The prospect of a Brexit-induced recession is looming larger after a survey signalled UK retail sales dropped unexpectedly in August, dealing a blow to hopes that consumer spending can rescue Britain’s ailing economy.
Just 10 per cent of retailers polled by the Confederation of British Industry said sales increased in August compared to a year ago, with 58 per cent saying sales were down. Outlook for the month ahead hit its lowest level since the financial crisis.
Shoppers had been helping to keep the economy afloat by continuing to spend but the latest data indicates they are becoming more cautious, increasing the prospect that growth could be negative for a second quarter in a row.
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The pound is up 0.2 per cent against the dollar so far today and broadly flat against the euro.
Across the Atlantic, Donald Trump's $1.5 trillion tax cuts are on course to push the US government deficit beyond $1 trillion this year, according to a new report. Before assuming office, the president had attacked his predecessor Barack Obama for increasing America's debt pile.
Cuadrilla has suspended fracking at its site in Lancashire following the largest earthquake recorded since the company started drilling for shale gas.
The suspension comes just a week after fracking was restarted.
Cuadrilla argues that the magnitude 1.55 quake moved the earth to a similar degree as "a large bag of shopping dropping to the floor".
The company says:
Minor movements of this level are to be expected and are way below anything that can cause harm or damage to anyone or their property.
Laura Ashley has swung to a pre-tax loss of £14.3m in the year to 30 June.
The troubled home furnishing chain is blaming some of those losses on changes to its website but conceded that the last twelve months had been " a difficult trading period for the group and indeed for the retail sector as a whole".
Sterling hovering just about in positive territory against other major currencies.
Ryanair flights are departing as normal this morning despite a strike by the airline's pilots over a range of grievances.
None of Ryanair's flights have yet been cancelled today, Simon Calderreports.
Ryanair has brought in pilots from other bases to cover for striking flight crew.
In contrast, other carriers including easyJet and Britiash Airways have cancelled a wide range of flights.
Further details of the routes affected can be found here:
Businesses in the eurozone are more pessimistic about the future of the economy than at any time in the past six years according to closely watched PMI surveys out today.
Manufacturing continued to contract while the service sector expanded in August according to the IHS Markit poll which is considered a good gauge of the economy.
The overall index came in at 51.8, slightly better than expected but respondents' views on future growth slumped to their lowest level since the eurozone crisis in 2013.
More FTSE 100 companies have a chief executive called Stephen than have a woman at the helm.
Only six of the chief executives were women, while seven were named Steve or Stephen,
The finding is part of an analysis of pay at Britain's largest firms by HR trade body the CIPD.
Pay rises hit highest since 2008
Major British employers gave average pay rises of 2.6 per cent to staff in the three months to July, the highest pace of increase in more than 10 years, data from industry consultants XpertHR showed on Thursday.
Annual pay settlements in Britain began to rise roughly a year ago as the lowest unemployment rate since the mid-1970s put pressure on employers to retain staff, but deals had been stuck at around 2.5% in recent months.
The increase in the latest data represented the strongest rise since the three months to December 2008.
Reuters
Household incomes growing more slowly than UK economy
Despite the news that British workers are getting slightly bigger pay rises than they have been used to, they are still receiving less than their fair share of the economic pie, OECD figures suggest.
Bloomberg points out that in many nations, household incomes are now rising faster than the overall economy is growing.
The UK is the only country that the OECD highlighted where the opposite is true and household incomes are growing more slowly than the economy.
Orders cancelled after second fire at Ocado warehouse
Ocado has cancelled some customers' food deliveries after another fire broke out at one of its warehouses.
The online supermarket said a "small fire" at its warehouse in Erith was put out by the London Fire Brigade on Wednesday night.
Affected customers will be offered a new delivery slot on Friday.
In February, a larger blaze broke out at Ocado's warehouse in Andover, causing widespread damage.
Retailers expect the sharpest deterioration in business conditions since February 2009 in the coming months, according to the Confederation of British Industry.
Its latest survey found that just 10 per cent of retailers reported sales had increased over the past year while 58 per cent said sales were down.
Anna Leach, the CBI's deputy chief economist, says:
“Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.
Retail sales deteriorate sharply
Consumers have been keeping the UK economy afloat of late as businesses hold off investment, awaiting any kind of certainty on the outcome of Brexit.
But the latest CBI survey suggests shoppers are starting to become more cautious.
Hoard Archer, chief economic advisor to the EY Item club says:
The CBI distributive trades survey points to sharply weakened retail sales over late July and the first half of August.Specifically, the balance of retailers reporting year-on-year growth in sales volumes plunged to-49% in August from -16% in July. This was the lowest balance since December 2008 and the second lowest since the survey began in 1983.
Why might this be happening?
We believe earnings growth may well have peaked in the 3-months to June (when they reached an 11-year high of 3.7%) while employment growth is likely to slow. It seems highly questionable whether the labour market can sustain its recent improvement as companies face a soft domestic economy and a highly challenging combination of domestic political, global economic and Brexit uncertainties.Other factors may limit consumer spending. In particular with the sa ings ratio very low, consumers may at the very least be keen to avoid further dissaving - especially given all of the major uncertainties.
The CBI says we could be seeing a “broadening” rather than a “deepening” in the decline in sales...
Tesco has pledged to ban any brands that use excessive packaging from its stores in a bid to reduce plastic waste.
On Wednesday, the supermarket announced the launch of the second phase of its "Remove, Reduce, Reuse & Recycle" plan which aims to remove hard-to-recycle materials from products.
Thanks to the scheme, Tesco will have removed 4,000 tonnes of hardest to recycle materials from its brand products by the end of the year and now it wants to work with brands to do the same.
More details from Sarah Young:
Blow to Trump as figures reveal US has half a million fewer jobs than thought
The Labour Department has revised down its jobs number by 501,000 in a blow to Donald Trump's claims that America's economy is steaming ahead.
Employment in retail was 146,400 lower in March than previously thought while leisure and hospitality businesses had 175,000 fewer workers.
In light of that huge downward revision - the biggest since 2009 - today's data showing that the number of unemployment benefit claimants fell by 12,000 will not come as much comfort.
Meanwhile, Trump has had yet another pop at the Federal Reserve.
US presidents normally respect the independence of the central bank. This one has made a habit of blaming it for the US economy's problems.
"Why can't I have low interest rates when Germany has them?" has been Trump's attack line again today.
A reminder of yesterday's tirade:
He's previously called the Fed "crazy" and compared its chair, Jerome Powell, to a golfer who can't putt.
Sterling soars as Johnson meets Macron
The pound is surging today against all major currencies, up:
0.87% against the dollar to $1,2109
0.86% against the euro to €1.1032
0.8% against the yen
1.02% against Swiss franc to 1.2033
1.02% against Australian dollar to 1.8064
Angela Merkel's latest comments on the backstop appear to have given the pound a large boost.
She said she had not set the UK a 30-day deadline to fix the impasse over the backstop, as Boris Johnson had said yesterday.
"I said that what one can achieve in three or two years can also be achieved in 30 days. Better said, one must say that one can also achieve it by 31 October," Ms Merkel told a news conference in the Hague.
It remains to be seen how exactly that extra time will enable any kind of solution to be reached, however.
More on Donald Trump's "greatest" economy ever which, like his real estate empire, is being funded by piles and piles of debt.
America's deficit - the debt-funded gap between what the government takes in through taxes and other sources of revenue, and what it spends - will widen to $1tn for the 2020 fiscal year, the US Congressional Budget Office has said.
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