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| Carillion collapse drags UK construction down to brink of stagnation - business live | |
| (35 minutes later) | |
| Noble Francis, economics director at the Construction Products Association, fears that we haven’t seen the full impact of Carillion’s collapse yet. | |
| Markit/CIPS UK construction activity in January effectively flat in January. House building fell whilst there were marginal rises in commercial & infrastructure after falls in the 2nd half of last year. #ukconstruction #construction https://t.co/GzFiAsgeuc pic.twitter.com/Pj5Xk2jjaV | |
| What we don't know is the impact of the liquidation of Carillion on construction activity. The surveying is likely to have occurred prior to the main effects of work stopping on site in the 2nd half of the month & will mainly have effected the infrastructure & commercial... | |
| ...60% of Carillion 72 key projects were in infrastructure & the effect of the liquidation of Carillion on the estimated 25,000-30,000 sub-contractors will only become apparent over the next few months. | |
| Duncan Brock of the Chartered Institute of Procurement & Supply says political and economic uncertainty is hitting the UK construction sector, pushing it towards stagnation. | |
| “The blocks to progress included a sharp rise in costs and a shortage of key materials, which contributed to longer lead times as supplier capabilities were stretched to their limits. | |
| “Against this challenging backdrop, though larger orders from cautious clients also failed to materialise, firms retained a sunny disposition with optimism at a seven-month high and a slight rise in employment continued. | |
| “With construction teetering on the edge of contraction, this surprise outcome will serve as a jolt to policymakers, that the impact of political and economic uncertainty remains large at the beginning of 2018.” | |
| Sam Teague, Economist at IHS Markit, says there wasn’t much New Year cheer in the building sector: | |
| “January’s PMI data indicated a difficult start to 2018 for the UK’s construction sector, underlined by business activity growth slumping to a four-month low and new orders sliding back into decline. | |
| “A contraction in house building added to lacklustre commercial building and civil engineering markets, and reduced inflows of new work suggest overall activity could slip into decline in February. Furthermore, cost pressures remained intense, fuelled by shortages of input materials and high costs for imported products. | |
| Max Jones, global corporates relationship director for construction at Lloyds Bank Commercial Banking, says the collapse of Carillion has hit the construction sector. | |
| Jones explains: | |
| “It has clearly been a month like no other for the sector, so this drop in the PMI reading comes as no major surprise. | |
| “The impact of Carillion’s liquidation has rippled down the supply chain and shaken confidence across the industry. There have inevitably been fears for the sub-contractors with exposure to the collapse, though some have drawn down on emergency support from banks, including the £50m Lloyds fund. | |
| Tens of thousands of small construction companies, and other suppliers, across the UK were hit by Carillion’s shock liquidation in early January. Work was halted at two major hospitals, while other firms were forced to lay off staff as they’re unlikely to be paid for work carried out for Carillion. | |
| NEWSFLASH: Britain’s construction industry has slowed to near stagnation, and housebuilding is in decline. | |
| Data firm Markit reports that UK building companies experienced a “subdued start to 2018”, with total industry activity barely rising. | |
| Its monthly construction PMI, which measures activity, dropped to just 50.2 for January from 52.2 in December. That’s worryingly closed to the 50-point mark that separates expansion from contraction. | |
| In another blow, housebuilding activity shrank - while civil engineering work picked up. | |
| Job creation across the construction industry also slowed, to an 18-month low. That’s a blow to apprentices already reeling from the collapse of Carillion last month. | |
| Markit says: | |
| A return to contraction in residential building activity was accompanied by near-stagnant commercial and civil engineering activity. New orders declined, linked by many companies to market uncertainty. | |
| On a more positive note, confidence towards future growth prospects improved, with many firms anticipating an increase in new project wins later in the year. | |
| More to follow... | |
| This is turning into bitcoin’s worst week since 2013.... | |
| Bitcoin falls 9% to below $8,200. It's now -30% on the week, its biggest weekly fall in nearly 5 years. | |
| Of course, bitcoin has always bounced back from its previous slumps (five years ago it was worth just $20). But is this time different?.... | |
| Telecoms group BT is also having a bad morning. | Telecoms group BT is also having a bad morning. |
| Shares have fallen over 5% to 241.3p, a five-year low, after some underwhelming results this morning. | Shares have fallen over 5% to 241.3p, a five-year low, after some underwhelming results this morning. |
| Profits over the last nine months are down 9%, and the company has also reported a fall in TV customers - despite splashing out on live Ashes coverage (given England’s performance, perhaps they should have spared us....) | Profits over the last nine months are down 9%, and the company has also reported a fall in TV customers - despite splashing out on live Ashes coverage (given England’s performance, perhaps they should have spared us....) |
| My colleague Mark Sweney points out that BT’s consumer division seems to be slowing, while its IT services division continues to struggle.... | My colleague Mark Sweney points out that BT’s consumer division seems to be slowing, while its IT services division continues to struggle.... |
| BT’s TV service lost 5,000 customers in final q 2017. But says was “Best quarter ever” as viewin up 23% y-on-y due to Ashes/Champs League. Deal for Sky channels from 2019 cost £50m in “upfront costs”. | BT’s TV service lost 5,000 customers in final q 2017. But says was “Best quarter ever” as viewin up 23% y-on-y due to Ashes/Champs League. Deal for Sky channels from 2019 cost £50m in “upfront costs”. |
| BT’s share price has fallen 4% as growth stalled at its consumer division - where broadband customer additions have slowed and BT TV lost customers despite Champions League and Ashes coverage - in the last quarter of 2017. And the global IT services division continues to tank. | BT’s share price has fallen 4% as growth stalled at its consumer division - where broadband customer additions have slowed and BT TV lost customers despite Champions League and Ashes coverage - in the last quarter of 2017. And the global IT services division continues to tank. |
| At the risk of labouring the point..... | At the risk of labouring the point..... |
| CHART OF THE DAY: Bitcoin has lost more than half its market value in just six weeks. pic.twitter.com/UUoZR9hIKV | CHART OF THE DAY: Bitcoin has lost more than half its market value in just six weeks. pic.twitter.com/UUoZR9hIKV |
| Economics professor Nouriel Roubini says the ‘mother of all bubbles’ is now deflating fast: | Economics professor Nouriel Roubini says the ‘mother of all bubbles’ is now deflating fast: |
| Bitcoin is the biggest bubble in human history: much bigger than the Mississippi, South Sea, Tech & Tulip bubbles. The Mother Of All Bubbles is now crashing: down 60% from its December peak & still crashing. Will discuss it today with @tomkeene on @BloombergTV from 6am to 7am EST pic.twitter.com/WStGJiRySe | Bitcoin is the biggest bubble in human history: much bigger than the Mississippi, South Sea, Tech & Tulip bubbles. The Mother Of All Bubbles is now crashing: down 60% from its December peak & still crashing. Will discuss it today with @tomkeene on @BloombergTV from 6am to 7am EST pic.twitter.com/WStGJiRySe |
| European stock markets are on the back foot again this morning, with losses across the board. | European stock markets are on the back foot again this morning, with losses across the board. |
| Germany’s DAX is the worst performer. It’s being dragged down by Deutsche Bank, which has lost almost 6% after reporting a €497m loss for 2017 (alongside that $70m fine) | Germany’s DAX is the worst performer. It’s being dragged down by Deutsche Bank, which has lost almost 6% after reporting a €497m loss for 2017 (alongside that $70m fine) |
| Here’s Naeem Aslam of Think Markets on bitcoin’s decline: | Here’s Naeem Aslam of Think Markets on bitcoin’s decline: |
| Bitcoin below 10K tells you only one message which is the upward momentum has died out and the odds are that we would continue to consolidate or grind lower. | Bitcoin below 10K tells you only one message which is the upward momentum has died out and the odds are that we would continue to consolidate or grind lower. |
| Connor Campbell of SpreadEx agrees that bitcoin is firmly on the back foot. | Connor Campbell of SpreadEx agrees that bitcoin is firmly on the back foot. |
| The biggest story this Friday didn’t belong to the traditional markets, however, but Bitcoin. Opening Monday at $11700 – remember at its 2017 it hit $20000 – it is now struggling to keep its head above $8400, following a week that dealt blow after blow to the cryptocurrency. | The biggest story this Friday didn’t belong to the traditional markets, however, but Bitcoin. Opening Monday at $11700 – remember at its 2017 it hit $20000 – it is now struggling to keep its head above $8400, following a week that dealt blow after blow to the cryptocurrency. |
| First there was the introduction of new regulations on anonymous trading accounts in South Korea, one of Bitcoin’s biggest markets, followed by reports that Facebook would be banning cryptocurrency adverts on its site. Now comes the news that Bitcoin’s pre-Christmas rise is being investigated by the US Commodity Futures Trading Commission for market manipulation, closing out a horrible few days for the previously ascendant product. | First there was the introduction of new regulations on anonymous trading accounts in South Korea, one of Bitcoin’s biggest markets, followed by reports that Facebook would be banning cryptocurrency adverts on its site. Now comes the news that Bitcoin’s pre-Christmas rise is being investigated by the US Commodity Futures Trading Commission for market manipulation, closing out a horrible few days for the previously ascendant product. |
| Deutsche Bank has been fined $70m (£49m) by US regulators for attempting to rig a benchmark for interest-rate derivatives and other financial instruments. | Deutsche Bank has been fined $70m (£49m) by US regulators for attempting to rig a benchmark for interest-rate derivatives and other financial instruments. |
| The bank agreed the settlement with the Commodity Futures Trading Commission after investigators found traders sought to manipulate rates from 2007 until May 2012. | The bank agreed the settlement with the Commodity Futures Trading Commission after investigators found traders sought to manipulate rates from 2007 until May 2012. |
| It is alleged the bank’s staff knew they were breaking the law, with one trader telling a broker that “a lot of people would actually do jail time” if practices were exposed. | It is alleged the bank’s staff knew they were breaking the law, with one trader telling a broker that “a lot of people would actually do jail time” if practices were exposed. |
| James McDonald, the CFTC’s director of enforcement, said: | James McDonald, the CFTC’s director of enforcement, said: |
| “There is no room in our markets for manipulation. We will continue to work hard to stamp it out, wherever we find it.” | “There is no room in our markets for manipulation. We will continue to work hard to stamp it out, wherever we find it.” |
| A spokesperson for Deutsche Bank said it had co-operated with the investigation and had “undertaken significant efforts to remediate benchmark-related activities”. | A spokesperson for Deutsche Bank said it had co-operated with the investigation and had “undertaken significant efforts to remediate benchmark-related activities”. |
| Mike van Dulken of Accendo Markets reckons bitcoin is following a familiar pattern: | Mike van Dulken of Accendo Markets reckons bitcoin is following a familiar pattern: |
| The old Bubble chart suggests Bitcoin past fear, headed towards capitulation pic.twitter.com/Nw01pngFVi | The old Bubble chart suggests Bitcoin past fear, headed towards capitulation pic.twitter.com/Nw01pngFVi |
| Miles Eakers, chief market analyst at Centtrip, says Bitcoin has made a “woeful” start to the new year. | Miles Eakers, chief market analyst at Centtrip, says Bitcoin has made a “woeful” start to the new year. |
| “The drop followed comments made by India’s Minister of Finance, Arun Jaitley, that the Indian government ‘does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system’. | “The drop followed comments made by India’s Minister of Finance, Arun Jaitley, that the Indian government ‘does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system’. |
| “We anticipate there will be more of such protectionist regulation. This is likely to put Bitcoin under more strain, causing it to drop to the $8000 a coin level.” | “We anticipate there will be more of such protectionist regulation. This is likely to put Bitcoin under more strain, causing it to drop to the $8000 a coin level.” |
| January was a cruel month for digital currency fans, and February isn’t turning out much better. | January was a cruel month for digital currency fans, and February isn’t turning out much better. |
| Bitcoin has fallen by 5% this morning to $8,521, its lowest level since late November. That means it’s lost more than half its value since peaking near $20,000 in the week before Christmas. | Bitcoin has fallen by 5% this morning to $8,521, its lowest level since late November. That means it’s lost more than half its value since peaking near $20,000 in the week before Christmas. |
| The selloff follows reports that American regulators are investigating whether last autumn’s price surge had been caused by market manipulation. | The selloff follows reports that American regulators are investigating whether last autumn’s price surge had been caused by market manipulation. |
| According to Bloomberg, the US Commodity Futures Trading Commission has been investigating the Bitfinex exchange and a cryptocurrency company called Tether. | According to Bloomberg, the US Commodity Futures Trading Commission has been investigating the Bitfinex exchange and a cryptocurrency company called Tether. |
| Fortune Magazine has a good explanation: | Fortune Magazine has a good explanation: |
| Specifically, regulators are curious about Bitfinex’s relationship with virtual currency Tether, which the exchange claims is pegged to the dollar. So in theory, one dollar equals one Tether. | Specifically, regulators are curious about Bitfinex’s relationship with virtual currency Tether, which the exchange claims is pegged to the dollar. So in theory, one dollar equals one Tether. |
| Tether has become a popular way for some investors to buy Bitcoin on exchanges. But the CFTC’s probe feeds into worries that Tether may not be actually backed by the dollar, as Bitfinex has provided little proof of the relationship, critics say. That hazy relationship has fueled concerns that Bitfinex may be simply creating Tether coins out of thin air and using Tether to buy Bitcoin—thereby propping up the price of the latter asset. | Tether has become a popular way for some investors to buy Bitcoin on exchanges. But the CFTC’s probe feeds into worries that Tether may not be actually backed by the dollar, as Bitfinex has provided little proof of the relationship, critics say. That hazy relationship has fueled concerns that Bitfinex may be simply creating Tether coins out of thin air and using Tether to buy Bitcoin—thereby propping up the price of the latter asset. |
| Digital currencies have also been hit by the news that Facebook is banning all adverts for cryptocurrencies. India’s finance minister added to their woes, by saying his country doesn’t accept cryptocurrencies as legal tender and pledging to fight their use for “illegitimate activities”. | Digital currencies have also been hit by the news that Facebook is banning all adverts for cryptocurrencies. India’s finance minister added to their woes, by saying his country doesn’t accept cryptocurrencies as legal tender and pledging to fight their use for “illegitimate activities”. |
| Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. | Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business. |
| Today we discover how America’s labour market is faring, when January’s non-farm payroll is released. | Today we discover how America’s labour market is faring, when January’s non-farm payroll is released. |
| Economists predict that around 180,000 new jobs were created last month, up from December’s disappointing 148,000 (which might get revised today). That should leave the jobless rate at just 4.1%, which is a 17-year low, although it could possibly drop to just 4.0%. If so, expect some gleeful tweeting from President Trump...... | Economists predict that around 180,000 new jobs were created last month, up from December’s disappointing 148,000 (which might get revised today). That should leave the jobless rate at just 4.1%, which is a 17-year low, although it could possibly drop to just 4.0%. If so, expect some gleeful tweeting from President Trump...... |
| The key issue, though, is whether wage growth picked up. It could rise to 2.6% from last month’s 2.5%, which could fuel expectations of higher inflation in America. | The key issue, though, is whether wage growth picked up. It could rise to 2.6% from last month’s 2.5%, which could fuel expectations of higher inflation in America. |
| Andrew Hunter of Capital Economics says: | Andrew Hunter of Capital Economics says: |
| The tightening labour market is yet to put much upward pressure on wage growth, but with core inflation now starting to rebound we suspect that average hourly earnings will not be far behind. | The tightening labour market is yet to put much upward pressure on wage growth, but with core inflation now starting to rebound we suspect that average hourly earnings will not be far behind. |
| Signs of inflationary pressures have already been hitting the bond market in recent days, sending prices down and yields to their highest level in several years. So we could see more action there today. | Signs of inflationary pressures have already been hitting the bond market in recent days, sending prices down and yields to their highest level in several years. So we could see more action there today. |
| Meanwhile in the UK, we get a new health check on Britain’s building sector. Markit’s Construction PMI report is expected to show that growth slowed a little in January. | Meanwhile in the UK, we get a new health check on Britain’s building sector. Markit’s Construction PMI report is expected to show that growth slowed a little in January. |
| We’ve also got financial results from BT and Germany’s Deutsche Bank (more shortly....) | We’ve also got financial results from BT and Germany’s Deutsche Bank (more shortly....) |
| European stock markets are expected to open a little lower, led by Germany’s Dax. | European stock markets are expected to open a little lower, led by Germany’s Dax. |
| European Opening CallsFTSE100 is expected to open 5 points lower at 7,485DAX is expected to open 63 points lower at 12,940CAC40 is expected to open 9 points lower at 5,445 | European Opening CallsFTSE100 is expected to open 5 points lower at 7,485DAX is expected to open 63 points lower at 12,940CAC40 is expected to open 9 points lower at 5,445 |
| Here’s the agenda. | Here’s the agenda. |
| 9.30am GMT: UK Construction PMI for January | 9.30am GMT: UK Construction PMI for January |
| 1.30pm GMT: US non-farm payroll jobs report | 1.30pm GMT: US non-farm payroll jobs report |
| 3pm GMT: University of Michigan’s survey of US consumer sentiment | 3pm GMT: University of Michigan’s survey of US consumer sentiment |