Manufacturing gloom: UK factory growth falls to 34-month low - live

Discussion in 'Market News' started by Lily, Mar 1, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    All the day’s economic and financial news, as manufacturers across the globe suffer a poor February

    10.41am GMT

    The sharp slowdown in UK factory growth last month has disappointed analysts.

    They are worried that domestic demand weakened in February, compounding the impact of weaker demand from overseas. And the EU referendum could weigh on the sector for several months too.

    “After an encouraging start to 2016, the manufacturing PMI took a turn for the worse in February, falling to its lowest level in nearly three years and barely remaining in growth territory.

    “Activity levels deteriorated on the back of weakness in new orders, with domestic demand no longer compensating for lacklustre export orders. The weakness led manufacturing to post job losses for the fifth time in the last seven months. On a brighter note, the weakness was not across the board as new orders for intermediate goods edged higher.

    “The weak start to the year continues for the manufacturing sector with even domestic demand unable to contribute to the levels it has done previously.

    However, amidst the headwinds of slowing global growth, uncertainty over a Brexit and skills shortages in the industry comes the recent depreciation in sterling which may just provide the jump-start that manufacturing exporters need to boost exports and put a spark back into the sector’s performance.”

    Domestic demand has been the key driver of UK manufacturing in recent months. But with households showing some Brexit jitters too, UK manufacturing might be heading for a rough time until the referendum is out of the way.

    As long as the UK votes to stay in the EU, domestic demand will likely pick up again thereafter. If the UK votes to eject itself from its biggest market, things may get much rougher, though.

    10.07am GMT

    The unemployment rate across the eurozone has hit its lowest level since August 2011, the early months of the debt crisis.

    The eurozone jobless rate ticked down to 10.3% in January 2016, down from 10.4% in December 2015, for the first time since August 2011.

    Jan 2016: euro area unemployment rate 10.3% (Dec 15 10.4%), EU 8.9% (Dec 15 9.0%) #Eurostat

    9.55am GMT

    UK factories do have one glimmer of hope -- the recent slump in the pound.

    Today’s report was conducted before Brexit firms sent sterling down to new seven-year lows, which ought to help exporters....

    UK manufacturing PMI survey took place between 12-24 Feb. Sterling started really shifting lower on the 22nd so no help there

    9.49am GMT

    Barclays shares are being hammered harder, after it reported an 8% fall in profits, halved its dividend and warned of further job cuts.

    They fell 11% a moment ago, forcing trading to be briefly suspended.

    #Barclays shares halted in London on volatility after 11% drop

    9.38am GMT

    More gloom! Britain’s factories have posted their slowest growth in almost three years, as the nation’s manufacturing sector slipped to near-stagnation.

    Data firm Markit’s monthly healthcheck of the sector showed that output slowed sharply, as exports suffered from weakness in the global economy.

    “The near-stagnation of manufacturing highlights the ongoing fragility of the economic recovery at the start of the year and provides further cover for the Bank of England’s increasingly dovish stance.

    “The breadth of the slowdown is especially worrisome. The domestic market is showing signs of weakening while export business continued to fall. Price pressures also remained firmly on the downside, with the survey signalling input costs falling at a double-digit annual pace and average factory gate selling prices showing a further decline. A lot of this is driven by the ongoing weakness of global commodity prices.

    9.20am GMT

    European stock markets are taking today’s weak manufacturing data in their stride.

    Britain’s FTSE 100 just touched its highest point since the 5th of January, with mining group Anglo American and fashion chain Burberry among the risers.

    China's #PMI manuf just fell to a new 5Y low. Remember the time when this kind of release spooked Europe's equity markets? All green today.

    9.09am GMT

    It’s official: Europe’s manufacturing sector expanded at the slowest rate in a year last month, fuelling fears that its economy is heading into trouble.

    The latest Purchasing Managers Index reports, based on data from thousands of firms, shows that the eurozone’s factory sector only expanded modestly.

    “Lacklustre domestic demand is being compounded by a worsening global picture. Exports either fell or rose more slowly in all countries surveyed with the sole exception of Austria.

    “For a region in desperate need of lower unemployment, the near-stalling of jobs growth in the manufacturing sector comes as disappointing news. Firms are cutting back on their hiring due to worries about the outlook.

    8.57am GMT

    Growth in Germany’s factory sector has ground to a near-halt, according to Markit.

    The German manufacturing PMI slowed sharply to 50.5, a 15-month low, from 52.3 in January. New orders, and new exports, both dipped to the slowest growth since last summer.

    8.54am GMT

    France’s manufacturers remained in near-stagnation last month.

    The French PMI came in at 50.2, up from 50.0 in January - which showed no growth at all.

    “Falling new orders were again the source of weakness, leading firms to cut production levels slightly.

    Meanwhile, the survey’s price indices point to continued downward pressure on already low inflation.”

    8.50am GMT

    Italy’s factory sector didn’t enjoy a great February.

    The Italian manufacturing PMI has fallen to 52.2, from 53.2 in January. That’s the lowest reading in a year, signalling that growth last month.

    8.43am GMT

    The first European PMI reports are out.

    The Dutch manufacturing sector has reported its slowest growth in 18 months, with the PMI dropping to 51.7 from 52.4.

    (2) @Markit's #Spanish #PMI down to 54.1 in Feb from 8-month high of 55.4 in Jan. New orders growth "solid". Employment at 7-month high

    8.36am GMT

    Chinese investors have taken today’s weak factory data in their stride.

    The Shanghai composite index closed 1.7% higher, on hopes that Beijing will heed calls for more stimulus measures.

    8.33am GMT

    Back to China....and Beijing is reportedly planning to cut up to six million workers from failing companies.

    The sackings are part of the government’s attempts to clear out its economy and remove excess capacity.

    China aims to lay off 5-6 million workers from “zombie enterprises” over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two sources with ties to the country’s leadership said.

    Beijing is trying to rejuvenate its flagging economy by streamlining bloated industrial sectors, starting with coal and steel, but layoffs have emerged as one of the biggest concerns for cash-strapped regions ahead of next week’s annual session of parliament.

    8.26am GMT

    Few things get our blood pumping faster than a takeover battle. And we might have one brewing, over the London Stock Exchange.

    Shares in the LSE have soared by 8% in early trading, after rival US operator Intercontinental Exchange (ICE) said it was considering a bid for the LSE.

    8.10am GMT

    Shares in Barclays have shed 4% at the start of trading, as traders give their verdict to today’s results.

    The bank is briefing reporters now:

    New Barclays boss Jes Staley says a hiring freeze he announced when he arrived - Dec 1 - has led to 5,700 cut in headcount

    Barclays CEO Jes Staley's pay package for his first month in the job: £277k. Sacked CEO Antony Jenkins gets £505k bonus, £3.4M for the year.

    Barclays CEO Staley says to sell down 62% Barclays Agrica stake, but would be happy to keep a minority stake in Africa biz

    8.02am GMT

    Russia’s factory sector continued to deteriorate last month.

    The Russian manufacturing PMI fell to 49.3 in February, down from 49.8 in January, showing a sharper slowdown.

    Disappointingly for goods producers, scrutinising the survey data leaves little encouraging news. Workforce numbers continued to slide while outstanding business was depleted at a sharp pace.

    #Russia manufacturing PMI in February 49.3, down from 49.7, contraction continues

    7.51am GMT

    Barclays has hit investors with some bad news.

    The bank is more than halving its dividend, from 6.5p to 3p, after suffering and 8% drop in pre-tax profits.

    Chief executive Jes Staley, making his first announcement since taking the helm in December, said he was “announcing initiatives to accelerate our strategy and simplify the group” as profits fell 8% to £2.1bn in 2015.

    Staley said the bank would reduce its stake in its African business - which expanded in 2005 when it bought South African bank Absa - and reduce its payout to shareholders.

    Related: Barclays cuts dividend as profits fall 8%

    Crucial that @Barclays cutting dividend 2016 &2017...this likely to push shares lower today

    7.46am GMT

    Dr. He Fan, Chief Economist at Caixin Insight Group, says today’s PMI report shows that Beijing needs to take more action, fast.

    “The Caixin China General Manufacturing PMI for February is 48, down 0.4 points from the previous month. The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy.

    The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.”

    China PMI manufacturing index weak in Feb, dipping to 49, lowest since Nov 2011, vs 49.4 in Jan. Another factor explaining policy easing.

    Chinese PMIs were predictably weak and while no doubt affected by the seasonal disruptions of Chinese Lunar New Year (LNY), the trend of late was pointing to further weakness in any case.

    In the NBS Manufacturing PMI, the key components of output and new orders both wilted dramatically. Probably of most concern was the renewed collapse in the small companies component, which contracted to 44.4. This emphasises the fact that despite the huge growth in credit in January, most of it is going to the large state-connected corporates while small and medium sized private enterprises continue to struggle.

    7.44am GMT

    Confusingly, China actually has two PMI reports -- the Caixin one which is so gloomy this month, and a separate survey conducted by the government.

    And that official PMI confirms that the factory sector shrank last month:

    China’s official manufacturing purchasing managers’ index fell to 49 in February from 49.8 in January, equalling its weakest since February 2009 and the seventh straight month of decline. The National Bureau of Statistics, which released the measure, said this was partly due to seasonal effects of the lunar new year holiday, when many factories shut down for extended periods to allow workers to travel to distant hometowns to spend time with their families.

    The official services sector PMI, which had previously held up better than the manufacturing index in China’s economic slowdown, also slipped last month to 52.7, its weakest level since December 2008.

    7.36am GMT

    China’s economy has suffered another jolt, with its manufacturing sector shrinking at a faster pace and cutting jobs at the fastest rate since the depths of the financial crisis.

    It’s a bad start to PMI Day, painting a pretty grim picture of the world’s second-largest economy.

    7.20am GMT

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    Today’s latest February manufacturing PMI numbers from Spain, Italy, France and Germany are expected to reinforce concerns of a gradual manufacturing slowdown, with both the German and French measures expected to show stagnation.

    The latest UK manufacturing PMI numbers are expected to show further weakness, down from 52.9 to 52.3, though recent sterling weakness might help on the margins.

    Continue reading...

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