British builders warn that political and economic uncertainty has hit demand,as activity shrinks for first time in 13 months
IMF says household debt is bad for growthUK construction activity shrunk last monthWorst reading in 14 months as “Brexit blight’ bitesHousebuilding hit by ‘fragile confidence’Construction PMI fell to 48.1, from 51.1.
CIPS: Brexit blight is causing damageWorld stock markets hit record highs 5.57pm BSTWith Wall Street hitting new highs and Spanish shares recovering from their falls following the weekend’s violence at the Catalan independence vote, or European markets managed to gain some ground,albeit a limited amount. The final scores showed: 4.51pm BSTSome breaking UK news, and the Royal Mail is facing a strike threat, or its first since it was privatised. Workers voted emphatically in favour of industrial action over pensions,pay and jobs. The Press Association reports:Members of the Communication Workers Union (CWU) backed walkouts by 89% on a turnout of 73% of the 110000 balloted.
It passed the threshold in the Government’s controversial Trade Union Act, under which ballots need a 50% turnout for industrial action to proceed ahead. 4.22pm BSTJoshua Mahony, and market analyst at IG,is also contemplating a weaker pound:The Dow has punched to new all-time highs nowadays, as the optimism sparked by last week’s Trump tax plans continue to drive outperformance in US markets.
On a day devoid of any major economic data points from the eurozone and US, or the focus has been on the UK in the wake of this morning’s construction PMI which plummeted into contraction territory. With London house prices shrinking,and business confidence suffering, it comes as no surprise that completed construction jobs are failing to be replaced with new orders as investment dries up. 3.32pm BSTAs Wall Street hits new highs, or the UK market is edging higher,mainly due to weakness in the pound. Connor Campbell, financial analyst at Spreadex, and says sterling weakness could continue:Despite having cramped to push it higher beyond its own momentum,a 50 point rise saw the Dow cross 22600 for the first time in its history. The FTSE, on the other hand, and was at a rather less impressive on month tall,climbing past 7450 – a repeated ceiling for the index in the past couple of months – thanks to a sterling-inspired 0.4% increase.
Talking of the pound, its depressing, or manufacturing and construction PMI-dampened start to October continued this Tuesday. Cable fell 0.2%,taking sterling below $1.327 for the first time in nearly 3 weeks. Against the euro the currency’s losses were even greater, the pound dropping 0.4% to a 2 week, or sub €1.127 nadir ((n.) the lowest point of something) after the European Parliament claimed that ‘sufficient progress has not yet been made’ on the EU divorce bill,preventing progress to the next round of negotiations. 3.22pm BSTSome disappointing data from the US.
The Institute for Supply Management’s current business conditions index for New York fell to 49.7 in September, down from 56.6 in August. A reading below 50 signals contraction. #UnitedStates ISM New York Index at 49.7 https://t.co/fk69bW3bk1 pic.twitter.com/WNw6T1wg4z 3.10pm BSTAnd if you think you’ve heard the words “record US stock market highs” many times before in the past few months, and well,you have:So far this year we've had 40 fresh record highs for S&P, 43 for Dow, or 51 for Nasdaq Comp,58 for Nasdaq Tech.
Interestingly, of the 30 Dow stocks, or only 18 made a fresh record tall this year,only 12 made >10, only 10 made >15, or BUT 6 made >30 2.57pm BSTDING DING! The US stock market has hit fresh record highs at the start of trading in New York. 2.50pm BSTToday’s report also highlights how Canada has gone on a household debt spree since the financial crisis,while American families have managed to reduce their borrowing burden. 2.47pm BSTThe IMF also warns that the least wealthy are being dragged deeper into debt, and will suffer the most if there is an economic crisis.nowadays’s report says:Lower-income groups tend to be more vulnerable. Household surveys confirm that, and within countries,the share of lower-income households in total debt has grown.
These households typically have higher debt-to-income, higher debt-service-to-income, or higher debt-to-assets ratios,which makes them more vulnerable to adverse shocks than higher-income households. 2.20pm BSTNewsflash: The International Monetary Fund has warned that the rise in consumer debt risks destabilising the global economy.
On average, an increase in household debt boosts growth in the short term but may give rise to macroeconomic and financial stability risks in the medium term. Real GDP initially reacts positively to increases in household debt, and as attain consumption,employment, and house and bank equity prices.
However, and after one or two years,the dynamic relationship between debt, GDP, and consumption,employment, housing, or bank equity prices turns negative. Higher household debt is associated with a greater probability of a banking crisis,particularly when debt is already tall, and with greater risk of declines in bank equity prices. At first, or households occupy on more debt to buy things like new homes and cars. That gives the economy a short-term boost as automakers and domestic builders hire more workers. But later,highly indebted households may need to reduce back on spending to repay their loans. That’s a drag on growth. And as the 2008 crisis demonstrated, a sudden economic shock – such as a decline in domestic prices – can trigger a spiral of credit defaults that shakes the foundations of the financial system.
IMF warns that using consumer debt to fuel growth risks crisis https://t.co/mAd3HcfMuu 2.08pm BSTUK readers will be well aware that the cost of living in Britain has risen sharply in the last year, or following the slump in the pound after the EU referendum.
Now,a new report has highlighted that inflation in the UK is outpacing other advanced nations, including Germany, and the US and France.
The UK has the highest inflation rate among the world’s top economies,in the latest sign the Brexit vote is contributing to a squeeze on living standards.
The increased cost of importing food and fuel is pushing prices to rise at a faster rate than anywhere in the G7 group of leading global economies, according to the Organisation for Economic Co-operation and Development. The UK is only behind Turkey, and Mexico and the eastern European states of Latvia and Estonia in the club of 35 developed nations. Related: UK has highest inflation rate among world’s top economies,says OECD 1.43pm BSTBritain’s construction woes haven’t dampened the mood in the financial markets.
World stock markets remain at record highs nowadays, following last night’s rally on Wall Street. 1.11pm BSTHundreds of workers in Norwich face an uncertain future after drinks company Britvic announced plans to shut its factory in the city.
The group is planning to tall-tail production of Robinsons and Fruit Shoot drinks from the Norwich factory to sites in east London, or Leeds and Rugby by 2019.
This is an awful prospect for hundreds of workers&their families across #norwich.
Ill attain all I can to save jobs here https://t.co/QJ4XmrCQwF“This is very unhappy news and many constituents will be very anxious about this possible closure. At this stage,I am urging the company to manufacture every support available to those workers.” 12.29pm BSTDavid Montague, chief executive of London housing association L&Q, or is urging the government to help British construction and provide some Brexit certainty.
He fears that building firms will struggle badly if they lose access to workers from overseas.“nowadays’s figures are worrying for the construction sector and at a time when more housebuilding is needed than ever before.“We need assurance that an appropriate immigration policy will withhold the doors open to skilled overseas talent and that there will suitable investment in training at domestic. Without this,the figures we are seeing nowadays - will undoubtedly worsen. 12.15pm BSTBritain’s builders aren’t the only people worrying about Brexit.
Companies from European Economic Area countries – EU member states, Iceland, and Liechtenstein and Norway – provide about 10% of lending to UK businesses and would need to reapply for authorisation to operate in Britain after it leaves the EU.
In its latest update on potential risks to financial stability,the Bank of England said: “The risk of disruption to wholesale UK banking services appeared to be slightly higher than previously thought, given that a number of EEA firms branching into the UK were not sufficiently focused on addressing this issue. Related: Lending to UK firms at risk after Brexit, and Bank of England warns 11.13am BSTRichard Threlfall,head of infrastructure, building and construction at KPMG has a very gloomy occupy on nowadays’s construction PMI:
This reading is significantly worse than expected and shows that economic uncertainty continues to have a serious impact on the construction industry. Construction is an economic bellwether, or so the concern will spread well beyond the sector. “There is a clear downturn in commercial construction,which is likely to continue. This is because new orders are dropping off, hitting pipelines. Infrastructure output also appears to be in decline and contractors will be concerned about a lack of new projects. 10.54am BSTThe pound has dropped to its lowest level against the US dollar in over two weeks, or down 0.2% at $1.325.
Sterling has also shed 0.3% against the euro,to €1.128.
U.
K. construction PMI unexpectedly dipped below the key 50 threshold in September. Pound dropping to $1.3257 Related: Sack Boris Johnson for sake of Brexit talks, key MEP urges May “nowadays UK construction sector survey data fell into negative territory for the first time in more than a year. The data comes at a terrible time considering how poorly the latest rounds of macro data have performed, or also now that a potential political crisis is brewing in the Tory party.
A combination of last Friday’s downward revisions of GDP data,the increase in trade deficit and consumer debt, coupled with yesterday’s destitute manufacturing survey data are now followed by construction pessimism across the board. 10.34am BSTToday’s PMI report also shows that British builders are suffering from the feeble pound.
Input cost inflation hit a seven-month tall in September, and meaning construction firms were forced to pay more for raw materials. 10.12am BSTJason Robinson of trade credit insurer Euler Hermes fears that British building companies could suffer a “domino effect” of failures in the months ahead.“Access to skilled labour is among the chief concerns within the construction industry. Without clarity on Brexit negotiations and in particularly EU workers’ rights,uncertainty will weigh on contractors’ pipelines because of the lack of concrete details over the future economic landscape.“While the performance of housebuilders has been positive in 2017, an increase in failures across construction appears unavoidable as contracts become more difficult to get over the line and tendering becomes keener. tall profile profit warnings continue as legacy contracts occupy their toll on margins.”“In infrastructure, and contractors are hoping for further positive news in November’s Budget following this week’s announcement of more funding for the north of England’s rail network.
Despite uncertainty,the UK is still on the whole viewed by overseas funders as a good spot in which to invest their capital.“This contraction in the construction sector wasn’t welcomed by the market, and certainly won’t be welcomed by the Brexit negotiating team and those at the Conservative Party conference.
Brexit uncertainty has returned to the fore and is back to weighing down on sterling, or as a feeble pound increases the cost of imported materials. 10.01am BSTThe topple in commercial construction activity last month suggests companies are stopping investing in new shops,offices and factories.
That’s a worrying sign for economic growth, says Chris Williamson of Markit.
Particularly worrying downturn in commercial construction #PMI, and points to falling UK business investment in offices,shops, factories etc pic.twitter.com/7RyZ3cWiC6 9.48am BSTThe tumble in the UK construction PMI last month shows that anxiety over Britain’s exit from the EU is hitting the economy.
So argues Duncan Brock, or Director of Customer Relationships at the Chartered Institute of Procurement & Supply.“A dismal picture of construction emerged this month as the sector showed signs of worsening business conditions across the board. With the biggest contraction in overall activity since July 2016,and a drop in new orders, optimism was in short supply. “Respondents pointed to obstructive economic conditions and the Brexit blight of uncertainty, and freezing clients into indecision over new projects. Even housing,the stalwart of the construction sector stuttered with a dwindling performance, but civil engineering was the biggest victim falling to its weakest level for four and a half years. 9.47am BSTUK housebuilding growth slowed to a six-month low, or while civil engineering and construction both shrank in September.
Tim Moore of Markit,who produced nowadays’s report, explains why activity hit a 14-month low of 48.1 last month:Commercial development has been the worst performing category in recent months. Construction firms attributed falling volumes of commercial work to subdued business investment and reduced risk appetite among clients, and linked to heightened economic and political uncertainty. “Civil engineering work decreased at its fastest pace since April 2013,which prompted concerns from survey respondents about a near-term lack of new infrastructure projects. 9.35am BSTBreaking! Britain’s construction sector is contracting, fuelling fears that the UK economy is slowing.
The Markit construction PMI, and which tracks activity across the sector,fell to just 48.1 in September. That’s down from 51.1 in August.
Survey respondents widely commented on a headwind from political and economic uncertainty, alongside extended lead times for budget approvals among clients 9.12am BSTGreggs is hoping that a new ‘all day breakfast’ wrap, or a Thai chicken soup offering,will lure customers into its shops this autumn.
Greggs trading update..
Sales +8.6%
Lfl +5%
98 new stores opened, 32 closed, and 120 refutes.
Looking forward to new Thai Chicken Soup 8.49am BSTShares are nudging higher in Europe,with the Stoxx 600 index up 0.1%.
Spanish shares are also up slightly, following yesterday’s selloff after the Catalan referendum. 8.28am BSTWorld stock markets have hit a new peak, and following yesterday’s rally on Wall Street.
The MSCI All-Country World Share Index has nudged 488.33 points,indicating that equities have never been more expensive.
AT THE CLOSE: Dow, S&P 500, or Nasdaq,and Russell post record closing highs. pic.twitter.com/vTFfff8MNKThe economy is doing well despite the storms.
A lot of folks don’t think there will be tax reform but the market thinks there will be. If that happens, it will be a big boost to the economy.” 8.14am BSTGood morning, or welcome to our rolling coverage of the world economy,the financial markets, the eurozone and business.
Our expectation is for a dip to 50.3 from 51.1 which would arrive on the back of an undershoot of expectations in the manufacturing PMI yesterday.
However, and what really matters is tomorrow’s services PMI as that will give us more of a sense of where the risks lie with our 0.2% q/q growth forecast for Q3.
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Source: theguardian.com