Growth in Britain’s manufacturing sector slowed sharply in April, in a sign that the economy got off to a weak start in the second quarter 12.17pm BST Here in Athens, the Greek government has announced that until it gets “concrete signs” of the country’s liquidity asphyxiation being eased, it is not going to bear the political cost of putting a potentially explosive list of reforms before parliament. 11.43am BST Over in Greece, monthly pension payments appear to have gone through, following angry scenes outside Athens banks on Thursday. 11.29am BST In other UK news, the Financial Conduct Authority is looking into a series of complaints over the manipulation of a key contract used to price savings products and mortgages.The City watchdog is scrutinising a series of complaints over manipulation of a key contract used to price savings products and mortgages. The complaints allege the systematic rigging of short-term interest rate contracts (Stirs) by traders on the London International Financial Futures Exchange (Liffe) in recent years. 11.15am BST Here is the full story on the manufacturing PMI from the Guardian’s Katie Allen. 10.49am BST Now for some reaction to the weak manufacturing PMI from City economists (whose forecasts were far wide of the mark) and other experts. In a way, bad luck has prevented a more balanced recovery in the UK, where consumption continues to be the most reliable driver of growth. When sterling was low in 2009 - 2013, it did not help UK exporters very much because demand from the major export market, the eurozone, was weak due to the global financial crisis and the euro crisis. Now that the eurozone is rebounding, UK exporters struggle to defend their market share due to the weaker euro. Still, we expect the return to more normal growth in the eurozone to benefit UK manufacturers as well over time. The large April drop in the UK manufacturing PMI is likely to be a blip and buoyant domestic demand will support activity. This decelerating pace of growth is strongly linked to the general uncertainty that has crept into the manufacturing and industrials sector in the past few months. The strengthening of the pound against the euro continues to bring concerns over exports, impacting on the UK’s competitiveness and margins. Furthermore, the looming general election adds further unease to the sector in terms of EU membership and any possible changes to taxation. This is a disappointing survey that adds to the evidence that the economy has recently lost momentum, which likely partly reflects increased business caution ahead of the highly uncertain general election. It is also evident that UK manufacturers are being hampered in key eurozone export markets by sterling’s strength against the euro. Recent data points to a marked loss of momentum in manufacturing activity since the start of the year. While consumer facing sectors are still forging ahead thanks to low inflation and a pick-up in wage growth, any sign that export growth was about to turn around at the end of last year now looks to have been a false dawn. Nevertheless, it would be premature to write off manufacturing’s contribution to growth in the future, not least because continued employment growth points to some confidence about longer term prospects. UK manufacturing output slumps to 7-month low. PMI slides to 51.9, way below all 31 estimates in @ReutersPolls pic.twitter.com/A1xXa0rgv8 10.44am BST Shockingly weak. That’s the only way to describe news highlighting the continuing struggles of Britain’s manufacturers last month.Its easy to see why the health check of industry from Markit/CIPS raised eyebrows. The snapshots of the three most important sectors of the economy - manufacturing, construction and services - are closely watched because they are the first evidence of the state of the economy in the month and they are forward rather than backward looking. 10.16am BST The unexpected and sharp fall in the headline manufacturing PMI to 51.9 in April from 54 in March was driven by broad weakness in the sector.It was the slowest growth for UK factories in seven months, as growth in output, new orders, and employment all slowed.Coming on the back of weaker-than-expected GDP numbers on Tuesday and only six days before the general election, today’s UK PMI delivered less than positive news on the health of the manufacturing sector. Rates of expansion in production and order books both slowed sharply in April, meaning manufacturing is again unlikely to provide much of a boost to broader economic growth. This keeps the emphasis for maintaining the recovery highly reliant on the services sector. 9.52am BST The far weaker-than-expected manufacturing PMI has sent the pound lower. 9.32am BST The headline index on the Markit/CIPS manufacturing PMI fell to 51.9 in April, from 54.6 in March.This is a bit of a shocker. Economists were expecting 54.6 (where anything above 50 signals growth). The March number was revised down to 54 from 54.4. 9.11am BST At 9.30am we will get the earliest indication of how the UK economy was performing as the second quarter got underway.The Markit/CIPS manufacturing PMI survey for April will be closely watched by markets and policymakers alike. 8.54am BST While most European markets are closed today for the May Day holiday, Michael Hewson, chief market analyst at CMC Markets UK, reflects on their recent performance and considers what might lie ahead in the short term.It’s not been a good week for European equity markets with the rebound in the euro knocking the German DAX down quite heavily, posting its first monthly loss this year. The declines this month and this week also raise the prospect of more losses to come, particularly if the euro continues to rise in the coming weeks, which seems quite likely, given that it is becoming increasingly likely that any prospect of a US rate hike has receded by at least three months. 8.45am BST Lloyds Banking Group has taken a £745m hit from the forced sell-off of its TSB branch network.A reminder, if needed, of how the impact of the financial crisis that began in 2007/8 is still being felt. Lloyds Banking Group has taken a £745m hit from its TSB branch network, denting profits at the bailed-out bank in the first three months of the year.Lloyds was forced to sell off the 631-branch network under terms agreed with the EU before its 2008 taxpayer bailout. The government originally took a 43% stake in Lloyds but this has now fallen to 20.95% through a series of share sales. 8.29am BST The FTSE 100 is down 0.5% in early trading at 6926.Lloyds Banking Group is the top riser, up 3.3% at 80p after publishing its first-quarter results (more on those soon). 7.54am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.The latest manufacturing data for China was published overnight, showing the sector barely grew in April. Continue reading...
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