UK business activity grows at fastest pace in five years after lockdown eased - as it happened

Rolling coverage of the latest business and markets news after business activity jumped in July

• UK private sector output growth hits five-year high
• UK retail sales bounce back in June close to pre-coronavirus levels
• Coronavirus - latest updates
• See all our coronavirus coverage

3.09pm BST

2.52pm BST

DATA FLASH: US manufacturing and services PMIs for July have come in lower than forecast.

The US services sector contracted in July, with the PMI reading coming in at 49.6. While that's better than June's 47.9, it fell short of a Reuters poll which expected a reading of 51.0.

2.33pm BST

Wall Street has opened for trading and US stocks have followed European and Asian markets into the red:

2.12pm BST

With investors retreating to safe havens amid another drop in stock prices, spot gold has surpasses $1,900 per ounce for the first time since September 2011.

1.49pm BST

NEWSFLASH: British Airways owner IAG is going to issue a fresh lot of shares by September in an attempt to raise 2.5bn that will help keep it afloat amid the Covid-19 crisis, according to Reuters.

The newswire is citing several sources as saying the money will likely be raised through a rights issue, in which new shares will be offered to existing shareholders at a discount.

1.31pm BST

As experts chew over the UK PMI and retail data, research suggests the hospitality sector is just limping back to life.

Workers in the UK's hospitality sector are still suffering from a 68.9% drop in shifts being doled out, even after further loosening of lockdown restrictions in England.

1.03pm BST

More job cut announcements are coming through, but this time from Essex-based banana supplier Winfresh UK.

As a result the financial position of the company has become untenable.

It is too early to define what the long-term prospects are for the company, but we will explore all the options.

12.44pm BST

UK private sector business activity grew at the fastest pace in five years this month as the easing of the lockdown brought the economy back to life, the Guardian's Phillip Inman writes.

After the sharpest contraction in modern history during April, May and June, the economy returned to growth in July as pent-up demand from consumers and business customers led to a jump in sales and began to fill order books.

Related: UK private sector output growth hits five-year high

12.33pm BST

Approximately a third of England's public leisure centres will remain closed on Saturday as a widespread picture of financial distress among community leisure operators overshadows the long-awaited reopening of gyms and indoor swimming pools, the Guardian's Zoe Wood writes.

While privately owned chains such as PureGym, David Lloyd and Virgin Active are eager to proceed with opening plans, the charitable trusts behind the country's 2,116 council-owned sites, are being circumspect as coronavirus restrictions tip their finances into the red.

Related: One in three public leisure centres in England to remain shut as funds dry up

12.13pm BST

Time to check in with stock markets and it's a sea of red across Europe:

11.42am BST

Malaysia's ministry of finance has issued a statement on the Goldman Sachs settlement linked to its alleged role in the 1MDB scandal.

Malaysia's minister of finance Tengku Dato' Sri Zafrul Aziz said:

This settlement represents assets that rightfully belong to the Malaysian people. We are confident that we are securing more money from Goldman Sachs compared to previous attempts, which were far below expectations.

We are also glad to be able to resolve this outside the court system, which would have cost a lot of time, money and resources.

11.18am BST

BREAKING: Goldman Sachs has reached a $3.9bn settlement with Malaysia over the 1MDB scandal.

We've confirmed reports that the Wall Street lender's agreement will mean paying out $2.5bn in cash and a further $1.4bn in assets to linked to the 1MDB bonds.

11.10am BST

The owner of British Gas has ended its international expansion plans with the sale of its North American energy supply business for $3.6bn, the Guardian's energy correspondent Jillian Ambrose writes.

Centrica's shares soared by more than 22% on Friday after revealing the deal to sell off Direct Energy to US energy giant NRG Energy.

10.55am BST

Some experts are warning that PMIs are not the best way to gauge UK economic strength in the middle of the pandemic.

James Smith, ING's developed markets economist says that while PMIs are usually helpful in telling us about the level of growth in normal times, all they are telling us now is that the economy is no longer contracting (which we already knew based on May's GDP data ).

Like other survey-based data, they are calculated by netting out the number of businesses saying conditions are improving against those that say they are worsening. S

o what these latest PMI numbers tell us is that on balance, a higher proportion of firms are seeing things getting better - but it doesn't tell us much about the magnitude of that improvement.

A safety-conscious consumer, as well as the increasing financial challenge posed by rising unemployment, suggest that the overall economic recovery is unlikely to a full V-shape'.

Despite a strong recovery in retail sales during June, we don't expect the size of the UK economy to return to pre-virus levels until 2022 or later.

10.26am BST

Rhys Herbert, senior economist at Lloyds Bank, says today's wave of data is good news for the UK and provides further confirmation that economic trends are improving.

Herbert says:

Moreover, the economy may be performing slightly better than what we're seeing here.

The PMIs have so far underestimated the scale of the rebound when compared to the official data. This has been true for manufacturing, a sector that was one of the first to emerge from lockdown and consequently has had the best opportunity to build momentum.

10.12am BST

The IHS Markit/CIPS report on the UK PMI data says the readings for July are marked improvement" in business conditions across the UK.

Unsurprisingly, it's been chalked up to an increased return to work and a phased reopening of the wider UK economy.

Amidst this brightening picture, there were some winners and losers. Some parts of the economy performed better than others, both through luck with being early to reopen and good adaptation in responding to the challenges of the pandemic.

The biggest concern is that staffing levels remained disappointingly low across both sectors, as furlough schemes came to an end and redundancies started to appear.

9.40am BST

And strong figures have emerged out of the UK as well, with flash PMIs beating forecasts across the board.

For July, the composite PMI reached 57.1 compared to 47.7 in June, which was the strongest pace of growth in 61 months (or just over five years).

UK composite #PMI (a measure of changes in overall business activity) climbed further in July, to 57.1.

Like the eurozone data released earlier, we can debate exactly what these numbers mean, but they are certainly much better than most had expected...#vshapedrecovery pic.twitter.com/qhk3puQ539

9.32am BST

While the eurozone PMI readings are an encouraging sign at the start of the third quarter, there are fears that the recovery could be short-lived.

Chris Williamson, chief business economist at IHS Markit said:

The data add to signs that the economy should see a strong rebound after the unprecedented collapse in the second quarter.

However, while the survey's output measures hint at an initial v-shaped recovery, other indicators such as backlogs of work and employment warn of downside risks to the outlook.

9.27am BST

Flash eurozone PMIs are out and we have forecast-beating figures on all fronts for July.

The composite PMI output index came in at 54.8, which compares to 48.5 in June and marks the fastest pace of growth for 25 months. Economists polled by Reuters had expected a reading of 51.1.

9.06am BST

Turning back to UK retail sales, some experts are forecasting a further recovery in July following the reopening of pubs, restaurants, hotels and hairdressers in England this month.

But a fresh wave of job cuts could threaten to knock consumer spending.

The retail sector should benefit from a further significant easing of lockdown restrictions in July with pubs, restaurants, hotels and hairdressers allowed to open conditionally in England, along with a number of other leisure facilities and venues such as theme parks, cinemas, museums and galleries. The social distancing rule was also relaxed from two metres to one metre plus".

However, there is uncertainty as to just how willing consumers will be to spend over the coming months. Indeed, persistent consumer caution is seen as a significant risk that could limit the UK recovery.

Related: UK coronavirus job losses: the latest data on redundancies and furloughs

Consumers are highly likely to adopt a cautious approach to discretionary purchases given the uncertain economic environment. Consumer confidence currently remains at a relatively low level despite coming off recent long-term lows. On top of this, ongoing concerns over coronavirus may limit shopper footfall.

On a positive note, three months of net repayment of unsecured consumer debt totalling 15.8 billion over March-May has improved many households' balance sheets, which will help some consumers' purchasing ability.

8.41am BST

We've still got about 20 minutes until we get eurozone PMI figures for July, but data already out from Germany and France are showing some forecast-beating figures and suggest we're seeing a further recovery from Covid-19 lockdowns.

Germany has come out stronger than expected on both services and manufacturing PMI.

Germany Manufacturing PMI comes in at 50 exp: 48

Germany Services PMI comes in at 56.7, exp: 50.5

8.18am BST

The retail figures are doing little to support UK stocks with the FTSE 100 down 1.36% and the more domestically focused FTSE 350 down 0.6%.

Stocks across mainland Europe are also in the red:

Related: China orders US consulate in Chengdu to close as tensions rise

7.54am BST

Retailers French Connection, Naked Wines and Hotel Chocolat have reported surging digital sales as consumers turned to online channels during the nationwide lockdown.

Hotel Chocolat has said that digital sales rose over 200% in the quarter to the end of June and sales of subscriptions or recurring purchases, such as refills for in-home hot chocolate makers, grew 47%.

However, with its 125 stores across the UK closed for 12 weeks, including the key periods of Easter and Mother's Day, overall revenues fell 14% year-on-year to 45m in the six months to the end of June.

7.42am BST

As it stands, UK total retail sales are just 0.6% lower than February pre-Covid lockdown levels in February.

Retail continued to recover from the sharp falls seen in April, with overall sales now almost back to pre-pandemic levels. But there are some dramatic differences in sales across the retail industry.

Food sales continue above their pre-pandemic levels due to the closure of cafes, restaurants and pubs. Online sales have risen to record levels, and now count for 3 in every 10 spent.

7.30am BST

It looks like the retail jump was helped again by the DIY and home improvement lockdown trend.

What's interesting here is that shops dealing in hardware, furniture and appliances saw sales rebound to near-pre-lockdown levels:

In June 2020, electrical household appliances, hardware, paints and glass and furniture stores all returned to similar levels as before the pandemic as home improvements during lockdown helped boost their sales https://t.co/NIrHEvMg9D pic.twitter.com/DKoGrcrQBE

The proportion of online spending reduced to 31.8% in June when compared to the record 33.3% reported in May, but is a considerable increase from the 20.0% reported in February https://t.co/EEqkBNmiKQ pic.twitter.com/YMzTVGT7Tx

7.16am BST

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

We're starting the day off with some relatively positive news for the high street, after fresh data showed that the easing of lockdown in England last month helped UK retail sales beat forecasts in June.

Strong rebound in UK retail sales reported in June as lockdown eases. Volume of sales up 13.9 percent on May and - excluding motor fuel 1.7 percent UP on a year ago. The most positive recovery indicator for UK we have seen so far.