US factory growth hits 13-year high, but UK economy 'loses momentum' – as it happened
Britain's factories were hit by a jump in price pressures last month, dragging back growth
- Latest: US factory growth accelerates
- UK manufacturing PMI drops to 55.9
- Factory growth has slowed as price pressures rise
- Eurozone factory recovery strengthens
Earlier:
8.54pm BST
And finally.... European stock markets mostly ended the day higher, although Spain was dragged down by worries over how Catalonia's push for independence may develop.
In London, the FTSE 100 closed 66 points higher at 7,438, a rise of 0.9%. Germany's DAX gained 0.6% and France's CAC rose by 0.4%.
The Spanish stock market is suffering after the violent images and footage that were broadcasted around the world yesterday of the Catalonian independence referendum. The use of force by police officers shocked viewers around the globe, and the heightened tensions in the region have prompted investors to cash in their positions.
Opinion polls in advance of the referendum suggested that the pro-independence side were in a minority, but I suspect Madrid's actions will drive up calls for independence. The political uncertainty is weighing on their stock market, and until the situation is solved, traders will be wary.
4.40pm BST
Dennis de Jong, managing director at UFX.com, reckons the tensions gripping Britain's Conservative Party have helped to drag the pound down today.
He writes:
"It has not been a Monday to remember for the pound, and the remainder of the week poses further challenges to the UK currency.
"This morning's underwhelming manufacturing PMI reading could well spur a sell off, while Theresa May's premiership is coming under increasing scrutiny, and that's likely to leave the pound losing further ground.
Related: Theresa May vows to stay and dodges question on Johnson's future
4.40pm BST
The US economy appears to be romping ahead, if today's ISM factory survey is any guide.
Capital Economics explain:
The rise in the ISM manufacturing index to a 13-year high of 60.8 in September, from 58.8, is the latest illustration of the benefit to the manufacturing sector from the weaker dollar and strong global demand.
The index is now, at face value, consistent with GDP growth surging above 5% annualised in the second half of this year.
3.43pm BST
Over in Greece the government has tabled its first draft of the 2018 budget, in which its projects a primary surplus target of 3.5%.
"It is clear that this will be the last budget under a [bailout] program".
#Greece News: Greek Budget for 2018 Foresees Growth of 2.4%, Primary Surplus of 3.5% https://t.co/dxMcG1uyQQ pic.twitter.com/Z5zuSw3IyD
3.38pm BST
Mexico's factories also had a good September.
Activity grew at the fastest rate in 16 months, sending the Mexico manufacturing PMI up to 52.8 last month, from 52.2 in August.
3.19pm BST
The jump in US factory growth is helping to keep Wall Street at record highs today.
The Dow Jones industrial average has gained 74 points, or 0.3%, to 22,479. The rally is led by Intel, Procter & Gamble and Goldman Sachs, who have all gained 1%.
3.15pm BST
This chart from Danske Bank shows how US manufacturing has strengthened in recent months (according to ISM, anyway).
#US #ISM manufacturing at the highest level since May 2004 and also much higher than #Markit #PMI (and hard data for that matter) $EURUSD pic.twitter.com/gV9uq9vj9i
3.11pm BST
Wow! America's factory sector has posted its fastest growth in 13 years.
The Institute for Supply Management's manufacturing activity index jumped to 60.8 in September, from 58.8 in August. Any reading over 50 shows growth.
ISM index consistent with strong US GDP growth pic.twitter.com/lTFsYk3hr5
ISM: Monster growth in New Orders, Production, Employment, Supplier Deliveries, and Pricing. So freaking strong.
ISM manufacturing prices paid at highest level since 2011 pic.twitter.com/2LDvEb2GUR
US manufacturing sector growing according to latest PMI. Although reading of 53.1 means roughly 0% change in the hard output data. pic.twitter.com/PPy41tS9MD
2.52pm BST
Canada's manufacturing sector has posted another month of solid manufacturing growth.
The Canadian factory PMI has risen to 55.0, up from 54.6 in August. Factory bosses reported that output and new business growth both jumped in September, with job creation also up.
2.31pm BST
Brazil's manufacturing survey is out....and it shows that the sector expanded a little in September.
The Brazilian factory PMU came in at 50.9, matching August's level, which indicates slow but steady growth.
2.16pm BST
Sterling has just hit a three-week low against the dollar, down 1%, or 1.3 cents at $1.3265.
The pound has also shed 0.5% against the euro, to a1.128, as this morning's factory slowdown continues to weigh.
Sterling got off to a rough start during Monday's trading session after weaker than expected data from Britain's manufacturing sector, suggested that the economy could be losing momentum.
As the Tory conference gets underway sterling falls 1% vs dollar, biggest fall in 4 months (day after UK election)https://t.co/B9PvyPIVsO
1.54pm BST
Uber's UK boss, Jo Bertram, has stepped down to do something "new and exciting" instead - as the ride-hailing firm fights to retain its licence to operate in London. More here.
Uber's UK boss quits as worldwide chief flies in for London licence talks https://t.co/CvpJcqaVHz
12.58pm BST
It's Conservative Party conference week! And chancellor Phillip Hammond has tried to excite delegates in Manchester by extending the Help to Buy scheme.
Hammond announced that the government will provide an extra 10bn to the scheme, which lets people get a loan from the government to help buy a newly build house.
.@PhilipHammondUK: I can announce an extra 10bn in funding to Help to Buy to provide loans under the scheme through to 2021 #CPC17
"Reviving Help to Buy is like throwing petrol onto a bonfire.
The property market is totally dysfunctional because supply is so tightly constrained by planning rules, and adding more demand without improving the supply of houses is just going to raise house prices and make homes more unaffordable for people who don't qualify for the Help to Buy subsidy.
11.57am BST
Sterling has made a poor start to October, falling almost one cent against the US dollar to $1.3296.
The slowdown in UK factory growth last month didn't help the pound, as it has stirred concerns over the health of the wider economy.
The market never appreciates signs of a slowdown, especially when they are likely linked to the thick fog of uncertainty still surrounding Brexit.
We expect the rest of the surveys to also show signs of moderation as the UK economy enters a period of slow cooling rather than falling off a cliff.
11.53am BST
Nicholas Megaw of the Financial Times makes a good point about the PMI -- UK firms aren't receiving enough support from the weak pound.
He writes:
This month's survey showed less benefit from the pound, with fewer firms reporting a boost to overseas demand while more reported an increase in cost inflation.
Input price inflation hit a six-month high, with higher commodity prices and supply chain pressures also driving up costs.
The weak pound is pushing up costs for UK manufacturers without boosting demand as much as they'd hoped https://t.co/d1rfSl6wnf pic.twitter.com/bYd8bdhG0o
10.43am BST
Here's our economics correspondent Richard Partington on today's UK factory survey:
Britain's manufacturers slowed the pace of output in September amid a rise in production costs linked to the weak pound.
The Markit/Cips UK manufacturing PMI barometer of factory sentiment showed activity fell to 55.9 last month from 56.9 in August, as the cost of goods used in the production process increased to a six-month high.
Slowdown in UK manufacturing as weak pound raises costs https://t.co/YUap0ix9cv
10.38am BST
Over at Luton airport, passengers who hoped to fly with Monarch Airlines today have been scrambling to find alternative flights - or going home disappointed.
"We got told to go home: 'We can't help you so you may as well go home.'
"He told me I wouldn't be be able to get a flight."
10.16am BST
The slowdown in factory growth may be partly due to Brexit uncertainty.
Bosses will be reluctant to buy expensive new machinery until they know what trading conditions they will face from 2019.
"Manufacturers across a range of sectors, particularly steel and oil and gas, are cashing in on sterling's fall in the last year while the UK continues to reap the benefits of the Single Market. However, businesses are not committing to long term investments and the flip side of the weaker pound is that increased input costs are weighing down on margins.
"The promise of a transition deal has provided reassurance, but manufacturers are calling for negotiations to progress quickly on trade and EU workers' rights to settle the nerves on the availability of qualified overseas employees and new investment."
10.14am BST
We shouldn't be too gloomy about UK manufacturing.
The sector has now racked up 14 months of growth in a row, having shrunk immediately after last year's EU referendum.
Although PMI output index dropped back, still consistent with strong pick-up in quarterly growth in official manufacturing output in Q3. pic.twitter.com/0Opk277UU9
10.06am BST
Ms Lee Hopley, chief economist at EEF, says UK factories are struggling to meet orders because they've failed to invest in new equipment:
Emerging problems in the supply chain, signalled by lengthening lead times, are likely related to the subdued investment performance of the past few quarters.
Companies will only satisfy some of their capacity needs through additional recruitment which needs to be complemented with higher capital spend on productivity enhancing investment. With the demand outlook holding up, government action in the forthcoming Budget to spur companies to commit to investment in the UK will be a priority."
10.01am BST
Worryingly, some UK factories are struggling to deliver their orders in time due to supply shortages, according to the PMI report.
Duncan Brock, Director of Customer Relationships at the Chartered Institute of Procurement & Supply, explains:
"The biggest news this month is the fall in the productivity of manufacturing supply chains as suppliers lost the fight to keep on top of promised delivery times and their performance weakened to the greatest extent for six-and-a-half years.
The blame lay squarely at the feet of capacity constraints and some commodity shortages in food, but also other materials such as plastics and steel.
9.55am BST
British factories will probably be forced to pass their higher raw material costs onto consumers, which could push UK inflation even higher.
Mike Rigby, Head of Manufacturing at Barclays, warns:
With cost pressures remaining elevated and margins being increasingly squeezed, it's only a matter of time before manufacturers raise prices which will likely impact the domestic demand that has been fuelling growth in the sector."
9.48am BST
The drop in the UK factory PMI in September suggests Britain's economy is losing momentum, warns Rob Dobson, Director at IHS Markit.
He says:
"The latest PMI survey showed a modest deceleration in the rates of expansion in UK manufacturing production and new orders. Although it looks as if the sector made solid progress through the third quarter as a whole, the growth slowdown in September is a further sign that momentum is being lost across the broader UK economy.
Exports remain a bright spot, however, still rising at one of the strongest rates over the past six-and-a-half years.
9.41am BST
Just in: UK factory growth slowed last month, as Britain failed to match the eurozone's strong performance.
The UK's factory PMI , which measures activity across the sector, fell to 55.9 in September, from August's 56.7.
#UK manufacturing #PMI softens slightly to 55.9, missing consensus expectation of 56.2 according to #Bloomberg @markets pic.twitter.com/SlHHQLrOiz
Growth of new export business remained among the best registered over the past six-and-a-half years. There were reports of increased sales to Europe, the USA, China and Brazil.
Some firms also mentioned an ongoing boost from the historical weakness of sterling, although this was less prominent as a factor than earlier in the year
9.15am BST
Breaking! The eurozone's manufacturing sector has posted its best month since early 2011.
That's according to data firm Markit, whose euro area factory PMI has jumped to 58.1, the highest in six and a half years.
The eurozone manufacturing boom kicked into an even higher gear in September.....
"Surging order book growth has encouraged manufacturers to take on extra staff at a rate never previously seen in the 20-year history of the PMI survey. Despite this expansion of capacity, backlogs of incomplete work built up at a faster rate, suggesting that the hiring upturn has plenty more room to run.
8.57am BST
Over in Madrid, shares have fallen following yesterday's referendum in Catalonia, and the violent clashes between Spanish police and those trying to take part.
Catalonian president Carles Puigdemont has indicated that the region could declare independence after Sunday's poll, even though the vote had already been declared illegal by Spain's constitutional court.
Spanish Gov bonds took a hit on Mon morning in the wake of Sund's disputed independence vote in Catalonia @fastFT https://t.co/iDwJgX0Gqr pic.twitter.com/hZFtMRz7az
8.33am BST
The Unite union has accused Theresa May's government of 'sitting on its hands' and allowing Monarch to fail.
Monarch needed help due to terror attacks in Egypt and Tunisia, which encouraged more rivals to compete on its Spanish roots. The "decimation" of the tourist trade in Turkey was another crucial factor.
Had German gov't not approved loan to keep #AirBerlin flying, there could have been similar repatriation effort needed as for #Monarch.
Continuing uncertainty surrounding Brexit and the ability of UK airlines to fly freely in Europe after the UK has left the EU undoubtedly hindered Monarch getting the investment it needed to restructure and survive.
"This uncertainty, combined with the apparent unwillingness of the Government to assist at commercial rates and at a profit to the taxpayer, has left thousands of jobs at a great British airline hanging by a thread.
8.22am BST
Monarch's unhappy demise is good news for its rivals, including Ryanair, which is going through its own crisis right now (having cancelled flights due to a lack of pilots).
Shares in easyJet have jumped by 5% at the start of trading, while BA's parent company, IAG, are up 2%. Ryanair's share are up over 3%.
U.K. airline shares open sharply higher after #MonarchAir put under administration pic.twitter.com/rGsTFqhaav
8.22am BST
Passengers arriving at Gatwick to be told all @Monarch flights cancelled, after it ceased trading at midnight. Most going home in taxis @LBC pic.twitter.com/fwl0Kcol7S
8.15am BST
Following Monarch's collapse at 4am, the Civil Aviation Authority is now conducting the "biggest ever peacetime repatriation" in UK history.
Two flights from Ibiza have already landed this morning, at Gatwick and Birmingham, but that still leaves over 100,000 people abroad.
We are securing over 30 aircraft to fly 110,000 people back to the UK at no cost to them. #Monarch pic.twitter.com/kS1S5kN51p
8.10am BST
Anyone who arrives at a UK airport hoping to fly with Monarch Airlines will be disappointed today:
Related: Q&A: Monarch Airlines has shut down - what happens next?
8.07am BST
UK manufacturers fear they could lose 17bn per year in European sales if Britain leaves the EU under a 'Hard Brexit'.
That's according to a new report from top law firm Baker McKenzie, which examines the implications of Britain defaulting to World Trade Organisation rules.
"These figures indicate the extent to which the UK's key manufacturing sectors are likely to be hit by the impact of a hard Brexit.
You can understand why there is now mounting pressure for the UK to negotiate new customs arrangements for post Brexit trade with the EU and for companies to work with their industry groups to help shape future trading relations with the EU."
"We have heard a lot about how much Europe exports to the UK, for example, in the automotive sector.
"That may be true in numerical terms, but when you look at this as a percentage of their trade, you can clearly see that the EU exports a lot more broadly, to a whole host of other markets, and consequently, it is far less dependant on the UK as a market than the UK is on it. This will have significant implications for upcoming negotiations."
7.48am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we discover how Britain's factories performed last month, as data firm IHS Markit publishes its health check on manufacturers across the globe.
The pound will be making headlines as well as the PMI figures from all 3 sectors of the domestic economy are pending for release over the next few days.
Today the release of the Manufacturing figures will set the stage and analysts are expecting a softer reading which could dampen expectations for a stronger pound in October. The British currency saw a strong performance during September following renewed bullishness from the Bank of England that suggested that a higher interest rate policy might be needed to arrest the rallying inflation.
"We are putting together, at very short notice and for a period of two weeks, what is effectively one of the UK's largest airlines to manage this task. The scale and challenge of this operation means that some disruption is inevitable. We ask customers to bear with us as we work around the clock to bring everyone home."
Related: Monarch Airlines flights cancelled as airline goes into administration
Related: Catalan referendum: preliminary results show 90% in favour of independence
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