As it’s quietened down, sit back and enjoy this video of retail magnate Sir Philip Green swapping bon mots with Sky News....
Here’s the full story:
The latest US unemployment report is as impressive as ever.
Just 262,000 people filed new claims for unemployment benefit last week, 4,000 fewer than the previous week.
That means the initial jobless claims total has been below 300,000 for 76 weeks in a row, which hasn’t happened since 1973.
Britons are less pessimistic about the economy - survey
The UK public have shaken off some of their post-referendum worries, according to IPSOS Mori, the polling company.
Its latest survey has found that 43% of the public expect the economy to deteriorate over the next 12 months, down from 57% a month ago.
And the proportion expecting conditions to improve has risen to 28%, from 23%.
Conservative voters have become particularly optimistic this month, apparently, perhaps showing they’re happy with Theresa May’s premiership. But remain supporters, young people and Labour voters are all still gloomy, according to IPSOS Mori’s Gideon Skinner:
After a 4yr low post-Brexit, @IpsosMORI economic optimism index back to early 2016 levels https://t.co/jxpxF5DlAF pic.twitter.com/XaVv6N9blb
— Gideon Skinner (@GideonSkinner) August 18, 2016
Cons. voters notably more optimistic re economy this month; remain-leaning young, ABs, and London/Scots pessimistic https://t.co/jxpxF5DlAF
— Gideon Skinner (@GideonSkinner) August 18, 2016
The European Central Bank has urged EU leaders to pick up their game following Britain’s EU referendum.
The minutes of its last meeting, released today, state that:
“A strong call was made for European policymakers to contain political uncertainty surrounding the UK exit negotiations and to provide a clear vision for the future path of the European Union and its integration process.”
The ECB also hinted that it might deploy fresh stimulus measures at its September meeting, once policymakers had assessed the situation in the eurozone.
The minutes of July’s meeting say:
“It was widely felt among members that it was premature tod iscuss any possible monetary policy reaction at this stage.
More time was needed to assess the incoming information over the coming months, although downside risks had clearly increased.”
Updated
Asda’s record fall in sales shows that the company needs to compete better on price, and quality, to stay afloat, says Paul Thomas, senior consultant at Retail Remedy.
The limping Asda ship has a new captain and for Sean Clarke’s first trading update, it could be no worse.
It is too soon for the new CEO to have had any significant impact but a 7.5% decline in like for like sales is apocalyptic for Asda.
There is absolutely no honeymoon period for Sean Clarke: it’s a case of get in there and power up the defibrillator.
Back to this morning’s UK retail sales figures, and this chart shows how shoppers have benefitted from falling prices since mid 2014.
1.4% in July - British shoppers still basking in lower prices. But degree of deflation is the least since Jan 2015. pic.twitter.com/rtldReHetx
— Marcus Wright (@MarcusEconomics) August 18, 2016
The weaker pound could end this trend, though, by pushing up import costs....
Some aghast reaction to ASDA’s sales slump:
The 7.5% fall in like-for-like sales needs to be viewed alongside the fact that the other 3 supermarkets all grew sales in same period #asda
— Mark Casci (@MarkCasci) August 18, 2016
Asda sales down 7.5% - what's incredibly worse than a nadir?
— Ashley Armstrong (@AArmstrong_says) August 18, 2016
ASDOCALYPSE NOW.
— Emma Haslett (@emmahaslett) August 18, 2016
Just so you know I came up with that first. #Asda
ASDA suffers record sales slide (again)
Ouch. In fact. double-ouch.
Sales at ASDA, the supermarket chain owned by US mega-group Walmart, have fallen by 7.5% in the last quarter - its worst performance ever!
#Breaking Sales at Asda fell 7.5% in the past three months, its worst quarterly performance on record, company says pic.twitter.com/TMsSWYeR9w
— Press Association (@PA) August 18, 2016
Walmart says it is urgently addressing the situation, but admits turning Asda around will take time given the “competitive environment in the UK”, and food deflation.
Back in June, Walmart surprise retail experts by parachuting the head of its Chinese operation, Sean Clarke, to run Asda.
Like all UK supermarkets, Asda has been squeezed by the rise of discount chains such as Aldi and Lidl. It is also struggling to cope with the shift towards online shopping, and the move away from large supermarkets towards smaller convenience stores.
Updated
Sports Direct puts own board under the microscope
Newsflash: Sports Direct has announced plans to review its own board.
The retail chain, whose working practices were exposed by the Guardian last December, has also told the City that its own internal review will be published early next month.
Here’s the statement:
Sports Direct announces that the independent report on working practices being undertaken by the law firm RPC, which will review and report on the internal investigation announced in December 2015, will be published in the week commencing 5 September 2016, (ahead of the AGM on 7 September 2016).
An external evaluation of the board is planned for later this financial year.
Sports Direct to conduct "external evaluation" of board https://t.co/u8v33wrRXf
— Graham Ruddick (@GrahamtRuddick) August 18, 2016
In other retail news, Amazon has just announced is is opening a new fulfilment centre in Tilbury, Essex next year.
This will create 1,500 new permanent jobs, but Amazon will also be deploying its latest Robotics technology, which means....
The robots slide under a tower of shelves where products are stowed, lift it and move it through the fulfilment centre. Robots help speed order processing time and reduce walking time by moving the shelves to employees, reducing the time taken to stow items for sale or pick them for new customer orders.
They also save space, allowing for 50 per cent more items to be stowed per square foot.
Here’s a recent feature about Amazon’s smart robot work:
The jump in the pound suggests investors have been too gloomy about the UK since the Brexit vote, says Arnaud Masset, market analyst at Swissquote Bank.
Perhaps July’s solid retail sales are a once-off and the positive effects of the weaker pound will be short-lived. However, one thing is certain: the market has been overly pessimistic in the wake of the Brexit vote and clearly needs to better assess the lay of the land.
Tourism boosts retail sales
It appears that Britain’s shopkeepers are benefitting from a flurry of tourists, thanks to the slump in the pound since the Brexit vote
Joe Grice, Chief Economic Adviser at the Office for National Statistics, explains:
“These are strong numbers showing a pronounced increase in sales compared with last July. Better weather this year could be a major factor with sales of clothing and footwear doing particularly well. There is also anecdotal evidence from respondents suggesting the weaker pound has encouraged overseas visitors to spend.
Department stores and specialist retailers like jewellers are among those reporting a good month.”
Pound surges after retail sales surprise
Sterling is rocketing higher, as fears of a Brexit-induced recession ease.
The pound has jumped by over one cent against the US dollar to $1.3154, a two week-high, as traders hail the 1.4% jump in retail sales last month.
It’s also up 0.8 eurocents at €1.1631, bouncing back from Tuesday’s three-year low.
Pound Rebounds as More U.K. Data Defies #Brexit-Effect: This Time It's Retail Sales pic.twitter.com/FUyCO0a10j
— justin carrigan (@justincarri) August 18, 2016
Andy Scott, economist at HiFX, says British consumers appear to be “unfazed” by the Brexit vote. That could mean the UK avoids falling into recession, as some economists had feared.
Scott says:
Sentiment is key to avoiding a prolonged downturn or recession and the consumers willingness to spend would point to it holding up well.
This chart shows exactly how British retail sales surged by 5.9% year-on-year in July (note how prices fell across the sector)
Updated
Retail sales: snap reaction
City experts are hailing the surprise rise in UK retail sales in July.
Joshua Mahony of IG points out that it follows yesterday’s decent unemployment figures.
Yet another strong post-referendum reading, with retail sales up 1.4% in July, following yesterdays claimant count figure. GBPUSD spiking
— Joshua Mahony (@JMahony_IG) August 18, 2016
It may mean the economy actually keeps growing this quarter, despite Brexit uncertainty, says Howard Archer of IHS Global Insight:
#UK #retail sales volumes jump 1.4% m/m & 5.9% y/y in July despite confidence slump after Brexit vote; boosts Q3 growth propsects
— Howard Archer (@HowardArcherUK) August 18, 2016
Jeremy Cook of currency exchange firm World First reckons consumers could play a big role in keeping the economy moving:
You get a harness on a UK consumer and you'll get a lot of work out of them
— World First (@World_First) August 18, 2016
But economist Rupert Seggins remans cautious:
UK retail sales up strongly in July, but note that it's only a loose indicator of household consumption expenditure. pic.twitter.com/DM6yPxAv7Z
— Rupert Seggins (@Rupert_Seggins) August 18, 2016
No immediate sign of a Brexit shock here....
Every part of the UK retail sector enjoyed growth last month, with non-food stores doing particularly well.
And consumers benefitted from cheaper prices in July.
The ONS explains:
Compared with June 2016, the quantity bought increased by 1.4%; all sectors showed growth with the main contribution again coming from non-food stores.
Average store prices (including petrol stations) fell by 2.0% in July 2016 compared with July 2015. Compared with June 2016, there was a fall of 0.8%.
ONS say falls in average store prices were seen across all store types compared with July 2015, with the largest fall in petrol stations
— RANsquawk (@RANsquawk) August 18, 2016
Updated
UK RETAIL SALES RELEASED
BOOM! UK retail sales have soared in July, despite the uncertainty caused by the Brexit vote.
Retail sales jumped by 1.4% month-on-month, smashing expectations of a rise of just 0.1% to 0.2%. If you strip out fuel sales, retail sales were 1.5% higher.
And on an annual basis, retail sales were almost 6% higher than in July 2015.
It’s still early days, but it does suggests that consumers aren’t gripped by post-referendum angst.
Good News! In July 2016, the volume of UK retail sales is estimated to have increased by 5.9% compared with July 2015 #GBP
— Shaun Richards (@notayesmansecon) August 18, 2016
The Office for National Statistics says that retailers benefitted from warm weather in July, as Brits finally their wardrobes with summery clothing.
And the slump in the pound may also have helped, by encouraging overseas visitors to come to the UK.
More to follow....
Updated
As retail analyst Mark Brumby points out, retail spending isn’t the best route to economic prosperity (especially given Britain’s current account deficit!):
Market suggests consumers expect next move in UK rates to be down. And they’re probably right. Stuttering bonfire, petrol etc.
— Mark Brumby (@brumbymark) August 18, 2016
Retail stats shortly (9.30). Could be resilient (weather better) but, ultimately, it’s not more consumption & imports that we need
— Mark Brumby (@brumbymark) August 18, 2016
Kingfisher: No sign of Brexit hurting demand
Kingfisher, which owns the B&Q do-it-yourself chain, is a decent barometer of the UK retail world.
So investors are encouraged to see that it posted a 3% jump in sales over the last quarter.
CEO Véronique Laury told shareholders that the EU referendum vote has created uncertainty, but:
“There has been no clear evidence of an impact on demand so far on our businesses.”
Neil Wilson, markets analyst at ETX Capital, reckons Kingfisher might actually profit from a slowdown in the housing market:
Brexit uncertainty, which looks to have cooled the UK property market, may actually be helping as homeowners improve rather than move. Moving home costs money and people may be more inclined to sit tight, perhaps re-mortgage to a lower rate, and carry out home improvements.
European markets up in early trading
European stock markets are starting the day with a gentle rally, as fears of an imminent US interest rate hike recede.
The FTSE 100 index has risen by 24 points, or 0.35%, to 6883, which recovers most of yesterday’s losses. Mining shares are leading the risers, with Antofagasta and BHP Billiton jumping by 2.5%.
The markets in Spain, Italy, Germany and France have all risen by around 0.7%.
Last nights dovish minutes from the Federal Reserve are the main factor, with traders anticipating that US interest rates won’t rise in September.
Reading the tealeaves in today’s retail sales figures may be tricky, warn economists at RBC Capital Markets.
They write:
In the UK this morning brings news of retail sales in July.
Given it is the first month of data following the referendum result, there will be interest from those trying to discern how the consumer has behaved in the aftermath of the surprise result. However, this isn’t the easiest series to interpret in terms of the read across to broader macro aggregates.
French jobless rate hits four-year low
Quelle surprise! France’s unemployment rate has hit its lowest level since 2012.
In a boost to embattled president Francois Hollande, the French jobless rate has dipped to 9.9% in the second quarter of 2016.
That’s the lowest level since the third quarter of 2012, shortly after the socialist leader was sworn in as president (and promptly saw his plane struck by lightning as he flew to meet Angela Merkel).
France's unemployment rate drops below 10% for the first time since 2012 https://t.co/Cg4fryGw1a pic.twitter.com/waIfdaLVtV
— Bloomberg Economics (@economics) August 18, 2016
France’s persistently high unemployment rate has dogged Hollande’s presidency; he had pledged to bring it down, but instead the jobless total has hit a series of record highs.
And even at 9.9%, France’s unemployment rate is basically double that of the UK or America. So there’s still lots of work for Hollande, or his successor, to do, as Reuters explains:
Unemployment was down in all age categories, but the fall in youth unemployment was sharper: it fell 0.4 points to 24.3%, the lowest since 2014.
The percentage of long-term unemployed -- those registered as out of work for over a year -- remained stable at 4.3%, however.
French ILO Unemployment Rate Q2: 9.9% (est 10.1%, prev 10.2%)
— rens_beck (@rens_beck) August 18, 2016
French Mainland Unemployment Change Q2: -74K (est -15K)
Updated
The agenda: Retail therapy or Brexit belt-tightening?
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Once dubbed a nation of shopkeepers, Modern Britain now looks more like a nation of shoppers. And today we get our first official signal of how June’s Brexit vote has hit consumers.
July’s retail sales figures, due at 9.30am, will show whether shopping habits took a knock in the weeks after Britain voted to leave the EU.
Economists predict that retail sales crept up by just 0.1% during the month, which would mean sales were 3.9% higher than a year ago.
In June, retail sales fell by 0.9% – the biggest decline in six months – so the City is hoping for a recovery in July.
A poor reading could show that the Brexit vote is eroding confidence, while a decent report might reassure policymakers that Brits are taking the situation in their stride.
Yesterday’s unemployment figures didn’t show much impact from the vote, with Britain’s jobless rate remaining at just 4.9%.
But it’s not all rosy out there. Pollsters at TMS reported that the British public’s confidence in the economy has fallen sharply since the vote to leave the European Union.
TMS found that 33% of Britons think the economy has worsened compared with a year ago, up 11 points from April.
Also coming up today....
Investors are still digesting the minutes of the last US Federal Reserve meeting, which were released last night. They show that the Fed was split over the prospects of an early interest rate hike. That’s likely to push shares higher in Europe today.
They’re also watching the Japanese yen nervously, as it bobs a
In the corporate world, the Co-operative Bank and retail group Kingfisher are publishing results this morning, with US retail giant Wal-Mart around lunchtime.
And in the eurozone, we’re getting French unemployment figures, and eurozone inflation.
Looking ahead, highlights include UK retail sales, EU CPI, ECB Minutes, Philadelphia Fed Manufacturing Index and earnings from Wal-Mart
— RANsquawk (@RANsquawk) August 18, 2016
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