Aurelia Butler

Growth in UK economic activity has slowed more than expected to an 18-month low as manufacturing shrank on weaker demand, supply shortages and labour, according to a closely watched survey.The S&P/Cips global flash UK composite purchasing managers’ index, a measure of private sector activity, dropped to 50.9 in August from 52.1 last month. That is the lowest reading since February 2021, when the country was in a pandemic-related lockdown. The reading, based on data collected between August 12 and 19, was weaker than the 51.1 forecast by economists polled by Reuters and was only marginally above the 50 mark, which indicates a majority of businesses reporting a month-on-month expansion.Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said: “The UK private sector moved closer to stagnation in August, as mild growth of activity across the service sector only just offset a deepening downturn at manufacturers.”The PMI index for manufacturing collapsed from 51.1 in July to 46 in August, the first reading indicating a contraction since May 2020, when the UK economy was under a stringent lockdown. Reduced customer demand, the delayed delivery of goods and materials and labour shortages all weighed on performance, according to panel members.A number of companies said increased economic uncertainty and high costs had weighed on market confidence and sales. The PMI sub-index for factories’ orders fell sharply, indicating the third consecutive month of contraction.Consumer demand is limited by historically high UK inflation, which rose to 10.1 per cent in July. Citigroup, the bank, on Monday forecast that inflation would exceed 18 per cent in January next year, as energy prices continue to soar.Paul Dales, chief UK economist at Capital Economics, a consultancy, said “we suspect the composite PMI will be ringing the recession alarm bell before long”, adding that he expected a recession in the third quarter after official data showed that the economy contracted in the second quarter. The Bank of England this month forecast a prolonged recession that would leave the economy smaller by Q3 2025 than it was before the pandemic. However, Dales said that, in view of soaring inflation, the BoE would have little choice but to continue lifting interest rates from 1.75 per cent now to 3 per cent.Simon Harvey, head of FX analysis at Monex Europe, a foreign exchange company, said that with the PMI sub-index for inflation still pointing to prices rising, albeit at a slower pace than in previous months, Tuesday’s data “confirms our view that the BoE will likely conduct a second 50 basis points hike at their September meeting”.That view is supported by recent further surges in European wholesale gas prices, which suggest the cost pressure could intensify in the coming months. The downturn in the manufacturing sector was confirmed by the first fall in output since February 2021 in the three months to this August, the CBI, an employers’ organisation, reported on Tuesday.

However, the UK composite PMI was stronger than in the eurozone, where the index dropped to 49.2, thanks to the resilience of the British services sector.The UK services PMI remained largely stable at 52.5, with Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, saying this could reflect “the additional support to incomes provided by the government in July”.But overall, the survey showed that the UK’s economic recovery from the hit of the pandemic has stalled. John Glen, Cips chief economist, said disruptions to supply chains from the Ukraine war, soaring inflation, higher interest rates and now industrial action at ports were all “keeping private sector business owners awake at night”. More

There are currently more than 300 supervisory bodies across Germany, a figure the finance ministry would like to reduce.With the new authority, the finance ministry hopes to make it easier to tackle complex international money laundering cases, which have long been a weak spot for the country. “We need to do better in many areas,” said a government representative, referring to the fight against money laundering.The current FIU unit, which receives suspicious activity reports, will work with the new authority, and a coordination unit will be set up to supervise the non-financial sector. Details on the ministry’s plans will be published this week. More

Investing.com — The dollar charges to a new high as the euro weakens again. New home sales data for July are due, and the Federal Reserve’s Neel Kashkari will speak after the market close. Elon Musk wants to know what Jack Dorsey has on file about Twitter’s spams and bots, and crude oil prices rise after Saudi Arabia’s oil minister warns of a supply cut to stop what he sees as unjustified weakness in futures markets. Here’s what you need to know in financial markets on Tuesday, 23rd August.1. Euro hits new 20-year low as PMIs point to recessionThe dollar marched to a new 20-year high as the euro slumped again with the prospect of an energy-driven recession in the second half of the year looming ever larger.The euro fell as low as $0.9902 before paring losses, after figures suggesting that the key German manufacturing sector held up better than expected in August as supply chain bottlenecks eased.However, that didn’t stop the composite purchasing managers indices of both Germany and France slipping into contraction territory. S&P’s manufacturing PMI for Japan also fell to its lowest level since February 2021.2. U.S. New Home Sales due; Fed’s Kashkari to speak laterThe dollar’s strength owes much to the fading of hopes for a dovish pivot on monetary policy from the Federal Reserve. Instead, expectations are mounting that Chairman Jerome Powell will use his keynote speech at Jackson Hole on Friday to ram home the message that the Fed will keep tightening policy.If any of Powell’s colleagues feel like dissenting as the economy shows signs of cooling off, it’s likely to be Neel Kashkari, head of the Minneapolis Fed, one of the most dovish members of the Fed’s policymaking committee. He’s due to speak at 19:00 ET (23:00 GMT).Redbook Research’s latest update on the economy and New Home Sales data for July are due before that at 08:55 ET and 10:00 ET respectively.3. Stocks set for a weak bounce as Zoom outlook weighsU.S. stock markets are expected to open with a weak bounce, after suffering their worst daily loss in eight weeks on Monday.By 06:15 ET, Dow Jones futures were up 47 points, or 0.1%, while S&P 500 futures and Nasdaq 100 futures were both up 0.2%. The main cash indices had lost between 1.9% and 2.6% on Monday.Sentiment is not being helped by a sharp cut in guidance from Zoom Video (NASDAQ:ZM) after hours on Thursday which exposed the extent of its struggle to grow beyond its basic videoconference offering. Medtronic (NYSE:MDT) is the big name reporting earnings before the open, while Intuit (NASDAQ:INTU) headlines after the bell. Chinese e-commerce company JD.com (NASDAQ:JD) is also due to report.4. Musk subpoenas documents from Dorsey to bolster Twitter fightElon Musk subpoenaed documents from Twitter (NYSE:TWTR) founder and former CEO Jack Dorsey, aiming to bolster his arguments about the social media company’s spam and bot users as he tries to fend off Twitter’s attempts to force him to buy it.Twitter sued Musk for failing to proceed with his binding takeover offer earlier in the summer, while Musk countersued, claiming Twitter had withheld information about spam accounts.Prior to that, Musk had counted on support from Dorsey and others to help him take the company private, encouraged by Dorsey’s supportive (but non-binding) comments on social media. Dorsey would stand to realize around $1 billion from a sale of his stake in the company to Musk, however.A five-day trial is due to start on October 17th.5. Oil rises as Saudi Minister threatens supply cut; natgas continues its LNG-driven surgeCrude oil prices bounced after Saudi Arabia’s oil minister tried to jawbone the market higher with warnings of a possible cut in output.In interviews with Energy Intelligence and Bloomberg, Prince Abdulaziz bin Salman said that futures prices, which have fallen over 25% from their peaks earlier in the summer, are failing to reflect the tightness of the physical market, and that the OPEC+ group of producers may need to cut supply to end that ‘disconnect’. The American Petroleum Institute’s weekly inventory data are due at 16:30 ET as usual.By 06:25 ET, U.S. crude futures were up 1.8% at $92.00 a barrel, while Brent futures were up 1.5% at $95.97 a barrel. Natural gas futures continued to push to new 14-year highs as demand from Europe ahead of the coming winter kept the Atlantic LNG market acutely tight. More

Eurozone business activity has suffered its biggest contraction for 18 months as a result of higher prices, falling demand and rising inventories of unsold goods, according to a benchmark survey of companies, which has added to fears of an impending recession.S&P Global’s flash composite purchasing managers’ index on Tuesday fell 0.7 points to 49.2, its lowest level since February 2021 and the second consecutive month below the crucial 50 mark that separates growth from contraction Economists polled by Reuters had expected a slightly bigger fall. But the survey underlined the challenges confronting the eurozone economy after German businesses reported their biggest reversal of activity for more than two years, while French businesses suffered their first contraction in 18 months.Andrew Harker, economics director at S&P Global, said the data “point to an economy in contraction during the third quarter”. He added: “Cost of living pressures mean that the recovery in the service sector following the lifting of pandemic restrictions has ebbed away, while manufacturing remained mired in contraction in August.”Tourism and hospitality-related services were boosted this summer by the lifting of most coronavirus restrictions in Europe, but the benefits appear to have been cancelled out for many companies by a rising number of countering factors. Russia is squeezing natural gas supplies to Europe, causing record eurozone inflation, eroding household spending and hitting business investment while forcing the European Central Bank to raise interest rates and convincing many economists that the eurozone is heading for recession. “August’s flash PMIs suggest that the eurozone economy is now contracting,” Jack Allen-Reynolds, an economist at Capital Economics, wrote in a note to clients, adding that “the ECB will have to press ahead with monetary tightening even as the economy falls into recession”.Eurozone government bonds sold off on Tuesday reflecting a belief that the economic downturn will not be enough to deter the ECB from raising its deposit rate from zero to 0.5 per cent at next month’s meeting. Italy’s 10-year bond yield rose to 3.65 per cent, a two-month high.New orders for eurozone businesses in both services and manufacturing fell for a second consecutive month, according to S&P Global, leaving factories grappling with the biggest increase in inventories of unsold products in the 25-year history of the survey. “Particularly sharp declines in output were seen across basic materials categories and in the autos sector, but reductions were also recorded in parts of the service sector, including in tourism and recreation and real estate,” it said.The survey also found evidence that inflationary pressures were easing, as input costs and selling prices both rose at their slowest pace for almost a year. Supply chain constraints also abated as delivery times rose at their slowest pace since October 2020. The reduction in business activity was mostly concentrated in Germany and France, it found, while output in other eurozone countries continued to increase, “albeit only marginally”.The PMI reading for Germany fell 0.5 points to 47.6, a slightly smaller decline than expected to its lowest level since June 2020, as a sharp drop in the services index offset an improvement in manufacturing. “German GDP may not have fallen in the second quarter, but it will all but certainly do so in the third quarter, and we doubt it will be able to avoid a technical recession this year, Melanie Debono, an economist at Pantheon Macroeconomics, said in a note to clients.The French PMI reading fell more than expected, dropping 1.9 points to 49.8, as activity was hit by a sharp slowdown in the services sector. More

Ethiopia’s bilateral creditors, co-chaired by France and China, first met in September 2021 but progress on debt relief has been complicated by a 21-month civil war that began in the northern Tigray region.The bilateral creditor discussions, held under the G20’s Common Framework debt restructuring process, were “stellar” but the newness of the process had contributed to delays, Brook Taye, a senior adviser at Ethiopia’s ministry of finance, said at a virtual event hosted by the African Development Bank. More

The top court also denied Najib’s request for a stay of sentence. This was Najib’s final appeal. More

LONDON/LUANDA (Reuters) -Angolans will vote on Wednesday for a new president and parliament in what looks set to be the closest election in Africa’s second-biggest oil producer since the country won independence from Portugal in 1975.WHO ARE THE MAIN PLAYERS?President João Lourenço of the governing MPLA, who has made reforming the corruption-plagued southern African country his priority since taking office in 2017, faces Adalberto Costa Júnior of the rebel-turned-opposition group, the National Union for the Total Independence of Angola (UNITA).A May Afrobarometer poll gave the ruling MPLA, which has governed Angola since independence, a lead of 7% over UNITA. Analysts expect it to win despite growing support for the opposition.WHAT IS AT STAKE FOR INVESTORS?Angola is one of Africa’s largest economies. It is the continent’s second-largest oil producer after Nigeria, according to OPEC, while Kimberley Process data ranks it as the world’s seventh-biggest producer of rough diamonds.Long dominated by state-owned companies, a legacy of its socialist past, Angola has embarked on ambitious privatisation programmes but progress has been slow. Authorities expect the restructuring of state oil company Sonangol and diamond miner Endiama ahead of partial IPOs to take a further 12 to 18 months.Lourenço has also opened anti-corruption probes against the previous MPLA administration.After five years of recession, Angola’s GDP increased 0.7% in 2021, according to the World Bank, and the finance ministry expects growth of 2.7% for this year. Inflation is falling, but remains above 20%.A return to growth linked to higher oil prices has, as usual, not benefited most Angolans, around half of whom live in poverty, according to the Angola Multidimensional Poverty Index. Such desperation could easily spill over into violence during the elections, said Risk Advisory Group’s Laura Seara Cabeça.WHAT ARE MARKETS WATCHING OUT FOR?Investors in the country’s $9 billion worth of outstanding Eurobonds are pricing in a win and a majority of the 220 parliamentary seats for the MPLA, which would mean the continuation of Lourenço’s market-friendly policies.Angola’s Eurobonds currently yield above 10%, Tradeweb data show, the level at which a country is often considered to be locked out from issuing new debt.The country’s debt burden soared to a record high of 131% of gross domestic product (GDP) in 2020 and then fell to 75% last year, helped by higher oil prices.A JPMorgan (NYSE:JPM) index of Angola’s bonds is down 9.3% in the last six months, compared with a 12.5% fall for the continent as a whole.WHAT IS THE DIFFERENCE BETWEEN MPLA AND UNITA’s POLICIES?Not much. Both have presented similar proposals aimed at diversifying the economy and tax base away from oil, and encouraging investment in sectors such as renewable energy, fisheries and tourism, according to Fernandes Wanda, an economist at University Agostinho Neto in Luanda.But Jon Schubert, a political anthropologist at the University of Basel, said he thought the ruling MPLA had yet to demonstrate the political will to end Angola’s continued heavy dependency on oil.Lourenço told a campaign rally on Saturday that the MPLA had lifted the “taboo” against privatisation in a country long dominated by socialist thinking on the economy and he also praised a $3.7 billion deal it reached with the IMF in 2018.”Above all, we gained the international credibility we needed in international markets,” he said.UNITA has promised to end the “concentration of the economy in a single political and social group” – a reference to Angola being one of the world’s most stratified societies, whose elite comprises only those with ruling party connections.But the party has not criticised the government’s broader macroeconomic reforms because it would most likely pursue the same policies, said South Africa-based independent analyst Marisa Lourenço, not a relative of the president.UNITA presidential candidate Costa Junior told Reuters on Sunday he would continue to push for implementation of an agreement between his party, the MPLA and others to maintain economic stability regardless of which party took power.”I have pushed for a stability pact and I will continue to do so indefinitely,” he said.Whoever wins will still face volatility in the price of oil, which accounts for more than half of Angola’s government revenues and 94% of exports, according to the International Monetary Fund, which said any fall in crude prices could quickly trigger debt problems in the country. More