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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/jul/31/oil-sanctions-venezuela-china-uk-credit-eurozone-pmis-
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| Moody's issues warning over UK consumer credit as borrowing hits £200bn - business live | Moody's issues warning over UK consumer credit as borrowing hits £200bn - business live |
| (35 minutes later) | |
| 3.41pm BST | |
| 15:41 | |
| The Dallas Federal Reserve manufacturing activity index has climbed from 15 in June to 16.8 in July, much better than the expected fall to 13. | |
| The production index, a key measure of state manufacturing conditions, rose 11 points to 22.8, indicating output grew at a faster pace than in June, said the Dallas Fed. | |
| But the positive data, there were more mixed responses from respondents: | |
| Business is good, not great. We are busy. | |
| The foreign competition for new equipment is extremely competitive and our company is not able to match their selling prices. | |
| Things are going poorly in the economy. We have no projects, and business is slow. | |
| We are experiencing the summertime blues. Business is very dull July to date. | |
| Washington, D.C., is still a significant contingent factor for a better or worse outlook. Prospects for better are dimming. | |
| The increases in business are small but measurable. We have been trying to add employees over the last six months, with no qualified candidates available. | |
| I cannot explain it, but we are slower than we have ever been at this time and it seems like we are not the only ones. | |
| Updated | |
| at 3.47pm BST | |
| 3.09pm BST | 3.09pm BST |
| 15:09 | 15:09 |
| Next on the agenda are the latest US housing figures, which have come in better than expected. | Next on the agenda are the latest US housing figures, which have come in better than expected. |
| Pending home sales bounced back in June after three months of decline. The National Association of Realtors said that its index of contracts to buy previously owned homes jumped1.5% to a reading of 110.2. This was higher than the 0.7% rise that analysts had been forecasting. But the market remains limited by the number of houses available to buy. | Pending home sales bounced back in June after three months of decline. The National Association of Realtors said that its index of contracts to buy previously owned homes jumped1.5% to a reading of 110.2. This was higher than the 0.7% rise that analysts had been forecasting. But the market remains limited by the number of houses available to buy. |
| Lawrence Yun, the NAR chief economist said: | Lawrence Yun, the NAR chief economist said: |
| The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs. | The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs. |
| Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria. | Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria. |
| Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago. | Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago. |
| 2.55pm BST | 2.55pm BST |
| 14:55 | 14:55 |
| The fall in the Chicago PMI follows five straight months of rises, and is the lowest level for three months. Jamie Satchi, economist at MNI Indicators which helps compile the report, said: | The fall in the Chicago PMI follows five straight months of rises, and is the lowest level for three months. Jamie Satchi, economist at MNI Indicators which helps compile the report, said: |
| MNI’s July Chicago Business Barometer should be viewed in the context of the underlying, upward trend in business sentiment witnessed since early 2016. Key indicators, despite reversing their June reading, remain above their respective averages set over the last twelve months, and point towards robust confidence among U.S firms. | MNI’s July Chicago Business Barometer should be viewed in the context of the underlying, upward trend in business sentiment witnessed since early 2016. Key indicators, despite reversing their June reading, remain above their respective averages set over the last twelve months, and point towards robust confidence among U.S firms. |
| Updated | Updated |
| at 2.56pm BST | at 2.56pm BST |
| 2.48pm BST | 2.48pm BST |
| 14:48 | 14:48 |
| Still with the US and there is a smidgen of data due. | Still with the US and there is a smidgen of data due. |
| First comes the Chicago Purchasing Managers Index, which has come in lower than expected, down from 65.7 in June to 58.9 in July. | First comes the Chicago Purchasing Managers Index, which has come in lower than expected, down from 65.7 in June to 58.9 in July. |
| USA Chicago PMI announcement - Actual: 58.9, Expected: 60.0 pic.twitter.com/gpa4ER5TGy | USA Chicago PMI announcement - Actual: 58.9, Expected: 60.0 pic.twitter.com/gpa4ER5TGy |
| 2.35pm BST | 2.35pm BST |
| 14:35 | 14:35 |
| Dow hits new high as Wall Street opens | Dow hits new high as Wall Street opens |
| Optimism about US company earnings has helped push Wall Street higher once more. | Optimism about US company earnings has helped push Wall Street higher once more. |
| The Dow Jones Industrial Average has hit a new intraday peak of 21,885, while the Nasdaq Composite and S&P 500 are both on the rise in early trading. So far around 73% of major companies reporting results have beaten expectations, and Apple is the next big name to come under the spotlight, with its results due after the market closes on Tuesday. | The Dow Jones Industrial Average has hit a new intraday peak of 21,885, while the Nasdaq Composite and S&P 500 are both on the rise in early trading. So far around 73% of major companies reporting results have beaten expectations, and Apple is the next big name to come under the spotlight, with its results due after the market closes on Tuesday. |
| 2.02pm BST | 2.02pm BST |
| 14:02 | 14:02 |
| Thurday sees the Bank of England’s latest interest rate and monetary policy decisions, and ING Bank has been looking at the possibilities. And they have felt moved to drag in Game of Thrones for some reason: | Thurday sees the Bank of England’s latest interest rate and monetary policy decisions, and ING Bank has been looking at the possibilities. And they have felt moved to drag in Game of Thrones for some reason: |
| 1.05pm BST | 1.05pm BST |
| 13:05 | 13:05 |
| UK consumer borrowing hits £200bn | UK consumer borrowing hits £200bn |
| Katie Allen | Katie Allen |
| In another important development, UK consumer borrowing is back above £200bn for the first time since the financial crash. | In another important development, UK consumer borrowing is back above £200bn for the first time since the financial crash. |
| That’s according to the latest Bank of England figures, released this morning. | That’s according to the latest Bank of England figures, released this morning. |
| Unsecured consumer credit, which includes credit cards, car loans and overdrafts, grew by 10% in the year to June, to £200.9bn. It was the first time the outstanding debt had gone above £200bn since the peak of the global financial crisis in 2008. | Unsecured consumer credit, which includes credit cards, car loans and overdrafts, grew by 10% in the year to June, to £200.9bn. It was the first time the outstanding debt had gone above £200bn since the peak of the global financial crisis in 2008. |
| The pace of growth in consumer credit did ease off slightly in June, going up by £1.5bn on the month after £1.8bn in May. | The pace of growth in consumer credit did ease off slightly in June, going up by £1.5bn on the month after £1.8bn in May. |
| Ruth Gregory, UK economist at the consultancy Capital Economics said the 10% rise on the year would still be concerning for the Bank. | Ruth Gregory, UK economist at the consultancy Capital Economics said the 10% rise on the year would still be concerning for the Bank. |
| Gregory says: | Gregory says: |
| “This will clearly do nothing to allay policymakers’ fears that unsecured credit is growing too quickly. | “This will clearly do nothing to allay policymakers’ fears that unsecured credit is growing too quickly. |
| But this at least suggests that households remain confident enough in their financial position to increase borrowing to help smooth consumption, as their real incomes are temporarily squeezed by higher inflation.” | But this at least suggests that households remain confident enough in their financial position to increase borrowing to help smooth consumption, as their real incomes are temporarily squeezed by higher inflation.” |
| 12.59pm BST | 12.59pm BST |
| 12:59 | 12:59 |
| Moodys issues warning over UK consumer credit | Moodys issues warning over UK consumer credit |
| Rating agency Moody’s has sounded the alarm over Britain’s consumer credit market. | Rating agency Moody’s has sounded the alarm over Britain’s consumer credit market. |
| It has downgraded the outlook on bonds backed by credit card customers, buy-to-let mortgages and car loans, and warned that some British borrowers will struggle to repay their debt as the economy weakens, and inflation eats into their salaries. | It has downgraded the outlook on bonds backed by credit card customers, buy-to-let mortgages and car loans, and warned that some British borrowers will struggle to repay their debt as the economy weakens, and inflation eats into their salaries. |
| In a new report Greg Davies, Moody’s assistant vice president, says: | In a new report Greg Davies, Moody’s assistant vice president, says: |
| “Household debt is high and still growing, leaving consumers vulnerable to an economic downturn, while higher inflation, weaker wage growth and levels of indebtedness leaves those in lower-income brackets the most exposed.” | “Household debt is high and still growing, leaving consumers vulnerable to an economic downturn, while higher inflation, weaker wage growth and levels of indebtedness leaves those in lower-income brackets the most exposed.” |
| “An additional challenge is that households’ capacity to draw on savings to maintain consumption and/or service their consumer debts has significantly diminished.” | “An additional challenge is that households’ capacity to draw on savings to maintain consumption and/or service their consumer debts has significantly diminished.” |
| As a result, Moody’s has downgraded the collateral outlooks on most ‘UK structured finance sectors’ to negative. | As a result, Moody’s has downgraded the collateral outlooks on most ‘UK structured finance sectors’ to negative. |
| It believes they will perform negatively over the next 12 to 18 months. | It believes they will perform negatively over the next 12 to 18 months. |
| Structured finance is the process of taking a large number of individual loans, packaging them into a single security, and selling it to investors. In theory, this allows investors to get a guaranteed income stream, but with the danger of losses if the underlying loans underperform (as happened spectacularly in the subprime crisis of 2008). | Structured finance is the process of taking a large number of individual loans, packaging them into a single security, and selling it to investors. In theory, this allows investors to get a guaranteed income stream, but with the danger of losses if the underlying loans underperform (as happened spectacularly in the subprime crisis of 2008). |
| These are the areas which Moody’s is worried about: | These are the areas which Moody’s is worried about: |
| Non-prime residential mortgages bonds: These borrowers are paying higher interest rates, and have smaller savings pots to absorb any shocks, says Moody’s. | Non-prime residential mortgages bonds: These borrowers are paying higher interest rates, and have smaller savings pots to absorb any shocks, says Moody’s. |
| Bonds backed by the UK’s buy-to-let (BTL) sector: Bondholders could suffer losses if house prices fall, due to “the high proportion of interest-only underlying loans”. | Bonds backed by the UK’s buy-to-let (BTL) sector: Bondholders could suffer losses if house prices fall, due to “the high proportion of interest-only underlying loans”. |
| Automobile asset-backed securities: Moody’s fears that “delinquencies are likely to rise slightly” as the economy deteriorates. It singles out the boom in Personal Contract Purchase (PCP) plans, which have allowed customers with poor credit histories to buy new cars. | Automobile asset-backed securities: Moody’s fears that “delinquencies are likely to rise slightly” as the economy deteriorates. It singles out the boom in Personal Contract Purchase (PCP) plans, which have allowed customers with poor credit histories to buy new cars. |
| Credit card asset-backed securities: Moody’s expects delinquencies and defaults on these bonds to rise, especially if unemployment increases. | Credit card asset-backed securities: Moody’s expects delinquencies and defaults on these bonds to rise, especially if unemployment increases. |
| Moody’s warning comes just a few hours after Britain’s Financial Conduct Authority announced it would review the booming car loan market, amid worries that consumer debt is getting out of hand. | Moody’s warning comes just a few hours after Britain’s Financial Conduct Authority announced it would review the booming car loan market, amid worries that consumer debt is getting out of hand. |
| Updated | Updated |
| at 1.12pm BST | at 1.12pm BST |
| 12.25pm BST | 12.25pm BST |
| 12:25 | 12:25 |
| Newsflash: Officials from the Bank of England and the Unite union have sat down at conciliation firm ACAS. | Newsflash: Officials from the Bank of England and the Unite union have sat down at conciliation firm ACAS. |
| It’s a final attempt to stop a three-day walkout at the Bank, starting tomorrow, over a 1% pay offer to Unite staff. | It’s a final attempt to stop a three-day walkout at the Bank, starting tomorrow, over a 1% pay offer to Unite staff. |
| Last-ditch talks aimed at averting the first strike at the Bank of England in more than 50 years have started @acasorguk @unitetheunion | Last-ditch talks aimed at averting the first strike at the Bank of England in more than 50 years have started @acasorguk @unitetheunion |
| 12.04pm BST | 12.04pm BST |
| 12:04 | 12:04 |
| The threat of US sanctions on Venezuela has alarmed investors, sending them racing to ditch bonds issued by Caracas. | The threat of US sanctions on Venezuela has alarmed investors, sending them racing to ditch bonds issued by Caracas. |
| The price of long-term Venezuelan dollar bonds fell almost one cent, according to Reuters data. | The price of long-term Venezuelan dollar bonds fell almost one cent, according to Reuters data. |
| Bonds issued by state oil firm Petróleos de Venezuela also took a tumble. It buys US light crude oil, and mixes it with its own crude to create a product for export - so any sanctions would hurt the company. | Bonds issued by state oil firm Petróleos de Venezuela also took a tumble. It buys US light crude oil, and mixes it with its own crude to create a product for export - so any sanctions would hurt the company. |
| Meanwhile, the European Union has added its voice to the chorus of concerns over Sunday’s vote: | Meanwhile, the European Union has added its voice to the chorus of concerns over Sunday’s vote: |
| Venezuela - EU has 'grave doubts election result can be recognised', says held in 'doubtful, often violent circumstances' | Venezuela - EU has 'grave doubts election result can be recognised', says held in 'doubtful, often violent circumstances' |
| 11.30am BST | 11.30am BST |
| 11:30 | 11:30 |
| Eurozone jobs: What the experts say | Eurozone jobs: What the experts say |
| Marc Brütsch, chief economist at Swiss Life, says the drop in eurozone unemployment shows that Europe’s economy is strengthening: | Marc Brütsch, chief economist at Swiss Life, says the drop in eurozone unemployment shows that Europe’s economy is strengthening: |
| #Eurozone recovery reaches labour market. #Unemployment rate falls to lowest sine financial crisis #Economy #Euroland https://t.co/DJjSeLYq9Z | #Eurozone recovery reaches labour market. #Unemployment rate falls to lowest sine financial crisis #Economy #Euroland https://t.co/DJjSeLYq9Z |
| Ken Odeluga of City Index says the data has cheered investors. | Ken Odeluga of City Index says the data has cheered investors. |
| #EUR starts week on front foot on raft of strong data, incl. unexpected fall in Eurozone unemployment, better than forecast #inflation ^KO | #EUR starts week on front foot on raft of strong data, incl. unexpected fall in Eurozone unemployment, better than forecast #inflation ^KO |
| But Craig Erlam of OANDA points out that the eurozone has plenty of room for improvement: | But Craig Erlam of OANDA points out that the eurozone has plenty of room for improvement: |
| Unemployment at 9.1% is still extremely high and when you break that down by country, it becomes much higher again in some places. Core inflation is also only at 1.3% which is still well below the ECB’s target and with the currency appreciating strongly this year, downward pressures here will continue to build. | Unemployment at 9.1% is still extremely high and when you break that down by country, it becomes much higher again in some places. Core inflation is also only at 1.3% which is still well below the ECB’s target and with the currency appreciating strongly this year, downward pressures here will continue to build. |
| The central bank should therefore tread very carefully when it comes to removing stimulus, as I expect it will. | The central bank should therefore tread very carefully when it comes to removing stimulus, as I expect it will. |
| 10.40am BST | 10.40am BST |
| 10:40 | 10:40 |
| In another encouraging sign, youth unemployment across the eurozone has fallen by 400,000 over the last year. | In another encouraging sign, youth unemployment across the eurozone has fallen by 400,000 over the last year. |
| There are now 2.588 million young people out of work in the euro area, or 18.7% of the youth population, down from 21% in June 2016. | There are now 2.588 million young people out of work in the euro area, or 18.7% of the youth population, down from 21% in June 2016. |
| The lowest youth unemployment rate is in Germany (6.7%), while the highest were recorded in Greece (45.5% in April 2017), Spain (39.2%) and Italy (35.4%). | The lowest youth unemployment rate is in Germany (6.7%), while the highest were recorded in Greece (45.5% in April 2017), Spain (39.2%) and Italy (35.4%). |