Rolling business and financial news, as the latest PMI reports show how factories fared last monthSurprise drop in British manufacturing growth in AugustBritains economy may be unbalancing againBerenberg: Putin is to blameEurozone recovery falters as manufacturing growth slowsGermany in surplusIntroduction: Lots of manufacturing industry surveys coming up 2.41pm BST Over in Greece, the prime minister has vowed to make a dent in the countrys perilously high jobless total.Unemployment is societys most insidious and tough enemy because it undermines the dreams of youth, Samaras said For the first time in 24 quarters there is a projected GDP increase while there is a forecast for new 770,000 jobs by 2020, the conservative premier said. 2.15pm BST Another PMI report just landed, showing that Brazils factory sector has returned to (modest) growth last month.Brazilian manufacturing PMI broke over the 50-point mark, which splits expansion from contraction, for the first time since March, rising to 50.2 from 49.1 in July.HSBC Brazil Manufacturing #PMI posts 50.2 in August, (Jul: 49.1). Although marginal, first 50.0 reading in 5 months. http://t.co/8AwAD6WZxiThe HSBC Brazil Manufacturing PMI index suggests that business activity improved modestly in August in what may have been a rebound following the disruptions caused by the FIFA World Cup. The headline PMI index rose from 49.1 in July to 50.2 in August the first above-50 reading since March, on the back of a sizeable rebound in production. However, new orders remain flat relative to the last month, suggesting that the outlook for the sector remains weak. 2.05pm BST The slowdown in eurozone manufacturing growth has helped to push the main European markets into the red, on a generally tedious trading session.The Italian stock market is down almost 0.5%, after its factories reported an unwelcome drop in activity. Frances CAC index is in the red too, while the German and UK markets are hovering. 1.26pm BST Analysts at M&Gs Bond Vigilantes arm point out that Germany has reached a surplus despite weak growth in the last six months:Germany had 1st budget surplus in H1 since 1991, despite GDP growth of just 0.5%. Note to UK- THAT is austerity http://t.co/g87RcIWESh 1.07pm BST Theres also chatter that the new sanctions on Russia could hit its high-tech gas supply industry."@cigolo: Ban on buying Russian bonds eyed as EU envoys meet-sources High technology for gas excavation also under consideration" 1.04pm BST Interesting... EU leaders are going to consider a ban on Europeans buying Russian government bonds, according to a Reuters newswire snap.RTRS - BAN ON EUROPEANS BUYING RUSSIAN GOVERNMENT BONDS TO BE DISCUSSED AT EU TALKS ON FURTHER SANCTIONS - SOURCES woof woof 12.53pm BST A reminder of how labours share of the pie has been nibbled away since the post-war days:"Happy" Labor Day America. RT @conradhackett: GRAPH: The decline of wages as a share of US GDP pic.twitter.com/VsskTK32S2 12.48pm BST Hats off to James Ashton, executive editor at the Evening Standard and the Independent, for bagging the first interview with Tescos new boss, Dave Lewis.Lewis, who started at Tesco this morning, mainly focuses on his work at Unilever (launching Dove in the UK, making shampoo more glamorous, etc), but theres a few hints about his style.How can I help you? he shoots across the table, pleasantries aside. No wonder Lewis has a reputation for putting the customer first. He is slick, but later comes a confession.I am wonderfully naïve about some of the stuff that is going to come but that is fine, it has served me well up to now, he says, vowels flat from his Yorkshire upbringing. I will do what I have to do tomorrow in the same way that I did things yesterday.I needed to find out for myself whether I can lead a whole business, Lewis says. Some people think that is crazy given some of the jobs I have done but actually I dont think you know whether you can truly lead a business until you sit in that seat.It's Day One for Tesco's Dave Lewis. Read the first interview here http://t.co/ndhFqxVeDJ 12.30pm BST Back to Germany, and the eurozones largest economy has officially posted its first surplus since reunification, for the first six months of this year.The Federal Statistical Office, Destatis, reported that Germanys general government achieved a surplus of 16.1bn in January-June, or around +1.1% of GDP.It's official, Germany had its first GG surplus (+1.1% GDP) in 23 years. There must be *some* room for flexibility. http://t.co/t0TR7sGcrTFirst we have to see if the economic forecasts remain as they are. If we have more money, if in doubt we will spend it in the area of investment. It is absolutely right for the topic of investment to be so prominent. 11.45am BST The escalating dispute between Russia and Ukraine has also driven the ruble down to a fresh record low today.A bout of early selling pushed the ruble down by around 1%, so that $1 was now worth 37.6 rubles.Ruble Falls to Record, 10yr yield jumps to highest in 5years as #Russia sanctions loom. http://t.co/WjimOFvdnH pic.twitter.com/ynFb2LahNFDevelopments in the Ukraine will eminently also continue to cast a long shadow, and will obviously be the main topic for discussion at this weeks NATO Summit in the UK, with the weekend call from some US senators to arm the Ukraine and Putins call for an independent state in the Ukraine underlining alarming similarities to the antecedents to World War I. 11.16am BST Martin Beck, senior economic advisor to the EY ITEM Club, also fears that Britains economy is becoming more unbalanced.Hes worried by the August factory slowdown, and the jump in unsecured lending to consumers in July (see here), saying:The combination of todays data suggests that the UKs expansion is in danger of losing its balance. In early 2014, investment and exports offered solid support to GDP growth and reduced the economys reliance on consumer spending and the housing sector. But there is now concern that the UK is in danger of repeating the problems of the past. 11.09am BST We should remember that Britains factory sector has been declining as a proportion of the overall economy for decades.This chart, from Bloombergs UK economist1 Jamie Murray, shows how overall UK GDP has grown much faster than the manufacturing sector since the mid 1970s.@graemewearden stable GDP share optimistic for a sector that has lost average of 29000 jobs every quarter since 1978 pic.twitter.com/2276XGqFkS 10.53am BST And heres some full reaction from Jeremy Cook, World Firsts chief economist, to the UK factory slowdown: While growth has remained positive, manufacturing is now expanding at the slowest rate since June of last year.Output and new orders for UK manufactured goods continued positively, but the slowing of growth has meant that employment change is at its weakest in 14 months. 10.33am BST Heres a news story on the slowdown in Britains factories:UK manufacturing PMI hits 14-month low in August 10.26am BST In other British economic news, the number of mortgages being approved has fallen.Just 66,569 new home loans were approved in July, down from 67,085 in June. That suggests the market is cooling somewhat as recent affordability tests hit home. 10.12am BST Rob Wood of Berenberg bank lays the blame for Britains factory slowdown firmly at the feet of Vladimir Putin.Wood warns that the escalating tensions with Ukraine could hurt UK growth this year, and in 2015. Putin hits UK manufacturing. The manufacturing PMI fell sharply to a 14 month low of 52.5, down from 55.4 in July and below consensus expectations. Russias escalation of the conflict in Ukraine has taken a toll on the internationally exposed manufacturing sector, and that effect could yet worsen further in the coming months given recent confidence drops in the more directly exposed core European economies. These developments pose a serious downside risk to growth this year and next.So far then increased international uncertainty is probably affecting exports and investment plans the most, and could return the UK to the lopsided consumer led recovery seen last year. 10.05am BST Mike Rigby, head of manufacturing at Barclays, says todays PMI survey shows UK factories havent achieved faster export growth:Growth in manufacturing continues but at a more controlled level than we have seen so far this year. Although there is still a confident buzz amongst manufacturers, the fragility of a recovery which continues to rely heavily on consumer spending is still an underlying cause for concern. A much-needed boost in export orders is yet to materialise but is becoming increasingly important if the UK manufacturing recovery is to rebalance and become more sustainable. 10.00am BST David Noble, CEO of the Chartered Institute of Purchasing & Supply, agrees that this mornings PMI report shows the UK factory sector is slowing.UK manufacturers were walking rather than running in August as the sectors performance fell to a 14-month low and growth began to slow further. There is a distinct easing across the breadth of UK manufacturing, with growth in output, new orders and employment all reducing to a more pedestrian level.Growth in new export orders has slowed to a five- month low against a backdrop of market uncertainty and increasing geo-political tensions. To help plug the hole left by a faltering Eurozone, manufacturers are finding new markets in North America and the Middle East. Vitally however, manufacturers continue to anticipate growth for the foreseeable future, with SMEs in particular, still hiring to catch up with one and a half years of consecutive output and new order growth. 9.52am BST Jeremy Cook, economist at World First, fears that the recent revival in Britains factory sector may have run its course:While the worst days of the recession are definitely behind us, UK PMI survey also suggests that the finest days of the recovery are too 9.42am BST There is bad news in the UK too -- Britains factory sector has reported a bigger than expected drop in growth last month.Geopolitical tensions, such as the Ukraine crisis, appear to be hitting growth in the sector after a strong performance over the last year. Europes economic malaise is also hurting manufacturers.It is also becoming increasingly evident that UK industry is not immune to the impacts of rising geopolitical and global market uncertainty, especially when they affect economic growth and business confidence in our largest trading partner the eurozone. It is noticeable that where export orders were reported to have risen, companies mainly linked this to demand from North America, Asia and the Middle East, as opposed to our European partners.It therefore looks as if manufacturing will provide a lesser contribution to the UK economic growth story in the third quarter than at the start of the year. Another sign that the UK economic boom is fading as the August manufacturing #PMI falls to 52.5 #GBP 9.32am BST Some early reaction to the news that eurozone factory growth slowed last month:Another bad day for #euro zone econ data, #Germany slowing down too. Pressure on #ECB mounts.Overall picture of manufacturing in eurozone: Activity slowing - although some growth, prices hardly increasing. Ukraine a factor #eurozone 9.21am BST And the upshot of all this mornings data is that the Eurozones manufacturing sector has just recorded its weakest growth in 13 months, adding to pressure on policymakers to take more action.The big-three nations of Germany, France and Italy all reported job losses, as did Greece. Staffing rose in Spain, the Netherlands, Austria and Ireland, but Ireland was the only nation to report a faster pace of hiring than in July. National data provided some bright spots, with the Irish numbers still buoyant and signs that Greece managed to move back into expansion territory. France remains a real concern though, with its manufacturing sector contracting at the quickest pace since May 2013, as does Italys descent from solid expansion to stagnation. Signs that growth impetus waned in the key industrial engine of Germany, and in Spain and the Netherlands too, is also less than reassuring. The slowdown in industry is likely to add further fuel to the fire for analysts expecting additional monetary or fiscal stimulus to be implemented. Eyes will now turn to the services PMI numbers on Wednesday for further clues on underlying growth momentum and whether policymakers can continue to wait for earlier measures to start to deliver. 9.07am BST Better news from Greece; factories have reported their first growth since May, with the PMI inching over the 50-point mark.Greek manufacturing output returns to growth in August, headline #PMI at 50.1 (48.7 in July) http://t.co/mg3umTxSXR pic.twitter.com/SPR2oqB8Ky 9.06am BST German factory sector has grown at its slowest rate in 11 months, with its manufacturing PMI dipping to 51.4 from 52.4 in July. Markit economist Oliver Kolodseike warns that:Warning lights are flashing in Germanys goods-producing sector, 9.00am BST The decline in Frances factory sector has accelerated, as Europes second largest economy still struggles. The French manufacturing PMI has slipped to just 46.9, well below the 50-point mark that separates expansion from contraction. Thats the lowest reading in 13 months.The latest disappointing PMI data for Frances manufacturing sector underline its ongoing struggles, with new orders sinking further in a fragile demand environment. Sharply falling output led firms to cut back employment, purchasing and stock levels further in August. This sort of across- the-board weakness has been a common theme in recent months and there remains very little to suggest any turnaround in fortunes will be imminent. And the beat goes on in #France as its manufacturing #PMI falls to 46.9 in August #Euro 8.55am BST Bad news from Italy. Its factory sector has suffered its first drop in activity in over a year.The Italian manufacturing PMI fell to 49.8 in August, down from 51.9 in July. Its the first time since June 2013 that the index has fallen below the 50-point mark.Italian manufacturing sector contracts for first time in over a year. PMI falls to 49.8 in Aug from 51.9 in July, expected 50.8. 8.51am BST As flagged in the intro, Germanys Federal Statistics Office has confirmed that its economy contracted by 0.2% in the second quarter of this year.That matches the first estimate of GDP, released last month. German GDP slump largely construction. Net trade also a drag. Big inventory build-up. Outlook weak. pic.twitter.com/7sfORwLIKf 8.38am BST Back to those PMI reports... and the Dutch manufacturing sector has grown at its slowest rate in over a year.The Netherlands manufacturing PMI dipped to 51.7, from 53.3 in July. That still shows that activity expanded, but rather less vigorously. Output, new orders, and employment growth all slowed. 8.36am BST Shares in Tesco have fallen by over 1.5% this morning as the City gives new chief executive Dave Lewis a cautious reception.Lewis has been rushed into the supermarket to take charge a month early, after last Fridays nasty profits warning. 8.28am BST Spain Manufacturing PMI (Aug) comes in weaker than expected at 52.8, exp 53.3Spanish manuf PMI - input prices still rising, but output prices down to a 5-month low (48.8). 8.25am BST Onto Spain, and its factory sector has just recorded its ninth expansion in a row.Growth has slowed, though, with Markits manufacturing PMI dropping to 52.8 from 53.9 in July. Thats still a fairly decent rate of expansion, given weakness in other parts of the eurozone, although slower than expected.Spains manufacturing expansion slows in August, with the headline #PMI at 52.8 (July: 53.9) http://t.co/mTTVcfzrJW pic.twitter.com/QAknqPrgR8However, mfg orders in Spain rose at quickest pace in +7 years. Charted against Quantity of Purchases Index here: pic.twitter.com/eSQ4toOOtj 8.13am BST Russias manufacturing sector has posted a small rise in activity last month, with its manufacturing PMI unchanged at 51.0.President Putins recent policy of import substitution (encouraging firms to use domestic products rather than overseas goods) appears to be stimulating activity. New orders rose at the fastest pace in a year.The overall impact of import substitution on the Russian economy appears to be negative. Indeed, large scale import substitution typically leads to higher costs and output prices growth, deducting from private consumption more than manufacturers add on the production side. 8.03am BST Taiwan has posted the strongest PMI report this morning, with new factory orders rising at the fastest rate in 42 months.But Indonesias manufacturing sector contracted for the first time in a year:Taiwan tops the Asian manufacturing #PMI table for the third month running in August pic.twitter.com/Ueac7PPm3A 7.53am BST Irelands factories have just expanded at their fastest rate in 15 years, helped by a big jump in new orders from Britain.The latest purchasing managers survey, which is produced by Investec, found a marked improvement in the health of the Irish manufacturing sector, with output and new orders both accelerating.This is a strong outcome, particularly when framed against the backdrop of weakening signs from some Eurozone trading partners of late, although the prognosis for Irelands other key export markets (the US and UK) remains encouraging. With manufacturing firms in Ireland stepping up their purchasing and hiring activity, it is clear that they are optimistic of a strong finish to the year and, while noting that the risks to global growth and (not unrelated) geopolitical tensions have increased in recent months, we expect to see continued progress into 2015. 7.45am BST There are new fears that Chinas factory sector is slowing, after two surveys of the countrys manufacturers came in weaker than expected.HSBCs monthly China Manufacturing survey has found that output and new order growth slowed last month, as firms continued to shed job. Overall, the manufacturing sector still expanded in August, but at a slower pace compared to previous months. We think the economy still faces considerable downside risks to growth in the second half of the year, which warrant further policy easing to ensure a steady growth recovery. 7.39am BST Good morning, and welcome to our rolling coverage of the financial markets, the world, economy, the eurozone and business.Were starting the week with a splurge of economic surveys of manufacturing sectors across the globe.Something of a tumbleweed open seen for share markets as September trading gets underway. Financial bookies: FTSE100 +1, DAX FLAT, CAC40 +2 Continue reading...
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