UK factory growth hits three-month low, but eurozone and US power on – as it happened
All the day's economic and financial news, including new manufacturing reports from around the world
- Latest: US factories post best month since 2014
- UK manufacturing growth slowed in June
- Pound drops after British data disappoints
- Eurozone factory growth hits six-year high
Earlier:
3.34pm BST
OK, time for a quick catch-up.
Britain has missed out on a general pick-up in factory output last month.
3.26pm BST
This is more like it.
America's factory sector has posted its strongest growth in almost three years, according to The Institute for Supply Management.
ISM +2.9; New Orders +4, Jobs +3.7 but Prices -4.5
The rise in the ISM manufacturing index to 57.8 in June, from 54.9, leaves the index at its highest level in nearly three years and supports our view that annualised GDP growth has rebounded strongly in the second quarter.
3.01pm BST
Here's the key points from Markit's survey of the US factory sector in June:
2.58pm BST
Breaking: America's factory sector slowed last month, according to Markit's PMI survey at any rate.
Markit reports that new orders growth among US manufacturers slowed last month, while production rose at the lowest rate in 10 months.
Manufacturing growth in the #US weakens again in June, with #PMI down from 52.7
in May to 52.0 https://t.co/gdquWTIFAJ
2.50pm BST
Wall Street has started the third quarter of 2017 in a positive mood.
The Dow Jones industrial average has gained 120 points, or almost 0.6%, led by banks and technology companies.
2.48pm BST
A cocktail of factors has pushed the gold price down to a seven-week low today.
Gold's poor start to July comes after a nasty fall in June which broke its best winning streak since 2010. Nevertheless gold rallied 8% in the first half of the year as the Trump trade faded, but has stalled again as markets see central banks taking a more hawkish stance in the second half."
1.38pm BST
Here's Larry Elliott on today's FSB report:
Related: We have fixed issues that caused financial crisis, says Mark Carney
1.28pm BST
The organisation responsible for monitoring the health of global financial system is urging regulators not to cave in to 'reform fatigue'.
Mark Carney, head of the Financial Stability Board, has put down his spade and hockey stick and turned his attention to the upcoming meeting of G20 leaders later this week.
In particular, giving into reform fatigue could erode the willingness of G20 members to rely on each other's systems and institutions and, in the process, fragment pools of funding and liquidity.
Carney, head of the Financial Stability Board, reeled off regulators' accomplishments, including better-capitalized banks, reduced risk of big public bailouts, a thorough reform of the derivatives markets and a decline in the most dangerous activities of so-called shadow banking.
One of the biggest threat to all these achievements, he said on Monday, is "reform fatigue."
Carney says financial-crisis victory in sight if G-20 stays firm https://t.co/qH6WcPz3lY via @borisg_work pic.twitter.com/pxFyUUqg7a
12.41pm BST
Britain's cost of living crisis has reached the vaults of the Bank of England.
"The result of the bank's unwillingness to negotiate fair pay will be that the bank's sites, including the iconic Threadneedle Street in the city of London will effectively be inoperable without the maintenance, parlours and security staff.
"Mark Carney needs to get his own house in order. It is nothing short of shameful that the iconic symbol of financial services in the UK is choosing to ride roughshod over the concerns of its dedicated and hardworking staff and impose this derisory pay deal. The governor can no longer turn a blind eye to what is happening on his own patch.
"The Bank has been informed of industrial action being called by Unite the Union. The Union balloted approximately 2% of the workforce. Should the strike go ahead, the Bank has plans in place so that all sites can continue to operate effectively. We will continue to have discussions with Unite and hope that there will be a positive outcome."
Last week, the Governor planted a tree at @HavenHouseCH, one of our charities of the year 2016/17. https://t.co/JTae3JmS1j pic.twitter.com/yDjMHrGn5n
12.15pm BST
Sterling continues to drop, as traders digest this morning's PMI data.
The pound has now shed 0.7 of a cent against the US dollar, to $1.2955, wiping out Friday's rally.
The UK's manufacturing sector activity reading fell to 54.3 in June, marking its slowest pace of growth in three months.
This disappointing report has dealt another blow to sentiment and is likely to add to the horrible cocktail of soft economic releases which is slowly illustrating the impact of Brexit.
11.57am BST
This chart shows how City economists had expected British factory activity to have been much stronger in June.
Many had expected a PMI in the 56-ish region, not as low as 54.3.
Big miss on the UK Manufacturing PMI. Nobody saw it that low. pic.twitter.com/0cUVPvk8dQ
11.39am BST
Although UK manufacturing is obviously important, it only makes up around 10% of Britain's economy.
On Wednesday, we find out how the dominant service sector fared in June. This morning's disappointing factory data may be a sign that service companies also struggled, says Andy Bruce of Reuters:
UK manufacturing PMI drops 2 points in June.
Falls that big are followed up by a drop in the services PMI 66% of the time.
11.06am BST
Howard Archer, Chief Economic Advisor to the EY ITEM Club, says the slowdown in UK factory expansion last month is "disappointing", particularly as export growth slowed.
"The survey indicates that not only did output slow in June, but the sector is entering the third quarter with reduced momentum with new orders at an 11-month low. This was primarily due to weaker domestic demand, but it is disappointing to see that export orders slowed.
Furthermore, the slowdown in manufacturing activity is reported across all sectors - consumer, intermediate and investment goods. Backlogs of work fell in June which also points to weaker activity going forward. Additionally, confidence among manufacturers dipped to a seven-month low in June, although it was still decent, and employment growth slowed.
"The foot unexpectedly came off the accelerator last month suggesting that manufacturers' attention was in part drawn to grappling with the uncertainty from both the general election and the start of Brexit negotiations.
Encouragingly, production levels are still in positive territory but growth slowed to its lowest rate for three months and most disappointingly, given the weakness in sterling, was the slowdown in new export business.
10.30am BST
In another boost for Europe, the jobless rate across the eurozone remains at its lowest level since the financial crisis began.
Unemployment in the single currency region was 9.3% in May, matching April's figure, and the lowest since March 2009.
May 2017: euro area unemployment rate stable at 9.3%, EU at 7.8% #Eurostat https://t.co/0MhJKFEcWw pic.twitter.com/TOeKgGa3YQ
10.11am BST
City experts are disappointed to see that Britain's manufacturing growth has dipped to a three-month low in June:
Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply, says political anxiety is hurting the sector:
"Manufacturing activity showed signs of slowing this month, as fears that the sector would feel the impact of both the election and the start of Brexit talks materialised.
"While the sector remained in growth, a softening of new orders suggested some hesitancy from the UK to commit to new projects, which will be a worry as the domestic market has been the main driver of growth in the past two months. Apart from some orders from the US and Western Europe, exports fared little better as a continuing weak, but stable pound began to lose some of its allure.
"The PMI figures show a drop in confidence this month as manufacturers grappled with the general election result and uncertainty arising from our negotiations to exit the EU.
"But manufacturers are resilient. They have a keen eye on margins and are taking steps to future-proof their business. Many are stockpiling and investing to win contracts, while others are boosting their export order books.
"The UK's manufacturing sector is still growing but the pressures that have become almost de rigeur in UK economic data are still very much present.
New business growth has slowed which is limiting the increase in new employment in the sector, confidence has slipped to a 7 month low and while price pressures are easing, supply lines are becoming stretched and are therefore slowing, extending the time taken on projects.
While rest of the EU outperforms the UK economy it will make Brexit negotiations easier- EU can claim costs for UK. Reversal would be tricky https://t.co/OnPyXEd0Zd
10.08am BST
It's not all bad news for the UK. Factory growth over the last quarter is the strongest since 2014, despite the slowdown in June.
Ave UK manufacturing #PMI output index in Q2 was highest for 3 years & signals production rising 0.5%, but growth slowed in June pic.twitter.com/z4sjOeLPPj
9.56am BST
Sterling has fallen by half a cent, following the news that UK factory growth was weaker than expected last month.
The pound is now trading at $1.297, away from the six-week highs struck last week.
9.38am BST
Breaking: Britain's manufacturing growth slowed last month, as UK factories failed to keep pace with their rivals across the channel.
The UK manufacturing PMI has dropped to 54.3 in June, well below expectations of a reading of 56.5. This is the slowest growth in three months.
"New business rose at the weakest pace for nearly a year and growth was down sharply from April's near three-year high. This slowdown was largely centred on the domestic market, where increased business uncertainty appears to have led to some delays in placing new contracts.
"Export orders remained disappointingly lacklustre despite the ongoing competitiveness boost of the weak sterling exchange rate.
9.30am BST
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9.25am BST
Stand by your desks! UK manufacturing PMI is due at 9:30 am Fingers crossed... #GBP #BoE
9.20am BST
It's official -- the eurozone's factory sector is growing at its fastest rate in over six years.
The boom in Germany, and solid expansion in France, Italy and Spain have all helped to deliver the fastest expansion since 2011.
"Eurozone manufacturing growth gained further momentum in June, rounding off the best quarter for just over six years. At current levels, the PMI is indicative of factory output growing at an annual rate of some 5%, which in turn indicates the goods- producing sector will have made a strong positive contribution to second quarter economic growth.
"Exports continue to play a major role in driving the expansion, increasing in recent months at rates not seen for six years, buoyed in part by the weak euro. But it's also clear that factories are benefitting from ongoing strong demand from domestic customers.
"There's no sign of the impressive performance ending any time soon. Optimism about the year ahead has risen to the highest for at least five years, backlogs of orders are building up at the fastest rate for over seven years and factories are reporting near-record hiring as they struggle to deal with the upturn in demand. As such, the manufacturing sector is clearly in expansion mode and looks poised for continued robust growth in coming months."
9.16am BST
Newsflash: Eurozone manufacturing growth has hit a new six-year high.
9.08am BST
More good news! Greece's factory sector has returned to growth for the first time since last summer.
Do not adjust your sets: Greek manufacturing PMI is in *growth* again. First time in nearly a year. Overall eurozone at April 2011-high pic.twitter.com/aL7kZ7FcO1
9.06am BST
Boom! German factory growth has hit a 74-month high.
Germany's manufacturing PMI, which measures activity across the sector has risen to 59.6 in June, up from 59.5 in May.
"Although output growth held broadly steady and job creation eased slightly since May, the expansion in new orders accelerated further. Suppliers remained under intense pressure with input delivery times lengthening to the greatest extent since April 2011.
"Input price inflation slowed for the second month running to the weakest since November 2016, but remained stronger than the 21-year survey trend level. Output prices increased at the sharpest rate since February."
8.55am BST
France's factories have posted another month of solid growth too, as demand and business confidence rose.
The French manufacturing PMI has jumped to 54.8 in June, from 53.8 in May - that shows a faster expansion, but not quite as pacy as expected.
*FRANCE JUNE MANUFACTURING PMI RISES TO 54.8; PRELIM. 55
"A strong degree of business optimism was also a key feature of the latest survey, perhaps buoyed by reduced political uncertainty following the conclusion to June's legislative elections and robust economic conditions in the Eurozone."
8.51am BST
Just in...Italy's factory sector picked up last month, thanks to a surge of new orders.
Italian Manufacturing PMI: 55.2 vs exp 55.3; prev 55.1
A strong end to the quarter with a pickup seen in output & exports pic.twitter.com/cNtX3AMqMj
8.50am BST
European stock markets are rallying this morning, helped by the pickup in Chinese factory growth last month.
The main indices have all risen in early trading. London's FTSE 100 has jumped by 42 points, or 0.6%, to 7355.
It's manufacturing Monday, and with China's Caixin PMI just about climbing out of contraction territory the European indices got off to a strong start.
Having neared 2 month lows last Friday there was plenty of room for the FTSE to bounce back this morning and bounce back it did, rising more than half a percent to sit just below 7350. The thrust of the UK index's growth stemmed from the commodity sector, itself boosted by the latest 0.5% jump from Brent Crude, the black stuff now trading at $49 per barrel for the first time in around a month.
8.32am BST
Breaking: Spain's factory data has missed forecasts, but still shows solid expansion.
The Spanish manufacturing PMI has come in at 54.7, down from May's 55.4.
"June saw a continuation of the recent strong performance of the Spanish manufacturing sector, with growth remaining elevated. The first half of the year has been impressive, with no real sign among the latest data that rates of expansion are running out of steam heading into the second half.
"One thing that is on the wane is inflation, with both input costs and output prices rising at the weakest rates since late-2016. This should help firms maintain competitive pricing, enabling them to take advantage of improving customer demand."
Spanish manuf PMI headline index down but sill no sign of cooling. Output, new orders up; employment at near-record high.
8.28am BST
The Russian PMI is a worry.
Growth in Russia's manufacturing sector almost fizzled out last month, with its PMI dropping to an 11-month low of 50.3, from May's 52.4.
8.17am BST
Norway's manufacturing base just posted its strongest growth in five years, according to its PMI report:
#Norway
Manufacturing #PMI reaching the highest level since March 2012 => fine details => points to further acceleration in manufacturing! pic.twitter.com/XzwVxbOhwD
tEconomics: #Sweden Swedbank Manufacturing PMI at 62.4 https://t.co/dWPLvAZMek pic.twitter.com/DnA8UikulB
$SEK: Swedish PMI better than expected, helped not only by a robust macro momentum in Europe, but also by delayed krona weakness pic.twitter.com/oP3b3TSkkV
8.11am BST
Other Asian countries have followed China's lead, and reported manufacturing growth last month.
Reuters has the details:
Factory Purchasing Managers' Indexes for South Korea, Japan,Taiwan Vietnam and India all remained above the 50-mark that separates contraction from expansion on a monthly basis.
And all of these indexes, except for Japan and India, rose from the previous month, indicating an acceleration in expansion.
8.04am BST
Metal prices have jumped this morning, following the news that Chinese factories returned to growth last month. Aluminium and copper are both rallying.
$DBB BASE METALS: Aluminum Extends Rally as China PMI Beats Estimates$HG_F #copper #aluminium pic.twitter.com/y18QSVk94v
8.00am BST
China got PMI Day off to a decent start, by reporting its fastest factory growth in three months.
"The manufacturing sector recovered slightly in June, but based on the inventory trends and confidence around future output, the June reading was more like a temporary rebound, with an economic downtrend likely to be confirmed later."
7.45am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
We're getting a healthcheck on the world's factories today, as data firms release their monthly Purchasing Managers Index reports.
Happy PMI day!
With more hawkish noises coming from certain quarters of the Bank of England's Monetary Policy Committee in recent days, markets are likely to be especially sensitive to the PMI surveys this month.
As they were conducted mid-month in June, it should be expected that the results incorporate businesses' views about the impact of the indecisive general election result on 8 June.
Looking ahead, highlights include Eurozone, UK and US mfg PMIs, US ISM and construction spending.
Continue reading...