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Industrial production smashes expectations but construction sector slips deep into recession

Pound makes modest rebound as industrial and manufacturing production figures beat expectations; climbs 0.5pc against the dollar to over $1.32
Construction sectorslips into recession but stronger industrial output confirms that the UK economy picked upthe pace in the third quarter; trade deficit narrows slightly in September
European stocks spend second straight day plunging into the red; FTSE 100 retreats 0.7pc despite mining and housebuilding stocks climbing
Burberry's fall softened by respected Belgian billionaireAlbert Frere increasing his stake in the fashion house
5:35PM
Markets wrap: Industrial output enjoys best winning streak in 23 years
Industrial production smashes expectations but construction sector slips deep into recession

Housebuilders have a rare bright spot on the sinking FTSE 100 today
Industrial output in the UK smashed expectations in September and is on its best winning streak in 23 yearsbut the flagging construction sector slipped into recession, ONS statistics have shown today.
Industrial production growth confounded economists' forecasts to rise 0.7pc on a month-on-month basiswith the pound climbingback over $1.32 against the dollar following the release, which confirms that the UK economy picked up the pace during the third quarter.
Elsewhere, global stocks have plunged for a second straight day and the FTSE 100 has suffered worst in Europe after escaping much of Thursday's downwardturn in investor sentiment.
Burberry extended its losses following its strategy shiftbut revered Belgian activist investorAlfred Frere upping his stake in the fashion house to 6pc has lifted it from its morning lows. Distribution firm Bunzl has plunged 6.5pc on concerns of Amazon's disruption tothe B2B market and housebuilders have clawed back ground lost in a two-day retreat following a sales slowdown at Persimmon and Redrow.
IG market analyst Joshua Mahony gave his take on markets today:

"The FTSE 100 has seen a week characterized by selling finished off in style with the index hitting the lower ebb in over a month thanks to a sharp rise in the pound. The pound has been a big outperformer thanks to the release of impressive industrial and manufacturing production figures this morning.
"Early GBP gains were built upon amid the latest comments from Michele Barnier who showed that despite a shortening timeline, there is still a chance to start trade talks in December. David Davis now has a fortnight to agree a divorce payment or else wait until March to begin trade talks."
4:31PM
GDP rising at fastest pace this year as factories boom in winning streak for UK industry
Britains factories are booming, with industrial output now on its longest growth streak for 23 years.
The surge in manufacturing and mining is driving up growth in the wider economy the National Institute for Economic and Social Research believes GDP rose by 0.5pc in the three months to October, faster than any quarter so far this year.
Output in the sector has risenfor six consecutive months, smashing expectations by growing at 0.7pc in September and 1.1pc over the third quarter as a whole, according to the Office for National Statistics.
Factory output rose 1.1pc in the quarter with transport mainly car production up 3pc.
Mining and quarrying grew by 2.1pc, while electricity, gas and other related utilities rose by 1.1pc.
Read Tim Wallace's full report here
3:53PM
Fully funded Faroe Petroleum to raise $100m as sale talks loom
Industrial production smashes expectations but construction sector slips deep into recession

Faroe Petroleum is one of few North Sea explorers to emerge from the downturn debt free but it's still after more funds
Faroe Petroleum plans to bolster its fully funded balance sheet with a $100m (?76m) bond issuance ahead of talks to sell a stake in its growing North Sea portfolio.
The ambitious operator is one of the few North Sea minnows to emerge from the oil market downturn cash-rich and debt free, but it now plans to take advantage of strong investor appetite in the bond market to bolster its balance sheet while marketing its projects to potential partners.
The plans emerged just six weeks after Graham Stewart, Faroes boss, said the groups development programmes are fully funded in the near term despite the company carrying no debt.
Mr Stewart denied that the deal-hungry company would use the bond to fuel further acquisitions in the North Sea but said the financial flexibility could help strengthen the companys bargaining position as it seeks out new partners for its fields.
Read Jillian Ambrose's full report here
3:12PM
Markets update: US stocks tumble on tax reform delays
Industrial production smashes expectations but construction sector slips deep into recession

Delays to Donald Trump's tax agenda is sinking stocks this afternoon
US stocks are extending their losses into a second day this afternoon as uncertainty surrounding Donald Trump's tax reform plans resurfaces while the FTSE 100 has sunk firmly into the red after escaping much of yesterday's sell-off.
Burberry's rebound on back ofreveredBelgian billionaireAlbert Frere upping his stake was short-lived and the fashion designer is now 3.3pc down. Its fall is only outmatchedby Bunzl which has suffered its biggest intraday drop in over two years after Morgan Stanley highlighted the threat of online giant Amazon to the distribution firm's earnings.
Housebuilders have clawed back lost ground after sinking in the last two days on fears of slowing sales in the sector while on the FTSE 250, defence and technology group Ultra Electronics has dived nearly 9pc after announcing that there will be delays to its acquisition of Sparton.
2:34PM
Ferguson's 1bn sale of Nordic unit paves way for special dividend
Industrial production smashes expectations but construction sector slips deep into recession

Ferguson is the world's largest supplier of plumbing and heating equipment
Plumbing and heating supplier Ferguson has raised the prospect of a special payout for investors after selling its Nordics division to a private equity business.
FTSE 100-listed Ferguson known as Wolseley until it rebranded in July sold the underperforming building material distribution business to Stark Capital, part of Lone Star Funds.
The sale for 1.025bn (?910m) was on a debt-free and cash-free basis, and costs related to the deal are expected to be about 50m. Net assets of the business being sold are about 500m and Ferguson is retaining about 150m of property, which are expected to be sold off at a later date.
John Martin, chief executive of Ferguson, which operates the Plumb Center brand in the UK, said the sale would enable us to continue to focus on our strategy of accelerating profitable growth in our plumbing and heating businesses".
Read Alan Tovey's full report here
2:03PM
Should the UK's manufacturing sector be doing better?
Industrial production rose for 6th consecutive month in Sept, a feat last achieved 23 yrs ago. But higher oil prices cast shadow over the outlook pic.twitter.com/it60UmMUlD Samuel Tombs (@samueltombs) November 10, 2017
The UK's manufacturing sector has been the economy's bright spot since the EU referendum as the pound's plunge makes British exports more affordable but should it be doing even better?
Possibly but "supply chains are increasingly complex and interconnected means logistical considerations and competitive advantage probably matter just as much as price", according to ING Developed Markets economist James Smith.
He added that while the uptick in the sector is encouraging, the persistent weakness in consumer spending is a much bigger concern for the Bank of England.
The central bank hastaken the first step to easing the strain on UK household incomes but inflation and wage growth figures next week will determine whether that pressure is beginning to ease.
Forecasts suggest that the pain for UK consumers actually increased in October but many economists believe that inflation will have peaked last month.
Bremainer twitter seen here reacting to the UK Industrial Production data. pic.twitter.com/F0YqdFw41r Nicola Duke ? (@NicTrades) November 10, 2017
1:41PM
Kobe Steel quality scandal driven by pursuit of profits and demanding corporate culture
Industrial production smashes expectations but construction sector slips deep into recession

Hiroya Kawasaki, president of Kobe Steel, bows during a news conference in Tokyo
Scandal-hit Kobe Steel's troubles were driven by a relentless focus on profits and the companys regimented corporate culture, which led to more than decade of faked quality guarantees on its products.
Japans third largest steel-maker said it sincerely and deeply apologised for the enormous amount of worry and trouble we have caused as the findings of an investigation into its problems emerged.
A 27-page document detailing what went inside Kobe which has been loss-making for the two years said failed quality controls were behind testing data being altered.
The report said that a severe management environment with demanding profit targets had contributed to the scandal.
The investigation into the issues which affected more than 500 customers including those in the aerospace, transport and nuclear industries was ordered by Japanese government.
Read Alan Tovey's full report here
1:04PM
Lunchtime update: Pound makes modest rebound as UK manufacturing and industrial production figures smash expectations
Industrial production smashes expectations but construction sector slips deep into recession

Industrial production smashed expectations in September
The pound has made a modest rebound on currency markets after UK manufacturing and industrial production figures smashed expectations to confirm that the UK economy started to pick-up the pace in thethird quarter.
Industrial production is on its best winning streak for 23 years but construction plunged into contraction territory as political and economic uncertainty continues to plague the sector.
After a bright start, European stocks have plunged into the red for a second straight day with the FTSE 100 retreating 0.5pc despite its huge mining stocks clawing back lost ground.
Fashion house Burberry has pared some of its losses after respected Belgian billionaireAlbert Frere upped his stake to 6pc while food manufacturer Bakkavor has revived its plan to float on the London Stock Exchange just a week after ditching its IPO due to market volatility.
Accendo Markets head of research Mike Van Dulken gave his take on this morning's diving stocks:

"Equity indices remain on the back foot as fears intensify about a delay to the US corporation tax cut, couples with some disappointing earnings, pulled shares further from recent record highs. All eyes on whether prior historic resistance turns supportive to revive the otherwise strong uptrend. Pause for consolidation, or start or a more meaningful correction?"
12:36PM
Burberry shares recover after respected Belgian investor reveals increased stake
Industrial production smashes expectations but construction sector slips deep into recession

Burberry's new strategy wasn't taken well by investors
Revered Belgian billionaire Albert Frere has upped his stake in Burberry, capitalising on the fashion house's two-day plunge following the announcement of its new upmarket strategy.
Burberry's shares plunged 10pc yesterdayand were on the slide againtoday until Frere'sincreased stake was revealed. Its shares have nowcompletely reversedtoday's4pc loss and peaked into positive territory following the announcement.
The company's chief executiveMarco Gobbetti has asked shareholders to bare a couple years of pain in order to revitalise Burberry's margins but investors dumped the stock yesterday on the major strategy shift.
Industrial production smashes expectations but construction sector slips deep into recession

Shares shot up when the increased stake was revealed
11:53AM
David Davis says City is 'very much in my mind' as Brexit talks resume
Industrial production smashes expectations but construction sector slips deep into recession

The Brexit secretary said he wanted to ensure the City remains competitive post-Brexit
David Davis has reassured City firms he has their concerns at heart before heading off to Brussels for the latest round of Brexit negotiations today.
When I sit round the negotiating table with [EU chief negotiator] Michel Barnier, or round the cabinet table with my colleagues, its always with the importance of the City very much in my mind, the Brexit secretary said last night, adding he was determined to maintain the Citys competitiveness".
Speaking at an awards ceremony held by the City A.M. newspaper, Mr Davis said he wants to ensure employing EU citizens remains as easy as possible post-Brexit.
While leaving the EU will allow us to bring back control of immigration, it wont mean pulling up the drawbridge, he said.
Read Jack Torrance's full report here
11:32AM
Differing fortunes in the construction sector
Overall UK construction sector in recession as output fell -0.9%q/q in Q3. House building and industrial construction grew though. pic.twitter.com/Wz8nEzg6ud Rupert Seggins (@Rupert_Seggins) November 10, 2017
The continuing struggles of the construction sector is the most alarming takeaway from this morning's mixed batch of results.
The sector has flickered between expansion and contraction all year but September's contractionwas its worst since March 2016.
Rebecca Larkin, senior economist at the Construction Products Association, highlightedthat is a clear variation in performance by sector with private housing supported by the Help to Buy scheme and private commercial where new orders have fallen for three quarters.
10:54AM
Industrial production's run of form best in 23 years; UK trade performance is 'abysmal'
Industrial production smashes expectations but construction sector slips deep into recession

The recent surge in oil prices could weaken manufacturing output
Let's have some more reaction to this morning's mixed batch of data on the UK economy.
Pantheon Macro's UK economist Samuel Tombs described the performance of UK trade since sterling's huge depreciationas "abysmal", adding that higher oil prices could weaken the recovery in manufacturing output.
He did point out, however, that industrial production has risen for six straight months, a record last achieved 23 years ago.
Mr Tombs added on the outlook for the sector:

"Looking ahead, however, the recovery in manufacturing output likely will weaken in response to the recent surge in the oil price. In addition, output in the energy supply sector likely plunged by about 4% month-to-month in October, due to unseasonably warm weather. Accordingly, its unlikely that industry can be counted on to support GDP growth again in Q4."
10:21AM
Flurry of industrial activity provides economy welcome relief from the consumer slowdown
The flurry of industrial activity is providing the UK economy some welcome relief from the consumer slowdown, Capital Economics' UK economist Ruth Gregory commented.
She added, however, that construction's worse-than-expected decline will mean that the figures will have a minimal impact on GDP figures for the third quarter.
What the UK economy looks like - in one handy chart. pic.twitter.com/XcfRJo1oNk Rupert Seggins (@Rupert_Seggins) October 25, 2017
That being said, it should be noted that industrial and manufacturing production picking up is far more important than construction's woes. As economist Rupert Seggins' excellent tweet above shows, the construction sector is dwarfed in terms of importance in the UK economy.
9:53AM
Industrial, manufacturing, construction and trade figures key takeaways
UK manufacturing ends Q3 on a high note, growing by 0.7%m/m. Production as a whole was up 1.1%q/q for Q3. Largest contribution to #ukmfg was transport equipment. pic.twitter.com/eCnSpqPz8i Rupert Seggins (@Rupert_Seggins) November 10, 2017
I wouldn't say currency traders have piled into sterling following those better-than-expected figures from the ONS but itis back on the rise. Let's have a look at the key takeaways from today's release.
Industrial production comfortably beat expectations in September to record a monthly rise of 0.7pc in September, primarily due to a 0.7pc rise in manufacturing.
Construction output slipped1.6pc on a month-on-month basis in Septemberas new work falls 1.3pc and repair and maintenance tumbles2.1pc.
The trade deficit excluding erratic commodities narrowed by ?0.1bn to ?3.8bn between August and September but widened in the three months to September.
Sterling jumps 0.1pc to $1.3154 against the dollar but remains flat against a basket of the leading currencies in reaction to the batch of data.
9:39AM
Pound rebounds as economic figures smash expectations
Industrial production smashes expectations but construction sector slips deep into recession

Manufacturing and industrial production accelerated in September
Industrial production smashed expectations in September but the construction sector slipped deep into contraction territory, ONS figures have shown this morning.
Sterling has made a modest reboundon currency markets after manufacturing production also beat economists' forecasts and the trade deficit narrowed slightly.
9:13AM
Manufacturing, industrial and construction indicators due soon
Looking ahead, highlights include UK trade balance, manufacturing and industrial production, while US will see Michigan consumer sentiment. Sigma Squawk (@SigmaSquawk) November 10, 2017
This week's economic release highlight drops at the bottom of the hour so let's have a quick look at what we're expecting.
Industrial production is expected to have accelerated in September to 0.3pc on a month-on-month basis but manufacturing, the UK economy's bright spot,is forecast to slow to 0.3pc and construction could sink back into contraction territory, according to economists.
The bar is set so low for sterling that "a string of robust economic indicators from the UK could greatly alter the perception about when the UK central bank might hike again", according to CMC Markets analyst David Madden.

8:50AM
Bakkavor revives IPO one week after shelving it due to 'market volatility'
Industrial production smashes expectations but construction sector slips deep into recession

Bakkavor has announced that it will go ahead with its IPO plan just a week after ditching the proposal
Food manufacturer Bakkavor has revived its plan to float on the London Stock Exchangethis month just a week after shelving it - purportedly on the grounds of market volatility.
The UKs leading producer of hummus said this morning its shares will list on November 16 at a price of 180p, giving it a market cap of around ?1bn - lower than the minimum valuation of ?1.4bn it had previously been aiming for.
The food producer, which supplies ready meals to Britains major supermarkets, announced it was shelving the float last Friday.
It said at the time: Whilst the company received sufficient institutional demand to cover the offering, the Board has taken the decision that proceeding with the transaction would not be in the best interests of the company, or its shareholders, given the current volatility in the IPO market
The Daily Telegraph understands Bakkavor was approached by investors following that decision and persuaded to revive it - albeit at the lower price.
Report by Jack Torrance
8:37AM
Agenda: Industrial production figures set to show UK economy picking up the pace
Industrial production smashes expectations but construction sector slips deep into recession

Growth in the manufacturing sector is expected to soften slightly this morning
A very quiet week for UK economic indicatorssprings into life this morning with industrial production figures set to confirmthat theeconomy is picking up the pace.
Although recent GDP growth estimates point to a strengthening economy, indicators from the manufacturing and construction sectors also due are expected to dampen any enthusiasmwith the latter forecast to sink back into contraction territory.
Further opportunity to assess the health of the economy following the Bank of Englands first interest rate hike in a decade will arrive next week with inflation, wage growth and retail sales among the key releases.
Asia stocks suffer another day of profit taking from the highs on no real news following sharp selloff in the US on no news followed that in Japan y'day as investors become nervous at these levels. But, acc to JPM, macro narrative remains supportive equities into yr-end. pic.twitter.com/ma34iGJyi4 Holger Zschaepitz (@Schuldensuehner) November 10, 2017
The European Commissions grim assessment of the UKs economic outlook halted the pounds rebound yesterday and sterling is bobbing around in flat territory against the dollar this morning after paring early losses.
A volatile session over in Tokyo and disappointing corporate figures sparked yesterdays stumble on global stocks markets but the FTSE 100 is back on the rise this morning.
Miners are clawing back lost ground and heating and plumbing products firm Ferguson is topping the blue-chip index after selling Stark Group to an affiliate of private equity firm Lone Star. Meanwhile, fashion house Burberry is languishing at the bottom of the FTSE 100 leaderboard for a second straight day after announcing its shift towards a more upmarket strategy.
Interim results: Castings, Volex, Vedanta
AGM: VinaLand, Galliford Try
Economics: Construction output m/m (UK), Manufacturing production m/m (UK), Industrial production m/m (UK), Goods trade balance (UK),Preliminary UoM inflation expectations (US), Preliminary UoM consumer sentiment (US), Final CPI m/m (GER)

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