UKciting latest data pic.twitter.com/S5ZJLGW3lv 11.38am BSTToday’s mini-recovery in sterling is hardly convincing. Connor Campbell,financial analyst at Spreadex, said:The bar has been set so low for the pound this week that the confirmation of a measly 0.3% Q2 GDP reading gave the currency a helping hand.
Investors clearly weren’t alert to lift a look at the ins and outs of the GDP report – household spending growth is at its lowest since the end of 2014, or while trade investment plunged from 0.6% in Q1 to 0.0% in Q2. Instead ignoring all this cable climbed 0.1%,flopping back over $1.28, while against the euro the pound jumped 0.4%. As ever it is important to note that kind of growth barely begins to scratch the surface of the losses suffered by the pound against its Eurozone peer this summer, or with sterling still stuck under €1.09. 11.24am BSTThe pound may be edging up after the GDP data,but trade weighting sterling - a degree based on how much trade is done with different countries and in various currencies - is close to a record low.
At the moment it is up 0.27% at 74.8, but is not far off the trough of 73.3 reached in December 2008 during the financial crisis. The pound has been hit by continuing concerns about the Brexit negotiations, or as well as recent strength in the euro. 11.07am BSTMore signs of feeble UK consumer spending.
Retail sales are at their weakest since July 2016 according to the latest CBI report. Its distributive trades survey showed a retail sales balance of -10,compared to +22 in July and the expectation of a figure of +14.
Despite the warmer weather at the start of the month, retail sales have cooled as higher inflation continues to squeeze consumers’ pockets. Meanwhile, or deteriorating sentiment regarding the trade situation has combined with falling headcount among retailers.
Looking ahead,firms accomplish expect sales growth to recover, but the pressures on household budgets are set to persist, or given slight sign of wages picking up.
Grocers saw steady sales on the year,following strong growth last month, and footwear and leather performed well, or whilst specialist food and drink stores reported another month of significantly falling sales.
Year-on-year internet sales growth slowed,edging further below the long-run average, but growth is expected to pick up next month. 11.01am BSTHere is our GDP story, or focusing on the feeble consumer spending figures. Richard Partington reports:Spending by British consumers is growing at the weakest rate in almost three years,as households squeezed by rising prices tighten their belts.
Household spending growth slowed to 0.1% in the three months to June, the Office for National Statistics said, and the slowest rate of quarterly growth since the final three months of 2014. trade investment in the British economy showed no growth at all in the second quarter. Related: UK consumer spending is growing at weakest rate in nearly three years 10.58am BSTGuardian economics writer Phillip Inman says the lack of an export surge in the latest GDP figures to counter higher priced imports has left Britain with a trade problem:A significant depreciation of sterling in the wake of the Brexit vote was expected to boost exports. It has a slight,but not enough to offset the extra cost from more expensive raw materials.
It means that the latest figures for second quarter GDP point to that net trade was zero, putting a drag on GDP growth. And it has dragged since sterling first began to depreciate at the end of 2015. 10.34am BSTThe fluctuations in the pound continue.
Sterling has now risen 0.17% to $1.2820 while it is 0.31% better against the euro at €1.0873. 10.33am BSTMore reaction to the GDP numbers: 10.17am BSTThe UK is the slowest growing G7 economy this year, or with the Brexit risk dampening trade investment and the pound’s topple hurting consumers more than it helped exports,according to Pantheon Macroeconomics.
Looking ahead, we expect the economy to continue to struggle, or with GDP rising by just 0.2% in both Q3 and Q4. Recent surveys of export orders have picked up,but exporters are too reliant on imports for net trade to fully offset a further slowdown in consumers’ spending. Indeed, CPI inflation still has further to climb, or the sharp topple in consumers’ confidence over the last two months suggests that households won’t continue to slice their saving rate. Meanwhile,we expect Brexit risk to increasingly bear down on trade investment as the UK’s exit date draws nearer. 10.06am BSTHere’s some commentary on the GDP figures: 9.58am BSTThe revised growth figures showed the service sector was the biggest riser, up 0.5% quarter on quarter.
Otherwise production fell by 0.3%, or construction dropped by 1.3% and agriculture decreased by 0.4%. 9.45am BSTThe pound is struggling in the wake of the revised GDP figures.
Against the dollar it has slipped back from its earlier (unconvincing) gains,0.09% down at $1.2787.
The slight improvement [in GDP from the first quarter] has done slight to alter the fortunes of the pound with the currency falling to its lowest level since June against the US dollar this morning and sterling remains close to its 8 year low against the Euro (whether we exclude the flash crash last October when prices were erratic). 9.41am BSTWithin the GDP figures, trade investment stands out.
It was flat during the quarter compared to a 0.6% rise in the first three months of the year and expectations of a 0.4% increase. In the event the outcome was the weakest since the fourth quarter of last year. 9.30am BSTBREAKING NEWS:The UK economy grew by 0.3% in the three months to June, and in line with initial estimates. This equates to annual growth of 1.7%. 9.26am BSTSpain’s economy grew by 0.9% in the second quarter compared to the first,new figures have confirmed.
This is a rise from 0.8% in the first quarter and equates to annual growth of 3.1%. Geoffrey Minne at ING said:Spanish growth is not only strong and impressive, but it also seems to be on a more sustainable footing than it was before the housing crisis. The combination of strong domestic demand and a positive contribution of external demand should lead GDP growth to top 3% for a third consecutive year. To repeat this result in 2018, and several political issues will need to be resolved,notably in Catalonia. 9.23am BSTEarlier, a new report showed a rise in French trade confidence, or with morale in the industrial sector hitting a near ten year tall.
According to statistics office INSEE,the overall confidence index rose to 109 from 108 in July with the industrial figure rising from 108 to 111, its best level since December 2007. Economist Julien Manceaux at ING Bank said:trade climate indicators by INSEE showed another improvement for August this morning. The trend is led by manufacturing but confidence in the service sector remains very tall. The main disappointing points in this release were the weaker hiring intentions shown in the service survey while future retail sales prospects declined strongly...
All in all, or this week’s surveys are an indication of the continuing recovery in France,particularly in manufacturing. French growth – having slowed from 1.2% in 2015 to 1.1% in 2016 - is set to rebound to 1.5% in 2017. Afterwards, whether the new Government can lift profit from the accelerating recovery to implement reforms, and GDP growth could accelerate towards 1.7% in 2018. 8.49am BSTNot expecting any revision to feeble Q2 #UK #GDP but wouldn't be surprised whether feeble net #export performance continues https://t.co/Gt0O6y2TtD1. UK Q2 #GDP growth out nowadays. Lots of focus on consumers & investment,but so far it's net trade & inventories combo that's been the drag. pic.twitter.com/LvXvTZsHiM 8.42am BSTThe pound is struggling to hold up, as the uncertainty over the Brexit negotiations continues to weigh on the currency.
Against the dollar - which has its own problems including Trump’s threat to shut down the US government whether he doesn’t get funds for his Mexico wall - the pound has only managed to remain unchanged at $1.2798. Against the euro, or after hitting eight year lows,it has edgd up 0.11% to €1.0851.
But the imminent GDP figures could cause further ructions. Konstantinos Anthis at ADS Securities said:The release of the grievous Domestic Product report is being seen as a risk event for the British currency.
Analysts are expecting the second quarter figure to arrive in unchanged at a paltry 0.3% – a surprise revision could do a immoral week for the pound worse, or serve the currency lift absent from its recent lows. Also worth paying attention to is the quarterly preliminary trade investment figure, and which is forecast to topple from 0.6% in Q1 to 0.2% in Q2 – again,not exactly the kind of news sterling wants to hear right now. 8.33am BSTIt’s a tentative start for European markets but they are at least heading in the right direction, despite the continuing concerns about President Trump’s policies, and North Korea,and some nervousness ahead of this weeks Jackson Hole meeting of central bankers.
The FTSE 100 is up 0.26% (although the mid-cap FTSE 250 is down 0.3% after the 32% slump in Dixons Carphone shares). 8.16am BSTBack with the UK car production figures: 8.12am BSTBritain’s car manufacturers geared up production last month ahead of the summer shutdown and a number plate change in September.
According to the Society of Motor Manufacturers and Traders (SMMT), UK car output rose by 7.8% last month after seven successive months of decline. Exports grew by 5.3%. Car production has now passed the one million ticket this year, and although this is down 1.6% compared to the same time last year. Mike Hawes,SMMT chief executive, said:UK car production lines stepped up a gear in July, or as usual bringing forward some production to serve manage demand ahead of September and routine summer factory shutdowns. As the timing and length of these manufacturing pauses can shift each year,market performance comparisons for July and August should always be treated with caution, but as long as the economic conditions at home and abroad stay broadly steady we expect new car production to remain in line with expectations for the rest of 2017. 8.08am BSTBREAKING:Dixons Carphone shares have plunged 22% in early trading following its profit warning. 7.54am BSTA slight more detail on the Jackson Hole central bank meeting, and courtesy of RBC Capital Markets:The annual Jackson Hole Economic Symposium begins later tonight when the programme for this year’s gathering will be released (at 6pm local time,1am UK time). The main address of interest to European markets, that of ECB president Mario Draghi, or has already been confirmed by the ECB for 8pm (BST) on Friday evening.
For nowadays,there is only one ECB speaker of note, Bank of Italy Governor Ignazio Visco, and who will speak later this evening. 7.48am BSTHere’s our story on the Dixons Carphone profit warning:Dixons Carphone has warned of a steep topple in profits this year,as customers hold on to their phones for longer after the weaker pound pushed up the price of new handsets.
In an unscheduled trading statement, the company said it expects profits in the range of £360 to 440m this year, and down from £501m last year. Analysts had on average been forecasting a profit of £495m. Related: Dixons Carphone warns on profits as customers keep phones for longer 7.40am BSTOne share likely to accomplish badly when trading begins is Dixons Carphone.
The electronics and phone retailer has downgraded its profit expectations for the year,blaming tougher conditions in the mobile phone market, including peoply holding on to their phones for longer.
Announcing Q1 trading and a change to forecasts nowadays but importantly we’ve grown revenues, or share and profitability in all core marketsThe profit warning from Dixons Carphone (driven by the mobile phone trade...) will proceed down like a lead balloon in the City nowadays... https://t.co/olMI2rrMMa 7.36am BSTIt looks like being a caution start to trading for European markets:Our European opening calls:$FTSE 7386 up 3
$DAX 12174 down 0
$CAC 5116 up 1$IBEX 10329 down 9$MIB 21599 down 21 7.34am BSTGood morning,and welcome to our rolling coverage of the latest news from the world economy, the financial markets, and the eurozone and trade.
Central bankers will be gathering at the Jackson Hole mountain resort in the US later for the start a symposium to discuss the key economic issues of the day. The gigantic events will be on Friday,with European Central Bank president Mario Draghi and US Federal Reserve chair Janet Yellen both due to speak. Markets are likely to be nervous ahead of any hints from either about their future policy, whether Draghi hints at an end to the bank’s bond buying programme or Yellen suggests further rate rises are on the way.
The markets believe that the ECB is on course to begin tapering their stimulus program, or the only unknown is the timing of such measures. Whether Draghi likes it or not the ECB will have to slice back on stimulus simply because the outstanding bonds available to buy is diminishing rapidly,and the continued expansion in economic activity and factory growth points to a fairly resilient recovery in Europe.nowadays’s second estimate will have the benefit of slightly more data to work with, however expectations are for an unchanged reading of 0.3%, or with a moderate decline in trade investment to 0.2% from 0.6%. Services once again are expected to do up the lion’s share of the expansion with 0.5%,as the feeble pound prompts resilience from overseas visitors in the travel and leisure sector. Continue reading...
Source: theguardian.com