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Pound tumbles amid Brexit cliff-edge fears; factory output slumps - business live Pound tumbles amid Brexit cliff-edge fears; factory output slumps - business live
(32 minutes later)
Rolling coverage of the latest economic and financial newsRolling coverage of the latest economic and financial news
Sadly, another UK retailer has gone into administration, just a week before Christmas. The online and pop-up bookseller The Book People appointed administrators at PricewaterhouseCoopers, putting almost 400 jobs at risk.
At least, there will be no immediate job losses, according to the administrators, who also promised that Christmas orders already placed by customers will be fulfilled. PwC are now looking for a buyer of the business.
My colleague Sarah Butler writes:
He also said that the US needed to reduce its trade gap with Europe to get its global trade deficit down, and that it must find ways to sell more goods to the EU.
The US trade representative, Robert Lighthizer, has given an interview to Fox Business Network. He said that a trade between the US and the UK is a priority for Washington and negotiations will be launched soon.
The US housing market is benefiting from low mortgage rates, and is propping up the wider economy. Construction of single-family houses – the largest share of the housing market – rose 2.4% to 938,000 units, the highest level since January. The number of multi-family homes started jumped 4.9% to 427,000.
US housing starts rose more than expected last month, and permits for future home construction jumped to a 12 1/2 year high, according to data just released by the US Commerce Department.US housing starts rose more than expected last month, and permits for future home construction jumped to a 12 1/2 year high, according to data just released by the US Commerce Department.
The figures painted a rosy picture of the American housing market. The number of houses started rose 3.2% to 1.365m last month, with single-family construction reaching a 10-month high. Building permits increased 1.4% to 1.482m in November, the highest level since May 2007.The figures painted a rosy picture of the American housing market. The number of houses started rose 3.2% to 1.365m last month, with single-family construction reaching a 10-month high. Building permits increased 1.4% to 1.482m in November, the highest level since May 2007.
Here is more reaction to the poor factory numbers from the CBI. Howard Archer, chief economic adviser to the EY Item Club forecasting group, says:Here is more reaction to the poor factory numbers from the CBI. Howard Archer, chief economic adviser to the EY Item Club forecasting group, says:
Time for a quick recap.Time for a quick recap.
The pound has suffered a sharp tumble as the government prepares to pass legislation that could cause a “cliff-edge” Brexit at the end of next year. Sterling has slumped by nearly 1.5 cents today to below $1.32, back towards levels seen before Thursday’s general election.The pound has suffered a sharp tumble as the government prepares to pass legislation that could cause a “cliff-edge” Brexit at the end of next year. Sterling has slumped by nearly 1.5 cents today to below $1.32, back towards levels seen before Thursday’s general election.
The Boris Bounce in the stock market has also fizzled out. Share in banks and housebuilders are among the big fallers today, with Lloyds down 5%.The Boris Bounce in the stock market has also fizzled out. Share in banks and housebuilders are among the big fallers today, with Lloyds down 5%.
Britain’s factories have suffered their worst slump in activity since the financial crisis a decade ago. Orders also took a worrying tumble, suggesting manufacturing’s recession isn’t over.Britain’s factories have suffered their worst slump in activity since the financial crisis a decade ago. Orders also took a worrying tumble, suggesting manufacturing’s recession isn’t over.
The latest UK labour market statistics are a mixed bag. Unemployment is down (good) and employment is up (also good), but wage growth has slowed (bad) and vacancies are down too (worrying).The latest UK labour market statistics are a mixed bag. Unemployment is down (good) and employment is up (also good), but wage growth has slowed (bad) and vacancies are down too (worrying).
The CBI’s director general, Carolyn Fairbairn, has issued a statement pledging to help Boris Johnson secure a new trade deal with the EU by the end of next year.The CBI’s director general, Carolyn Fairbairn, has issued a statement pledging to help Boris Johnson secure a new trade deal with the EU by the end of next year.
She says:She says:
In the past, the CBI - which opposed Brexit in 2016 - has sounded more critical about the issue. Last month, MPs attacked it for not applying for funds to help businesses with their no-deal preparations.In the past, the CBI - which opposed Brexit in 2016 - has sounded more critical about the issue. Last month, MPs attacked it for not applying for funds to help businesses with their no-deal preparations.
The CBI also resisted commenting on whether it thinks achieving a trade deal by December 2020 is achievable. Former Trade secretary Liam Fox has said today that it’s possible....The CBI also resisted commenting on whether it thinks achieving a trade deal by December 2020 is achievable. Former Trade secretary Liam Fox has said today that it’s possible....
Fawad Razaqzada, market analyst at Forex.com, says he pound was hit by a double whammy of bad news this morning.Fawad Razaqzada, market analyst at Forex.com, says he pound was hit by a double whammy of bad news this morning.
And here’s the result:And here’s the result:
Here’s our news story on today’s UK jobs report:Here’s our news story on today’s UK jobs report:
Today’s dire UK factory data haven’t helped the pound - it’s still wallowing around $1.32, down a cent this morning.Today’s dire UK factory data haven’t helped the pound - it’s still wallowing around $1.32, down a cent this morning.
Deutsche Bank has warned its clients that the pound is likely to weaken in 2020, as renewed Brexit uncertainty threaten to drag the economy into a recession.Deutsche Bank has warned its clients that the pound is likely to weaken in 2020, as renewed Brexit uncertainty threaten to drag the economy into a recession.
UK manufacturers are crying out for some economic certainty, says Anna Leach, the CBI’s deputy chief economist.UK manufacturers are crying out for some economic certainty, says Anna Leach, the CBI’s deputy chief economist.
Here’s her take on this morning’s worrying factory data:Here’s her take on this morning’s worrying factory data:
The slump in UK factory output this autumn is due to Brexit worries, and weakness in the global economy, says Tom Crotty of chemicals giant INEO.
NEWSFLASH: Britain’s factory sector has suffered its worth quarter since the financial crisis, as Brexit uncertainty hurts the sector.
The CBI has reported that output volumes fell in the three months to December, at the fastest pace since the financial crisis, with output expanding in only six out of 17 sub-sectors.
The headline fall in output was primarily driven by the motor vehicles sub-sector -- probably because several carmakers held shutdowns in November in case Britain had crashed out of the EU at the end of October.
Factory bosses also reported that order books were weaker than normal, a worrying sign for prospects in 2020.
The CBI says:
UK businesses need to pay attention to Boris Johnson’s Brexit strategy, and keep preparing for a no-deal crisis at the end of next year.
So says Paul Hardy, Brexit director at global law firm DLA Piper:
Shares in UK-focused companies are sliding further into the red, wiping out some of the gains recorded on Friday.
Banks are in the front-line, on fears that a new cliff-edge Brexit crisis will weaken the economy in 2020. That’s driven Royal Bank of Scotland down by 4% -- a blow to the government, which still owns a majority stake.
Property companies, which are also vulnerable to economic worries, are also among the top fallers on the FTSE 100 this morning. British Land, which owns Meadowhall shopping centre in Sheffield and built the Cheesegrater in London, is down 3.5%.
Sterling’s slump today is a timely reminder that Brexit is far from over, despite Boris Johnson’s election claims that he would get it “done” and move onto other issues.
Dean Turner, economist at UBS Wealth Management, has warned that sterling will remain highly volatile over the next few months, with a crucial deadline falling in the summer.
Back in the markets, sterling is still being pummelled by Brexit fears.
The pound is still down more than 1% against the dollar, below $1.32, as investor worry that Britain will fail to agree a new trade deal with the EU by the end of next year.
The recent ‘Boris Bounce’ is well and truly over, as the government hardens its commitment to ending the withdrawal period at the end of December. Remember, the pound hit $1.35 as the election results rolled in during the early hours of Friday morning.
Michael Gove, who has been closely involved with no-deal Brexit planning, has defended the plan to make it illegal to request an extension to EU alignment beyond 2020.
He told BBC Breakfast that the government is fully committed to delivering Brexit on time.
And he denied that the December 2020 deadline could slip:
There’s a real gender split in today’s unemployment report.
The number of employed men jumped by 54,000 on the quarter to 17.31m, while the number of employed women fell by 30,000 to 15.49m. That reverses a recent trend, which has seen more women entering the labour market (partly due to pension changes).
If you include bonuses, UK pay growth also took a hit last month.
Total pay only rise by 3.2% per year in the August-October period, down from 3.7% a month ago, today’s labour market report shows.
That’s partly because some workers received bigger bonuses in October 2018 than this year.
Newsflash: Britain’s unemployment rate has stuck at its lowest level in 45 years, but wage growth has slowed.
The jobless rate was 3.8% in the three months to October, the Office for National Statistics says, matching last month’s reading.
The ONS explains:
But average earnings only rose by 3.5% per annum during the quarter, down from 3.6% a month ago. That means real wage growth (accounting for inflation) have dropped -- a blow to families in the run-up to Christmas.
The ONS also reports that the employment rate has hit a new all-time high, at 76.2%, up from 75.8% a year ago.