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Pound edges up as UK economy grows by 0.3% in second quarter - business live | |
(35 minutes later) | |
1.47pm BST | |
13:47 | |
On the US jobs figures, Dennis de Jong, managing director of UFX.com, said: | |
Today’s initial jobless claims data, while up from last month, will be welcome news for President Trump as his government continues pointing to solid labor market figures as the benchmark for economic strength. | |
The US President took to social media earlier this week to claim his tenure at the White House has already created over one million jobs and, while figures may be debated, jobless claims look to be heading towards a multi-decade low. | |
However, despite the figures remaining under the 250k target, it seems today’s data will do little to shift the market’s bearish view of the dollar at present. | |
Trump’s ‘government shut down’ claims earlier this week have done nothing to help investors buy the greenback, but continued improvement on the employment situation certainly won’t harm long term aspirations for US economy growth. | |
1.44pm BST | |
13:44 | |
US weekly jobless claims rise | |
Weekly initial jobless claims in the US rose last week but by slightly less than expected. | |
They climbed from 232,000 the week before to 234,000, but this was below the forecast of 238,000. | |
1.00pm BST | 1.00pm BST |
13:00 | 13:00 |
US rates could rise again this year - Kansas Fed president | US rates could rise again this year - Kansas Fed president |
The Jackson Hole meeting of central bankers, sponsored by the Kansas City Federal Reserve, is in focus because of speeches by ECB boss Mario Draghi and Fed chair Janet Yellen. | The Jackson Hole meeting of central bankers, sponsored by the Kansas City Federal Reserve, is in focus because of speeches by ECB boss Mario Draghi and Fed chair Janet Yellen. |
Draghi’s speech will be closely watched for clues about an end to its bond buying programme, while Yellen is expected to comment on the prospect of future rate rises. | Draghi’s speech will be closely watched for clues about an end to its bond buying programme, while Yellen is expected to comment on the prospect of future rate rises. |
Ahead of the meeting, Kansas City Fed president Esther George has been promoting the idea of more rate increases. | Ahead of the meeting, Kansas City Fed president Esther George has been promoting the idea of more rate increases. |
Fed’s George: -Opportunity For Fed To Hikes Again This Year - BBG TV | Fed’s George: -Opportunity For Fed To Hikes Again This Year - BBG TV |
Fed’s George: Outlook Supports Gradually Removing Accommodation - BBG TV | Fed’s George: Outlook Supports Gradually Removing Accommodation - BBG TV |
Fed’s George: Economy In Good Place, Backs Beginning Balance Sheet Unwind - BBG TV | Fed’s George: Economy In Good Place, Backs Beginning Balance Sheet Unwind - BBG TV |
12.49pm BST | 12.49pm BST |
12:49 | 12:49 |
Larry Elliott | Larry Elliott |
The weak pound is hitting consumer spending more than it is benefiting exporters, it seems. Our economics editor Larry Elliott writes: | The weak pound is hitting consumer spending more than it is benefiting exporters, it seems. Our economics editor Larry Elliott writes: |
The downside to a weak pound is immediately apparent because imports get dearer and foreign holidays get more expensive. With sterling at its lowest level for eight years, there have been plenty of horror stories of travellers from the UK being gouged by foreign exchange bureaux. | The downside to a weak pound is immediately apparent because imports get dearer and foreign holidays get more expensive. With sterling at its lowest level for eight years, there have been plenty of horror stories of travellers from the UK being gouged by foreign exchange bureaux. |
The benefits of a weaker currency tend to be less obvious but are potentially significant nonetheless. Exports become cheaper and the UK becomes a more attractive destination for overseas tourists. This leads to an improvement in the balance of payments, something that is sorely needed in Britain’s case. | The benefits of a weaker currency tend to be less obvious but are potentially significant nonetheless. Exports become cheaper and the UK becomes a more attractive destination for overseas tourists. This leads to an improvement in the balance of payments, something that is sorely needed in Britain’s case. |
A breakdown of the UK’s latest growth figures shows that the impact of a lower pound on consumption is coming through much more quickly than its impact on trade. A year after the sharp depreciation of the pound in the wake of the Brexit vote, household spending growth has virtually stalled... | A breakdown of the UK’s latest growth figures shows that the impact of a lower pound on consumption is coming through much more quickly than its impact on trade. A year after the sharp depreciation of the pound in the wake of the Brexit vote, household spending growth has virtually stalled... |
Meanwhile, net trade – which measures how imports and exports have changed over the latest quarter – contributed a big fat zero to growth in the three months to June. | Meanwhile, net trade – which measures how imports and exports have changed over the latest quarter – contributed a big fat zero to growth in the three months to June. |
Larry’s full analysis is here: | Larry’s full analysis is here: |
12.31pm BST | 12.31pm BST |
12:31 | 12:31 |
More UK recession talk: | More UK recession talk: |
Greater-than-evens chance UK will enter technical #recession, says @fathommacro, citing latest data pic.twitter.com/S5ZJLGW3lv | Greater-than-evens chance UK will enter technical #recession, says @fathommacro, citing latest data pic.twitter.com/S5ZJLGW3lv |
11.38am BST | 11.38am BST |
11:38 | 11:38 |
Today’s mini-recovery in sterling is hardly convincing. Connor Campbell, financial analyst at Spreadex, said: | Today’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. | 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 ready to take a look at the ins and outs of the GDP report – household spending growth is at its lowest since the end of 2014, while business 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, with sterling still stuck under €1.09. | Investors clearly weren’t ready to take a look at the ins and outs of the GDP report – household spending growth is at its lowest since the end of 2014, while business 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, with sterling still stuck under €1.09. |
11.24am BST | 11.24am BST |
11:24 | 11:24 |
The pound may be edging up after the GDP data, but trade weighting sterling - a measure based on how much trade is done with different countries and in various currencies - is close to a record low. | The pound may be edging up after the GDP data, but trade weighting sterling - a measure 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, as well as recent strength in the euro. | 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, as well as recent strength in the euro. |
11.07am BST | 11.07am BST |
11:07 | 11:07 |
Retail sales weakest since July 2016 - CBI | Retail sales weakest since July 2016 - CBI |
More signs of weak UK consumer spending. | More signs of weak 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. | 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. |
Anna Leach, CBI Head of Economic Intelligence, said: | Anna Leach, CBI Head of Economic Intelligence, said: |
Despite the warmer weather at the start of the month, retail sales have cooled as higher inflation continues to squeeze consumers’ pockets. Meanwhile, deteriorating sentiment regarding the business situation has combined with falling headcount among retailers. | Despite the warmer weather at the start of the month, retail sales have cooled as higher inflation continues to squeeze consumers’ pockets. Meanwhile, deteriorating sentiment regarding the business situation has combined with falling headcount among retailers. |
Looking ahead, firms do expect sales growth to recover, but the pressures on household budgets are set to persist, given little sign of wages picking up. | Looking ahead, firms do expect sales growth to recover, but the pressures on household budgets are set to persist, given little sign of wages picking up. |
The CBI said: | The CBI said: |
Grocers saw stable sales on the year, following strong growth last month, and footwear and leather performed well, whilst specialist food and drink stores reported another month of significantly falling sales. | Grocers saw stable sales on the year, following strong growth last month, and footwear and leather performed well, 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. | Year-on-year internet sales growth slowed, edging further below the long-run average, but growth is expected to pick up next month. |
Updated | Updated |
at 11.54am BST | at 11.54am BST |
11.01am BST | 11.01am BST |
11:01 | 11:01 |
Richard Partington | Richard Partington |
Here is our GDP story, focusing on the weak consumer spending figures. Richard Partington reports: | Here is our GDP story, focusing on the weak 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. | 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, the slowest rate of quarterly growth since the final three months of 2014. Business investment in the British economy showed no growth at all in the second quarter. | Household spending growth slowed to 0.1% in the three months to June, the Office for National Statistics said, the slowest rate of quarterly growth since the final three months of 2014. Business investment in the British economy showed no growth at all in the second quarter. |
The slowdown in private consumption, which was worse than expected by City economists, comes as rising inflation and weaker levels of wage growth puts the squeeze on household budgets. The slump in the value of the pound since the UK’s vote to leave the European Union last year is also taking its toll. | The slowdown in private consumption, which was worse than expected by City economists, comes as rising inflation and weaker levels of wage growth puts the squeeze on household budgets. The slump in the value of the pound since the UK’s vote to leave the European Union last year is also taking its toll. |
Howard Archer, the chief economic adviser to the EY Item Club, said: “Consumer spending is likely to be pressurised through the latter months of the year by an ongoing appreciable squeeze on purchasing power. Indeed, real incomes growth is likely to remain negative for some months to come.” | Howard Archer, the chief economic adviser to the EY Item Club, said: “Consumer spending is likely to be pressurised through the latter months of the year by an ongoing appreciable squeeze on purchasing power. Indeed, real incomes growth is likely to remain negative for some months to come.” |
Some of the fall in household spending could be down to consumers shifting their car purchases to beat a tax change earlier this year, according to analysts at Capital Economics. “We remain optimistic that a modest acceleration in growth in the second half of the year is in prospect,” said Paul Hollingworth, UK economist at the consultancy. | Some of the fall in household spending could be down to consumers shifting their car purchases to beat a tax change earlier this year, according to analysts at Capital Economics. “We remain optimistic that a modest acceleration in growth in the second half of the year is in prospect,” said Paul Hollingworth, UK economist at the consultancy. |
The full story is here: | The full story is here: |
Updated | Updated |
at 11.03am BST | at 11.03am BST |
10.58am BST | 10.58am BST |
10:58 | 10:58 |
Phillip Inman | Phillip Inman |
Guardian 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: | Guardian 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 little, but not enough to offset the extra cost from more expensive raw materials. | A significant depreciation of sterling in the wake of the Brexit vote was expected to boost exports. It has a little, but not enough to offset the extra cost from more expensive raw materials. |
It means that the latest figures for second quarter GDP show 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. | It means that the latest figures for second quarter GDP show 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. |
As Samuel Tombs, UK economist at Pantheon Macroeconomics points out, this contrasts with the boost to GDP from net trade that has followed every depreciation in the pound since the second world war. | As Samuel Tombs, UK economist at Pantheon Macroeconomics points out, this contrasts with the boost to GDP from net trade that has followed every depreciation in the pound since the second world war. |
The reason could be that Brexit uncertainty has encouraged a degree of reticence among exporters. But more likely, the explanation lies in the changing nature of supply chains that send parts all over the world and back again, turning almost every component in a manufactured good into an import at some stage of the process. | The reason could be that Brexit uncertainty has encouraged a degree of reticence among exporters. But more likely, the explanation lies in the changing nature of supply chains that send parts all over the world and back again, turning almost every component in a manufactured good into an import at some stage of the process. |
10.34am BST | 10.34am BST |
10:34 | 10:34 |
The fluctuations in the pound continue. | The 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. | Sterling has now risen 0.17% to $1.2820 while it is 0.31% better against the euro at €1.0873. |
Updated | Updated |
at 10.43am BST | at 10.43am BST |