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Author Topic: UK factories stockpile at record pace; Canada joins global slowdown - as it happened  (Read 8 times)

NadiaWits

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UK factories stockpile at record pace; Canada joins global slowdown - as it happened

British manufacturing confidence has dropped, while over the channel the eurozone factory sector is shrinkingLatest: Canada only expands by 0.1% in Q4UK factories hit by Brexit uncertaintyUK manufacturing PMI drops to 52.0 from 52.8Eurozone factory growth slides Introduction: It’s factory PMI Day 5.22pm GMT Some sad news to end the week. Professor Lord Bhattacharyya, a leading light of British industry for decades, has died aged 78.“I am deeply saddened by the death of Professor Lord Bhattacharyya. Kumar has been a heroic figure, helping establish in Britain a world-wide reputation for excellence and innovation in advanced manufacturing. Through the WMG, which he founded, and through his extraordinary energy and tenacity Kumar encouraged many firms to locate and expand in Britain. Hundreds of thousands of people in Britain owe their livelihoods to Kumar Bhattacharyya.“It has been a personal privilege to be able to work so closely with Kumar, who helped inspire our modern Industrial Strategy, and to be his friend. Kumar will be sorely missed by everyone who knew him, and our thoughts are with his wife Bridie, their three daughters Anita, Tina and Malini and their family.”Tragic news about Lord Bhattacharyya. A true industrialist who made a huge contribution to British steel and car making .:https://t.co/sNJWzURQ25Oh no! Gutted. Such a great manSo sad to hear this news. Lord Bhattacharyya was a lovely gentleman and will be missed.. My thoughts are with his family and friends. .:https://t.co/[email protected] on the sad passing of Lord Kumar Bhattacharyya: "He was a mischievous character who lived life to the full and was always thinking about the next thing. But above all else he was an incredible servant to this community and we all owe him a huge debt of gratitude."Chamber Statement on the death of Professor Lord Bhattacharyya"We are deeply saddened to learn of the death of Lord Kumar Bhattacharyya and our thoughts are with his family and friends at this time." Louise Bennett OBE DLRead more here: .:https://t.co/yceHLQjO2x pic.twitter.com/T1gszcz3wh 4.40pm GMT Over on Wall Street, shares in Tesla have plunged by over 7% after it announced a strategic shift last night.“Given that there is a lot happening in Q1, and we are taking a lot of one time charges, and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,.We do think that profitability in Q2 is likely.” Related: Tesla cuts car prices and shuts stores as it shifts to online-only sales  3.36pm GMT American factories are suffering from the downturn overseas, says Capital Economics’ Michael Pearce. Here’s his take on the decline in the US manufacturing PMI last month (which follows weak figures from Japan, China and the eurozone earlier today)The further drop in the ISM manufacturing index is a clear sign that US manufacturers are getting hit by the broader global industrial downturn. While the shifting domestic policy mix is the main reason we expect economic growth to slow further this year, the weaker global backdrop poses a downside risk to our below-consensus view.The decline in the ISM index in February to 54.2, from 56.6, was a littler sharper than most anticipated (Consensus 55.5, Capital Economics: 54.0), but is in line with the deterioration seen in most of the regional Fed surveys. Activity in the US manufacturing sector appears to be taking its lead from developments overseas, following the earlier plunge in both the German and Chinese PMIs. With the latter rising last month, there are at least some emerging signs that the global backdrop did not deteriorate much further in February. 3.14pm GMT Ouch! America’s factory sector also weakened last month, according to two rival surveys.The ISM’s gauge of manufacturing growth, just out, dropped to 54.2 in February form January’s 56.6. That’s the lowest level in two years, and much worst than the 55.5 expected by economists (reminder, any reading over 50 shows growth).“Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month.Consumption (production and employment) continued to expand but fell a combined 8.9 points from the previous month’s levels.”ISM Manufacturing index Decreased to 54.2 in Februaryhttps://t.co/kpkwhFBMYr pic.twitter.com/JoIWh3MEgjUS Manufacturing PMI (Feb F) 53.0 versus 53.7 flash/expected, previous 54.9: - Operating conditions improve at slowest pace since August 2017 - Rates of output and new order growth soften - Inflationary pressures easeFull Report: .:https://t.co/RePLPip6QQ $USD $DXY pic.twitter.com/DCA3x7vBXC 3.09pm GMT This is why the rush to stockpile goods in the UK ahead of Brexit is a problem:How #Brexit works: because of May's kicking the Brexit can down the parliamentary road, UK business needs to stockpile, in case of a no deal scenario, which means corporate debt, trapped capital... and higher likelihood of business failure. .:https://t.co/wtMh1QcyR1 2.41pm GMT In a further example of economic weakness, US consumer spending fell by 0.5% percent in December, the biggest decline in nine years.That follows a 0.6% gain in November, and indicates that American consumers ended 2018 cautiously -- as trade tensions intensified and the US Federal Government shutdown kicked off. 2.16pm GMT In 2018 as a whole, Canada’s economy grew by 1.8%, down from 3.0% in 2017.Household spending and business investment both slowed during the year, as Statistics Canada explains:The slowdown in 2018 was evidenced in most GDP components, with the exception of exports. The nominal growth of the compensation of employees was also higher in 2018.Household final consumption expenditure slowed to 2.1% growth following a 3.6% increase in the previous year. Growth in overall business investment slowed to 0.3% following a 2.3% gain in 2017. The slowdown in 2018 reflected a 2.3% decline in housing investment and a 1.7% increase in non-residential construction and machinery and equipment investment. Exports volumes rose at a faster pace, accelerating from 1.1% growth in 2017 to 3.3% in 2018. 2.10pm GMT With growth so weak, the Bank of Canada may feel unable to raise interest rates anytime soon:The ‘R’ word will be on minds as Canada’s economy barely skirted the start of a recession in Q4. The GDP data makes next week’s Bank of Canada meeting of interest only to the extent that Governor Poloz pulls further back from his talk about normalizing rates. cc @cibc #USDCAD .:https://t.co/L5q2jYUjh3 2.03pm GMT The sharp slowdown in Canadian growth is fuelling concerns that the country could be close to recession....Canada’s GDP growth falls to 0.1% in Q4 2018.A recession kicks off when two consecutive quarters of negative growth appear.Still ridiculous that my 2017 model forecasted a recession could kick off as early as Q2 2019?  #cdnpoli #ToRe #VanRe pic.twitter.com/96Nzk4Q6DyFollowing a trend in the rest of the world, Canada GDP missed estimates, mainly due to bad investment and reduced exports in Q4. Houshold spending slowed, leading to inventory builds - which bodes poorly for 1Q2019.Annual GDP ends up at 1.8%. pic.twitter.com/lI0uOoEv8C 1.46pm GMT Newsflash: Canada’s economy slowed to near-stagnation in the final three months of 2018.Canada’s economic growth slowed to 0.1% in Q4, the slowest since 2016. Full-year GDP gain was 1.8% compared to 3.0% in 2017.“There were special factors that were going to depress growth and they certainly came out in spades”: RBC Deputy Chief Economist Dawn Desjardins on Canada’s Q4 GDP pic.twitter.com/Sfdiup2ZHO 1.17pm GMT Wall Street is also expected to start March on the front foot:US Opening Calls:#DOW 26099 +0.70%#SPX 2802 +0.64%#NASDAQ 7152 +0.73%#IGOpeningCall 1.09pm GMT Here’s our news story on the worrying state of UK manufacturing: Related: UK manufacturers' optimism at 27-year low amid Brexit stockpiling  12.59pm GMT Despite the drumbeat of (mostly) poor manufacturing data this morning, most European stock markets have risen today.Thursday marked the last day of the month of February, a month which saw the major global equity indices extend their gains for the second consecutive month after they had tumbled at the end of last year. Sentiment improved on the back of positive US-China trade talks and as major central banks have re-iterated the need for interest rates to remain low for longer. For these reasons, we have seen the Shanghai Composite outperform her peers on a year-to-date basis, while ongoing Brexit uncertainty has held back the UK’s FTSE 100.The key risk now is if no trade deal is achieved at the end of it all, although that looks increasingly unlikely. For now, therefore, momentum appears to be on the upside. But sooner or later, stock market investors will start focusing on something else. 12.43pm GMT You know the UK retail crisis is serious when it touches the Duchess of Cambridge.LK Bennett, one of Kate Middleton’s favourite fashion brands, is preparing to fall into administration, putting around 500 jobs at risk.LK Bennett, a brand favoured by the Duchess of Cambridge, has always described itself as bringing “a bit of Bond Street luxury to the high street” but has not been immune to tough high street trading as Britons cut back spending on clothing at a time when the cost of running high street stores has risen sharply.  Related: LK Bennett lines up administrators as it struggles to find backer LK Bennett heading into administration a year after Amber Rudd promised settled status application for EU citizens would be 'as easy as setting up an online account at LK Bennett' 12.17pm GMT After being hobbled by Brexit uncertainty for so long, UK exporters will be hoping for some progress on the new trade deals promised by Brexiteers.But there’s bad news on that front. America is taking a tough line in its negotiations, demanding that Britain gives greater access to US agricultural products.The outline requirements were published by the office of the US trade representative, headed by Robert Lighthizer, as required by Congress. The office said it was seeking “comprehensive market access for US agricultural goods in the UK”.It was also looking to remove “unwarranted barriers” related to “sanitary and physiosanitary” standards in the farm industry, something that would put it at loggerheads with the UK environment secretary, Michael Gove, who has repeatedly said British food standards will remain the same if not be better than they currently are. Related: Concern over food safety as US seeks greater access to UK markets America First. .:https://t.co/CNr4SkRPxN 10.45am GMT The big picture this morning is that the world’s factories had a poor February.While UK manufacturing was propped up by stockpiling, the eurozone suffered its worst month in over five years, Japan stumbled, and China couldn’t reverse its recent slump. The rise in stockpiling activity, due to Brexit, has created artificial demand via extra inventory, and has also tied up a great deal of working capital. This is certainly a cause for concern as manufacturers contend with challenging domestic and global factors at an uncertain and fragile time for the global economy.“There’s also little positivity for the sector globally, as the PMI results for China and Japan also reported a decline. Closer to home, the data for the Eurozone reflects further deterioration, as highlighted by Germany and Italy, this is driven in a large part by geopolitical uncertainty.”The reality is that orders are stagnating and future output is expected to decline with optimism clearly hit by the gathering storm clouds.“On the other side of the Channel, Eurozone manufacturing went into its deepest downturn for almost six years as trade war worries, slowing global growth, and the UK’s imminent exit from the EU all hit demand. The slump, which is being led by Europe’s powerhouse Germany as well as France, Spain, and Italy, will worry British businesses. The possibility that the EU, the world’s biggest economy, is heading towards a recession right at the moment the UK leaves doesn’t bode well for our global trade prospects.” 10.26am GMT Britain’s stockpiling scramble is a boost to eurozone factories, says economist Sam Tombs of Pantheon.Stockpiling by U.K. manufacturers now the most widespread it has ever been, according to February's PMIs. Note no corresponding hoarding of components by Eurozone manufacturers. So stockpiling is shoring up EZ manufacturers right now, but not benefiting U.K. producers. pic.twitter.com/kcCLhsYTBF 10.12am GMT Earlier this week, Bank of England governor Mark Carney warned MPs there simply aren’t enough warehouses to accommodate all the stockpiling needed for a no-deal Brexit.But this hasn’t stoppedUK firms cramming raw materials, parts and finished goods into every available nook, cranny and dusty corner, in case supply chains freeze after Brexit.Scale of stockpiling going on in UK manufacturing is unprecedented in modern G7 history, according to the @IHSMarkitPMI .:https://t.co/IweBPuumsy pic.twitter.com/tMMHl6z4vp 10.10am GMT Lee McDarby, Corporate IP Managing Director at moneycorp, says UK manufacturing is suffering “troubling times”The weak Pound should be supporting manufacturers to export and yet new export orders have been almost stagnant for the second month in a row.This signals a slowdown in the global economy, with importers unable or unwilling to buy British goods. Meanwhile the ambitions of manufacturers to sell their products abroad are inhibited by ongoing Brexit uncertainty. 10.02am GMT Here’s Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, on the challenges facing UK manufacturing: “The UK manufacturing sector continues to suffer the slings and arrows of outrageous fortune as the harsh realities of Brexit uncertainty, challenges in the global economy and a weak pound affected confidence, jobs and overall activity. “The sector’s sickness was also visible in employment levels with the steepest job losses in six years and with business optimism at its lowest levels since 2012, firms are unlikely to start hiring any time soon. The small gram of positivity around the reduction in inflationary pressures on input prices offered little consolation.“In summary, the march of the makers has turned into a painful crawl where only certainty about the Brexit way forward can ease the sector’s pain.” 9.53am GMT UK factories both large and small were forced to cut jobs last month, Markit adds:Manufacturers cut back on employment for the second consecutive month, with the rate of job losses the steepest since February 2013.Employee numbers were reduced across the consumer, intermediate and investment goods sectors, and at small-, medium- and large-scale enterprises.  9.41am GMT Newsflash: UK factories are stockpiling at a record rate as they scramble to get ready for Brexit.Worryingly, business confidence has slumped too, encouraging bosses to cut jobs at the fastest pace since 2013, a blow to workers.February saw manufacturers continue to implement plans to mitigate potential Brexit-related disruptions. Purchasing activity was scaled-up to stockpile raw materials, leading to a survey-record expansion in input inventories.The uncertain outlook also impacted on business optimism and employment, with confidence at a series-record low and the rate of job losses hitting a six-year high. Pre-production inventories rose to the greatest extent in the series history, after also hitting a record high in January. Almost 70% of the companies offering a reason behind the build-up of stocks attributed it to Brexit. The #PMI also reveals underlying weakness of demand (only last October and July 2016 saw worse order book readings) and increased gloom about the year ahead, linked principally to Brexit, prompted UK factories to cut headcounts at the fastest rate for six years in February 3/3 pic.twitter.com/FaoXgvPykZ 9.29am GMT Bloomberg says:Euro-area factories suffered their biggest drop in orders in almost six years in February amid mounting concern over trade tariffs and Brexit, dealing a blow to those anticipating a speedy rebound in momentum.Euro-area factories suffers their biggest drop in orders in almost 6 years .:https://t.co/fRRBKBSC1w 9.24am GMT Euro area manufacturing is in its deepest downturn for almost six years, warns Chris Williamson, chief business economist at IHS Markit.And he thinks the situation could get even worse.“Most worrying is the downward trend in new orders. Orders are falling at a faster rate than output to a degree not seen for seven years, meaning production is likely to be pared back further in coming months unless demand revives.The new orders to inventory ratio has also fallen to its lowest since 2012, with many companies reporting excess warehouse stocks.“The downturn is being led by Germany and Italy, but Spain has also now fallen into contraction and only modest expansions are being seen in France, Austria and the Netherlands.“In addition to widespread trade war worries, often linked to US tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion.”  9.11am GMT NEWSFLASH: The eurozone’s factory sector has suffered its first contraction in over five years, dragged down by Germany and Italy.Data firm Markit reports that manufacturing output in the eurozone slipped into negative territory for the first time since June 2013. A challenging international climate, characterised by political and trade uncertainties, meant that export orders fell a fifth successive month and to the greatest degree for over six years. Eurozone manufacturing PMI in contraction. Lowest reading since 2013. pic.twitter.com/Zdfw7kq90l 8.56am GMT Dutch factories haven’t escaped the global slowdown either, with growth hitting its lowest level in 32-months in February. Still, at least they kept expanding....Plight of the eurozone widened to The Netherlands in Feb, with Manufacturing PMI tumbling to 32-month low of 52.7 (55.1 - Jan). Weaker export orders weighed on overall demand pressures, while business optimism hit weakest since Nov '15. More: .:https://t.co/ZrRO7BOPdL pic.twitter.com/mipnmmSJkP 8.53am GMT More gloom! Factory output in Italy has fallen at the fastest rate since 2013, as new orders continue to shrink.The Italian manufacturing PMI dipped to just 47.7 in February, even worst than January’s 47.8, showing the contraction continued.  8.49am GMT Ouch! Spain’s manufacturing sector has suffered its first contraction in five years.Spanish factories were hit by their first drop in new orders since July 2016. This helped to drag Spain’s manufacturing PMI down to 49.9 for February, down from 52.4 in January.Panellists commented on a challenging economic environment in February, especially in key export markets. The latest survey showed that new orders declined for the first time since July 2016, undermined in the main by a similar-sized fall in new export work.The deterioration in foreign orders was the first for nearly six years and reflected weakening demand in neighbouring European countries plus falling sales to China.  8.44am GMT Poland’s factories had a very rough February, with growth shrinking at the fastest rate since the financial crisis.Polish manufacturers continued to signal downturn, with #PMI at 47.4 (48.2 - Jan). Output declined at the sharpest rate in almost a decade amid reduced demand from domestic and international markets. More: .:https://t.co/sDgjFu5WHD pic.twitter.com/AUXqZx2RRu 8.35am GMT We have some good news too, though! #India Q4 GDP growth may have slowed to 6.6% y/y from the previous quarter, but the manufacturing PMI in Feb rose to 54.3, highest since Dec 2017. It does not have the best correlation with GDP, but at least suggest limited downside to growth. pic.twitter.com/DAEdvKhyEO 8.29am GMT Russia’s factory sector came close to contracting last month.The Russian manufacturing PMI dropped to just 50.1 (just above stagnation), from 50.9 in January. That’s a five-month low. Markit blames weaker global demand conditions, and a recent VAT hike.Russia PMI for February is only 50.1, down from 50.9, just barely in expansionary territory. Matched by the data for incomes and retail sales. It's not sanctions, it's not the oil price, it's a policy mistake by a government that's running a 2.7% budget surplus 8.27am GMT Economists are hoping that the downturn at China’s factories is bottoming out, after a long slowdown.As this chart shows, the sector did contract in February - but much less sharply than in January:“The subindex for new orders returned to expansionary territory in February after staying in contraction for two months. Despite slipping back into contractionary territory following a rise the month before, the gauge for new export orders hit its second highest level since March 2018. Domestic manufacturing demand improved significantly, and foreign demand was not deteriorating as quickly as last year. 8.19am GMT Joe Hayes, economist at IHS Markit, says Japan’s factory slowdown suggests its economy may be weakening -- especially if Tokyo presses on with a planned sales tax hike: “Sharper reductions in output and demand drove the Japanese manufacturing economy into contraction during the midway point of Q1, compounding reductions already recorded in January. Global trade frictions and weak domestic manufacturing demand pose considerable risks to Japan’s goods producers. As such, firms pared back expectations to near-neutrality. The rebound seen in the official Q4 GDP estimate does not appear to be reflective of underlying economic conditions in Japan.“With the consumption tax hike set to come into play later this year, weak domestic demand will only heighten fears that the economy could be poised for a downturn. Focus turns towards service sector data, which will need to show signs of resilience in order to offset the manufacturing drag.”  8.00am GMT Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Manufacturing conditions in #China were broadly stable in Feb, according to Caixin #PMI data. Encouragingly, both output and total new orders expanded slightly, despite export sales slipping back into contraction. More here: .:https://t.co/UtQxPTJUDF pic.twitter.com/rtzoileO7E Continue reading...

Source: .:https://www.theguardian.com/business/live/2019/mar/01/manufacturing-china-japan-uk-eurozone-growth-trade-war-brexit-business-live



 

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