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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 2pm) and Nick Fletcher

Manufacturing gloom: UK factory growth falls to 34-month low - as it happened

A derelict mill waiting for redevelopment in Rochdale, United Kingdom.
A derelict mill waiting for redevelopment in Rochdale, United Kingdom. Photograph: Christopher Furlong/Getty Images

European markets end higher

The new month has got off to a positive start for stock markets, as investors shrugged off disappointing manufacturing PMI data from China to the UK to the US. Indeed, markets seemed to be more focus on the prospect of more central bank stimulus ahead to boost sluggish global economies or, in the case of the Federal Reserve, a delay in any planned interest rate rise.

Tony Cross, market analyst at Trustnet Direct, said:

That’s certainly been a solid start to the month’s trade, with the FTSE-100 putting in another impressive day of gains although with downbeat PMI data out of China - and indeed the UK – it’s difficult not to be left thinking that the upside has come about only at the expense of promised further stimulus measures.

A strong performance from the oil price helped, with Brent crude currently up 1.2% to $37.04 a barrel. The final scores on the European markets were:

  • The FTSE 100 finished 55.79 points or 0.92% higher at 6152.88, its highest leel since 31 December last year
  • Germany’s Dax was up 2.34% at 9717.16
  • France’s Cac climbed 1.22% to 4406.84
  • Italy’s FTSE MIB rose 2.21% to 18,011.91
  • Spain’s Ibex ended up 1.77% at 8611.0
  • In Greece, the Athens market added 0.65% to 520.08

On Wall Street, ahead of the Super Tuesday US delegate voting, the Dow Jones Industrial Average is currently 300 points or 1.8% higher.

On that note, it’s time to close the blog. Thanks for all your comments, and we’ll be back tomorrow.

Using the closing prices, also likely to be demoted from the FTSE 100 are Smiths Group, Hikma Pharmaceuticals and Aberdeen Asset Managment.

The four replacements as things stand would be Paddy Power Betfair after its merger, hospitals group Mediclinic following a reverse takeover, Morrisons after it was relegated in December at the last review, and Investec.

Again, the moves need to be ratified by the FTSE committee on Wednesday.

Mike Ashley’s Sports Direct International is being relegated from the FTSE 100 following a Guardian investigation. The demotion is based on tonight’s closing price of 410p, down 40% since December, and will be confirmed officially by a committee at index compilers FTSE on Wednesday.

Full story here:

Updated

The Draghi comments come from a letter sent today in reply to MEP Jonas Fernández.

No limits to measures we can take - Draghi

ECB president Mario Draghi has added fuel to the expectations that the central bank will unveil further stimulus measures at this month’s meeting.

He said the euro area inflation dynamics continued to be weaker than expected, and there are increased risks to the bank’s earlier outlook, according to Reuters.

The agency reports him saying “there are no limits to how far we are willing to deploy our instruments within our mandate to achieve our objective of inflation rates below,k but close to, 2% over the medium term.”

Mario Draghi.
Mario Draghi. Photograph: Stephanie Lecocq/EPA

Here’s a handy round-up of the day’s PMIs:

Not exactly a convincing recovery is the view of Rob Carnell, chief international economist at ING Bank, on the ISM figures:

The February Institute of Supply Management (ISM ) manufacturing index rose to 49.5 from 47.8 in January. This means that manufacturing is likely to be expanding at a slightly stronger pace than it was in January.

But slightly stronger is still a long way from robust. Typically, we see an index of 50 or above as necessary to indicate growth at an acceptable rate, whilst 43.2 is the historical break-even index for contraction or expansion.

One key element of this release, which always happens the same week as the US labour report, is the employment index. This also rose, reaching 48.5 from a very soft 45.9 in January. But like the headline index, it remains deep in “contraction” territory, albeit marginally less so than in January.

Moreover, as a guide to payrolls, this is not very reliable. Despite the weak January employment index, January manufacturing payrolls employment actually rose by 29,000, its highest since November 2014. On a more positive note, new orders remained positive at a respectable 51.5.

Markets will no doubt see this survey as a positive release, an excuse for stocks to rally and bond yields to rise. But in truth, this is another mixed survey, and not terribly reliable at that. We do not see it as sufficiently robust to warrant the Federal Reserve raising rates again at its March meeting.

Here are some of the respondents comments to the ISM:

  • “Low oil prices and reduced activity continue affecting our business.” (Petroleum & Coal Products)
  • “U.S. business demand is solid; international demand is soft.” (Chemical Products)
  • “Mobility spend is up.” (Computer & Electronic Products)
  • “Business has to get better. And it appears it is. Healthy backlog for 2016.” (Fabricated Metal Products)
  • “Very strong demand for product. Material availability very good and commodity pricing continues to be depressed.” (Machinery)
  • “Airlines are still ordering planes and spare parts for plane galleys.” (Transportation Equipment)
  • “Market is beginning to trend up with spring season on its way.” (Wood Products)
  • “Not seeing impact from global economic volatility or oil prices. Business is strong and growth projections remain the same.” (Miscellaneous Manufacturing)
  • “Orders are coming in stronger than expected.” (Furniture & Related Products)
  • “Still a bit sluggish.” (Food, Beverage & Tobacco Products)

The Federal Reserve’s dilemma:

David Morrison at Spread Co said:

The US ISM Manufacturing PMI beat the consensus expectation by quite a distance. Nevertheless, it wasn’t enough to register expansion in a sector which has been declining for over a year now.

Earlier today China’s Manufacturing PMIs continued to show contraction in the sector. On top of that, there was an unwelcome dip in the country’s Non-Manufacturing PMI as well, suggesting that the hoped-for rebalancing from manufacturing and exporting to consumer demand may not be going as well as hoped.

Manufacturing data from across the eurozone and UK was also generally disappointing. Add in yesterday’s weak US Chicago PMI and Pending Home Sales, together with the year-on-year Euro zone CPI print of -0.3% and you have plenty of evidence that the global economic outlook isn’t exactly glowing.

Of course, what this all means for central bank-fixated investors is that further stimulus can’t be far away. Stock market bulls must be praying for a bad US payroll number on Friday to really kibosh the fear of further Fed rate hikes this side of summer.

US construction spending is also stronger:

US ISM manufacturing beats expectations

And by contrast with the Markit PMI, the manufacturing activity index from the Institute for Supply Management has come in higher than expected.

The index came in at 49.5 in February, up from 48.2 in the previous month and better than the 48.5 forecast. This is the highest level since September.

The new orders index was flat at 51.5 and the employment index was much stronger than the expected 46.4, coming in at 48.5.

Despite the better than expected data, the ISM index still shows a sector in contraction since the figure is below 50. More fuel to the idea that the Federal Reserve will be in no hurry to raise interest rates again.

Updated

Chris Williamson, chief economist at Markit said:

The February data add to signs of distress in the US manufacturing economy. Production and order book growth continues to worsen, led by falling exports. Jobs are being added at a slower pace and output prices are dropping at a rate not seen since mid-2012.

US output
US output Photograph: Markit

The deterioration in the manufacturing sector’s performance since mid-2014 has broadly tracked the dollar’s rise, which makes US goods more expensive in overseas markets and leads US consumers to favour cheaper imported goods.

With other headwinds including the downturn in the oil sector, heightened uncertainty due to financial market volatility, global growth worries and growing concerns about the presidential election, it’s no surprise that the manufacturing sector is facing its toughest period since the global financial crisis.

US manufacturing
US manufacturing Photograph: Markit

US manufacturing PMI second lowest since October 2012 -Markit

US manufacturing performed marginally better than expected in February but worse than in January.

The Markit manufacturing purchasing managers index came in at 51.3 last month, higher than the initial estimate of 51 and the forecast of 51.2. But it was down on the final figure for January of 52.4.

The same pattern was seen in the employment index, which at 51.8 was better than the initial estimate of 51.5 but lower than January’s 52.8.

The output index at 51.8 was the lowest since October 2013.

Updated

Wall Street opens higher

Ahead of the US manufacturing figures for February - remember there is the Markit PMI followed shortly afterwards by the ISM survey - Wall Street has climbed sharply in early trading.

The Dow Jones Industrial Average is up 93 points or 0.6% while the S&P 500 has opened up 0.5% and Nasdaq up 0.8%, as the oil price shows signs of stabilising.

Summary: UK factories stumble in global manufacturing rout

Time for a very quick summary.

Britain’s factory sector has posted its slowest growth in almost three years. UK manufacturers have been hurt by the weakening global economy and signs of domestic slowdown, and economists fear further problems ahead.

Growth across the eurozone’s manufacturing sector hit a one-year low. Germany and France saw near-stagnation, and firms reported renewed price pressure - a day after the eurozone fell back into deflation.

The Eurozone jobless rate has hit a new four and a half-year low. In January, 10.3% of workers were unemployed, around twice the levels in the US and UK.

China got the day off to a bad start, with factory activity shrinking again. Analysts say it puts more pressure on Beijing to take further measures to stave off severe economic problems.

The financial markets have taken the news well; shares are up across Europe, and the US expected to follow.

But there are new signs of unease in the markets, as Japan sells 10-year bonds at a negative yield for the first time ever.

Barclays shares have slumped by 10% as investors balk at falling profits and a dividend cut.

The London Stock Exchange could be the centre of a tug-of-war, as the owner of the New York stock exchange ponders launching a rival takeover bid.

Updated

The financial market turmoil of 2015 has knocked around £50bn off the value of the world’s 20 wealthiest people.

That’s according to the annual survey of the megarich from Forbes , which reports that Carlos Slim, the Mexican telecoms tycoon, had a year to forget. His fortune shrank from $77.1bn to $50bn last year.

Bill Gates also became a little poorer, but Facebook’s Mark Zuckerberg bucked the trend.

My colleague Graham Ruddick has read the report, and explains:

Bill Gates has been crowned the richest man in the world for the third year in a row, although the Microsoft founder’s fortune also dipped from $79.2bn to $75bn.

Zuckerberg’s wealth grew by $11.2bn to give him a total net worth of $44.6bn.

Zuckerberg is the sixth richest person in the world, behind Jeff Bezos, the Amazon founder, Slim, investor Warren Buffett, Amancio Ortega, the businessman behind the Zara fashion empire, and Gates.

Updated

Brazilian manufacturing recession worsens

Here comes the first slug of economic data from across the Atlantic.... and it show that Brazil’s factory sector shrank at a rapid pace in February.

The Brazilian manufacturing PMI, which measures activity at hundreds of firms, fell to a three-month low of 44.5 in February, from 47.4 in January. That’s the second-fastest contraction since the financial crisis in 2008.

And firms also saw their costs jump, due to the weakening Brazilian currency.

Markit explains:

Brazil’s manufacturing recession extended to February, with a further drop in incoming new work leading companies to lower production and cut jobs again. Such was the extent of the downturn that firms shed jobs at the second-fastest pace since April 2009.

The weaker real continued to exert upward pressure on input costs, which rose at quickest rate since October 2008. Subsequently, tariffs were raised again, with charge inflation reaching a survey peak.

Japanese national flags flutter in front of buildings at Tokyo’s business district in Japan, February 22, 2016. Growth in Japan’s manufacturing activity slowed sharply in February as new export orders contracted at the fastest pace in three years, a worrying sign that overseas demand is deteriorating rapidly as China’s economy slows, a preliminary survey showed on Monday. REUTERS/Toru Hanai TPX IMAGES OF THE DAY

It’s a historic day in the financial markets. For the first time ever, investors have paid Japan for the privilege of lending to it for the next decade.

That’s because Japan auctioned 10-year bonds at an interest rate, or yield, of below zero for the first time ever.

That means investors agreed to pay more than the face value of the bonds, which Tokyo will repay in 2026.

The FT says that Japan has crossed a “financial rubicon”; it makes it the first G7 nation to sell 10-year bonds so cheaply.

You might think this would be welcome -- government deficits sound less scary when you can borrow for free. But in this case, it means investors are pessimistic about growth and inflation prospects.

It also shows the adverse consequences of negative interest rates, which the Bank of Japan imposed last month. Banks lose money on funds left at the BoJ, so they may as well buy 10-year bonds at a small loss instead. But with asset yields so low, it’s going to be even harder for banks to generate profits.

And could Germany be next? Ten-year bunds are yielding just 0.13% today....

Oil helps push markets higher

It’s lunchtime in the City of London, after a morning of generally downbeat economic news.

But shares are still up, though. The FTSE 100 has gained 45 points or 0.75% to a two-month high.

The prospect of a bidding war has driven London Stock Exchange Group up 8.5% to the top of the leader board. But Barclays has lost 9% to a three-year low, with traders disappointed by today’s results.

The Stoxx 600, which tracks the 600 largest listed European companies, is at a one-month high.

European stock market

Investors simply aren’t panicking about the weakness in the world’s factory sectors that we’ve seen today.

Instead, they may be cheered by the oil price. US crude is up 1.7% today at $34.33.

Joshua Mahoney of IG explains:

European markets have a spring in their step this morning, with the FTSE hitting an eight-week high in early trade.

The initial anxiety brought about by yet another batch of disappointing Chinese PMI readings overnight proved unfounded, as the slowdown story begins to play less of a role in global sentiment.

Wall Street is expected to turn green at the open too.

Wondering where you should have invested your hard-earned money (or your clients’) last month?

Deutsche Bank has the answer. You should have piled into gold on February 1st, when bullion was $1,128 per ounce. It’s now $1,245 per ounce, up 10%.

If you fancied some FX action, buying the yen against the US dollar would have been profitable too (it strengthened from ¥121 to ¥113 to the $1).

And you should have steered well away from wheat. It was the worst performing asset class, amid predictions of decent harvests and ample suppliers.

The second worst - the Greek stock market, which slumped in the face of deadlock between the Athens government and its creditors over its latest bailout plan.

L&G: Brexit economic case is unproven

Cranes around St.Paul’s Catherdral in the City of London, Britain.

Legal & General, the UK’s biggest asset manager, has just issued a statement on Britain’s In-Out EU referendum, scheduled for June 23.

L&G believes its business would suffer little impact of the UK public vote to leave the European Union, as it has relatively few customers on the continent.

However, it also warns that a Brexit vote would probably have some negative effect on the financial markets, and the real economy.

L&G says:

We consider that a vote to leave would have little direct impact on trading for Legal & General: our customer base is located very largely in the UK, the US and Asia.

It is however probable that a vote to exit, with a potentially lengthy period of negotiation and an uncertain outcome, would create uncertainty for markets and the broader UK economy in which we operate.

L&G also warns that there is a lack of clarity over the new trade links which Britain would forge after Brexit, and that “the economic case for leaving is unproven”. So it will keep the issue under review.

As one of the largest investors in the UK, we will be actively listening to companies we invest in, who will be assessing the potential impact for themselves.

So, quite a balanced view from L&G, who don’t seem terribly alarmed about Brexit. And Juliet Samuel of the Wall Street Journal thinks she knows why....

Updated

Alan Greenspan

Alan Greenspan was notoriously opaque when he was the world’s top central banker, joking once that “If I seem unduly clear to you, you must have misunderstood what I said.”

But the former Federal Reserve chairman has developed a new line in clarity in his older year.

Greenspan, who turns 90 on Sunday, has sat down with Bloomberg to talk about the global economy. And he criticised the new vogue towards negative interest rates, as central bankers

Asked if charging banks a negative interest rate was dangerous, Greenspan said:

“I wouldn’t say dangerous, but it is clearly not productive.”

“The big argument about excessively low interest rates for a very long period of time is that it warps the investment pattern on real investments.”

[As interest rates fall, so does the rate of return which banks get on their assets. However, in a negative interest rate world they cannot keep cutting the cost of their liabilities - customer deposits - without charging savers]

Greenspan also warned that “we’re in trouble” because “productivity is dead in the water”.

Output per hour is driven essentially by real capital investment, and it’s way below average, because business people are very uncertain about the future.

More here: Greenspan Says Negative Rates `Warp’ Investment Behavior

Updated

UK factory growth stalls - what the analysts say

The sharp slowdown in UK factory growth last month has disappointed analysts.

They are worried that domestic demand weakened in February, compounding the impact of weaker demand from overseas. And the EU referendum could weigh on the sector for several months too.

Here’s some early reaction:

Zach Witton, Deputy Chief Economist at EEF, the manufacturers’ organisation

“After an encouraging start to 2016, the manufacturing PMI took a turn for the worse in February, falling to its lowest level in nearly three years and barely remaining in growth territory.

“Activity levels deteriorated on the back of weakness in new orders, with domestic demand no longer compensating for lacklustre export orders. The weakness led manufacturing to post job losses for the fifth time in the last seven months. On a brighter note, the weakness was not across the board as new orders for intermediate goods edged higher.

Manufacturers face a challenging environment, with subdued demand from emerging markets and the ongoing weakness of the oil price weighing heavily on companies in the oil and gas supply chain. Against this backdrop, manufacturers will be looking at the forthcoming Budget and will want to see the Chancellor avoid adding significant costs at a time when business conditions are tough.”

Mike Rigby, head of manufacturing at Barclays

“The weak start to the year continues for the manufacturing sector with even domestic demand unable to contribute to the levels it has done previously.

However, amidst the headwinds of slowing global growth, uncertainty over a Brexit and skills shortages in the industry comes the recent depreciation in sterling which may just provide the jump-start that manufacturing exporters need to boost exports and put a spark back into the sector’s performance.”

UK factory PMI
UK factory PMI Photograph: Markit/Berenberg

Kallum Pickering of Berenberg Bank.

Domestic demand has been the key driver of UK manufacturing in recent months. But with households showing some Brexit jitters too, UK manufacturing might be heading for a rough time until the referendum is out of the way.

As long as the UK votes to stay in the EU, domestic demand will likely pick up again thereafter. If the UK votes to eject itself from its biggest market, things may get much rougher, though.

Updated

Eurozone unemployment rate hits four-year low

The unemployment rate across the eurozone has hit its lowest level since August 2011, the early months of the debt crisis.

The eurozone jobless rate ticked down to 10.3% in January 2016, down from 10.4% in December 2015, for the first time since August 2011.

That continues the slow recovery since April 2013, when the euro area jobless rate hit 12.3%. But it’s still far too high, especially in Greece and Spain where around one in four are out of work.

In the wider EU, the jobless rate dropped to 8.9% from 9.0% - the lowest in over six years.

UK factories do have one glimmer of hope -- the recent slump in the pound.

Today’s report was conducted before Brexit firms sent sterling down to new seven-year lows, which ought to help exporters....

Barclays shares are being hammered harder, after it reported an 8% fall in profits, halved its dividend and warned of further job cuts.

They fell 11% a moment ago, forcing trading to be briefly suspended.

UK factory growth hits 34-month low

More gloom! Britain’s factories have posted their slowest growth in almost three years, as the nation’s manufacturing sector slipped to near-stagnation.

Data firm Markit’s monthly healthcheck of the sector showed that output slowed sharply, as exports suffered from weakness in the global economy.

Firms struggled to attract new business and cut jobs for the second month running.

Markit's UK manufacturing PMI

Rob Dobson of Markit says UK firms are being forced to cut prices to attract business, due to weak demand at home and abroad.

“The near-stagnation of manufacturing highlights the ongoing fragility of the economic recovery at the start of the year and provides further cover for the Bank of England’s increasingly dovish stance.

“The breadth of the slowdown is especially worrisome. The domestic market is showing signs of weakening while export business continued to fall. Price pressures also remained firmly on the downside, with the survey signalling input costs falling at a double-digit annual pace and average factory gate selling prices showing a further decline. A lot of this is driven by the ongoing weakness of global commodity prices.

However, there are also signs that weaker growth is driving up competition between manufacturers to secure new business and among their suppliers too.

Updated

European markets rally despite factory woes

European stock markets are taking today’s weak manufacturing data in their stride.

Britain’s FTSE 100 just touched its highest point since the 5th of January, with mining group Anglo American and fashion chain Burberry among the risers.

The Footsie is currently up 0.35% at 6117 points, also helped by the bid battle over the London Stock Exchange (up 7%).

That means the London market has clawed back almost all the losses suffered in the great market turmoil in the first few weeks of this year.

The FTSE 100 over the last quarter
The FTSE 100 over the last quarter Photograph: Thomson Reuters

Germany’s DAX has gained 1%, and the French CAC is 0.2% higher.

Investors may be concluding that the weak manufacturing data will prompt another bout of stimulus measures from the world’s central banks.

Updated

Eurozone factory growth hits one-year low

It’s official: Europe’s manufacturing sector expanded at the slowest rate in a year last month, fuelling fears that its economy is heading into trouble.

The latest Purchasing Managers Index reports, based on data from thousands of firms, shows that the eurozone’s factory sector only expanded modestly.

Markit’s eurozone factory PMI hit a 12-month low of 51.2, down from 52.3 in January, dragged down by weakness in the two largest euro economies.

Today’s report shows that:

  • Slower growth of production, new orders, export business and employment
  • France and Germany hover close to stagnation mark; Greece slips back into contraction
Eurozone factory PMI, to February 2016

Chris Williamson, chief economist at Markit, says the eurozone faces the threat of sluggish growth in 2016, or a full-blown downturn.

“Lacklustre domestic demand is being compounded by a worsening global picture. Exports either fell or rose more slowly in all countries surveyed with the sole exception of Austria.

“For a region in desperate need of lower unemployment, the near-stalling of jobs growth in the manufacturing sector comes as disappointing news. Firms are cutting back on their hiring due to worries about the outlook.

“Prices are meanwhile being dropped as firms endeavour to boost sales, suggesting deflationary pressures have intensified. Input prices are falling at a rate not seen since July 2009.

“With all indicators – from output and demand to employment and prices – turning down, the survey will add pressure on the ECB to act quickly and aggressively to avert another economic downturn.”

Updated

Growth in Germany’s factory sector has ground to a near-halt, according to Markit.

The German manufacturing PMI slowed sharply to 50.5, a 15-month low, from 52.3 in January. New orders, and new exports, both dipped to the slowest growth since last summer.

France’s manufacturers remained in near-stagnation last month.

The French PMI came in at 50.2, up from 50.0 in January - which showed no growth at all.

Companies interviewed by Markit reported a drop in new business, and deflationary pressures.

Markit economist Jack Kennedy says:

“Falling new orders were again the source of weakness, leading firms to cut production levels slightly.

Meanwhile, the survey’s price indices point to continued downward pressure on already low inflation.”

Italy’s factory sector didn’t enjoy a great February.

The Italian manufacturing PMI has fallen to 52.2, from 53.2 in January. That’s the lowest reading in a year, signalling that growth last month.

New orders also rose at the slowest pace since February 2015.

The first European PMI reports are out.

The Dutch manufacturing sector has reported its slowest growth in 18 months, with the PMI dropping to 51.7 from 52.4.

And Spain’s factory PMI has dipped to 54.1, from 55.4. That’s a solid growth rate, and is the 27th month of expansion in a row.

Chinese investors have taken today’s weak factory data in their stride.

The Shanghai composite index closed 1.7% higher, on hopes that Beijing will heed calls for more stimulus measures.

Report: China to cut millions of jobs

Back to China....and Beijing is reportedly planning to cut up to six million workers from failing companies.

The sackings are part of the government’s attempts to clear out its economy and remove excess capacity.

Reuters has the story:

China aims to lay off 5-6 million workers from “zombie enterprises” over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two sources with ties to the country’s leadership said.

Beijing is trying to rejuvenate its flagging economy by streamlining bloated industrial sectors, starting with coal and steel, but layoffs have emerged as one of the biggest concerns for cash-strapped regions ahead of next week’s annual session of parliament.

The government’s plans to lay off five million workers in industries suffering from a supply glut would be the country’s boldest retrenchment programme in almost two decades, one source said.

The restructuring of state-owned enterprises from 1998 to 2003 led to around 28 million redundancies and cost the central government about 73.1 billion yuan ($11.2 billion) in resettlement funds.

A second source with leadership ties put the number of layoffs at six million. Both sources requested anonymity because they were not authorized to speak to media about the politically sensitive subject for fear of sparking social unrest.

London Stock Exchange shares surge as bid battle looms

Few things get our blood pumping faster than a takeover battle. And we might have one brewing, over the London Stock Exchange.

Shares in the LSE have soared by 8% in early trading, after rival US operator Intercontinental Exchange (ICE) said it was considering a bid for the LSE.

That would put ICE, which owns the New York stock exchagne, toe-to-toe against Germany’s Deutsche Börse, which announced plans for a ‘merger of equals’ with the LSE last week.

ICE has released a statement, confirming it is considering a bid for the LSE, which was enough to get the shares motoring:

London Stock Exchange shares today
London Stock Exchange share price Photograph: Thomson Reuters

Updated

Shares in Barclays have shed 4% at the start of trading, as traders give their verdict to today’s results.

The bank is briefing reporters now:

Russia’s factory sector continued to deteriorate last month.

The Russian manufacturing PMI fell to 49.3 in February, down from 49.8 in January, showing a sharper slowdown.

Data firm Markit warned that Russian factories cut jobs again, as Western sanctions and the oil price slump drives the economy towards recession:

Disappointingly for goods producers, scrutinising the survey data leaves little encouraging news. Workforce numbers continued to slide while outstanding business was depleted at a sharp pace.

Barclays halves dividend as profits slide

Barclays has hit investors with some bad news.

The bank is more than halving its dividend, from 6.5p to 3p, after suffering and 8% drop in pre-tax profits.

Jill Treanor reports:

Chief executive Jes Staley, making his first announcement since taking the helm in December, said he was “announcing initiatives to accelerate our strategy and simplify the group” as profits fell 8% to £2.1bn in 2015.

Staley said the bank would reduce its stake in its African business - which expanded in 2005 when it bought South African bank Absa - and reduce its payout to shareholders.

Here’s the full story:

Bloomberg’s Caroline Hyde reckons traders won’t be impressed.

Updated

Chinese slowdown: What the analysts say

Dr. He Fan, Chief Economist at Caixin Insight Group, says today’s PMI report shows that Beijing needs to take more action, fast.

“The Caixin China General Manufacturing PMI for February is 48, down 0.4 points from the previous month. The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy.

The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.”

Dr Gerard Lyons, economics advisor to London Mayor Boris Johnson, says it shows why the People’s Bank of China eased monetary policy yesterday (by allowing banks to hold less funds in reserve):

Chris Weston of IG agrees that the Chinese economy is getting worse:

Chinese PMIs were predictably weak and while no doubt affected by the seasonal disruptions of Chinese Lunar New Year (LNY), the trend of late was pointing to further weakness in any case.

In the NBS Manufacturing PMI, the key components of output and new orders both wilted dramatically. Probably of most concern was the renewed collapse in the small companies component, which contracted to 44.4. This emphasises the fact that despite the huge growth in credit in January, most of it is going to the large state-connected corporates while small and medium sized private enterprises continue to struggle.

Confusingly, China actually has two PMI reports -- the Caixin one which is so gloomy this month, and a separate survey conducted by the government.

And that official PMI confirms that the factory sector shrank last month:

The Financial Times has the details:

China’s official manufacturing purchasing managers’ index fell to 49 in February from 49.8 in January, equalling its weakest since February 2009 and the seventh straight month of decline. The National Bureau of Statistics, which released the measure, said this was partly due to seasonal effects of the lunar new year holiday, when many factories shut down for extended periods to allow workers to travel to distant hometowns to spend time with their families.

The official services sector PMI, which had previously held up better than the manufacturing index in China’s economic slowdown, also slipped last month to 52.7, its weakest level since December 2008.

China's slowdown deepens

China’s economy has suffered another jolt, with its manufacturing sector shrinking at a faster pace and cutting jobs at the fastest rate since the depths of the financial crisis.

It’s a bad start to PMI Day, painting a pretty grim picture of the world’s second-largest economy.

Data firm Caixin reports that China’s factory sector contracted at the fastest pace in five months. Its Purchasing Managers Index, based on data from hundreds of companies, fell to 48.0 in February, down from 48.4 in January.

Any reading below 50 shows a contraction, so this shows that the operating conditions faced by Chinese goods producers continued to deteriorate in February.

China PMI, February 2016

Output and total new orders shrank at a faster rate, and companies slashed staff at the fastest pace since January 2009 -- shortly after the failure of Lehman Brothers.

It highlights that Chinese policymakers are still battling against a hard landing, with serious implications for the global economy too.

Reaction to follow....

Introduction: Manufacturing reports in focus

A stainless steel product line at a factory in Dalian, Liaoning Province, China, today.
A stainless steel product line at a factory in Dalian, Liaoning Province, China, today. Photograph: China Daily/Reuters

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

It’s a big day for economic data, which should give new clues into the health of the world economy.

A string of new Purchasing Managers Index surveys will show how the world’s factory sector fared in February, from Asia to Europe to the US.

Analysts will be scrutinising them for signs that growth weakened last month, in the face of financial market turbulence and the slowdown in China.

We get the main eurozone data between 8.15am and 9am GMT, then the UK at 9.30am, followed by the US around 3pm.

The expectations aren’t great, as Michael Hewson of CMC Markets explains:

Today’s latest February manufacturing PMI numbers from Spain, Italy, France and Germany are expected to reinforce concerns of a gradual manufacturing slowdown, with both the German and French measures expected to show stagnation.

The latest UK manufacturing PMI numbers are expected to show further weakness, down from 52.9 to 52.3, though recent sterling weakness might help on the margins.

In the US we can expect to see further weakness in the latest ISM manufacturing numbers after a really soft February Chicago PMI manufacturing number yesterday. The sharp jump seen in January saw a sharp reverse to 47.6, with all major components also showing some worrying weakness.

Also coming up....

New eurozone unemployment data is released at 10am GMT. It’s likely to show that the jobless remained at around 10.4% in January, underlining the weak European recovery.

And on the corporate front, Barclays bank, commodity trading firm Glencore and high street pasty chain Greggs are reporting results.

We’ll be covering all the main events through the day....

Updated

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