UK construction growth hits one-year low, as Korean tensions hit markets - as it happened

All the day's economic and financial news, as British builders are hit by concerns over the economic outlook

• Latest: Construction growth hits 12-month low
• Expert: Economic uncertainty and Brexit are to blame
• Sector slipped closer to stagnation in August

Earlier:

• Introduction: North Korea crisis hits markets again
• European equities drop, as Japan's Nikkei loses 1%
• Gold has hit a 10-month high

3.18pm BST

With the US closed for Labor Day, let's have a recap.

World stock markets have begun the week on the back foot after North Korea's nuclear test on Sunday.

#Gold extends rally to 12mth high after N Korea Nuke test. Bullion jumped to $1,338/oz, highest level since Sept27. pic.twitter.com/LinZzo1ION

Related: South Korea holds live-fire drills and warns of more launches by North

Another week, another provocation, as North Korea re-emerges as the key driver of market sentiment this morning. Weakness for Asian markets were provided a predictable precursor to a negative session in Europe, with the FTSE losing ground once more.

Unfortunately there is unlikely to be any end in sight for this current standoff with North Korea, with few options seemingly on the table to demilitarise the regime. One thing is for sure, with North Korea testing increasingly threatening weapons, the growing threat of a nuclear war is going to continue bolstering gold prices, which today hit an almost one-year high.

Markit/CIPS UK Private housing activity grew in August but infrastructure was broadly flat & commercial activity fell again.#construction pic.twitter.com/Dzqcyzs9eb

1.20pm BST

The boss of one of Britain's biggest supermarket chains has warned that food could be left to rot at the UK border after Brexit.

"If you take our fresh produce supply chains, for example, we put things on a lorry in Spain and it will arrive in a distribution centre somewhere in England, and it won't have gone through any border checks.

"Anything that encumbers that has two effects: it adds cost, and it also has a detrimental effect on freshness - if you're shipping fresh produce from a long distance, even a few hours of delay can make a material impact."

12.46pm BST

Staff from the McDonald's fast food chain have held a rally outside parliament today, to mark the company's first ever UK strike.

Here's a photo from the scene....

"It is no coincidence that the 4^th September is Labor day in the US and that for the first time McDonalds employees in the UK will take industrial action in a dispute over pay and contracted hours.

"The strike has been coordinated on Labor Day in solidarity with other workers who are in dispute against fast food giants around the world. The publicity garnered from the strike, on an important date in the US companies calendar, will signify that McDonalds can no longer guarantee peaceful industrial relations with their workers who are determined to improve conditions not only in the two stores on strike but for the rest of their allies in the Bakers, Food and Allied Workers Union (BFAWU).

11.53am BST

Today's PMI report shows that the UK building sector risks sliding into recession, warns Sam Tombs of Pantheon Economics.

More here, by my colleague Richard Partington.

Related: UK construction 'flirting with recession' as Brexit uncertainty bites

11.12am BST

This chart highlights how commercial building projects, and civil engineering work, both weakened last month:

11.11am BST

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10.57am BST

In other news, investor confidence in the eurozone has risen this month.

Sentix's barometer of investor morale beat forecasts by rising to 28.2 for September, suggesting that Brexit isn't causing much angst across the Channel.

#euroarea #Sentix rises to 28.2 in Sept, as #NorthKorea tensions and #EUR strength is not weighing on investor confidence yet pic.twitter.com/kQKsakFPNg

10.34am BST

Robert Grigg, managing director of Property Finance at Hampshire Trust Bank, blames "ongoing economic and political uncertainty" for the slowdown in Britain's building sector.

Grigg adds:

Though today's data shows residential housebuilding has bucked the trend, we still need to ensure SME housebuilders are given both government and financial support in order to build their businesses and increase the number of homes in the UK - which is essential to solving the ongoing housing crisis."

10.10am BST

This slowdown in Britain's building sector may be a warning signal for the wider economy, says Jeremy Cook, chief economist at WorldFirst.

"In stark contrast to Friday's manufacturing sentiment numbers, the construction industry is looking very down in the mouth as a result of slowing government spending, uncertainty over Brexit and risks to the UK's macroeconomic landscape.

While imprecise, this could be used as a microcosm of the UK investment picture in a post-EU referendum atmosphere."

9.53am BST

Britain's building sector is now feeling the impact of drop in orders last year, says Noble Francis of the Construction Products Association.

New construction investment fell sharply in the 2nd half of 2016 & it is clear that it is now feeding through.#construction #ukconstruction https://t.co/WGNb54zt0d

Softer UK #Construction PMI bringing soft data in line with new orders data that has been slowing since Q4 2016: https://t.co/JoY5WSiZwl pic.twitter.com/vXv3G5ouLN

9.46am BST

Duncan Brock, director of customer relationships at the Chartered Institute of Procurement & Supply, believes Brexit uncertainty is hurting the UK construction sector.

He writes:

"The sector hit a roadblock this month as purchasing activity slowed for the third month and new business wins were hard to come by. Reduced Government spending, economic uncertainty and Brexit-delayed decision-making among clients were largely to blame.

"The struggling commercial sector drove this disappointment, languishing under the pressure with the fastest drop in activity in over a year. Job creation was nothing to shout about and showed signs of a slowdown, as companies reined back additional spending.

9.40am BST

Markit's survey shows that Britain's commercial building sector is shrinking at its fastest pace since last June's EU referendum.

That's a worrying sign, suggesting that companies are cutting back on spending.

UK commercial #construction output slumped for a 2nd successive month in Aug. Bodes ill for the economy & investment https://t.co/tBaIMoWBwn pic.twitter.com/TMbwjMTVGl

9.34am BST

Breaking! Growth in Britain's building's sector has fallen to its lowest level in a year.

Markit's construction PMI, just released, has dropped to 51.1 in August - down from 51.9 in July.

Civil engineering activity was close to stagnation and commercial work dropped at the fastest pace since July 2016. Reports from survey respondents widely suggested that concerns about the UK economic outlook had weighed on the commercial development sector, with clients opting to delay spending decisions and, in some cases, scale back planned projects.

9.20am BST

Although equities are down around the globe, and gold is up, we're not looking at a major rout in the markets (yet, anyway).

The markets' reaction seems similar to when missile launches have taken place in the past; investors sell stock, rush to safe havens, assess the situation, and then buy the dips as tension eases. While stocks fell in Asia, the selloff was not massive, mainly because the nuclear test occurred over the weekend and there was enough time to digest the news.

An H-bomb is undeniably different from the previous missile launches or nuclear tests; it's a game changer for North Korea's deterrent strategy. However, the biggest question to investors remains - what's next? Will the tensions lead to negotiations, or war?

8.46am BST

Precious metals producers Randgold and Fresnillo are defying the selloff.

Both companies are up 2% this morning in London, following the jump in the gold price to a 10-month high.

8.44am BST

European stock markets have all fallen at the start of trading, as traders worry about North Korea.

Germany's DAX is leading the selloff, down 0.66%.

North Korea has further escalated the geopolitical tensions over the weekend and the US has called for an emergency meeting of the U.N council. For investors, this does not present a stable environment for investing.

8.22am BST

North Korea's latest missile test is overshadowing China's latest gathering of leading emerging economies such as Brazil, Russia and India.

That will surely irritate China's president, Xi Jinping, as the Brics summit is a key platform for Beijing's international ambitions. Yesterday, Xi warned that "incessant conflicts in some parts of the world" were threatening global piece.

Whilst he knows the US will no doubt implement further economic sanctions, this time he risks the wrath of China, the only county that could potentially strangle North Korea's economy.

North Korea carried out the nuclear test on Sunday with full knowledge that it would enrage Beijing, with the timing threatening to overshadow the BRIC summit hosted by Chinese President Xi. Yet the rogue state paid little regard to this, which is concerning as it means there appears to be little preventing Kim Jong escalating the tension further.

Related: Xi Jinping says a dark shadow looms over the world after years of peace

8.06am BST

My colleagues around the world are live-blogging the latest developments in North Korea here.

Related: North Korea nuclear test: South Korea says it expects more missile launches - live

8.04am BST

The gold price has hit its highest level in almost a year, as North Korea's latest weapons test drives investors into 'safe haven' assets.

Bullion is changing hands at $1,337 per ounce, its highest level since last November - when Donald Trump's shock election win rattled the markets.

Expect North Korean rhetoric to heavily influence the safe haven asset throughout the day as global leaders react to the latest provocations.

7.46am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Related: South Korea simulates attack on Kim Jong-un's nuclear test site as tensions increase

Financial markets are back in risk aversion mode on Monday after the latest nuclear test from North Korea on Sunday triggered the usual safe haven rush.

"Like a bad horror movie, the North Korea saga intersperses moments of calm, with occasional action to jolt you out of your chair."

Our European opening calls:$FTSE 7428 -0.14%
$DAX 12078 -0.53%
$CAC 5100 -0.46%$IBEX 10281 -0.43%$MIB 21753 -0.48%

Related: McDonald's workers to go on strike in Britain for first time