Haldane warns inflation heading towards 4%; Robinhood to pay $70m penalty; chip shortage hits factories – as it happened

Graeme Wearden

from on 2021-06-30 18:51 (#5KPKS)

Rolling coverage of the latest economic and financial news

Latest: FINRA hits Robinhood with $70m penalty
Haldane warns against letting inflation expectations rise
Predicts inflation nearer 4% than 3%' by end of this year
Faster rate rises would be a very nasty surprise' to some households, firms, and governments
Haldane: Dangerous moment for inflation targeting regime

Earlier:

7.51pm BST

Time to wrap up... here are today's stories:

7.50pm BST

On Robinhood's $70m penalty from FINRA, the Wall Street Journal says:

The enforcement action is a blow to the fast-growing online brokerage, which was launched in 2014 and has won over users with commission-free trades and its sleek mobile app.

The company took on millions of new customers and attracted more scrutiny this year as many investors accessed Robinhood to speculate on so-called meme stocks such as GameStop Corp. and AMC Entertainment Holdings Inc. Its forthcoming initial public offering is one of the most anticipated of the year.

The FINRA sanctions remove one of the major black clouds hovering over Robinhood ahead of what could be a blockbuster initial public offering for the startup. Despite a series of public relations nightmares, Robinhood filed confidentially for an IPOin March. The offering could allow Robinhood to capitalize on its torrent growth and record high stock prices.Massachusetts wants to pull the plug on Robinhood

But Robinhood is still facing scrutiny from regulators and politicians.In particular, Gary Gensler, the chairman of the Securities and Exchange Commission, has repeatedly expressed concerns about the inherent" conflicts of interest that exist in the payment-for-order flow business model used by Robinhood and other brokerages that don't charge commissions.

In response to Finra's action, the company said: Robinhood has invested heavily in improving platform stability, enhancing educational resources, and building out our customer support and legal and compliance teams. We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratising finance for all."

The penalties come as Robinhood plans a stock market listing to capitalise on a period of explosive growth. The broker dealer has become synonymous with the rise of retail day trading since the start of the pandemic and the boom in meme stock" trades. It has more than doubled the number of users on its platform in the past year, from 13m at the end of March 2020 to 31m currently, according to Finra.

7.30pm BST

Retail trading platform Robinhood has been ordered to pay more than $70m in penalties for its systemic supervisory failures" and the significant harm suffered by millions of customers".

Wall Street regulator, the Financial Industry Regulatory Authority, has announced it was fining Robinhood $57m, and ordering it to pay $12.6m plus interest in restitution to its customers.

This action sends a clear message-all FINRA member firms, regardless of their size or business model, must comply with the rules that govern the brokerage industry, rules which are designed to protect investors and the integrity of our markets.

Compliance with these rules is not optional and cannot be sacrificed for the sake of innovation or a willingness to break things' and fix them later"

Robinhood is being ordered to pay about $70 million for harming millions of customers. It's the largest penalty ever imposed by Wall Street's self-regulator. https://t.co/5mdpAuKIrw

whether customers could place trades on margin, how much cash was in customers' accounts, how much buying power or negative buying power" customers had, the risk of loss customers faced in certain options transactions, and whether customers faced margin calls.

Robinhood's inability to accept or execute customer orders during these outages resulted in individual customers losing tens of thousands of dollars, and FINRA is requiring that the firm pay more than $5 million in restitution to affected customers.

Robinhood to pay $70 million for outages and misleading customers in the largest-ever FINRA penalty. Here's what you need to know. https://t.co/wPoH5XPc7C

6.09pm BST

Over to Danni Hewson, financial analyst at AJ Bell, for a summary of the day:

As leaving speeches go Andy Haldane's was a doozy. His warnings about inflation may have added to investor concerns but they certainly weren't the only thing troubling London markets today. Both the FTSE 100 (-0.7%) and 250 (-0.75%) seemed to be wrestling with the peculiar impasse the country seems to be at. Are we on track for 19 July or not? Are support measures coming to an end too quickly? Is recovery about to hit a great big wall?

Looking at the mixed bag of risers and fallers you'd be forgiven for scratching your head on which way investors are leaning. The Compass Group (+1.9%), British Land (+0.3%) and Whitbread (+0.15%), all potential Freedom Day" winners are up. Cineworld (-4.6%) and SSP (-1.9%) which you would expect to be similarly positioned, both down.

5.59pm BST

European stock markets also posted their fifth monthly rise in a row, despite a late stumble.

The Stoxx 600 dropped by 3.5 points, or 0.77%, today to end at 452.84 points.

5.21pm BST

The UK's blue-chip stock index has posted its longest run of monthly gains since 2016, but it was a close-run thing.

The FTSE 100 index fell by 50 points today, closing down 0.7% at 7037 points.

5.10pm BST

Back in the US, home sales have jumped much more than expected last month.

Pending Home Sales rose by a rapid 8% on a monthly basis in May following April's contraction of 4.4%, the US National Association of Realtors reported.

US Pending Home Sales (MoM) (May) announced.

Forecast: -0.8%

Actual: 8.0%#pendingsales #america #eurusd pic.twitter.com/WXjEwcbKPz

Another big econ surprise - May pending home sales +8% vs. an expected drop of -1%. This even as US property values rose +14.6% in April (according to S&P CoreLogic Case-Shiller Index) - largest gain since 1988.

4.37pm BST

Professor Costas Milas of the University of Liverpool's Management School has kindly got in touch, to say that Andy Haldane makes a good point about the risk of inflation.

Back in November 2019 (pre-pandemic, that is), and under the assumption of the base rate reaching 0.5% in 2021 Q2 as well as 445bn of QE, the Bank was predicting the level of CPI to be only 0.65% above its current level (i.e. the April and May average).

Almost certainly, the June CPI figure will be big enough to eliminate this difference. So there is a reasonable question to ask: if the Bank was happy' to predict this level of CPI with a higher than the current interest rate of 0.1% and half of the current QE, should it not start taking action or, at least, signalling action in light of its current prediction that inflation will exceed 3% temporarily'? Incidentally, Ancient Greeks used to say: Nothing is more permanent than the temporary'...

4.36pm BST

The FT's Chris Giles says Andy Haldane has left his job on Wednesday with a blast at his fellow central bank rate-setters for underestimating the growing risk of a dangerous inflation surge in the UK.

He also flags up that the departing BoE chief economist suggested that other central bankers may come round to his way of thinking...

Speaking about other MPC members and central bankers facing rising inflationary pressure in other economies, Haldane said people's minds are moving and the reason . . . is because the data is moving".

I would say watch this space pretty closely given how quickly the ground is moving beneath our feet."

4.20pm BST

Although the gold price has nudged up a little today, it is still poised for its worst month since November 2016.

Spot bullion has fallen from $1,906 per ounce at the end of May to $1,764 per ounce at present, having hit a 10-week low yesterday.

Gold Heads for Worst Month Since 2016

Rise in U.S. stocks to a fresh record and a resurgent dollar have weighed on gold. Investors are also assessing new travel restrictions in Europe amid concerns about delta variant, which helped spur a re-think of reflation trade.

~BBG pic.twitter.com/puXLm7KpSE

The dollar gained on Wednesday, headed for its biggest monthly rise since November 2016, supported overall by a surprisingly hawkish shift in the U.S. Federal Reserve's rates outlook at a meeting early this month, as well as concern over the spread of the Delta coronavirus variant.

3.49pm BST

While some UK households are, as Andy Haldane says, feeling optimistic and keen to spend again... other families are enduring a worrying time as the pandemic continues to loom over their lives.

Some working in the hospitality sector have been relying on the furlough scheme for many months to cover 80% of their wages.

Thousands of workers in the UK will suffer a steep fall in income as employers make redundancies after the furlough scheme begins winding down from Thursday, the Institute for Fiscal Studies warned.

Workers who live with higher earners will be unable to claim benefits and could see their income drop to zero should they lose their job. Families with children could lose as much as a third of their income if they are forced to rely on universal credit, the thinktank said.

3.38pm BST

In New York, the stock market has opened cautiously as investors await the next US jobs report due on Friday.

Tech stocks are lagging, though, while energy stocks, industrials and consumer-focused firms are in demand.

3.11pm BST

The UK government has announced new laws to replace EU rules on taxpayer-funded bailouts and business support, launching a subsidy system ministers say will help boost jobs and the economy.

In one of the most important pieces of post-Brexit legislation to date, the subsidy control bill will replace EU state aid rules that require its members to seek approval for government support for businesses.

3.10pm BST

The outsourcing company Serco predicts its profits will jump 50% during the first half of the year because of its continued work on Covid-19 contracts for various governments, including the UK's test-and-trace service.

The firm expects its underlying trading profit for the first six months of 2021 to reach between 120m and 125m, more than 50% higher than a year earlier.

2.48pm BST

Speaking of football...

2.38pm BST

Andy Haldane also warns that the UK risks a Minsky Moment for monetary policy, if inflation expectations shift upwards in the financial markets, and among businesses and households.

In his speech today, he says:

By the end of this year, I expect UK inflation to be nearer 4% than 3%. This increases the chances of a high inflation narrative becoming the dominant one, a central expectation rather than a risk. If that happened, inflation expectations at all maturities would shift upwards, not only in financial markets but among households and businesses too.

We would experience a Minsky Moment for monetary policy, a taper tantrum without the taper.

Entering fast and large, and exiting slow and small, puts a ratchet into central bank balance sheets. With large or frequent enough future shocks, this strategy is not time-consistent: either the stock of Government assets to buy is exhausted or, more likely before that, debt-serving concerns begin to contaminate perceptions of the future monetary stance. The latter is what academics call fiscal dominance. An asymmetric QE response function nudges us towards that fiscal danger zone and adds to concerns about the erosion of monetary policy independence. Or that, at least, is the risk.

It is these two points, taken together, that lead me to believe that this is the most dangerous moment inflation-targeting has so far faced. The answer is not to change the regime itself. Indeed, I can think of few poorer times to do so. In my view it does, however, call for immediate thought, and action, on unwinding the QE currently being provided, given the state of the economy and central banks' balance sheets. The Bank's on-going review into the process and sequencing of QE unwind is a welcome opportunity to do so.

Thirty Years of Hurt, Never Stopped Me Dreaming

In a speech released on his final day, Andy Haldane, the departing chief economist of the Bank of England, has warned that central bankers need to act to keep inflation in checkhttps://t.co/ks4qGRj29U pic.twitter.com/dqZQC8nuTw

2.12pm BST

Andy Haldane has been warning about the risks of rising inflation for months, but Bloomberg says today's intervention is the most strident' yet.

Haldane, leaving his post on Wednesday, used his last speech to urge his colleagues to shift their attention away from stimulating the economy and toward controlling the pace of price increases. Delaying action, he said, will require bigger action later.

This would leave monetary policy needing to play catch-up to re-anchor inflation expectations through materially larger and/or faster interest rate rises than are currently expected," Haldane said in a text released by the BOE on Wednesday.

Andy Haldane used his last speech as @bankofengland chief economist to warn that CPI inflation could get close to 4% by Christmas

Says "people's minds are changing" in central banks because of recent inflation data...

Via @economics https://t.co/7FXWexwK6N

1.50pm BST

Andy Haldane, the departing chief economist of the Bank of England, has warned that central bankers need to act to keep inflation in check before the cat is out of the bag'.

In a speech released on his final day at the Bank, Haldane predicts that by the end of this year, UK inflation will be nearer 4% than 3%" -- which would be rather higher than the BoE's target of 2%, and up from 2.1% last month.

This would leave monetary policy needing to play catch-up to re-anchor inflation expectations through materially larger and/or faster interest rate rises than are currently expected.

Economics 101 tells us what happens when too much money chases too few goods, and that what we're now seeing.

As soon as the cat is out of the bag, getting the cat back into the bag is jolly hard work.

It's only secured, then, by central banks, monetary policymakers having to playing catch-up, and having to raise rates somewhat faster, or somewhat further, than people were expecting.

That would be a very nasty surprise to a great many mortgage holders, a great many corporate borrowers, and indeed a great many governments.

Many borrowers now do not have a rise in borrowing costs in their lived experience, and that increases the chances that it would be not just a surprise, but a rather nastier surprise than we'd planned.

This feels like the most dangerous moment for that regime in its history, since 1992.

"Most dangerous point for inflation targeting in history since 1992" - Andy thinks expectations of inflation are more fragile than they have been in a long time#IfGEconomy

Now is the time to underscore the commitment to that inflation target, and reduce the fragility and expectations that I fear have picked up in the last month or two.

"Most dangerous point for inflation targeting in history since 1992" - Andy thinks expectations of inflation are more fragile than they have been in a long time#IfGEconomy

@bronwenmaddox asks how worried we should be about public debt?

Andy - orthodoxy has changed sharply over the last decade. Fewer concerns about debt stock and greater concern about how to service that debt (the cost of servicing public debt has been falling)#IfGEconomy

Andy - comes with risk, however. Debt servicing costs are now more sensitive to interest rates.

Overall public debt orthodoxy "feels more sensible now than at points in the past"#IfGEconomy

1.46pm BST

Over in the US, the pace of hiring has slowed this month, but remains solid.

That's according to private payroll operator ADP, which reports that US firms took on 692,000 people this month, down from May's 886,000 new hires.

ADP reports private-sector #payrolls grew by 692K in June, with gains across firm size and across all sectors. Gains were strong in services, especially leisure and hospitality. The labor market recovery remains robust, but payrolls are ~7 million short of pre-COVID-19 levels. pic.twitter.com/2jXYng13F2

payroll growth among the largest companies is leveling out. is this because they're often perceived to be terrible with pay and benefits? https://t.co/SQoMWg4khe pic.twitter.com/ixwZZy8cpd

11.39am BST

UK bus and coach operator Stagecoach has said it is confident about future prospects, after demand for travel fell sharply in the pandemic.

Stagecoach reported this morning that revenues dropped by around a third in the year to May 1st, to 928.2m, while statutory pre-tax profits fell to 24.7m from 40.6m.

We remain confident that there is a strong and positive future for public transport as we carefully follow the roadmap out of the pandemic. Passenger volumes are growing, with demand from fare-paying passengers so far recovering more strongly than demand from concessionary passengers.

We see good long-term prospects for the business and we are continuing to invest to support our long-term growth.

Stagecoach scraps dividend as pandemic hits bus services https://t.co/1gIjowngqs pic.twitter.com/YwveCkZRc3

11.07am BST

The global economy faces losing over $4 trillion of GDP in 2020 and 2021 due to the crash in tourism due to the coronavirus pandemic, according to a new report from UN agency UNCTAD released today.

UNCTAD estimates that international tourism and related sectors lost $2.4trn of activity in 2020, due to direct and indirect impacts of a steep drop in international tourist arrivals.

The world needs a global vaccination effort that will protect workers, mitigate adverse social effects and make strategic decisions regarding tourism, taking potential structural changes into account,"

In this scenario, a drop in global tourist receipts of $948 billion causes a loss in real GDP of $2.4 trillion, a two-and-a-half-fold increase. This ratio varies greatly across countries, from onefold to threefold or fourfold.

Labour accounts for around 30% of tourist services' expenditure in both developed and developing economies. Entry barriers in the sector, which employs many women and young employees, are relatively low.

10.35am BST

Eurozone inflation has dropped back to the European Central Bank's target.

Consumer prices across the euro area rose by 1.9% per year, from 2.0% in May -- back to the ECB's goal of keeping inflation close to, but below 2%.

Eurozone CPI falls to +1.9% YoY in June, from previous +2.0%, below, but close to, 2.0% ECB's inflation target @graemewearden

We think eurozone inflation may rise a bit further, to reach 2.8% by the end of the year, after which it should start to come down. While oil and other commodities will become less of a driver for inflation this year, low inventories of industrial goods mean that goods price inflation will remain with us until companies have replenished their stock, which may take several months.

And in services, the current pricing pressure we are all experiencing when trying to book a staycation or visit our favourite restaurants will remain until the supply of labour in these sectors catches up with demand later in the year.

Euro area core inflation at 0.91% in June, nothing to see here. Ignore the noise in HICP data until a trend emerges in smoothed/trimmed measures. pic.twitter.com/3QmYhiEVat

Little inflation divergence across countries. pic.twitter.com/0oGVa2uJHR

CPI in the Eurozone came in as expected for June; fairly muted, as inflation in other major economies is gathering pace. However, there is a dampening impact in Europe from statistical factors.

There is no reason that inflation will not be a notable issue in Europe in the coming months, just as it is everywhere else, as the economy opens up and activity increases. The ECB will be keeping a close eye on it, along with all the other central banks."

10.18am BST

Unemployment in Germany has fallen this month, as its economy recovery gathers speed.

The number of people out of work fell by 38,000 in seasonally adjusted terms to 2.691 million, better than the 20,000 fall expected. The seasonally adjusted jobless rate remained at 5.9%.

Companies are scaling back short-time work and are looking for new staff again."

Unemployment for #Germany in June "Solid, and leading indicators signal more to come." @ClausVistesen #PantheonMacro

Interestingly and according to media reports, short-time work schemes are no longer being used to exclusively tackle the fallout from the crisis but also as a result of increasing supply chain disruption, particularly in the German automotive and shipbuilding industry.

Employment expectations in both the manufacturing and services sector have continued to improve and are approaching all-time highs quickly. With improving employment prospects and the expected strong rebound of the economy, the risk of bankruptcies and a potential second unemployment wave are decreasing.

In fact, as the economy is likely to return to its pre-crisis level before the end of the year, previous threats of surging unemployment once government support schemes end have become less frightening. In the short run, the lack of skilled workers in certain sectors could become a more pressing issue than any increase in unemployment.

Germany: Labour market almost back to pre-crisis level | Snap | ING Think - The labour market performance in June almost brings German unemployment back to its pre-crisis level https://t.co/fIswLixjsx

10.09am BST

Dixons Carphone's pre-tax profits rose by 34% in the year to 1 May as it notched up almost 5bn in online sales of electrical goods including televisions, laptops and video game consoles to consumers stuck at home during the Covid-19 pandemic lockdowns.

The retailer, which owns the Currys PC World brand, said revenues from electrical goods ordered online more than doubled year on year to 4.7bn.

10.00am BST

Here's some reaction to the news that the UK economy contracted slightly more than expected in the first quarter of 2021, while the household savings ratio was a near-record high.

Paul Dales of Capital Economics says the surge in household savings is an upside to economic recovery. It could be longer and fast than expected, if people spend this stock of excess savings:

The small downward revision to Q1 GDP growth probably won't stop the economy from rising back to its pre-pandemic peak in the coming months.

And the larger-than-expected rebound in the household saving rate increases the potential for faster rises in GDP further ahead.

The small downward revision to Q1 GDP growth probably won't stop the economy from rising back to its pre-pandemic peak in the coming months. https://t.co/AVHTfPRLCV pic.twitter.com/8xTTh1Wxow

First, the economy emerged from lockdown with a relatively solid base for growth. For sure, GDP fell 1.6% quarter-on-quarter - revised down slightly from the original estimate of a 1.5% decline - but even allowing for the boost to output in Q1 from Government spending on COVID-19 testing and vaccinations, the quarter's contraction was a far cry from the 19.6% quarter-on-quarter fall in output during the first lockdown in Q2 2020.

The second point of interest was the significant rise in the household savings ratio to 19.9%, up from 16.1% in Q4 2020. This compared with an average of 8.5% from 2010-19. Higher savings reflected a lockdown-related fall in spending, but incomes remaining flat thanks to private sector adaptation and government support. The elevated savings ratio reaffirms that households are emerging from the crisis with cash to fuel higher spending.

Business investment fell by 10.7% q/q (revised up from -11.9%) in Q1 21, as the lockdown & the running down of excess stock built up in the run up to the end of the Brexit transition period weakened investment in Q1

Business investment is now 17.3% below its pre-pandemic level. pic.twitter.com/dgVeUdbvsx

High household savings offers hope of a summer consumer spending surge

Household saving ratio (average % of disposable income that is saved) rose to 19.9% in Q1 21 - the second highest on record & up from 16.1% in Q4 20 as #thirdlockdown limited spending opportunities. pic.twitter.com/iPgp1PuEsU

The data are a reminder of the damage lockdowns wreaked on the economy, even as the UK government provided extensive fiscal support. UK GDP was 8.8% below its pre-pandemic level, one of the worst performances of the G7. A significant proportion of the fiscal support appears to have boosted the household savings rate, which remained elevated at 19.9%.

Looking forward, current economic conditions are clearly much improved but later in the year there will be a fiscal headwind as the furlough scheme draws to a close. The outlook now hinges on the success of the UK's vaccine program in keeping hospital admissions down to acceptable levels."

9.40am BST

The UK economy shrank slightly more than previously thought during the lockdown earlier this year, as families saved money at the second-fastest rate on record.

UK GDP shrank by 1.6% in January-March, updated data shows, compared with a previous estimate of a 1.5% contraction.

GDP fell 1.6% in Quarter 1 (Jan to Mar) 2021, revised down slightly from a 1.5% fall in the previous estimate https://t.co/M8ddsSX7aI pic.twitter.com/EhmaLl56OF

As a result of rising coronavirus (COVID-19) cases, various national lockdowns were introduced across the countries of the UK for most of Quarter 1. As a result, household's final consumption expenditure fell as the opportunity for selected types of spending was restricted.

Spending in restaurants and hotels fell by 37.2% on the previous quarter while transport fell by 13.9% on the quarter.

The household saving ratio grew to 19.9% in Quarter 1 (Jan to Mar) 2021.

This is the second-highest growth on record after Quarter 2 (Apr to June) 2020 https://t.co/5yMJdORj31 pic.twitter.com/lpOrUBKMOp

The UK's underlying current account deficit narrowed to 12.7 billion (2.3% of GDP) in Quarter 1 (Jan to Mar) 2021 https://t.co/C8QfQUo9nO pic.twitter.com/N4b7EffeQk

Commenting on our revised GDP figures for Quarter 1 (Jan to Mar) 2021, Deputy National Statistician for Economic Statistics @jathers_ONS said: (1/3) pic.twitter.com/q1CurBNBoM

.@Jathers_ONS continued: (2/3) pic.twitter.com/AfrF3AuLbC

Talking about transactions between the UK and rest of the world (the balance of payments) @Jathers_ONS added: (3/3) pic.twitter.com/S6j1QoJgSr

9.21am BST

In the City, the FTSE 100 index has fallen to its lowest level in over a week - pulled down by miners and travel firms.

Jet engine maker and servicer Rolls-Royce (-2.5%), mining giants Glencore (-2.2%) and Anglo American (-2%), and British Airways parent company IAG (-2%) are leading the fallers.

9.02am BST

Worryingly for manufacturers, the semiconductor shortage is unlikely to end soon.

Last month, IBM's president warned that it could take two years to catch up with the backlog of orders caused by factory closures in the pandemic, and surging demand for electrical goods from consumers in lockdown.

Every car- and van-maker is being impacted by the computer chip crisis, with some delivery times for cars lengthening from three to six months, and many new vans not expected to be delivered until 2022.

8.49am BST

The 5.9% tumble in Japan's factory output last month was much worse than expected, says Bloomberg, pointing out that analysts expected a 2.1% drop.

As well as semiconductor shortages denting car production, manufacturers of all kinds pulled back amid yet another round of restrictions to contain the coronavirus.

The deeper-than-expected drop in Japan's May industrial production reflected a hit from the extended state of emergency to contain the virus. Weaker domestic demand overwhelmed support from exports, which have remained strong."

Japan's factory output slid sharply in May, as semiconductor shortages dented car production and manufacturers of all kinds pulled back https://t.co/wAH4KKkSbH

8.30am BST

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

The global shortage of semiconductors is hurting factory growth across Asia, and feeding through to delays in car deliveries into the UK.

The [5.9%] contraction, which was the first drop in three months, was much weaker than a 2.4% fall forecast in a Reuters poll of economists. It followed a 2.9% gain in the previous month.

Manufacturers of intermediate goods, such as tires and electrical lighting of passenger cars, are taking a hit from declines in motor vehicle production.

Japan's factory output fell 5.9% in May amid pandemic and chip scarcity | The Japan Times https://t.co/6FoqsrVNdm

Factors such as chip shortages have adversely affected the development of the (automobile) industry,"

Growth is slowing in China - the official manufacturing PMI fell to 50.9 in May, while the services PMI decreased to 53.5. pic.twitter.com/hirAAfoouY

China PMI - modest easing of data continues. Downside risks to commodity bulls. pic.twitter.com/sLyQdtyjAl

China's official non-manufacturing purchasing managers' index (PMI) fell to 53.5 in June from 55.2 in May, while the official manufacturing PMI fell to 50.9 in June from 51.0 in May #China #china #PMI #manufacturer #manufacturers #services #economy https://t.co/j8Z9SItTTS pic.twitter.com/lfxNXWB5kj

China business conditions PMIs fell slightly in June with the composite PMI -1.3pts to a still ok 52.9 driven mainly by a fall in services conditions.
Manufacturing price components also fell back in June (output prices -9.2pts to 51.4)
(Goldman Sachs chart) pic.twitter.com/PQR0RlIEIj

Stories of Chinese consumers saving instead of spending have been circulating for a while now, and it seems to be showing up in the data. Logistics and chips are making their presence felt in manufacturing.

Chips and ships will be a problem for the world as a whole for some time to come, and it could be that the initial Northern hemisphere reopening spending frenzy has eased somewhat.

There remains continued uncertainty as we move in to the second-half of FY21 with potential further disruption from Covid-19, an expected realignment of used vehicle margins and the risk of both new and used vehicle supply constraints.

Whilst the extent of the impact of the well-publicised semi-conductor chip shortage is not yet clear, it is becoming increasingly apparent there is likely to be some restriction of supply during the second-half of FY21, with vehicle order times already being extended.

Source	RSS or Atom Feed
Feed Location	http://feeds.theguardian.com/theguardian/business/economics/rss
Feed Title
Feed Link	http://feeds.theguardian.com/