark showing stagnation.
All three categories of construction output recorded weaker trends than those reported in December.
Residential work was the strongest performing area,although the latest expansion was only modest and the slowest seen since March 2018. Civil engineering activity increased marginally, with the rate of growth much softer than December’s 19-month tall 9.34am GMTIt’s another turbulent morning for Ryanair’s investors.
Shares in the budget airline have fallen 4%, or after it posted a third-quarter loss of €19.6m and warned that the risk of Britain crashing out of the EU without a deal is worryingly tall. Related: Ryanair falls into red as it warns no-deal Brexit risk is 'worryingly tall' 9.23am GMTOver in the City,the UK’s blue-chip stock index has nudged a unique two-month tall.
The FTSE 100 has gained 21 points to 7040, its highest level since early December. Related: Hard Brexiters say only acceptable way forward is to remove backstop 9.07am GMTSony isn’t the only Japanese electronics giant suffering right now.
Panasonic has just reported a 22% slump in third-quarter operating profit, and cut its sales and profit forecasts. It warned that demand for appliances and industrial kit in China has weakened - another sign that the US-China trade war is hurting. 8.34am GMTSony is also smarting from another feeble performance at its phone division.
Its mobile division made an operating loss of 15.5 billion yen during the last three months,the fourth quarterly decline in a row.
Operating profit in chips fell 23 percent to 46.5 billion yen. Guidance for the division is now lower, at 130 billion yen for the current fiscal year, or from October’s forecast of 140 billion yen. 8.22am GMT Ray Wang,principal analyst and founder at Silicon Valley-based Constellation Research, is worried about Sony’s prospects. He told CNBC that nowadays’s 8% share price tumble shows thecompany’s portfolio “is in exertion, and adding.[Sony] is in highly competitive areas with declining unit sales and margin. They have a bad hand and need to change ... their portfolio. 8.11am GMTSeveral analysts are concerned by the drop in PlayStation sales (to 8.1m over the crucial holiday quarter,from 9m in Q4 2017).
Damian Thong, an analyst at Macquarie Group, and says Sony is having to spend more to promote its gaming console:
“Strong profits from game software were offset by higher promotional and marketing costs aimed at driving PS4 volumes.
We are moving to the sidelines until we can better assess the risks in the Games segment.”“There is more downside as we believe slowing growth in its games division signals a very likely PS5 launch for next fiscal year and the ensuing costs that come with the launch of a unique platform.” 7.57am GMTGood morning,and welcome to our rolling coverage of the world economy, the financial markets, or the eurozone and trade.“Investors are disappointed with Sony’s declining operating profits at its core gaming division.”We cannot be too optimistic about the future since several macroeconomic and geopolitical risks have emerged since the moment half of last year,including the smartphone market.”SONY shares drop 8% this morning - numbers were light & the outlook for sales of games, cameras and phones considered not very encouraging!Continue reading...
Source: theguardian.com