US factory sector shrinking for first time in a decade; UK retailers gloomy – business live

Disappointing data from US, UK and Germany raises concerns over the global economy

• Latest: US factory sector is shrinking this month
• CBI: UK retail sales balance worst since 2008
• 58% of retailers report falling sales this month

Earlier:

• Eurozone growth has picked up, but remains weak
• French private sector growth up ... but Germany struggling

4.41pm BST

The strong pound has pulled Britain's stock market into the red.

The FTSE 100 index of blue-chip shares has just closed 75 points lower at 7,128, down over 1%.

3.44pm BST

Just in: Donald Trump has denied that America's economy is struggling (despite today's weak PMI report)... but taken another swipe at the Fed for not cutting interest rates faster.

The Economy is doing really well. The Federal Reserve can easily make it Record Setting! The question is being asked, why are we paying much more in interest than Germany and certain other countries? Be early (for a change), not late. Let America win big, rather than just win!

3.34pm BST

Time for a quick recap.

Related: UK high street sales fall at fastest rate since 2008

Angela Merkel: 'I did not set 30-day deadline'.

"I said that what one can achieve in three or two years can also be achieved in 30 days."

"It is not about 30 days. The 30 days were meant as an example to highlight the fact that we need to achieve it in a short time."@Reuters

Related: I want Tesco's packaging overhaul to plug into a new national framework | Dave Lewis

3.25pm BST

America's yield curve has inverted again - a sign that bond investors are concerned to hear that US factory output is shrinking.

The yield on 10-year Treasuries is now 1.59%, compared to 1.6% for two-year Treasuries.

3.11pm BST

Some snap reaction to the news that America's manufacturing is now (just) shrinking.

Not a great look for US manufacturing (granted ISM more closely watched than Markit PMI) -> pic.twitter.com/bbOTac1FxH

Bearish shark formation here on the 10-year Treasury yield after that sub-50 PMI print pic.twitter.com/GH2sARol03

US Markit PMI in at 49.9 which is line with hard manufacturing data which indicates the domestic manufacturing sector is in recession.

Not a single G7 country has a PMI >50. https://t.co/1F6kxSkFXt

3.06pm BST

Here's the US PMI report (only a flash estimate, as we're still in August of course)

U.S business activity growth eased in August, amid a slower rise in service sector output. The Flash U.S PMI slipped to 50.9 (52.6 - July), with overall new business rising at the slowest rate since October 2009. More here: https://t.co/Gpj0NtL6if pic.twitter.com/tJn07aGVQF

3.02pm BST

Newsflash: America's factory sector is shrinking for the first time in almost a decade - a sign that the trade war with China may be hurting.

Data firm Markit has just reported that its US manufacturing PMI has fallen to 44.9, down from 50.4 in July.

August's survey data provides a clear signal that economic growth has continued to soften in the third quarter. The PMIs for manufacturing and services remain much weaker than at the beginning of 2019 and collectively point to annualized GDP growth of around 1.5%.

The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector. Survey respondents commented on a headwind from subdued corporate spending as softer growth expectations at home and internationally encouraged tighter budget setting.

2.46pm BST

The pound has just jumped, after Angela Merkel played down the suggestion she's set Britain a new 30-day deadline to solve Brexit.

Yesterday, when meeting Boris Johnson, the chancellor said the conundrum of the Irish backstop could possibly be solved within 30 days.

It would be better to say one can achieve that by October 31.

$GBPUSD: Sterling surging as the UK and Brussels battle over the Irish backstop with the possibility of renegotiating the #Brexit withdrawal agreement hinted at by Germany's Merkel in contrast to comments from France's Macron pic.twitter.com/utL3HpIDWw

2.35pm BST

Ding ding! The New York stock market has opened a little higher, as investors await news from the Jackson Hole central banking symposium tomorrow.

Here's the opening prices:

U.S. stocks open higher https://t.co/zZvrZhTJiU pic.twitter.com/wNFcHmivsF

2.11pm BST

Barely a day goes by without Donald Trump undermining the Federal Reserve's independence... and he's just done it again.

The president is still fuming that Germany sold over a800m of 30-year bunds at a negative interest rate on Wednesday (meaning investors won't get any return at all).

Germany sells 30 year bonds offering negative yields. Germany competes with the USA. Our Federal Reserve does not allow us to do what we must do. They put us at a disadvantage against our competition. Strong Dollar, No Inflation! They move like quicksand. Fight or go home!

Sir - selling bonds at such a low yield is a sign of economic weakness not strength

2.02pm BST

Another retail survey has been released, which backs up the CBI's gloomy assessment of the sector.

The latest IMRG Capgemini eRetail Sales Index shows that online spending fell by 5.7% in July, compared with June. This dragged the annual increase in web spending down to just 4.4% - much weaker than the 10% averaged over the last five years.

Online sales growth had been subdued throughout the first half of 2019, but in June there seemed to be a bit of a bounce-back that hinted toward growth picking up again.

However, there is now evidence that the June performance was artificially inflated by heavy discounting to stimulate sales activity, and it seems likely that some of that volume was pulled forward from July.

12.59pm BST

In other retail news, supermarket chain Tesco has pledged to ban brands who use too much packaging, to help fight the plastics crisis.

Dave Lewis, the boss of Britain's biggest supermarket, has decided that Tesco could "reserve the right not to list" products with too much non-recyclable packaging from next year onwards.

We have all looked at the settled contents of a cereal packet and puzzled over the comparative size of the bag and box. Or opened a bag of crisps and wondered why the packaging is twice the size of the contents.

We're setting ourselves and our suppliers a challenge. The need is urgent, and so from next year we will assess the size and suitability of all packaging as part of our ranging decisions, and if it's excessive or inappropriate, we reserve the right not to list the product

We need a standardised national collection and a truly complete and national recycling infrastructure. Today, recycling rates vary across local authorities from 65% to 14%. Without a national infrastructure, industry efforts to improve the recyclability of materials used in packaging will not have the impact we need.

Related: I want Tesco's packaging overhaul to plug into a new national framework | Dave Lewis

12.31pm BST

Howard Archer of EY Item Club reckons the CBI is certainly on to something:

Even allowing that #CBI survey has often recently been markedly weaker than the actual #UK #retail sales data, the extent of the August weakness with the balance plunging to -49% does raise the question as to whether #consumers are becoming more cautious? https://t.co/SPv35gCqJK

12.07pm BST

A word of caution. The CBI's retail sales survey is much gloomier than recent official retail spending figures.

Last week, the Office for National Statistics reported that retail sales grew by 3.3% year-on-year in July, and by 1% month-on-month (they've not released August's numbers yet).

1\ The ONS released retail sales data for July this morning. There's been much scrutiny recently around the large gap that has opened up between (stronger) official data and (weaker) surveys. As this chart shows, the gap is pretty stark (thread) pic.twitter.com/f4wvi1nflX

5\ More generally, divergences between ONS retail sales data and surveys are not uncommon - e.g. we also saw a big gap over 2016. Given that retail surveys are unambiguously weaker than ONS data, it *may* make sense to put more weight on them for now

7\ Gloomier data certainly chimes better with that @cbitweets members are telling us about conditions on the High Street - trading environments are challenging, with competition tough, uncertainty high, and digital disruption ongoing

11.30am BST

The CBI is tweeting the key points from their retail sales survey:

UK #retail sales volumes fell at their fastest since the financial crisis in the year to August #DTS https://t.co/ER2ZWyrguh pic.twitter.com/0GyuxbWH5x

However, sales were only slightly below average for the time of year. This may indicate that the sharp fall in sales this month represents a "broadening" rather than a "deepening" in the decline #DTS https://t.co/ER2ZWyrguh pic.twitter.com/ougDysVPbA

11.28am BST

The threat of a no-deal Brexit is helping to keep shoppers off the high street, warns Anna Leach, CBI deputy chief economist.

She says:

Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.

"It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures."

Truly dismal CBI retail sales balance for August.

Worst since Dec 2008 and the 2nd-weakest reading since records began in 1983. pic.twitter.com/WIbrflN3Qi

11.16am BST

NEWSFLASH: Confidence among UK retailers is 'crumbling', as shops suffer the sharpest fall in sales and new orders since the financial crisis.

The CBI's latest survey of the retail sector, just released, also shows that optimism about upcoming sales has also hit its lowest level in over a decade.

11.05am BST

European stock markets are looking a bit directionless today.

The FTSE 100 has shed 37 points, or 0.5%. Some investors fear the Federal Reserve may not cut interest rates as rapidly as thought, as the minutes of July's meeting (released last night) showed a big split (see earlier post).

10.26am BST

The plunge in the pound since the Brexit vote has made UK assets more attractive to overseas buyers.

The global healthcare industry has many supporting factors including rising populations and ageing societies and well as higher incomes and propensities to spend on healthcare and this is no different in the Middle East.

9.57am BST

Today's PMI reports are hardly sparkling - they show that the eurozone economy is staggering along this month, with only modest growth.

But, they're also better than hoped - not to be sniffed at in the current climate.

The Eurozone PMI data in August were not as weak as had been expected, providing a rare bit of good news on the Eurozone economy.

Business confidence unexpectedly recovered a little, both in the Eurozone and also Germany which has led the slowdown in recent months.

Small wins should be celebrated.

A small uptick in eurozone's August PMIs from 51.5 to 51.8 is somewhat a relief today as analysts had expected a further slide. If nothing else, at least it indicates that the economy is unlikely to have slipped into negative growth halfway through the third quarter .

Slightly better than expected PMIs, but the forward looking components still suggest further downside ahead#Recession pic.twitter.com/bgrGI5pwz7

Eurozone growth remained muted in August amid ongoing manufacturing struggles. Flash PMI registered 51.8 (51.5 - Jul), still one of the weakest seen for 6 years. Exports were down for the 11th straight month and jobs growth was the weakest in over 3 yrs. https://t.co/6lzr6xjG5f pic.twitter.com/rABDQOIy8J

9.32am BST

Today's PMI report provides plenty of reasons to worry about Germany's economy.

It shows that:

9.29am BST

Lena Komilieva of G+ Economics isn't impressed:

Eurozone PMIs show a sobering picture: 1) The industrial economy remain in contraction. 2) The prolonged downturn has reached other parts of the economy, beyond exports. 3) Future growth expectations lowest since the euro crisis. This, with negative ECB rates and QE reinvestments

9.17am BST

The euro has risen against other major currencies following today's PMI surveys.

$EUR nudging slightly higher on firmer than expected French and German flash PMI's. However, on the grand scheme of things, this data is unlikely to deter the ECB from announcing a stimulus package in September pic.twitter.com/CrasiNCrqr

Dax jumps above 11800 after German manufacturing PMI beats forecasts to rise to 43.6. Pretty low bar to clear and in the grand scheme of things still a poor data point

9.15am BST

Newsflash: European company growth has picked up this month, but remains rather subdued.

Markit's overall eurozone composite PMI, just released, has risen to 51.8, from 51.5 in July. That level implies weak growth - but slightly better than a month ago.

The recent soft patch in the eurozone economy continued into August, according to latest PMI data from IHS Markit, with activity rising modestly amid a marginal increase in new business.

The recent pattern of services growth compensating for a downturn in manufacturing was repeated midway through the third quarter. August did see a drop off in confidence among companies in the single currency area, with firms becoming more wary of hiring additional staff as a result.

$EUR: BOOM!

- Euro-area PMI composite topped expectations
- Highest only since June 2019.
- PMI remains in easing territory where it has been since October 2018
- If you think this number is "strong", you're a muppet pic.twitter.com/rh0YYLIJE2

9.14am BST

Aila Mihr of Danske also fears Germany could be sliding into recession:

Reversal of July manufacturing #PMI dip is good news, but risk of another #GDP contraction in Q3 remains alive. #Germany remains a two-speed #economy and with continued stalling #employment #growth. pic.twitter.com/iycHdMcqNb

9.02am BST

Germany is still at risk of falling into recession this autumn, says Markit's Phil Smith, based on today's PMI survey.

He's concerned that 'cracks' are appearing in its service sector, with new order growth very weak and business confidence at a near five-year low.

Germany remains a two-speed economy, with ongoing growth of services just about compensating for the sustained weakness in manufacturing.

Although improving slightly, the survey's output data haven't changed enough to dispel the threat of another slight contraction in GDP in the third quarter, especially given the deterioration in the forward-looking indicators ...

8.56am BST

Worryingly, German business confidence fell this month.

Markit says that a majority of firms surveyed in today's PMI report are now gloomy:

For the first time in almost five years, the number of firms expecting output to fall over the next 12 months exceeded those predicting a rise, with sentiment the most negative overall since November 2012.

8.51am BST

Just in: Germany's economy is continuing to "underperform" this month.

Markit's new PMI survey shows that German factory sector is still shrinking, although at a slower pace, while the service sector continued to cool.

The German economy continued to underperform in August, latest flash PMI data showed.

Growth of service sector business activity was again countered by a marked fall in goods production, while overall job creation slipped to a five-year low. Worryingly for the outlook, total new orders sank deeper into contraction territory and firms' expectations towards future output turned negative for the first time since late 2014.

GERMANY & FRANCE Manufacturing PMI uptick
Germany new orders still down 8th consecutive month of reading below 50. pic.twitter.com/SLgyI9e0eg

8.41am BST

Traders and economists are impressed by today's French PMI report.

Here's Fred Ducrozet of Pictet Asset Management:

French PMI: strong headline *and* details. Outperformance likely to continue.

The European economy is in a dire condition but it isn't that bad for the French economy, its manufacturing PMI moved back in expansion pic.twitter.com/Qjw5ttkHSu

French services (53.3 from 52.6) and manufacturing (51 from 49.7) PMI beat expectations. Points towards continued economic outperformance from France pic.twitter.com/fJwUKxIEv7

8.35am BST

Eliot Kerr, economist at IHS Markit, says France appears to be outperforming some of its eurozone neighbours.

French private sector businesses posted another solid increase in output during August. Service sector expansion continued to surpass manufacturing growth, reflecting the broader trend seen across the eurozone in recent months.

However, in contrast to its peers, economic growth in France has remained solid and the latest set of PMI figures only add weight to the argument that this outperformance is likely to continue in the third quarter."

8.28am BST

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

Related: Trump raises pressure on Federal Reserve to cut interest rates

Here's what you need to know from the Fed Minutes yesterday. The dissenting voices. This is literally what I've been saying over the past couple of months - the data doesn't point to a cut.

George and Rosengren pic.twitter.com/JhNRQ3xYdZ