A quick look at the markets before we close up for the day:
- FTSE 100: +0.1% at 7,334
- Germany’s DAX: -0.5% at 12,965
- France’s CAC: -0.3% at 5,359
- Italy’s FTSE MIB: -0.4% at 22,270
- Spain’s IBEX: -0.3% at 10,183
- Europe’s STOXX 600: -0.1% at 386
- US Dow Jones: -0.2% at 24,235
That’s it for today, thank you for reading the blog and for all your comments. Have a good weekend and please join us again on Monday. AM
US manufacturing growth slows in November
US manufacturing grew at a solid pace in November, but at a slower rate than October, according to the IHS Markit PMI report.
The headline index dipped to 53.9 in November from 54.6 in October. (Anything above 50 signals growth.)
Chris Williamson, chief business economist at IHS Markit:
US manufacturers reported further solid growth in November. The rate of expansion settled slightly after October’s rebound from the hurricanes, but still leaves the sector on course for its best quarter since the opening months of 2015.
What’s especially encouraging is that growth is being led by producers of business equipment and machinery, indicating investment spending is on the rise.
Jobs growth in the sector has also picked up in recent months compared with the subdued hiring earlier in the year, suggesting that an expansionary mood is beginning to prevail in the goods producing sector. Business optimism is now at its highest since the start of 2016, underscoring how firms believe the upturn has further to run as we move into 2018.
Updated
UK government: RBS branch closures is 'commercial decision'
The government has attracted criticism from unions and the Labour party today, for failing to intervene in RBS’s decision to close 259 bank branches.
They point out the bank is still 71% owned by the taxpayer after the 2008 bailout.
A Treasury spokesperson has responded:
The decision to open and close branches is a commercial decision taken by the management team of each bank. The Government does not intervene in these decisions. But we understand the impact that closures can have on communities and peoples’ jobs.
Banks must now give customers as much notice as possible when a branch is closing, and ensure they are made aware of the options they have locally to continue to access banking services.
A reminder of how bitcoin has performed so far this year:
Wall Street subdued after Thursday's record
After a record day for US stocks on Thursday, Wall Street is pretty flat in early trading:
- Dow Jones: +0.2% at 24,314
- S&P 500: -0.04% at 2,647
- Nasdaq: -0.4% at 6,846
Over in Athens, the Guardian’s Helena Smith reports on a breakthrough in talks with Greece’s creditors:
“It appears that we will have a staff-level agreement by Saturday,” said a finance ministry official on the sidelines of round-the-clock talks currently taking place in Athens’ Hilton hotel.
Negotiations, which have focused on taxes and fiscal issues, will continue into the weekend.
If concluded the Greek finance minister Euclid Tsakalotos would be in a much stronger position to have the accord rubber-stamped when he attends Monday’s meeting of eurozone finance ministers - the Eurogroup - in Brussels. Athens is set to receive a further aid tranche in February.
The IMF is also participating in the talks but has yet to participate in Greece’s third – and many hope – final bailout until euro group countries agree on debt relief measures that would alleviate Athens’ staggering debt load.
The review is due to be finalised officially when the Eurogroup next meets on January 22nd – provided that Athens also completes 101 reforms known as prior actions.
If as expected that happens, it will be the first time in more than seven years of negotiations with the lenders keeping it afloat that Greece will have conformed enough to avoid the often tortuous haggling that has marked talks.
A fourth and final review will follow before the country exits its current €86bn bailout programme – imposed to prevent it crashing out of the euro at the height of the debt crisis in 2015 – in August 2018.
Bitcoin’s meteoric price rises won’t last when institutional investors enter the market.
That is the view of David Coker, a lecturer at Westminster business school and former vice president of global risk management at Deutsche Bank.
Coker says:
Many folks seem to have been surprised by bitcoin’s recent increase in price, first to ten thousand dollars and then, in rapid order, to eleven thousand dollars. However, these increases were to be expected given the cryptocurrency’s recent momentum. As the end of the tax year approaches, many Americans need to invest their annual pension contributions and bitcoin is the next ‘hot stock’ to buy.
Clearly speculative money is flowing into bitcoin, driven by relentless media coverage and, of course, meteoric price increases but this should not lead us to assume that extreme price volatility is a permanent feature of bitcoin.
The entry of institutional investors into the market will bring a longer term perspective to the asset class and they will likely stabilise prices over time through their use of derivatives. As frustrating as it might be, sometimes the best thing to do in a fast moving market is nothing.
Bitcoin pushes through $10,500 after US regulator approves futures
Bitcoin is up 7% at $10,642 after the US derivatives regulator said it would allow CME Group and CBOE Global Markets to list bitcoin futures.
Reuters explains:
The announcement by the Commodity Futures Trading Commission paves the way for CME and CBOE to become the first traditional US regulated exchanges to launch trading in bitcoin-related financial contracts, a watershed moment for the cryptocurrency that could lead to greater regulatory scrutiny.
Canadian economy grows 0.4% in Q3
The scores are in and Canada’s economy grew by 0.4% quarter-on-quarter in the third quarter.
That put Canada on a par with the UK and Italy, where growth was also 0.4% in the July to September period.
Here is how all the G7 economies performed in Q3:
- US: 0.8%
- Germany: 0.8%
- France: 0.5%
- UK: 0.4%
- Canada: 0.4%
- Italy: 0.4%
- Japan: 0.3%
Jonathan Reynolds, Labour’s shadow City minister, says RBS should be putting the needs of its customers first, rather than closing branches:
The decision by RBS to close one in four of its outlets is hugely disappointing. Not only will this result in the potential loss of 1,000 jobs, but many people depend on being able to use bank branch facilities in person. As the taxpayer continues to own 71% of the bank, its priority should be serving the best interests of UK customers.
We are astounded that the Government has signed off on these proposals and urge them to reconsider such a drastic move which risks serious harm to local communities. Labour will change bank regulations to stop branch closures where there is a clear impact on local communities and businesses.
Which?, the independent consumer advice service, has provided a useful interactive map of UK bank branch closures since 2015.
The map can be found here.
Gareth Shaw, money expert at Which?, said:
With bank branch closures gathering pace, it’s vital that banks ensure all consumers have access to vital everyday banking services, no matter where they live.
At a time when the payment industry is putting forward proposals that could significantly reduce the number of free-to-use ATMs, this news will be even more concerning for consumers who must not be left struggling to access the cash they need.
Here is a full report from the Guardian’s economics editor, Larry Elliott, on this morning’s strong UK manufacturing figures:
Stiglitz: bitcoin ought to be outlawed
Bitcoin is back above $10,000...
It is currently up 3% on the day at $10,250.
Joseph Stiglitz, the Nobel prize-winning economist who worked for Bill Clinton, is the latest critic of the digital currency:
Joseph Stiglitz: Bitcoin ought to be outlawed https://t.co/65llR9MTlA pic.twitter.com/Y4OF65e6nU
— World Economic Forum (@wef) December 1, 2017
Updated
Fortnum & Mason struggle to recruit after Brexit vote
The boss of Fortnum & Mason says the world famous London store is struggling to recruit staff after the Brexit vote, with the situation most acute in its restaurants.
Chief executive Ewan Venters says one in five of the chef posts across its six restaurants were unfilled as the drop in the value of the pound and concerns about anti-migrant attitudes deterred applicants.
He said:
Brexit is an alarming issue for me in terms of our ability to hire and retain good people. They are asking: ‘Do I feel welcome?’ That’s more the problem today.
Read our full story here:
European stocks hit a 2-week low after tech shares extend their selloff https://t.co/DDo75Vwx8K pic.twitter.com/XLvxaTPrt5
— Bloomberg (@business) December 1, 2017
Scottish secretary seeks urgent meeting with RBS
The Scottish secretary David Mundell has said that he is seeking an urgent meeting with RBS to discuss the impact of the bank closures across Scotland, describing rural branches as “a lifeline for many people”.
Mundell said:
I am very disappointed to hear of the plans by the Royal Bank of Scotland to close so many of their branches across Scotland. This is a serious issue for the communities they serve.
While usage of branches may have dropped, they are still a lifeline for many people, especially in rural areas. I’ll be seeking a meeting with the senior leadership of RBS to discuss these closures as a matter of urgency.
Howard Archer, chief economic advisor to the EY ITEM Club forecasting group, says the manufacturing sector is the UK economy’s “leading light”.
Highly impressive survey that boosts Q4 #GDP #growth hopes - but much will depend on #services sector Booming orders help #UK #factories to best month since 2013 - #PMI https://t.co/djgQuezkTq
— Howard Archer (@HowardArcherUK) December 1, 2017
A quick update on bitcoin after the wild volatility seen earlier in the week.
It is currently down 0.9% on the day, at $9,883, having hit a new record high of $11,395 on Wednesday.
Here is our latest story on the cryptocurrency that has got everybody talking:
European markets fall across the board
After a mixed start, Europe’s major markets have sunk into the red:
David Madden, analyst at CMC Markets, says a stronger euro is weighing on shares:
The rally in the euro is hurting the eurozone equity benchmarks, as the DAX, CAC 40 and FTSE MIB are firmly in the red this morning.
The continental equity markets are paying the price for their economic recovery, ultimately a stronger economy often translates into a stronger stock market, but for now the rally in the euro is holding them back.
The pound has dipped back below $1.35 and is currently down 0.3% against the dollar at $1.3486.
It has made up some of the losses against the euro, but is still down 0.1% at €1.1342.
Scotiabank’s Daniela Russell says that while the manufacturing PMI is encouraging for the wider economic performance in the fourth quarter, we shouldn’t get too carried away just yet.
This strong gain reinforces a fairly optimistic outlook for fourth quarter GDP growth. However, with manufacturing making up only 10% of the economy, we shouldn’t get too excited just yet before we get the key services PMI survey next week.
But if that does paint a similarly positive picture, then it would suggest that momentum is still strong as we head towards the end of the year – and perhaps growth in 2018 won’t be quite as bad as the Office for Budget Responsibility is forecasting.
Lee Hopley, chief economist at EEF, the manufacturers’ trade body, says the manufacturing PMI “points to everything coming up roses for manufacturing in the closing months of the year”.
Duncan Johnston, UK manufacturing industry leader at Deloitte, says the outlook for UK manufacturing is positive:
This month’s headline result has been boosted by strong domestic demand and significant gains in new export business, driven by overseas growth in US and Europe. The impact of previous declines in sterling appears to be reducing, as the index indicates that the UK manufacturing sector continues to strengthen.
Today’s result sees the highest level in four years and follows the strongest order books in almost 30 years reported by the CBI, increasing optimism among manufacturers.
Lots of reaction coming in to those stronger-than-expected UK manufacturing figures for November.
James Smith, economist at ING, says global growth is boosting Britain’s manufacturing sector:
The big economic story of 2017 has been the positive turnaround in global growth, which along with the weaker pound, has seen manufacturing sentiment soar in the UK.
The manufacturing sector is clearly a bright spot in the UK economy at the moment. However, given that manufacturing represents a relatively small share of the UK economy, the ongoing consumer slowdown and the knock-on effect this is having on retailers is a bigger concern, and is why we don’t expect overall growth to accelerate in 2018.
RBS branch closures: full list
Here is how the UK manufacturing sector has performed over the past two decades, in chart form:
Ruth Gregory, UK economist at Capital Economics, described the November report as “overwhelmingly upbeat”. She adds:
November’s Markit/CIPS manufacturing survey suggests that growth in the sector has accelerated further in then fourth quarter.
Encouragingly, the more forward-looking survey balances suggest that the sector should sustain this pace over the coming months too.
Overall, today’s survey provides us with further optimism that the manufacturing sector will continue to play a role in offsetting the slowdown in the consumer services sector.
UK manufacturing strongest in four years
Boom boom... Britain’s factories enjoyed the best month in four years in November, topping expectations and providing hope for the wider economy.
The headline index on the IHS Markit/CIPS PMI survey rose to 58.2 last in November, from 56.6 in October, fuelled by a sharp rise in new orders from both within the UK and abroad.
It easily beat the forecasts of economists polled by Reuters, who expected a headline number of 56.5.
Rob Dobson, director at IHS Markit:
UK manufacturing shifted up a gear in November, with growth of output, new orders and employment all gathering pace. On its current course, manufacturing production is rising at a quarterly rate approaching 2%, providing a real boost to the pace of broader economic expansion.
German manufacturing leads eurozone higher
Germany earned its reputation as a manufacturing powerhouse in November, leading the rest of the eurozone higher.
Here is how the sector performed in individual countries (anything above 50 signals expansion):
- Germany: 62.5
- Netherlands: 62.4
- Austria: 61.9
- Italy: 58.3
- Ireland: 58.1
- France: 57.7
- Spain: 56.1
- Greece: 52.2
Eurozone manufacturing grows at fastest rate in 17 years
Eurozone production lines were firing on all cylinders in November according to the IHS Markit manufacturing PMI survey.
The headline index rose to 60.1 from 58.5 in October, where anything above 50 signals growth.
It was the second highest on record for the index - which measures output, orders and jobs - after April 2000, at the height of the dot-com boom.
Chris Williamson, chief business economist at IHS Markit, said all the signs were there for a strong performance from the sector in 2018:
Companies are clearly expanding rapidly. Employment growth has hit an all-time high and business investment on machinery is trending sharply upwards, suggesting manufacturers are looking forward to the upturn persisting well into 2018.
RBS is 'deserting the Highlands', says Kate Forbes MSP
The Highlands MSP Kate Forbes has accused high street banks of deserting her constituency after Royal Bank of Scotland was the latest to announce a series of closures across the region.
Branches in Aviemore, Beauly, Kyle of Lochalsh and Mallaig will all shut by the summer – leaving some constituents more than 40 miles away from their nearest RBS.
Although in all cases there are alternative arrangements with the local Post Office as well as a visiting mobile bank, Kate Forbes MSP said she was deeply concerned about what the closures will mean for rural communities across Scotland.
The MSP for Skye, Lochaber and Badenoch said:
RBS is just the latest bank to abandon the Highlands and forget the locally communities who depend on their services. These banks are deserting the Highlands.
How are elderly and vulnerable customers supposed to access banking services, when they are expected to drive an hour from Mallaig to Fort William, or from Kyle to Portree? That is, of course, if the bus service is working perfectly.
Banks face choices as to where they focus their activities and it is clear but the waves of closures across the Highlands that national banks are failing rural customers and businesses in the Highlands.
Forbes, who said that she had already raised her concerns with senior representatives of RBS, added:
Many of us now use online banking, whether on the internet or by phone apps but the local branch is still very important for those who depend on physically visiting the local branch, such as elderly customers or businesses depositing cash.
Pound hovers above $1.35
The pound is just about keeping its head above the $1.35 mark this morning, after surpassing it on Thursday for the first time since the end of September.
It is down 0.1% against the dollar at $1.3511, and down 0.3% against the euro at €1.1323.
Here is our full story on the news from RBS this morning:
RBS shares are down 1% this morning after the news that it will be closing 259 branches with the loss of 680 jobs.
That makes it one of the FTSE’s biggest fallers, in a session where the index overall is slightly up.
Connor Campbell, analyst at Spreadex, says the FTSE has got off to a slow start this morning:
The FTSE got off to another slow start, scraping together a meagre 0.1% rise to just about lift away from yesterday’s 2 month nadir. While the commodity stocks are all in the green, the UK index is being hampered by its banking sector, with RBS leading its peers lower after announcing it is closing 259 branches and axing 680 jobs nationwide.
He says the performance of the FTSE and the pound over the rest of today will be dependent on the UK manufacturing PMI survey for November, out at 9.30am.
The closure of 259 RBS and Nat West branches will leave the banking group with 744 branches across the UK:
- 89 in Scotland
- 655 in England and Wales
They are turning their backs on rural Scotland. This will impact personal customers and businesses. RBS must think again. They have a duty to their customers. https://t.co/KySW42NQUa
— Ian Blackford (@IanBlackfordMP) December 1, 2017
FTSE opens higher
The FTSE 100 is currently up 8 points in a fairly subdued opening session across Europe:
- FTSE 100: +0.1% at 7,335
- Germany’s DAX: +0.2% at 13,046
- France’s CAC: -0.1% at 5,370
- Italy’s FTSE MIB: -0.2% at 22,322
- Spain’s IBEX: +0.1% at 10,222
- Europe’s STOXX 600: +0.02% at 387
MPs react to the news of closures and job cuts...
This #RBS announcement makes the case even more for a co-ordinated 'postbank' bringing banking/postal/government functions together in areas that will otherwise have no bank. @CWUnews @RBS
— Alison McGovern (@Alison_McGovern) December 1, 2017
Unacceptable that RBS plan to have no branches in Highland Perthshire with proposed closures in Pitlochry and Aberfeldy. Must reconsider.
— John Swinney (@JohnSwinney) December 1, 2017
Unite union: RBS is betraying local communities with 'savage' cuts
Unite, the UK’s largest union, says RBS is “decimating” its branch network and betraying local communities.
It says the bailed-out bank is denying access to local banking for thousands of taxpayers.
Rob MacGregor, Unite national officer:
The Royal Bank of Scotland has decided to decimate its bank branch network. Now serious questions need to be asked about whether these closures mark the end of branch network banking.
This announcement will forever change the face of banking in this country resulting in over a thousand staff losing their jobs and hundreds of high streets without any banking facilities.
The closure of another 259 branches is savage and represents a betrayal of loyal staff and customers who have supported the bank for decades. Why is the Government signing off this alarming branch closure programme?
RBS and NatWest closing another 259 branches - union fears signals end of branch banking
— Jill Treanor (@jilltreanor) December 1, 2017
The agenda: RBS cuts 680 jobs, global manufacturing data
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Royal Bank of Scotland has announced that it is closing a total of 259 branches, with the loss of 680 jobs.
The total includes 62 RBS branches and 197 NatWest branches. The banks said it will try and manage the redundancy process on a voluntary basis.
RBS said that since 2014, the number of customers using its UK branches has fallen by 40% while mobile transactions have increased by 73%.
A spokesperson said:
Over 5 million customers now use our mobile banking app and one in five only bank with us digitally. We’re providing our customers with more ways to bank than ever before – they can choose from a range of digital, to face-to-face options.
As customers continue to change the way they bank with us, we must change the way we serve them, so we are investing in our more popular branches and shaping our network, replacing traditional bricks and mortar branches with alternative ways to bank.
We expect these branch closures to result in around 680 redundancies. We realise this is difficult news for our colleagues and we are doing everything we can to support those affected. We will ensure compulsory redundancies are kept to an absolute minimum.
Also coming up today, we have a host of manufacturing PMI’s, which will give us the first insight into how the sector - and the wider economy - performed in November:
- 9am GMT: eurozone manufacturing PMI
- 9.30am GMT: UK manufacturing PMI
- 1.30pm GMT: Canadian growth figures for the third quarter (giving us the complete picture of for the G7 economies)
- 2.45pm GMT: US manufacturing PMI
Updated
