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| Version 19 | Version 20 |
|---|---|
| UK economic growth slows to 0.5% - as it happened | UK economic growth slows to 0.5% - as it happened |
| (about 23 hours later) | |
| 5.48pm GMT | 5.48pm GMT |
| 17:48 | 17:48 |
| European markets end lower | European markets end lower |
| With continuing concerns about China after it seemed to abandon its 7% growth target at the weekend, and nervousness as the US Federal Reserve began its latest policy meeting, shares suffered a day of losses. In the UK, commodity companies, weakened by Chinese worries, put pressure on the market while the latest GDP figures missed economists’ forecasts. There was also disappointing data from the US, including consumer confidence. The final scores showed: | With continuing concerns about China after it seemed to abandon its 7% growth target at the weekend, and nervousness as the US Federal Reserve began its latest policy meeting, shares suffered a day of losses. In the UK, commodity companies, weakened by Chinese worries, put pressure on the market while the latest GDP figures missed economists’ forecasts. There was also disappointing data from the US, including consumer confidence. The final scores showed: |
| On Wall Street, the Dow Jones Industrial Average is currently down 51 points or 0.29%. | On Wall Street, the Dow Jones Industrial Average is currently down 51 points or 0.29%. |
| On that note, we’ll close up for the evening. Thanks for all your comments, and we’ll be back again tomorrow. | On that note, we’ll close up for the evening. Thanks for all your comments, and we’ll be back again tomorrow. |
| 5.28pm GMT | 5.28pm GMT |
| 17:28 | 17:28 |
| Oil prices continue to slide, with Brent crude now down nearly 2% at $46.62. Jasper Lawler at CMC Markets said: | Oil prices continue to slide, with Brent crude now down nearly 2% at $46.62. Jasper Lawler at CMC Markets said: |
| West Texas crude broke down to two-month lows as the US government signed off on a deal to sell some its strategic petroleum reserve from 2018 until 2025 ahead of an expected build in weekly API inventories data. | West Texas crude broke down to two-month lows as the US government signed off on a deal to sell some its strategic petroleum reserve from 2018 until 2025 ahead of an expected build in weekly API inventories data. |
| 4.33pm GMT | 4.33pm GMT |
| 16:33 | 16:33 |
| There’s an interesting summary of the current state of play with the Greek financial crisis, including a timeline, from Standard & Poor’s. It says: | There’s an interesting summary of the current state of play with the Greek financial crisis, including a timeline, from Standard & Poor’s. It says: |
| In recent months, Greece’s fiscal position has significantly deteriorated, reflecting weaker economic activity, uncertainty regarding tax policy, as well as opportunistic delays on tax obligations. Under the new Financial Assistance Facility Agreement with the European Stability Mechanism, the government is currently putting into place tough measures to shore up revenues, and will move ahead with fresh expenditure cuts. We now forecast that the Greek economy will shrink by about 1% in 2015 and by an additional 2.3% next year, the latter partly reflecting an expected statistical effect (a large negative carryover from 2014). Risks to our GDP projections are substantial, however, and the margin of error is wide in both directions... | In recent months, Greece’s fiscal position has significantly deteriorated, reflecting weaker economic activity, uncertainty regarding tax policy, as well as opportunistic delays on tax obligations. Under the new Financial Assistance Facility Agreement with the European Stability Mechanism, the government is currently putting into place tough measures to shore up revenues, and will move ahead with fresh expenditure cuts. We now forecast that the Greek economy will shrink by about 1% in 2015 and by an additional 2.3% next year, the latter partly reflecting an expected statistical effect (a large negative carryover from 2014). Risks to our GDP projections are substantial, however, and the margin of error is wide in both directions... |
| Political and economic turmoil has severely weakened Greek banks’ funding positions and has hampered their capacity to access the interbank market. According to our estimates, about €30 billion of foreign funding left the country between January and February 2015. At the same time, Greek depositors started to withdraw domestic funding--we estimate that from the end of November 2014 to the end of September 2015, Greek banks lost about €50 billion of domestic deposits, amounting to 28% of Greece’s GDP. | Political and economic turmoil has severely weakened Greek banks’ funding positions and has hampered their capacity to access the interbank market. According to our estimates, about €30 billion of foreign funding left the country between January and February 2015. At the same time, Greek depositors started to withdraw domestic funding--we estimate that from the end of November 2014 to the end of September 2015, Greek banks lost about €50 billion of domestic deposits, amounting to 28% of Greece’s GDP. |
| The full report is here: | The full report is here: |
| Greece, Its Banks, And The Debt Crisis: December 2014 To Now | Greece, Its Banks, And The Debt Crisis: December 2014 To Now |
| 3.58pm GMT | 3.58pm GMT |
| 15:58 | 15:58 |
| Back in the UK, and MPs will be quizzing representatives of the steel industry, including a director from Tata Steel which last week announced 1,200 job cuts, and the government on the crisis facing the sector. The select committee hearing can be seen live here from around 16.10. | Back in the UK, and MPs will be quizzing representatives of the steel industry, including a director from Tata Steel which last week announced 1,200 job cuts, and the government on the crisis facing the sector. The select committee hearing can be seen live here from around 16.10. |
| Timely, given iron and steel production was one of the fastest shrinking sectors of the UK economy, according to the latest GDP figures. | Timely, given iron and steel production was one of the fastest shrinking sectors of the UK economy, according to the latest GDP figures. |
| 3.42pm GMT | 3.42pm GMT |
| 15:42 | 15:42 |
| Somewhat unusually, the poor US data has had a dampening effect on markets, said Connor Campbell at Spreadex: | Somewhat unusually, the poor US data has had a dampening effect on markets, said Connor Campbell at Spreadex: |
| Normally such dismal data would have been a big boost to the Dow, due to their rate-hike delaying capabilities. However, since it was already beyond unlikely that the Fed would choose to pull the lift-off trigger this month anyway, today’s economic bad news carried more weight as, well, bad news than it traditionally has done for much of the year. Not that this was too disastrous for the Dow (which, admittedly, was helped by decent third quarter results for Pfizer and Merck). | Normally such dismal data would have been a big boost to the Dow, due to their rate-hike delaying capabilities. However, since it was already beyond unlikely that the Fed would choose to pull the lift-off trigger this month anyway, today’s economic bad news carried more weight as, well, bad news than it traditionally has done for much of the year. Not that this was too disastrous for the Dow (which, admittedly, was helped by decent third quarter results for Pfizer and Merck). |
| 3.15pm GMT | 3.15pm GMT |
| 15:15 | 15:15 |
| Over in Greece, the country plans to release a framework for recapitalising its banks by Friday, according to Reuters. | Over in Greece, the country plans to release a framework for recapitalising its banks by Friday, according to Reuters. |
| This would be a day after the European Central Bank releases results of its health check on the country’s big four banks, and would allow parliament to vote it into law on Sunday. | This would be a day after the European Central Bank releases results of its health check on the country’s big four banks, and would allow parliament to vote it into law on Sunday. |
| According to Reuters sources, Greece’s bank rescue fund would plug any capital shortfall not covered by private investors, with a mix of new shares and contingent convertible bonds issued by the banks. | According to Reuters sources, Greece’s bank rescue fund would plug any capital shortfall not covered by private investors, with a mix of new shares and contingent convertible bonds issued by the banks. |
| 2.14pm GMT | 2.14pm GMT |
| 14:14 | 14:14 |
| Guys I think an October hike may be out | Guys I think an October hike may be out |
| 2.06pm GMT | 2.06pm GMT |
| 14:06 | 14:06 |
| US consumer confidence falls | US consumer confidence falls |
| Yet more disappointing data from the US. | Yet more disappointing data from the US. |
| The US consumer confidence index has fallen from 102.6 in September to 97.6, well short of the forecast 103. Lynn Franco, director of economic indicators at the Conference Board, said: | The US consumer confidence index has fallen from 102.6 in September to 97.6, well short of the forecast 103. Lynn Franco, director of economic indicators at the Conference Board, said: |
| Consumer confidence declined in October, following September’s modest gain. | Consumer confidence declined in October, following September’s modest gain. |
| Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook. Despite the decline, consumers still rate current conditions favorably, but they do not anticipate the economy strengthening much in the near-term. | Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook. Despite the decline, consumers still rate current conditions favorably, but they do not anticipate the economy strengthening much in the near-term. |
| Updated | Updated |
| at 3.18pm GMT | at 3.18pm GMT |
| 1.55pm GMT | 1.55pm GMT |
| 13:55 | 13:55 |
| Wall Street opens lower | Wall Street opens lower |
| As the US Federal Reserve meets ahead of unveiling its latest policy decision tomorrow there is a host of weak data. This makes it even more unlikely the Fed will raise rates this month, although its statement will be scoured for any indications as to whether the bank plans to act before the end of the year. | As the US Federal Reserve meets ahead of unveiling its latest policy decision tomorrow there is a host of weak data. This makes it even more unlikely the Fed will raise rates this month, although its statement will be scoured for any indications as to whether the bank plans to act before the end of the year. |
| After the disappointing durable goods figures, Markit’s services sector flash PMI reading came in at 54.4 in October. This was below the consensus forecast of 55.1 and compares with a final reading of 55.1 for September. | After the disappointing durable goods figures, Markit’s services sector flash PMI reading came in at 54.4 in October. This was below the consensus forecast of 55.1 and compares with a final reading of 55.1 for September. |
| So US markets have joined the general global downturn, with the Dow Jones Industrial Average 18 points lower in early trading. The decline has been limited by the growing expectation that the Fed will not move in December. | So US markets have joined the general global downturn, with the Dow Jones Industrial Average 18 points lower in early trading. The decline has been limited by the growing expectation that the Fed will not move in December. |
| Updated | Updated |
| at 2.22pm GMT | at 2.22pm GMT |
| 1.44pm GMT | 1.44pm GMT |
| 13:44 | 13:44 |
| Our economics editor Larry Elliott explains why the UK economy is becoming more unbalanced: | Our economics editor Larry Elliott explains why the UK economy is becoming more unbalanced: |
| Low interest rates make borrowing for consumption and speculation in financial assets cheap; the strong pound and the slowdown in the global economy make exporting UK made goods expensive and difficult. As things stand, poor quality growth is exacerbating the north-south divide and highlighting the age-old failure of Britain to pay its way in the world. | Low interest rates make borrowing for consumption and speculation in financial assets cheap; the strong pound and the slowdown in the global economy make exporting UK made goods expensive and difficult. As things stand, poor quality growth is exacerbating the north-south divide and highlighting the age-old failure of Britain to pay its way in the world. |
| Here’s his analysis: | Here’s his analysis: |
| Related: George Osborne has plenty on his plate with the UK economy | Related: George Osborne has plenty on his plate with the UK economy |
| 1.15pm GMT | 1.15pm GMT |
| 13:15 | 13:15 |
| This chart from RBC Capital Markets shows that UK growth has dropped below its recent average: | This chart from RBC Capital Markets shows that UK growth has dropped below its recent average: |
| Updated | Updated |
| at 1.15pm GMT | at 1.15pm GMT |
| 1.13pm GMT | 1.13pm GMT |
| 13:13 | 13:13 |
| New economic data from America just proved that Britain isn’t the only country whose manufacturing industry is struggling. | New economic data from America just proved that Britain isn’t the only country whose manufacturing industry is struggling. |
| Orders for US durable goods (long-lasting, expensive items such as factory machinery) fell by 1.2% in September. That follows a 3% slump in August, suggesting that the world’s largest economy is suffering from weaker demand in emerging markets. | Orders for US durable goods (long-lasting, expensive items such as factory machinery) fell by 1.2% in September. That follows a 3% slump in August, suggesting that the world’s largest economy is suffering from weaker demand in emerging markets. |
| Orders for commercial aircraft shrank by 35%, while demand for primary metals such as steel dropped 2.9%, and orders for computers fell 4.5%. Associated Press has more details. | Orders for commercial aircraft shrank by 35%, while demand for primary metals such as steel dropped 2.9%, and orders for computers fell 4.5%. Associated Press has more details. |
| The durable goods numbers are only terrible if you think the US is still a manufacturing economy. In which case, is Elvis #1 this week? | The durable goods numbers are only terrible if you think the US is still a manufacturing economy. In which case, is Elvis #1 this week? |
| Updated | Updated |
| at 1.22pm GMT | at 1.22pm GMT |
| 12.54pm GMT | 12.54pm GMT |
| 12:54 | 12:54 |
| We’re collecting City reaction to today’s GDP data here: | We’re collecting City reaction to today’s GDP data here: |
| Related: Slowdown in UK GDP growth: what the economists say | Related: Slowdown in UK GDP growth: what the economists say |
| 12.46pm GMT | 12.46pm GMT |
| 12:46 | 12:46 |
| Despite the manufacturing gloom, Britain is still excelling at making one thing - films. | Despite the manufacturing gloom, Britain is still excelling at making one thing - films. |
| The UK film industry grew by a rip-roaring 6% in the last quarter, according to today’s data from the ONS. | The UK film industry grew by a rip-roaring 6% in the last quarter, according to today’s data from the ONS. |
| Over the last 12 months, output has surged by 36%. | Over the last 12 months, output has surged by 36%. |
| The Daily Mail attributes this to successful films such as the latest James Bond adventures, which was partly filmed at Pinewood Studios. | The Daily Mail attributes this to successful films such as the latest James Bond adventures, which was partly filmed at Pinewood Studios. |
| 12.23pm GMT | 12.23pm GMT |
| 12:23 | 12:23 |
| And here’s another interesting, and depressing, chart from RBS: | And here’s another interesting, and depressing, chart from RBS: |
| This is the 7th recession (2 or more consecutive quarterly contractions) in UK manufacturing since 1997. pic.twitter.com/lrXspXxwwe | This is the 7th recession (2 or more consecutive quarterly contractions) in UK manufacturing since 1997. pic.twitter.com/lrXspXxwwe |
| 12.20pm GMT | 12.20pm GMT |
| 12:20 | 12:20 |
| The weaker-than-expected growth figures haven’t provided much cheer in the City. | The weaker-than-expected growth figures haven’t provided much cheer in the City. |
| The FTSE 100 index of leading shares is down 20 points, or 0.3%, at 6396. Mining stocks such as Anglo American and BHP Billiton are among the biggest fallers, reflecting persistent worries over global growth. | The FTSE 100 index of leading shares is down 20 points, or 0.3%, at 6396. Mining stocks such as Anglo American and BHP Billiton are among the biggest fallers, reflecting persistent worries over global growth. |
| Should investors be cashing in? Ian Forrest, Investment Research Analyst at The Share Centre, argues against panicking: | Should investors be cashing in? Ian Forrest, Investment Research Analyst at The Share Centre, argues against panicking: |
| “The UK economy looks like it has been losing momentum, hindered by China’s downturn, a construction slump and ailing manufacturers. | “The UK economy looks like it has been losing momentum, hindered by China’s downturn, a construction slump and ailing manufacturers. |
| However, recent figures including retail sales figures, have beat expectations. Therefore, despite the market’s disappointment this morning, investors should acknowledge that this level of growth is still relatively good and the weakness appears to be mainly in manufacturing which is not unexpected.” | However, recent figures including retail sales figures, have beat expectations. Therefore, despite the market’s disappointment this morning, investors should acknowledge that this level of growth is still relatively good and the weakness appears to be mainly in manufacturing which is not unexpected.” |
| 11.57am GMT | 11.57am GMT |
| 11:57 | 11:57 |
| Here’s another example of Britain’s unbalanced recovery. | Here’s another example of Britain’s unbalanced recovery. |
| While manufacturing shrank by 0.3% in the last quarter, the business services and finance sector grew by a healthy 1%. And “real estate activities” - the buying and selling of property - made the largest positive contribution to the increase. | While manufacturing shrank by 0.3% in the last quarter, the business services and finance sector grew by a healthy 1%. And “real estate activities” - the buying and selling of property - made the largest positive contribution to the increase. |
| 11.40am GMT | 11.40am GMT |
| 11:40 | 11:40 |
| UK economy 'at risk' unless manufacturing and construction pick up | UK economy 'at risk' unless manufacturing and construction pick up |
| The UK economy is now almost entirely reliant on services for growth, says Kallum Pickering, UK economist at German bank Berenberg. | The UK economy is now almost entirely reliant on services for growth, says Kallum Pickering, UK economist at German bank Berenberg. |
| Pickering is worried that both manufacturing and construction shrunk in the last quarter, and argues that structural reforms and fresh investment are needed to provide growth: | Pickering is worried that both manufacturing and construction shrunk in the last quarter, and argues that structural reforms and fresh investment are needed to provide growth: |
| In the construction industry, firms are experiencing increased costs pressures coming from labour and materials shortages. For production: It’s biggest component, manufacturing, not only suffers from weakness in global trade, but, more precisely, a lack of investment and a lack of willingness of firms to base production in the UK. | In the construction industry, firms are experiencing increased costs pressures coming from labour and materials shortages. For production: It’s biggest component, manufacturing, not only suffers from weakness in global trade, but, more precisely, a lack of investment and a lack of willingness of firms to base production in the UK. |
| This stems from, among other things, a chronic uncertainty in the UK’s future energy supplies due to lack of investment in energy capacity. Taken together, this implies that if a decline in UK services were to take place, the UK economy would be vulnerable. | This stems from, among other things, a chronic uncertainty in the UK’s future energy supplies due to lack of investment in energy capacity. Taken together, this implies that if a decline in UK services were to take place, the UK economy would be vulnerable. |
| 10.58am GMT | 10.58am GMT |
| 10:58 | 10:58 |
| TUC general secretary Frances O’Grady has rebuked George Osborne for failing to provide enough help to the manufacturing sector, and working people generally: | TUC general secretary Frances O’Grady has rebuked George Osborne for failing to provide enough help to the manufacturing sector, and working people generally: |
| “We need better balanced growth that delivers secure opportunities for working families. But while the economy is still expanding, the recovery is too weak, and Britain’s manufacturing industry remains in decline. What’s more, the government’s failure to protect our steel industry looks set to mean the loss of even more manufacturing jobs. | “We need better balanced growth that delivers secure opportunities for working families. But while the economy is still expanding, the recovery is too weak, and Britain’s manufacturing industry remains in decline. What’s more, the government’s failure to protect our steel industry looks set to mean the loss of even more manufacturing jobs. |
| “We need a proper industrial strategy to ensure our manufacturing industry keeps up with the rest of the world. And the Chancellor must invest more to boost demand rather than cutting the public services and tax credits which are vital to supporting working families.” | “We need a proper industrial strategy to ensure our manufacturing industry keeps up with the rest of the world. And the Chancellor must invest more to boost demand rather than cutting the public services and tax credits which are vital to supporting working families.” |
| 10.42am GMT | 10.42am GMT |
| 10:42 | 10:42 |
| This fascinating chart from Royal Bank of Scotland shows which areas of UK manufacturing performed particularly badly in the last three months. | This fascinating chart from Royal Bank of Scotland shows which areas of UK manufacturing performed particularly badly in the last three months. |
| Top 10 worst performing sectors in Q3. Iron and steel struggling but coal mining collapses. pic.twitter.com/H7xIjCtV9s | Top 10 worst performing sectors in Q3. Iron and steel struggling but coal mining collapses. pic.twitter.com/H7xIjCtV9s |
| (this is taken from today’s dataset, online here) | (this is taken from today’s dataset, online here) |
| 10.40am GMT | 10.40am GMT |
| 10:40 | 10:40 |
| Britain’s manufacturing industry is stuck in recession, having contracted by 0.3% in the last three months and 0.5% in the second quarter of the year. | Britain’s manufacturing industry is stuck in recession, having contracted by 0.3% in the last three months and 0.5% in the second quarter of the year. |
| Zach Witton, deputy chief economist at EEF, the manufacturers’ organisation, says that the UK metals industry has been hammered particularly hard: | Zach Witton, deputy chief economist at EEF, the manufacturers’ organisation, says that the UK metals industry has been hammered particularly hard: |
| “Growth was partly dragged back due to manufacturing remaining in recession. | “Growth was partly dragged back due to manufacturing remaining in recession. |
| The weakness was broad based across the sector as recent challenges have been exacerbated by the sharp contraction in iron and steel and, signs of slower demand from the consumer sector. | The weakness was broad based across the sector as recent challenges have been exacerbated by the sharp contraction in iron and steel and, signs of slower demand from the consumer sector. |
| Updated | Updated |
| at 10.40am GMT | at 10.40am GMT |
| 10.22am GMT | 10.22am GMT |
| 10:22 | 10:22 |
| Britain’s iron and steel-making industry suffered a torrid quarter, shrinking by 7%, according to Sky’s Ed Conway: | Britain’s iron and steel-making industry suffered a torrid quarter, shrinking by 7%, according to Sky’s Ed Conway: |
| "Basic iron & steel production" one of the fastest shrinking sectors of the economy in Q3. Down by 7% in quarter. Down 9% in past year | "Basic iron & steel production" one of the fastest shrinking sectors of the economy in Q3. Down by 7% in quarter. Down 9% in past year |
| Thousands of jobs are already being cut in the industry, which faces oversupply and faltering demand in emerging markets. | Thousands of jobs are already being cut in the industry, which faces oversupply and faltering demand in emerging markets. |
| Updated | Updated |
| at 10.25am GMT | at 10.25am GMT |
| 10.13am GMT | 10.13am GMT |
| 10:13 | 10:13 |
| Alex Edwards, currency analyst at UKForex, explains why the pound fell once the UK growth figures were released: | Alex Edwards, currency analyst at UKForex, explains why the pound fell once the UK growth figures were released: |
| Although the services component of the data was positive, the result will go some way to supporting arguments for the Bank of England to leave interest rates on hold for longer. | Although the services component of the data was positive, the result will go some way to supporting arguments for the Bank of England to leave interest rates on hold for longer. |
| If the US Federal Reserve is also dovish in its statement tomorrow, it could raise the possibility that we won’t see a UK rate hike until very late next year. | If the US Federal Reserve is also dovish in its statement tomorrow, it could raise the possibility that we won’t see a UK rate hike until very late next year. |
| 10.06am GMT | 10.06am GMT |
| 10:06 | 10:06 |
| Ben Brettell, senior economist at financial services firm Hargreaves Lansdown, is worried that the UK economy is becoming more unbalanced. | Ben Brettell, senior economist at financial services firm Hargreaves Lansdown, is worried that the UK economy is becoming more unbalanced. |
| The signs have been there for some time - the UK economy has been losing momentum..... | The signs have been there for some time - the UK economy has been losing momentum..... |
| Weaker construction and manufacturing output are the primary reasons for the slowdown, which could prompt concerns that the UK economy’s reliance on the services sector is increasing further. | Weaker construction and manufacturing output are the primary reasons for the slowdown, which could prompt concerns that the UK economy’s reliance on the services sector is increasing further. |
| 10.04am GMT | 10.04am GMT |
| 10:04 | 10:04 |
| Britain’s March of the Makers has been shunted off course by the problems in developing markets, explains Jeremy Cook of foreign exchange firm World First. | Britain’s March of the Makers has been shunted off course by the problems in developing markets, explains Jeremy Cook of foreign exchange firm World First. |
| Instead, we have a “Stroll of the Shoppers”, he says: | Instead, we have a “Stroll of the Shoppers”, he says: |
| “Manufacturing has been damaged in the UK by a strong pound and weakness in crucial export markets as a result of fears of a hard landing in China.” | “Manufacturing has been damaged in the UK by a strong pound and weakness in crucial export markets as a result of fears of a hard landing in China.” |
| Updated | Updated |
| at 10.07am GMT | at 10.07am GMT |
| 10.01am GMT | 10.01am GMT |
| 10:01 | 10:01 |
| UK GDP: the key charts | UK GDP: the key charts |
| The good news is that Britain’s economy has now expanded for 11 quarters in a row. | The good news is that Britain’s economy has now expanded for 11 quarters in a row. |
| And unless Germany posts a stellar quarter, the UK is still the third-best performing major economy since 2008. | And unless Germany posts a stellar quarter, the UK is still the third-best performing major economy since 2008. |
| Updated | Updated |
| at 10.08am GMT | at 10.08am GMT |