UK companies endure sharpest downturn since Brexit vote – as it happened

Photo of UK companies endure sharpest downturn since Brexit vote – as it happened

Rolling news coverage of markets, economics and business as purchasing managers indices show economy in decline

Wall Street gained at the opening bell on Friday, as some lukewarm words on trade from Xi Jinping and his counterpart Donald Trump (even when somewhat distracted) gave investors something to focus on.

The S&P 500 gained 0.24%, while the Dow Jones industrial average rose by 0.18% and the Nasdaq composite index rose by 0.28%.

Donald Trump, the US president, has said that a trade deal with China is “potentially very close”.

Marks & Spencer has rehired the head of Tesco’s F&F clothing brand to be its new clothing boss, a fortnight after the struggling retailer blamed the division for its poor performance.

Marks & Spencer clothing and home is a great business which still has strong brand affection and huge potential. I left the business because I felt it was drifting in the wrong direction but now feel we have a real chance to make it special again. The new team has already started to improve product and value and I am looking forward to working with them.

It looks like the warmish words of Xi Jinping will give some trade cheer to Wall Street.

Futures indicate that US stock markets are likely to rise gently at the opening bell. The S&P 500 and Dow Jones industrial average will rise by 0.15% each if it matches sales of the derivatives, while Nasdaq 100 futures currently point to a 0.22% rise.

An interesting marker laid down on Uber’s battle for its London licence here from Reuters: three days out from the crucial decision and the US taxi app company is none the wiser.

In September, TfL gave Uber just a two-month extension, far short of the maximum possible five years, and imposed further conditions covering ride-sharing, appropriate insurance and driver document checks.

Uber’s licence in London currently expires on 25 November. On Friday, both TfL and Uber declined to comment.

Just after midday, the FTSE 100 has gained ground slightly. It’s now up by 1.2%, as traders take some comfort from positive rhetoric on trade from China’s Xi Jinping.

Glencore is among the biggest winners, with the commodities miner up by 3.3%. British Gas owner Centrica has also risen by 3.2%.

TSB now says the payment problems have been resolved.

Overnight some payments were delayed in and out of TSB accounts. This has now been resolved and the payments have been completed. We apologise for any inconvenience this has caused.

It’s beyond belief that customers have experienced more problems as a result of yet another IT glitch from TSB, hot on the heels of a damning report into the bank’s system failure last year.

With banks increasingly trying to move customers online, these IT glitches are still far too common across the industry, and it’s clear that people need access to cash as a back-up.

The window shocker aside (a better video above for your delectation), the very early verdict is that Tesla’s “cybertruck” is not likely to be a game-changer for the company.

The truck’s “artisanal” cyber styling and excessive specs (range, acceleration), will likely result in a niche product made exclusively for a very conspicuous variant of EV enthusiasts and is unlikely to seriously threaten/disrupt incumbent truck [manufacturers] or may even fall short of broader pickup new entrants such as Rivian.

Spare a thought today for customers of TSB: the bank is facing a fresh IT glitch after customers failed to receive wages, benefits, pensions and other payments into their accounts.

Related: TSB struck by new IT glitch just months after £330m meltdown

Philip Hammond – remember him? – was back on the airwaves this morning, bashing the Labour party under Jeremy Corbyn, and also the harder Brexit supporters in his old party.

Thomas Pugh, a UK economist at Capital Economics, said the PMI data were consistent with a fall of 0.3% in UK GDP during the final three months of the year.

He said:

The first set of regular flash PMIs for the UK will only stoke fears that the economy is heading for a further slowdown at the end of the year. Indeed, even though we think that the PMIs are probably overstating the weakness in the economy a bit, the downturn in the services PMI is especially worrying.

The services sector has been the stalwart of growth over the last year, but this may be a sign that the weakness in the rest of the economy is starting to creep into the economy’s largest sector.

A caveat on the PMI data: because the early “flash” version only covers about 85% of the companies surveyed it can be revised when the final reading comes out.

Either way, it is not a picture of strength, and the Bank of England’s monetary policymakers will surely be thinking very hard about whether to respond to weak growth.

Doesn't look too good for the UK economy right now! PMI composite has fallen further below 50 signalling a GDP contraction in Q4! #Brexit uncertainty

We expect Bank of England to deliver a cut in January!

We hear time and again that uncertainty does not help companies who want to invest and grow their businesses. There’s been a fair share of uncertainty over the last three years, and it appears the addition of an election campaign is the cherry on top.

Howard Archer, chief economic advisor to the EY ITEM Club, said:

The new “flash” purchasing managers’ survey for the UK manufacturing and services sectors disappointingly marked its debut with weak news on the economy. Indeed, it showed overall manufacturing and services contracting at the fastest rate for 40 months in November, having been flat in October.

It was reported that domestic activity was being hampered by a lack of clarity on Brexit as well as business uncertainty being magnified by the forthcoming general election. It was also reported that there had been overstocking ahead of the scheduled 31 October UK exit from the EU.

The UK services PMI was 48.6, hitting the lowest level since the immediate aftermath of the Brexit vote in July 2016.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the reading was “Consistent with falling GDP, though it has been too downbeat repeatedly this year.”

The worse than expected UK PMI data has woken up sterling traders (who otherwise appeared to be taking a bit of a break as they await the general election result next month).

The pound is now down by 0.35% against the US dollar for the day, at $1.2868.

The PMI data represents the worst run since the global financial crisis triggered a recession a decade ago, IHS Markit said – leaving big questions for the Bank of England.

The weak survey data puts the economy on course for a 0.2% drop in GDP in the fourth quarter, according to Chris Williamson, chief business economist at IHS Markit. He said:

With an upcoming general election adding to Brexit-related uncertainty about the outlook, it’s no surprise to see UK businesses reporting falling output and orders in November.

While Brexit issues such as stock-building and car factory closures have led to volatile GDP data so far this year, making monetary policymaking especially difficult and encouraging the Bank of England to sit on its hands until the fog clears, the PMI surveys are not only warning that the underlying trend in the economy is deteriorating markedly, but also that the labour market is cooling.

The British manufacturing sector shrank more than expected in November as the services sector staved off a decline, according to an early reading of company activity.

The flash UK manufacturing output index came in at a reading of 48.3 in November, down from the October reading of 49.7 and lower than the 49 expected by economists.

And now we gear up for a very mildly exciting moment for UK economic data nerds: the first ever flash PMI reading for British manufacturing and services.

It will give us – drumroll please – a slightly earlier insight into what’s happening in the economy.

The Eurozone manufaturing sector continued to shrink in November, according to IHS Markit’s purchasing managers index (PMI).

The flash manufacturing reading came in at a reading of 46.6, below the 50 mark that indicates growth but an improvement compared to October and slightly higher than expected by economists.

Germany's manufacturing PMI bottoming out. New orders component in particular. Still not great. But possible recovery on the cards. $EUR distracted by Lagarde. But look at peripheral $EUR sensitive FX like $SEK & $ZAR. Even $AUD up a touch. Green shoots? More like fading risks

Lagarde highlighted public investment in particular (as opposed to spending on day-to-day operations), and repeated Mario Draghi’s calls for closer monetary union.

Economists said Lagarde’s speech, which has now finished, represented a continuation of Draghi’s stances – albeit with a review to come.

Continuity from @Lagarde, with a focus on a better policy/institutions alignment over the medium-term. Strategy review might be formally launched in December.

Meanwhile monetary policy will be driven by the economy, and the ECB should remain on hold based on today's PMIs.

ECB's Lagarde: Governments that can afford to loosen [fiscal policy] don't want to, while those that want to can't afford to#ECB #Lagarde #EURUSD

Lagarde to continue the #ECB’s push for fiscal policy to step up: “We will continuously monitor the side effects of our policies. Monetary policy could achieve its goal faster and with fewer side effects if other policies were supporting growth alongside it.”

Lagarde said she will begin a “strategic review” of monetary policy.

She said: “More on that later, but give us time to give a cohesive view.”

Christine Lagarde has used her first major speech as head of European Central Bank to call for higher investment from governments to take the weight off monetary policy.

She said: “It is clear that monetary policy could achieve its goal faster and with fewer side effects if other policies were supporting growth alongside it.

While investment needs are of course country-specific, there is today a cross-cutting case for investment in a common future that is more productive, more digital and greener.

Public investment in the euro area remains some way below its pre-crisis levels. The share of productive expenditure in total primary expenditure – which in addition to infrastructure includes R&D and education – has also dropped in nearly all euro area economies since the crisis. And new investment needs are emerging.

And here is Lagarde’s speech, delivered at the Frankfurt European Banking Congress on the “future of the euro area economy”.

The FTSE 100 is now up by 0.9%, with broad-based gains – the highest riser is Rolls Royce, which has only gained 2.6%.

It seems that Chinese president Xi Jinping’s trade optimism has buoyed investors.

Lagarde is up shortly (as are those eurozone PMI releases).

Analysts at Deutsche Bank, led by Jim Reid, warned that while there could be “volatility” in communications as she takes over the mantle from Mario Draghi, but also that she could take a gentle approach at first.

Lagarde’s previous remarks as President didn’t touch on monetary policy, but since then, she has met with her Governing Council colleagues, so she may feel emboldened to make firmer comments if she chooses.

[...] we could see a temporary increase in communications volatility at first as the market learns to interpret signals from Lagarde. The initial expectation is that she will be more consensus-driven and less prone to pre-announcing policies than Draghi was, which would likely reduce the scope for any major signal today.

Tesla has launched its new “cybertruck” – a boldly designed pickup truck taking aim for some of the most profitable cars made by US manufacturers – but perhaps even more eye-catching was a demonstration that resulted in shattered windows on the pristine vehicle.

Oh my fucking God!

Tesla allowed someone to throw a rock at the glass windows of the new #Cybertruck. It didn’t go as planned.

Related: Cybertruck: Tesla unveils new pickup truck but windows shatter during demo

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

Investors’ eyes this morning are on Christine Lagarde, as the still fresh European Central Bank boss makes her first proper speech at the helm of one of the world’s key monetary policy setters.

The ECB’s new president, Christine Lagarde, will most likely be unable to provide much more in the way of monetary-policy stimulus, given that one-third of the ECB Governing Council already opposes the current round of easing.

BREAKING: Chinese leader Xi Jinping says Beijing wants a trade deal with the U.S. but if need be will ‘fight back.’

We want to work for a ‘phase one’ agreement on the basis of mutual respect and equality.

When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want.

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