UK economy to avoid 2019 recession; Trump tweet lifts markets - as it happened
The latest UK GDP report shows that the economy will probably avoid sliding into recession this autumn
- Latest: Trump says he'll meet China's Liu He tomorrow
- Tweet lifts stock markets
- Newsflash: UK GDP fell 0.1% in August...
- ...but 0.3% quarterly growth means recession looks unlikely
9.58pm BST
Finally, the Dow Jones industrial average closed a neat 150 points higher tonight, following the news that Donald Trump would meet with China's trade envoy on Friday.
And the president is getting the market pumped again in after hours trading, saying the talks with China's delegation in Washington went "very well".
President Trump: China Talks Went Very Well Today, Will Continue Tomorrow
Futures pop higher:#DOW 26592 +0.32%#SPX 2948 +0.29%#NASDAQ 7769 +0.32%#USDJPY 107.93 +0.42%#AUDJPY 72.9920 1%#USDCNH 7.1052 -0.47% https://t.co/mNrv8sWFTb
8.12pm BST
America's Information Technology Industry Council (ITI), which represents the tech sector, has called on president Trump to end the trade war by dropping tariffs on Chinese goods.
TI President and CEO Jason Oxman issued this statement:
On Friday, President Trump has another opportunity to end this unnecessary and costly trade war with China when he meets with Vice Premier Liu He. ITI and our members support a trade agreement that puts an end to China's unfair trade policies and costly tariffs that are hurting American consumers, already struggling with growing economic disparities and stifling business large and small.
As this trade war has raged on for over a year, we believe there are tools to address China's unfair behavior without tariffs and we strongly encourage the U.S. and China to address these long-standing issues. Failure to come to an agreement will be costly to the global economy and detrimental to the future of emerging innovation within the tech industry."
8.10pm BST
Wall Street is holding onto its earlier gains, as traders cling onto hopes of progress at the trade talks in Washington.
STOCKS NOW:
- Dow up 116.49
- Nasdaq up 32.38
- S&P up 14.99
https://t.co/w9QKLC73AB
5.02pm BST
Trade war optimism had also pushed the Dow Jones industrial average up by 214 points right now.
That's a gain of 0.8%, to 26,560 points, at noon New York time.
4.43pm BST
Britain's FTSE 100 index of blue-chip shares has closed 19 points higher at 7,186, up 0.3%.
Optimism over the trade talks lifted shares, although the strengthening pound held back multinational with large overseas earnings.
Traders are a little more hopeful about the US-China trade talks after President Trump tweeted he will meet Liu He, China's Vice Premier, tomorrow. In a continuation of the back and forth on the trade front, Mr Trump tweeted China 'wants to make a deal, but do I?'. The fact Mr Trump will meet with Liu He sends a positive message, which is why we have seen an uptick in sentiment. The gulf between the two sides is wide, but a willingness to sit down and negotiate has injected some hope in the markets.
3.48pm BST
Donald Trump's trade tweet came as two Republican donors with links to the president's lawyer, Rudy Giuliani were reportedly arrested on campaign-finance charges.
Our US Politics Live blog is tracking all the action.
Meanwhile, Trump announced over Twitter that he would meet tomorrow with the Chinese vice premier to engage in trade talks.
The vice premier, Liu He, is leading China's negotiating team as the two countries attempt to wind down the tit-for-tat sanctions that have escalated in recent months.
Related: Republican donors tied to Rudy Giuliani reportedly arrested on campaign-finance charges - live
3.39pm BST
Never underestimate the power of a Donald Trump tweet.
All the main US stock indices, and nearly every European market, are solidly higher since the president tweeted that he'll meet Chinese vice-premier Liu He tomorrow.
Despite a gloomy start to the week, there have been enough titbits in the last couple of days to keep hopes of trade progress alive. First there was Wednesday's claim from a Chinese official that Beijing is open to a 'partial trade deal' in order to limit the negative impact to the country's economy.
And then, this Thursday, Donald Trump tweeted that he would be meeting with Vice Premier Liu He at the White House on Friday - a step up from Washington's usual high level negotiating team of Robert Lighthizer and Stephen Mnuchin, and perhaps a sign that something more substantial could come out of the talks.
3.23pm BST
Sterling is pushing higher, after Boris Johnson and Leo Varadkar issued a joint statement they can see a pathway to a possible Brexit deal.
The leaders of the UK and the Republic of Ireland have spent several hours talking today, at a manor house in Merseyside.
Here's our joint statement following my meeting with @BorisJohnson in Cheshire this afternoon pic.twitter.com/RxjF9qFte8
Sterling roofing as UK and Irish PM say there is a pathway to a possible deal#GBP +0.24% against other currencies#GBPUSD 1.23865 +0.43%#EURGBP 0.89513 -0.21%#GBPAUD 1.80302 +0.38%#GBPJPY 133.805 +0.34%#GBPCAD 1.6385 +0.57%#GBPCHF 1.22394 +0.19%
Related: Brexit: Boris Johnson and Leo Varadkar 'agreed they could see pathway to possible deal' - live news
3.15pm BST
Here's my colleague Richard Partington on today's GDP report:
Britain looks on track to avoid a recession despite mounting Brexit uncertainty after official figures showed an unexpectedly strong jump in economic growth over the summer.
The Office for National Statistics said gross domestic product (GDP) had risen by 0.3% in the three months to August, beating the forecasts of City economists, helped by the strength of the services sector and a boom in TV and film production across the country.
Related: UK looks likely to avoid recession despite Brexit chaos
3.05pm BST
The news that Donald Trump and Liu He will (apparently) meet at the White House tomorrow is pushing shares higher.
Investors see it as a positive development, which could lead to at least a 'partial trade deal' (one that leaves trickier issues unresolved).
US futures flying on these comments (again):#DOW 26480 +0.52%#SPX 2934 +0.54%#NASDAQ 7734 +0.60%#RUSSELL 1491 +0.84%#FANG 2569 +1.07% https://t.co/LogY0ebRWb
3.01pm BST
Donald Trump has just tweeted that he'll meet Liu He on Friday at the White House.
That could be an encouraging sign, suggesting that the Chinese delegation won't be leaving early (as sources had hinted earlier this week).
Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.
2.49pm BST
The New York stock exchange has opened very cautiously, as investors await developments from the US-China trade talks.
The Dow Jones industrial average has gained just 3 points, or 0.012%, to 26,349. The S&P 500 and the tech-focused Nasdaq index are equally subdued.
If we don't see a complete collapse in trade talks, the bullish case for US stocks remains in place as the US economy is still likely to see modest growth and the Fed is unlikely to raise rates over the next couple of years as inflation will probably not rise above their target over the next year.
2.12pm BST
Over in Washington, Chinese and US officials are sitting down for a new round of negotiations over the trade war.
China's vice-premier Liu He has been just greeted by US trade representative Robert Lighthizer and treasury secretary Stephen Mnuchin.
USTR Lighthizer, Liu He, and Secretary Mnuchin smile for cameras as trade talks kick off. pic.twitter.com/fSBFpc09QC
U.S. China trade talks about to start Treasury Secretary Mnuchin just arrive - he's looking forward to the talks pic.twitter.com/kVWTNTOI8h
1.58pm BST
Just in: US inflation was weaker than expected last month, potentially bolstering the case for an interest rate cut next month.
American consumer prices were unchanged month-on-month in September, below the 0.1% expected. On an annual basis, prices rose by 1.7%, below the 1.8% expected.
#US core #CPI down to +0.1 MoM in Sep from previous +0.3% and less than exp +0.2%; CPI 0.0%, less than exp +0.1%, hinting a more dovish stance by the #FederalReserve
Initial Jobless Claims to 210K, less than expected 215K#EURUSD rises to 1.1030@graemewearden pic.twitter.com/SapF6tecQk
1.23pm BST
Brexit uncertainty may not prevent a bidding war for perhaps the most famous hotel in the world - The Ritz.
"A hotel of this size and prominence being for sale will not only attract significant attention in the UK but also worldwide. You would expect a pool of 10 or so ultra-high net worth individuals entering a bidding process. Whether 800m is a true reflection of the asset's value will be a potential hurdle to the sale and achieving that sale price - each bidder will carry out a rigorous financial due diligence process.
However, given it will be classed as a 'trophy asset', buyers might not be put off by a financial performance that doesn't reflect the sale price. Whether it's an inflated price or not, this should not be seen as an indication of the buoyant hotel market in the UK in a wider context, primarily because the Ritz is almost a "one-off""
1.22pm BST
Reasonable @NIESRorg forecast shows UK economy pottering on at a sluggish underlying growth rate of roughly 0.3% a quarter
Just as Q1 was artificially high, Q2 artificially low, Q3 looks likely to be artificially high too pic.twitter.com/9Q1sgFCY1Q
1.01pm BST
Newsflash: The European boss of Japanese carmaker Nissan has warned that a no-deal Brexit would threaten the future of its entire EU operations.
Speaking at Nissan's car plant in Sunderland, Gianluca de Ficchy said that moving to WTO tariffs would be "unsustainable" for the company, as it would make its vehicles uncompetitive.
NEW: Nissan Europe chairman Gianluca de Ficchy has said a no-deal Brexit would put its entire business model in Europe "in jeopardy" and that it "won't be sustainable".
Asked about the future of Nissan's Sunderland plant - the biggest car plant in the U.K - De Ficchy said the firm wouldn't rush to decisions but would also need to act swiftly if WTO tariffs were imposed overnight.
De Ficchy said the firm was well prepared operationally for "a crisis situation" but that "the first thing we need to have is clarity," adding: "My message is that today as a business we do not have a clear understanding on the future evolution of the Brexit discussion."
12.38pm BST
The NIESR thinktank has crunched today's GDP data, and concluded that Britain will indeed avoid a recession this year.
They expect the UK post growth of 0.5% in the third quarter of 2019. That would reverse the 0.2% slump recorded in April-June, avoiding two consecutive quarters of contraction (a technical recession).
"Despite better than expected GDP data, the underlying pace of growth in the United Kingdom is slow. The strongest source of private sector demand is household consumption, driven by real wage growth, but this is not sustainable without a pick-up in productivity growth, and this seems unlikely in the near term."
11.50am BST
My colleague Sean Farrell is at the unveiling of the Turner 20 note -- and reports that Mark Carney fielded questions on the UK economy, the outlook for inflation and interest rates, and his own future.
"The data is fairly volatile at the moment influenced by a number of Brexit related effects.
"If you cast your mind back to our August report we expected 0.2% for Q3. We have one month to go. The underlying pace of growth is a bit softer than that."
"That is a question for the government. As the chancellor indicated in the past few days " they felt they would be on track. We will await the decision of the government at the appropriate time.
The government is focused on a couple of big issues. There is no reason that question would necessarily be asked " There is no need to speculate. There is plenty of time."
"As you know, inflation has just come down below 2% and the currency remains more volatile than usual because of the relatively wide range of Brexit outcomes that could transpire. The MPC will manage policy to balance the need to bring inflation back to target either from below or above by supporting this economy.
In more dramatic Brexit outcomes we will do whatever we can to support growth but I would remind in that regard that much of the flexibility that the bank has is the responsibility of other committees within the Bank, [especially] the FPC."
11.16am BST
Mark Carney, the governor of the Bank of England, says today's GDP report is consistent with a picture of "soft underlying growth".
Carney also warned that the pound is more volatile than usual due to Brexit uncertainty, adding that the Bank will do whatever it can to support growth if there is a disorderly Brexit.
Related: New 20 note featuring JMW Turner revealed by the Bank of England
10.56am BST
0.1% contraction in UK GDP in August according to @ONS - but 3 month rolling growth rate picks up to 0.3%
Analysts predicting that Q3 (July-Sep) will be positive, meaning UK would avoid recession after 0.2% Q2 fallhttps://t.co/lPBsg5ihra pic.twitter.com/k56smlqDZ2
10.51am BST
Brexit uncertainty and the US-China trade war are both hurting British industry.
Fhaheen Kahn, economist at Make UK, the manufacturers' organisation, explains:
"We are 21 days away from the UK leaving the EU and today's data shows that manufacturing is right in the eye of continued economic uncertainty. There is now a potent cocktail facing the sector of trade wars, a synchronised global downturn in major markets and political chaos which shows no signs of ending.
"The majority of sectors declined with pharmaceuticals and electrical equipment being hit especially hard and vacancies in the sector are also falling rapidly. So long as the current uncertainty persists manufacturing looks as far away as ever from returning to pre-financial crisis levels."
10.39am BST
A new round of Brexit stockpiling by nervous businesses and consumers should keep the UK out of recession.
Yael Selfin, chief economist at KPMG UK, says:
"Despite the contraction in GDP in August, the risk of the UK economy falling into a technical recession is still remote, due to strong growth in July. Also a potential new round of stockpiling will likely help boost GDP growth in September and October.
The latest figures are still a cause for concern however, especially as most of the fall comes from the manufacturing sector, which is particularly vulnerable to an adverse Brexit outcome."
10.22am BST
ING economist James Smith predicts that Britain will probably avoid recession in 2019 despite a gloomy August.
He writes:
UK GDP contracted by 0.1% in August, suggesting there is very little to cheer about in the UK economy at the moment.....
That said, the economy will most likely avoid a near-term technical recession. Consumer activity is continuing to grow, even if confidence remains fairly depressed. Shoppers appear to have been less fazed by the ups-and-downs of the Brexit process than businesses.
Still too early to be pencilling in a UK rate cut, we reckon, despite these latest gloomy GDP figureshttps://t.co/3rODqIm2xQ
10.15am BST
Sky News' economics editor, Ed Conway, agrees that Britain appears to be dodging a recession - but we'll only know for sure in a month's time.
UK economy contracts by 0.1% in Aug. Bit worse than expected. But July GDP growth revised up from 0.3% to 0.4%. At a glance it looks like the UK might have avoided recession. But much now depends on the final GDP figs for Q3, which we get in early Nov https://t.co/dwZCagVEep
UK GDP grew by 0.3%q/q in the 3 months to August. Main contributions came from the information & communications (0.1%) and professional services (0.11%) sectors. Manufacturing still the biggest drag (-0.1%). pic.twitter.com/RdVoaA5zcZ
Another better-than-expected U.K. GDP report. August's 0.3% 3m/3m% growth rate bettered the 0.1% rate expected by the consensus. Momentum in the services sector still in tact, despite the Brexit fiasco. Still no "hard" data supporting the case for the MPC to cut Bank Rate pic.twitter.com/rQ4LflScUq
Lights, camera, action: spike in tv/film production drives services growth & enables 0.3% GDP growth in 3 months to Aug - sparing uk from recession for now
10.02am BST
I've dug through today's growth report to find the main charts showing how the UK economy will probably avoid a Brexit recession, despite stumbling in August.
This shows how rolling three-month growth took a nasty tumble at the start of the summer, but has since recovered:
9.52am BST
Britain's film and TV production industry boosted growth in the last three months
The Office for National Statistics' head of GDP, Rob Kent-Smith, explains:
"Growth increased in the latest three months, despite a weak performance across manufacturing, with TV and film production helping to boost the services sector."
9.45am BST
Britain's services sector provided the bulk of the growth, as usual.
The ONS reports that services GDP grew by 0.4% over the last quarter, driven by the "professional, scientific and technical sector".
9.39am BST
Although August was weak, July and June were stronger than expected.
The ONS has revised July's growth up, from 0.3% to 0.4%. June has also been nudged up to +0.1%, from zero.
9.31am BST
NEWSFLASH: Britain's economy contracted by 0.1% in August, according to the Office for National Statistics' latest growth report.
That's a little weaker than expected, and the first monthly contraction since April.
9.27am BST
Former UK chancellor Philip Hammond has warned Brexiteers that their dreams of striking new free trade deals once Britain has left the EU don't add up.
In an interview with the Daily Telegraph, Hammond explains that such deals would have "very limited" economic value, and certainly wouldn't compensate for the loss of tariff-free, frictionless trade with the EU.
EXC: So. @PhilipHammondUK has finally said it - the entire 'bucaneering Britain' #Brexit narrative is based on a fallacy.
The much anticipated free trade deals don't outweigh costs of barriers to trade with EU from #Brexit 1/Thread
Full interview: https://t.co/S3pqTDr0eT"
Think about that for a sec.
The whole row over the backstop and quitting the Customs Union is so we can win the right to make ourselves poorer.
So says the for Chancellor. They have "very limited" economic potential. /2 pic.twitter.com/VNwwhd3Na4
As you'd expect from 'Spreadsheet Phil' he's not making it up - he's run the numbers. (See research by LSE, HMT, @jdportes and others).
They are mad:
UPSIDE from FTAs all FTA is less than 0.5% additional GDP by 2030
DOWNSIDE of Canada minus deal? Negative 4-7% 'lost' GDP /3 pic.twitter.com/0so5wnAfez
9.12am BST
European stock markets have just dropped smartly into the red, after China launched another broadside at America.
Beijing's foreign ministry accused Washington of 'smearing China' over its crackdown in Xinjiang, by blacklisting companies and refusing to issue visas to officials.
Beijing said on Thursday that comments by U.S. Secretary of State Mike Pompeo accusing China of human rights violations in its treatment of Muslims constituted a smear against China.
Foreign Ministry spokesman Geng Shuang made the comments at a daily briefing Thursday. He did not mention Pompeo in particular.
8.54am BST
Slowing economic growth and weak trade haven't stopped the rich spend-spend-spending, if the latest results from Moit Hennessy - Louis Vuitton are any guide.
LVMH, the world's leading luxury products group, recorded a 16% increase in revenue, reaching a 38.4 billion in the first nine months of 2019. Organic revenue grew 11% compared to the same period of 2018.
Learn moreaihttps://t.co/TMHcp0CXrF#LVMH pic.twitter.com/A8ffRC62Gv
8.38am BST
That FT story about divisions at the European Central Bank over QE just lifted the euro to a two-week high.
Euro breakout above 1.10 - cleared the trend line resistance in green here and went for it - nice setup. Resistance now at 1.1020 pic.twitter.com/RWtz3OXnci
8.27am BST
Sterling just slipped to a one-month low against the euro.
It touched a1.1105 for the first time since early September, meaning it has lost 2.3% against the euro in the last three weeks.
8.00am BST
Germany's economy is also struggling, compounding the risks to the UK economy.
New data show that German exports slumped by 3.9% year-on-year in August, the worst performance this year, with imports falling by 3.1%.
Based on provisional data, the Federal Statistical Office (Destatis) also reports that German #exports decreased by 3.9% and #imports by 3.1% in August 2019 year on year. https://t.co/WCyTEEbiGE pic.twitter.com/Cd8YXqszRa
7.38am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Two of the City's big fears - a Brexit-induced recession and a full-blown trade war - are in the spotlight today.
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