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UK growth hits six-month low as Brexit looms - business live UK growth hits six-month low as Brexit looms - business live
(35 minutes later)
The fall in US inflation reduces the urgency for further interest rate hikes by the Fed, according to Andrew Hunter at Capital Economics.
With real economic growth solid and the stock market continuing to rebound, we suspect that it’s still too soon to assume that the Fed’s tightening cycle is over.
But the continued stability of core inflation could give the Fed more room to pause, as officials assess the impact of the slowdown in global growth and tightening in financial conditions on the domestic economy. Regardless, we continue to expect that an economic slowdown later this year will force the Fed to start cutting rates again in 2020.
Annual inflation in the US fell to 1.9% in December from 2.2% in November, the Labor Department said.
A 2.1% drop in petrol prices over the 12 months offset a 1.6% rise in food prices, itself driven by an increase in the cost of fresh fruit and vegetables.
Core inflation – which strips out food and energy prices – was 2.2% in the year to December, unchanged from November.
BREAKING! US headline #inflation falls to 1.9% on oil prices, first reading below 2% since August 2017. Core inflation steady at 2.2%. pic.twitter.com/prQhfHvIkg
Read our full story on this morning’s GDP figures here:Read our full story on this morning’s GDP figures here:
UK GDP growth slows to 0.3% as manufacturing stallsUK GDP growth slows to 0.3% as manufacturing stalls
Professor Costas Milas of the University of Liverpool says today’s GDP data won’t deter the Bank of England from raising interest rates this year:Professor Costas Milas of the University of Liverpool says today’s GDP data won’t deter the Bank of England from raising interest rates this year:
Although today’s economic data confirms that our economy is slowing down, the slump is fully in line with Bank of England’s most recent predictions.Although today’s economic data confirms that our economy is slowing down, the slump is fully in line with Bank of England’s most recent predictions.
With this in mind, we are still on target for the Bank of England policy rate rate to rise to 1% by the end of 2019 [from 0.75% now]. Unless, of course, Mrs May’s Brexit deal is rejected during next week’s Parliamentary vote which risks opening Pandora’s (economic) box and bring into the picture interest rate cuts instead.With this in mind, we are still on target for the Bank of England policy rate rate to rise to 1% by the end of 2019 [from 0.75% now]. Unless, of course, Mrs May’s Brexit deal is rejected during next week’s Parliamentary vote which risks opening Pandora’s (economic) box and bring into the picture interest rate cuts instead.
Having briefly flirted above 7,000, the FTSE 100 is now back in the red as the earlier merriment appears to have evaporated.Having briefly flirted above 7,000, the FTSE 100 is now back in the red as the earlier merriment appears to have evaporated.
The FTSE is down 19 points or 0.3% at 6,923.91.The FTSE is down 19 points or 0.3% at 6,923.91.
Here’s how it looks elsewhere:Here’s how it looks elsewhere:
Germany’s DAX: -0.4% at 10,873.44Germany’s DAX: -0.4% at 10,873.44
France’s CAC: -0.4% at 4,784.62France’s CAC: -0.4% at 4,784.62
Italy’s FTSE MIB: -0.3% at 19,239.44Italy’s FTSE MIB: -0.3% at 19,239.44
Spain’s IBEX: +0.4% at 8,893.60Spain’s IBEX: +0.4% at 8,893.60
Europe’s STOXX 600: flat at 348.88Europe’s STOXX 600: flat at 348.88
Away from the UK, Italy could be heading into recession according to economists at the Dutch bank ING.Away from the UK, Italy could be heading into recession according to economists at the Dutch bank ING.
They say that poor industrial production data for November, combined with soft confidence numbers, significantly increase the chances of Italy entering a technical recession in the fourth quarter.They say that poor industrial production data for November, combined with soft confidence numbers, significantly increase the chances of Italy entering a technical recession in the fourth quarter.
The Italian economy is expected to shrink by 0.1% in the fourth quarter of 2018, following a 0.1% contraction in the third quarter.The Italian economy is expected to shrink by 0.1% in the fourth quarter of 2018, following a 0.1% contraction in the third quarter.
With similar fears for Germany, it’s not looking so rosy for the eurozone’s major powers.With similar fears for Germany, it’s not looking so rosy for the eurozone’s major powers.
Paolo Pizzoli, senior economist at ING, says:Paolo Pizzoli, senior economist at ING, says:
Industrial production data, just published by Istat, showed that the Italian economy shared the same difficulties as Germany and France in November.Industrial production data, just published by Istat, showed that the Italian economy shared the same difficulties as Germany and France in November.
Although a public holiday at the start of the month might have contributed to the worsening picture, we believe the impact is probably only minor.Although a public holiday at the start of the month might have contributed to the worsening picture, we believe the impact is probably only minor.
The pound has been boosted this morning by mounting speculation that Brexit could be delayed (or cancelled altogether).The pound has been boosted this morning by mounting speculation that Brexit could be delayed (or cancelled altogether).
According to a report in the Evening Standard, unnamed “cabinet ministers” said a Brexit date of 29 March was looking increasingly unachievable.According to a report in the Evening Standard, unnamed “cabinet ministers” said a Brexit date of 29 March was looking increasingly unachievable.
Here is an extract from the London paper:Here is an extract from the London paper:
A backlog of at least six essential Bills that must be passed before Britain leaves the European Union has left ministers convinced the timetable will be extended.A backlog of at least six essential Bills that must be passed before Britain leaves the European Union has left ministers convinced the timetable will be extended.
They include the much-delayed Immigration Bill.They include the much-delayed Immigration Bill.
Even asking MPs to sit at weekends and cancel their half-term holiday in February may not provide enough time to avoid asking for a delay, several sources have disclosed.Even asking MPs to sit at weekends and cancel their half-term holiday in February may not provide enough time to avoid asking for a delay, several sources have disclosed.
A senior minister said: “The legislative timetable is now very very tight indeed.”A senior minister said: “The legislative timetable is now very very tight indeed.”
The pound rose by a cent to a high of $1.285, but the gains narrowed when a spokeswoman for Theresa May said she had ruled out an extension to Article 50.The pound rose by a cent to a high of $1.285, but the gains narrowed when a spokeswoman for Theresa May said she had ruled out an extension to Article 50.
The pound is now up 0.4% or half a cent at $1.280. It is up 0.2% against the euro at €1.1526.The pound is now up 0.4% or half a cent at $1.280. It is up 0.2% against the euro at €1.1526.
HEDGE FUND MANAGER CRISPIN ODEY TELLS REUTERS HE IS NOW BETTING ON POUND TO RISE AS HE PREDICTS BREXIT WILL NOT HAPPENHEDGE FUND MANAGER CRISPIN ODEY TELLS REUTERS HE IS NOW BETTING ON POUND TO RISE AS HE PREDICTS BREXIT WILL NOT HAPPEN
Labour has responded to the latest growth figures, blaming a slowdown on the government’s “botched handling” of Brexit.Labour has responded to the latest growth figures, blaming a slowdown on the government’s “botched handling” of Brexit.
Peter Dowd, shadow chief secretary to the Treasury, says:Peter Dowd, shadow chief secretary to the Treasury, says:
It’s clear from these figures that the government’s botched handling of Brexit is continuing to damage our economy.It’s clear from these figures that the government’s botched handling of Brexit is continuing to damage our economy.
The ONS has reported that manufacturing had suffered their longest period of monthly falls in output since the financial crisis.The ONS has reported that manufacturing had suffered their longest period of monthly falls in output since the financial crisis.
Slowing growth and more disappointing manufacturing figures are another sign of the failures of the Tories on Brexit negotiations and economic policy in general.Slowing growth and more disappointing manufacturing figures are another sign of the failures of the Tories on Brexit negotiations and economic policy in general.
Only an election and change of government can turn this disastrous situation around.”Only an election and change of government can turn this disastrous situation around.”
Manufacturing was a clear weak spot in the UK economy in the three months to November, shrinking 0.8% compared with the previous three months.Manufacturing was a clear weak spot in the UK economy in the three months to November, shrinking 0.8% compared with the previous three months.
As we saw yesterday when Jaguar Land Rover and Ford announced thousands of job cuts, the car industry in particularly has been hit hard and production was down 2.4% over the three-month period.As we saw yesterday when Jaguar Land Rover and Ford announced thousands of job cuts, the car industry in particularly has been hit hard and production was down 2.4% over the three-month period.
A number of factors are weighing on the auto industry, including: a sharp fall in demand for diesel vehicles; tougher emissions tests which are causing delays; weaker demand in China; and Brexit uncertainty.A number of factors are weighing on the auto industry, including: a sharp fall in demand for diesel vehicles; tougher emissions tests which are causing delays; weaker demand in China; and Brexit uncertainty.
Francesco Arcangeli, economist at the manufacturers’ trade body, EEF, said:Francesco Arcangeli, economist at the manufacturers’ trade body, EEF, said:
While the service sector has performed better than expected the same cannot be said for manufacturing with production falling again and ten out of thirteen sub-sectors reporting a contraction in the three months to November. Most significantly, manufacturing output has now fallen for the fifth consecutive month, the first time this has happened since the financial crisis.While the service sector has performed better than expected the same cannot be said for manufacturing with production falling again and ten out of thirteen sub-sectors reporting a contraction in the three months to November. Most significantly, manufacturing output has now fallen for the fifth consecutive month, the first time this has happened since the financial crisis.
In particular, coming on the back of yesterday’s announcements there was yet more bad news for motor vehicles which contracted by 2.4% in the three-months to November. The sector, which is crucial for several manufacturing sub-sectors in the country, appears to be in a very weak spot and it would appear the knock-on effects are now having significant consequences for the supply chain.In particular, coming on the back of yesterday’s announcements there was yet more bad news for motor vehicles which contracted by 2.4% in the three-months to November. The sector, which is crucial for several manufacturing sub-sectors in the country, appears to be in a very weak spot and it would appear the knock-on effects are now having significant consequences for the supply chain.
Pablo Shah, economist at the Centre for Economics and Business Research, says UK growth is likely to remain weak in the coming months:Pablo Shah, economist at the Centre for Economics and Business Research, says UK growth is likely to remain weak in the coming months:
Today’s figures show that the UK economy has now entered what is likely to be a prolonged spell of weak growth. Cebr forecasts that the UK economy will expand by 1.1% in 2019, which would make it the weakest year since the 2009 recession, as economic uncertainty continues to cripple sentiment among firms and households alike.Today’s figures show that the UK economy has now entered what is likely to be a prolonged spell of weak growth. Cebr forecasts that the UK economy will expand by 1.1% in 2019, which would make it the weakest year since the 2009 recession, as economic uncertainty continues to cripple sentiment among firms and households alike.
Economic growth slowed to 0.3% in the three months to November, from 0.4% in the three months to October.Economic growth slowed to 0.3% in the three months to November, from 0.4% in the three months to October.
A breakdown shows that once again growth in the three months to November was reliant on the services sector, which accounts for roughly 80% of the economy. Construction output rose (thanks to housebuilding), and production fell.A breakdown shows that once again growth in the three months to November was reliant on the services sector, which accounts for roughly 80% of the economy. Construction output rose (thanks to housebuilding), and production fell.
Services sector grew by 0.3%Services sector grew by 0.3%
Construction output rose by 2.1%Construction output rose by 2.1%
Industrial production (including manufacturing output) fell 0.8%Industrial production (including manufacturing output) fell 0.8%
The UK economy grew by 0.3% in the three months to November, down from 0.4% in the three months to October and the weakest in six months.The UK economy grew by 0.3% in the three months to November, down from 0.4% in the three months to October and the weakest in six months.
Growth was driven by the services sector, while manufacturing output fell, led a by a slump in car production.Growth was driven by the services sector, while manufacturing output fell, led a by a slump in car production.
On a monthly basis, GDP rose by 0.2% in November, which was an improvement on October’s 0.1% growth.On a monthly basis, GDP rose by 0.2% in November, which was an improvement on October’s 0.1% growth.
Rob Kent-Smith, head of national accounts at the ONS, said:Rob Kent-Smith, head of national accounts at the ONS, said:
Growth in the UK economy continued to slow in the three months to November 2018 after performing more strongly through the middle of the year. Accountancy and housebuilding again grew but a number of other areas were sluggish.Growth in the UK economy continued to slow in the three months to November 2018 after performing more strongly through the middle of the year. Accountancy and housebuilding again grew but a number of other areas were sluggish.
Manufacturing saw a steep decline, with car production and the often-erratic pharmaceutical industry both performing poorly.Manufacturing saw a steep decline, with car production and the often-erratic pharmaceutical industry both performing poorly.
Neil Wilson, analyst at Markets.com, says the FTSE’s break through the 7,000 mark is significant:Neil Wilson, analyst at Markets.com, says the FTSE’s break through the 7,000 mark is significant:
FTSE 100 is testing 7,000 again, showing a firm bounce from the key test at 6,700 which it has survived. The area around 7,000 is the 38% retracement of the rally from the 2016 lows to the 2018 highs.FTSE 100 is testing 7,000 again, showing a firm bounce from the key test at 6,700 which it has survived. The area around 7,000 is the 38% retracement of the rally from the 2016 lows to the 2018 highs.
It’s also an area where we saw a lot of choppiness last November and is likely to form a key resistance point. The indicators appear quite bullish with the index breaking free from downtrend resistance and through its 50-day moving average on the close yesterday, which has proved a very sticky area of resistance throughout the recent downtrend.It’s also an area where we saw a lot of choppiness last November and is likely to form a key resistance point. The indicators appear quite bullish with the index breaking free from downtrend resistance and through its 50-day moving average on the close yesterday, which has proved a very sticky area of resistance throughout the recent downtrend.
European investors have started the day with moderate cheer, with all major indices edging higher in early trading.European investors have started the day with moderate cheer, with all major indices edging higher in early trading.
The FTSE is back above the 7,000 mark for the first time in 2019, up 57 points or 0.8%.The FTSE is back above the 7,000 mark for the first time in 2019, up 57 points or 0.8%.
It follows a turnaround on Wall Street on Thursday, with the Dow down sharply after a gloomy update from the department store Macy’s, which had disappointing sales over Christmas and lowered its earnings guidance for 2018.It follows a turnaround on Wall Street on Thursday, with the Dow down sharply after a gloomy update from the department store Macy’s, which had disappointing sales over Christmas and lowered its earnings guidance for 2018.
The Dow then recovered after comments by Jerome Powell, chair of the Federal Reserve, who signalled the central bank might be prepared to hit the pause button on further US rate hikes.The Dow then recovered after comments by Jerome Powell, chair of the Federal Reserve, who signalled the central bank might be prepared to hit the pause button on further US rate hikes.
Here’s how its looking across Europe:Here’s how its looking across Europe:
FTSE 100: +0.8% at 7,000.29FTSE 100: +0.8% at 7,000.29
Germany’s DAX: +0.3% at 10,949.72Germany’s DAX: +0.3% at 10,949.72
France’s CAC: +0.3% at 4,818.01France’s CAC: +0.3% at 4,818.01
Italy’s FTSE MIB: +0.3% at 19,354.55Italy’s FTSE MIB: +0.3% at 19,354.55
Spain’s IBEX: +0.4% at 8,890.90Spain’s IBEX: +0.4% at 8,890.90
Europe’s STOXX 600: +0.4% at 350Europe’s STOXX 600: +0.4% at 350
Struggling airline Flybe has recommended to shareholders a £2.2m takeover offer from a consortium led by Virgin Atlantic, which is part-owned by the billionaire Sir Richard Branson.Struggling airline Flybe has recommended to shareholders a £2.2m takeover offer from a consortium led by Virgin Atlantic, which is part-owned by the billionaire Sir Richard Branson.
The consortium, which also includes infrastructure firm Stobart Group and investment house Cyrus, are offering just 1p per share. That’s a hefty discount compared with Flybe’s closing price of 16.38p, and shares have plunged 90% this morning to 1.7p.The consortium, which also includes infrastructure firm Stobart Group and investment house Cyrus, are offering just 1p per share. That’s a hefty discount compared with Flybe’s closing price of 16.38p, and shares have plunged 90% this morning to 1.7p.
Flybe put itself up for sale in November after a profits warning that outlined the extent of its woes, as it struggled to cope with rising fuel costs, currency volatility and political uncertainty.Flybe put itself up for sale in November after a profits warning that outlined the extent of its woes, as it struggled to cope with rising fuel costs, currency volatility and political uncertainty.
If the deal goes ahead, Virgin and co will inject £100m into Flybe, broken down into a £20 working capital loan and £80m to invest.If the deal goes ahead, Virgin and co will inject £100m into Flybe, broken down into a £20 working capital loan and £80m to invest.
Economists polled by Reuters are expecting the ONS figures later this morning to show Britain’s manufacturing sector grew by 0.3% in November.Economists polled by Reuters are expecting the ONS figures later this morning to show Britain’s manufacturing sector grew by 0.3% in November.
But as we saw yesterday with Jaguar Land Rover and Ford axing thousands of jobs, car manufacturers in particular are struggling.But as we saw yesterday with Jaguar Land Rover and Ford axing thousands of jobs, car manufacturers in particular are struggling.
Michael Hewson , chief market analyst at CMC Markets, says the figures could well come in below expectations, following in the footsteps of Germany and France:Michael Hewson , chief market analyst at CMC Markets, says the figures could well come in below expectations, following in the footsteps of Germany and France:
Concerns about a slowdown in the UK economy will focus on a different sector today with the release of the latest manufacturing and industrial production numbers for November. We’ve already seen some ugly numbers out from Germany and France this week raising concerns that Germany could fall into recession in Q4.Concerns about a slowdown in the UK economy will focus on a different sector today with the release of the latest manufacturing and industrial production numbers for November. We’ve already seen some ugly numbers out from Germany and France this week raising concerns that Germany could fall into recession in Q4.
If the weak economic environment in Europe is any guide the UK could well cop some of the fallout from that, with the sharp decline in oil prices also weighing on the UK oil and gas sector.If the weak economic environment in Europe is any guide the UK could well cop some of the fallout from that, with the sharp decline in oil prices also weighing on the UK oil and gas sector.
UK industrial production is expected to rise 0.3%, while manufacturing production is expected to rise 0.4% after some sharp declines in October. It should be remembered that similar positive projections were expected for this week’s German and French numbers so a sharp miss to the downside can’t be ruled out.UK industrial production is expected to rise 0.3%, while manufacturing production is expected to rise 0.4% after some sharp declines in October. It should be remembered that similar positive projections were expected for this week’s German and French numbers so a sharp miss to the downside can’t be ruled out.
Jaguar Land Rover and Ford to axe thousands of jobsJaguar Land Rover and Ford to axe thousands of jobs
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.
UK growth figures at 9.30am will provide the latest insight into how the economy is faring as Brexit looms. It’s not expected to be pretty, with City economists pencilling in growth of just 0.1% in November.UK growth figures at 9.30am will provide the latest insight into how the economy is faring as Brexit looms. It’s not expected to be pretty, with City economists pencilling in growth of just 0.1% in November.
If economists are correct, the quarterly rate of growth will slow to 0.3% from 0.4%.If economists are correct, the quarterly rate of growth will slow to 0.3% from 0.4%.
The Office for National Statistics will also publish growth estimates for the major output sectors of the economy (services, manufacturing and construction), which will provide further clues on how sections of the economy are performing.The Office for National Statistics will also publish growth estimates for the major output sectors of the economy (services, manufacturing and construction), which will provide further clues on how sections of the economy are performing.
We already know that November was a terrible month for retailers (the worst on record according to Sports Direct boss Mike Ashley), but how is the rest of the economy holding up?We already know that November was a terrible month for retailers (the worst on record according to Sports Direct boss Mike Ashley), but how is the rest of the economy holding up?
The agenda:The agenda:
9.30am GMT: UK monthly GDP for November9.30am GMT: UK monthly GDP for November
9.30am GMT: UK services, industrial production, manufacturing output and construction output for November9.30am GMT: UK services, industrial production, manufacturing output and construction output for November
9.30am GMT: UK trade figures for November9.30am GMT: UK trade figures for November
1.30pm GMT: US inflation data for December1.30pm GMT: US inflation data for December