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A staff wanted sign in the window of a restaurant in the Soho district of London, U.K., on Tuesday, Sept. 7, 2021. LONDON — U.K. unemployment unexpectedly rose to its highest level in two and a half years, data showed Tuesday, amid a heated general election campaign in which the economy is a key battleground. Simultaneous strong wage growth divided opinions from market-watchers mulling the timing of an interest rate cut from the Bank of England. While market pricing on Tuesday suggested next to no chance of a rate cut at the BOE's June meeting, and a 36% shot in August, that probability rises to nearly 60% for the September deliberations. Consultancy Capital Economics said that, while the stickiness of wage growth would be a "lingering concern" for the BOE, the rate should soon be on a "firm downward path" as unemployment rises.
Persons: Richard Carter, Cheviot, BOE, Capital's, Ruth Gregory, Rishi Sunak, Keir Starmer, Sunak, We've, it's, Starmer Organizations: LONDON, Bank of England, National Statistics, Reuters, Consultancy Capital Economics, Conservative Party, Labour, Conservatives Locations: Soho, London
French election shock hits stocks and the euro
  + stars: | 2024-06-10 | by ( Anna Cooban | )   time to read: +4 min
London CNN —The decision by French President Emmanuel Macron to call a snap election after losing to the far right in a vote for European lawmakers roiled markets and the euro Monday. The first round of the French election is scheduled for June 30, followed by the second round on July 7. Under the French system, parliamentary elections are held to elect the 577 members of the lower house, the National Assembly. Higher yields indicate that investors want a bigger premium to buy French bonds given the political uncertainty. “A right-wing majority in the (French parliament) would hamper any reform plans.
Persons: Emmanuel Macron, Macron, Générale, , , Mike O’Sullivan, whittle, Andrew Kenningham, ” Mohit Kumar Organizations: London CNN, BNP, Credit Agricole, National, National Assembly, CNN, Capital Economics, Jefferies Locations: Paris, Europe, , France
It’s a very different matter in Europe — by far the biggest export market for Chinese EV manufacturers. EU tariffs could backfireAccording to Citi, the EU accounted for 36% of Chinese EV exports last year, more than the next five largest markets combined. By contrast, the United States currently receives just 1.1% of China’s EV exports. For BYD, China’s biggest EV maker, the tariffs would likely have to be even higher to be effective, they add. “I’d say we are entering a very tense period in terms of trade interactions and trade defense,” she added.
Persons: Joe Biden, “ I’m, ” Biden, Joseph Webster, Agatha Kratz, Kratz, That’s, Oliver Zipse, , Tu Le, , Josh Lipsky, Juliana Liu Organizations: London CNN, United, EV, European Union, Atlantic Council, EU, CNN, Citi, Capital Economics, BMW Locations: China, America, Europe, United States, It’s, Brussels, “ Brussels, Beijing, subsidization, EU, States, Italy, Hong Kong
The Fed aims to keep inflation at 2% over the longer run. Meanwhile, among the 20 countries that use the euro, annual consumer price inflation has slowed steadily since the start of the year. Fed Governor Michelle Bowman said earlier this month that she would favor a rate hike “should progress on inflation stall or even reverse.”So why does the United States appear to have a bigger inflation problem than Europe? Some economists argue there isn’t actually much daylight between the US and European rates of inflation, pointing to a quirk in the US measures. The measure is designed to track inflation in the real estate market while accounting for the fact that most Americans own their homes.
Persons: Michelle Bowman, Paul Donovan, Simon MacAdam, , MacAdam, ” Carsten Brzeski, Janet Yellen, Jim Watson, Brzeski, , ” Davide Oneglia Organizations: London CNN, Federal Reserve, European Central Bank, PCE, UBS Global Wealth Management, Capital Economics, ING, CNN, Monetary Fund, Washington, Reuters, Getty, , ECB, Lombard Locations: United States, Europe, Centreville , Maryland, AFP, Russia, Ukraine
Brent crude, the global oil benchmark, was down 0.4% at $86.8 per barrel, having earlier spiked more than 3%. The Israeli military has not commented, and Iran has not identified the source of the attack. Iran launched the attack in retaliation for a suspected Israeli strike on its embassy compound in Syria earlier this month. Iran is a big oil producer but exports most of its crude to China because of long-standing international sanctions. Mexico also said earlier this month that it would cut back oil exports because of strong domestic demand.
Persons: Brent, Israel, Benjamin Netanyahu, , ” Neil Shearing, Richard Bronze Organizations: London CNN, CNN, Capital Economics, Organization of, Petroleum, ANZ, United, Nikkei, Kospi, Tel Aviv Stock Exchange Locations: Hong Kong, London, Iranian, Isfahan, East, Iran, Syria, Hormuz, China, United States, Mexico, Asia, Israel, Tel Aviv
People walk over London Bridge looking at a view of Tower Bridge in the City of London financial district in London, Britain, October 25, 2023. REUTERS/ Susannah Ireland/File Photo Acquire Licensing RightsLONDON, Nov 10 (Reuters) - Britain's sluggish economy failed to grow in the July-to-September period but at least managed to avoid the start of a recession, figures from the Office for National Statistics showed on Friday. In the month of September on its own, the economy grew by 0.2% from August when growth was revised down to 0.1% from 0.2%. "But the key point is that the economy is not weak enough to reduce core inflation and wage growth quickly," Dales said. In the three months to September, output in Britain's huge services sector fell by 0.1%, industrial production was broadly flat and construction grew by 0.1%, the Office for National Statistics said.
Persons: Susannah Ireland, Paul Dales, BoE, Rishi Sunak, Jeremy Hunt, William Schomberg, Andy Bruce, Sarah Young Organizations: REUTERS, Office, National Statistics, Reuters, Capital Economics, Bank of England, Thomson Locations: City, London, Britain, Germany, United States
Prices increased by 0.9% from September when they had risen by a marginal 0.1%, Nationwide said. It was the biggest monthly increase since August 2022. Economists polled by Reuters had expected prices to fall by a monthly 0.4% and by 4.8% year on year. "The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained," Nationwide Chief Economist Robert Gardner said. "While some buyers are able to accept higher mortgage payments, helping to prop up house prices, their number is dwindling as shown by the drop in mortgage approvals in September," Pattison said.
Persons: Robert Gardner, BoE, Gardner, Imogen Pattison, Pattison, William Schomberg, Jason Neely Organizations: Nationwide, Reuters, Royal Institution, Chartered Surveyors, Bank of England's, Capital Economics, Thomson
Reuters GraphicsEuropean funds have effectively returned nothing this year after two down years, Morningstar data shows. Government bond funds have fared even worse and are set for three years of losses in both the U.S. and Europe. Bond yields rise as prices fall, and vice versa. Reuters GraphicsBank of America said there were $5.6 billion of inflows to long-dated Treasury funds last week, the largest on record. ICI data shows that U.S. money market funds have ballooned to $5.6 trillion in assets, from $4.6 trillion in October last year.
Persons: Dado Ruvic, Stefano Fiorini, Oliver Blackbourn, Janus Henderson, You've, Jonas Goltermann, Max Kettner, Harry Robertson, Mark Potter Organizations: REUTERS, Reuters Graphics, Morningstar, U.S, Generali Investments Partners, Reserve, Reuters, Treasury, Citi, ICE, Fed, Capital Economics, Investment Company Institute, Reuters Graphics Bank of America, Reuters Graphics Reuters, ICI, HSBC, Thomson Locations: Europe, U.S
Private-sector regular pay - the component looked at most closely by the BoE - saw annual growth slow to 8.0% in the three months to August, from 8.1%. Regular pay, adjusted for CPI inflation, grew by an annual 0.7% in the three months to August. Reuters GraphicsSLUGGISH ECONOMYBank of England Chief Economist Huw Pill said on Monday that fast rates of nominal pay growth stood at odds with most other labour market measures, which have pointed to a slowing economy. The number of job vacancies in the three months to September fell to a two-year low of 988,000, Tuesday's data showed. Unemployment figures and other related labour market data will not be published until Oct. 24, after the ONS said on Friday it needed more time to take account of low response rates.
Persons: Kevin Coombs, BoE, James Smith, Jeremy Hunt, Rishi Sunak, Huw Pill, payrolls, Ashley Webb, Webb, Sachin Ravikumar, William Schomberg, Bernadette Baum Organizations: REUTERS, LONDON, Bank of England, Britain's, National Statistics, Reuters, U.S, Bank, England's, ING, Private, of England, International Monetary, Capital Economics, Thomson Locations: Canary Wharf, London, Britain
Net borrowing, excluding state-owned banks, stood at 4.3 billion pounds ($5.49 billion) last month, less than the median forecast of 5.0 billion pounds in a Reuters poll of economists. In the first four months of the financial year, borrowing stood at 56.6 billion pounds. "As inflation slows, it's vital that we don’t alter our course and continue to act responsibly with the public finances," Hunt said in a statement after the data. Interest costs rose by 1.5 billion pounds compared with July last year to 7.7 billion pounds, the highest for July since records began in April 1997. The public finances were boosted by inflows of self-assessed income tax receipts which are typically strong in July, which stood at 11.8 billion pounds, 2.5 billion pounds more than in July last year.
Persons: Jeremy Hunt, Jessica Taylor, Handout, Hunt, Rishi Sunak, Liz Truss's, Ruth Gregory, Gregory, Gabriella Dickens, William Schomberg, Sachin Ravikumar, Andrew Heavens, Tomasz Janowski Organizations: REUTERS Acquire, Reuters, Bank of England, Conservative Party, Treasury, Capital Economics, Senior, National Statistics, Britain's, Thomson Locations: London, Britain
The ONS said falling gas and electricity prices were the biggest driver behind the drop in inflation, while food price inflation also eased. Despite the drop in the headline figure, Britain retains one of the highest rates of price growth in Western Europe, with only Iceland and Austria suffering higher inflation. The BoE is watching core inflation - which strips out volatile food and energy prices - and consumer services prices closely. Services inflation picked up to 7.4% from 7.2% in June. Financial markets on Wednesday showed a roughly two-thirds chance that the BoE's Bank Rate will hit 6% in February, up from 5.25% now.
Persons: Phil Noble, BoE, Sterling, Ruth Gregory, Jeremy Hunt, Andy Bruce, William Schomberg Organizations: REUTERS, Bank of, National Statistics, U.S, ONS, Bank, Capital Economics, Financial, Manufacturers, Thomson Locations: Altrincham, Britain, Bank of England, Western Europe, Iceland, Austria, BoE's
Official data on Friday showed the economy grew 0.2% in the second quarter, against the consensus for a flat reading in a Reuters poll of economists. The strong showing bolstered bets that the BoE would keep on raising interest rates, given the central bank stressed this month that resilience in the economy was one of the factors that would underpin its judgement. The central bank itself had pencilled in growth of 0.1% for the second quarter. "With much of the drag from higher interest rates still to come, we are sticking to our below-consensus forecast that the UK is heading for a mild recession later this year," said economist Ruth Gregory from consultancy Capital Economics. Reporting by Andy Bruce and David Milliken; editing by William James, Kate Holton and Christina FincherOur Standards: The Thomson Reuters Trust Principles.
Persons: Sterling, BoE, Neil Birrell, Jeremy Hunt, Ruth Gregory, Andy Bruce, David Milliken, William James, Kate Holton, Christina Fincher Organizations: Bank of England, U.S ., Reuters, Bank of, Miton, National Statistics, Manufacturing, Reuters Graphics, Capital Economics, Thomson Locations: Bank of England, Britain, Germany, France, Italy, United States
Morning Bid: Soft landing fatigue
  + stars: | 2023-08-11 | by ( )   time to read: +3 min
Positive economic data tends to move stock markets, either by fueling rallies, or prompting a temporary sell-off as traders take profits. But Wall Street stock markets ended Thursday flat. Futures point to mild declines for the S&P 500 and the Nasdaq 100 on Friday. The S&P 500 has risen 16% year-to-date. Analysts have cut their estimates for S&P 500 companies' 2023 earnings by about 15% since the end of last year, Capital Economics says.
Persons: Brendan McDermid, Naomi Rovnick, Emmanuel Cau, Cau, Ned Davis, Elaine Hardcastle Organizations: New York Stock Exchange, REUTERS, Nasdaq, Barclays, Economics, Capital Economics, Ned Davis Research, U.S Federal Reserve, Reuters Graphics Reuters, Reuters, University of Michigan, Thomson Locations: New York City, U.S, Tuscany
UK economic growth unrevised at 0.1% in first quarter of 2023
  + stars: | 2023-06-30 | by ( )   time to read: +2 min
REUTERS/Henry Nicholls/File PhotoLONDON, June 30 (Reuters) - Britain's economy grew 0.1% in the first quarter of this year, unrevised from an initial estimate published last month, figures from the Office for National Statistics (ONS) showed on Friday. "The final Q1 2023 GDP data confirms that the economy steered clear of a recession at the start of 2023. Friday's figures showed that households' real disposable income was 0.8% smaller than the previous quarter, reflecting higher costs for electricity, gas and food. There were also signs that people were saving less in response to the increased cost of living, as the savings ratio fell to 8.7% in the first quarter from 9.4% in the quarter before, its lowest level since the second quarter of 2022 though well above its pre-pandemic average. Stripping out volatile trade in precious metals, the ONS's preferred measure, the underlying current account deficit narrowed to 2.6% of GDP from 3.3% of GDP in the final quarter of 2022.
Persons: Henry Nicholls, Ashley Webb, David Milliken, Andy Bruce, Sarah Young Organizations: REUTERS, Office, National Statistics, ONS, Capital Economics, Thomson Locations: London, Britain, Germany, Ukraine
Squeezed UK households tap into savings at record pace
  + stars: | 2023-06-29 | by ( Andy Bruce | )   time to read: +3 min
Unsecured lending to consumers rose by 1.144 billion pounds ($1.45 billion) in net terms last month after a 1.513 billion-pound increase in April. A Reuters poll of economists had pointed to net consumer credit lending of 1.5 billion pounds in May. Thursday's data pointed to mixed signals from the housing market, with mortgage rates for new borrowers soaring past 6% this month in many cases. The value of net mortgage lending contracted in May by 92 million pounds, following a 1.466 billion-pound fall in April. It marked the first back-to-back falls in net mortgage lending since records began in 1986.
Persons: BoE, Ashley Webb, BoE Governor Andrew Bailey, Paul Heywood, Andy Bruce, William Schomberg, Emelia Organizations: Bank of England, Savings and Investment, Consumer, Capital Economics, Reuters, Equifax, Thomson
LONDON/SINGAPORE (Reuters) - The dollar fell slightly on Tuesday as investors awaited U.S. inflation data, while China’s yuan slipped to a six-month low after the central bank lowered a short-term lending rate to boost the economy. That helped push the dollar index, which measures the currency against six peers, down 0.26% to 103.32. The onshore yuan bottomed at 7.168 per dollar, its lowest since last November, and last traded at 7.152. Its offshore counterpart weakened to a new six-month low of 7.178, before paring its losses slightly. The Aussie dollar rose more than 0.4% to its highest since May 11 at $0.679, and was last at $0.678.
Persons: Dado Ruvic, Jane Foley, “ What’s, ” Foley, Julian Evans, Pritchard, ” Sterling Organizations: LONDON, REUTERS, Federal Reserve, Rabobank, Fed, Capital Economics, of England, Bank of Japan Locations: SINGAPORE, Asia, China
Average house prices as measured by the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas were forecast to stagnate next year. "Looking ahead, we think there is scope for prices to fall a little further. "Given supply is likely to stay tight, there is a risk house prices may not fall as much as we previously expected." The 30-year fixed mortgage rate, currently around 6.7%, was expected to average 6.2% in 2023. Those high mortgage rates are restricting housing supply, which puts upward pressure on prices, as well as demand.
Persons: Sam Hall, haven't, Sal Guatieri, Indradip Ghosh, Prerana Bhat, Aditi Verma, Maneesh Kumar, Jonathan Cable, Ross Finley, Sharon Singleton Organizations: stagnating, Reuters, U.S . Federal Reserve, Capital Economics, BMO Capital Markets, Thomson Locations: BENGALURU
Rainy March dampens shopper spending in Britain
  + stars: | 2023-04-21 | by ( )   time to read: +2 min
Economists polled by Reuters had forecast that sales volumes would fall by a monthly 0.5% after rising in January and February. Darren Morgan, director of economics at the Office for National Statistics, said the broader trend for retail sales was less subdued than the figures for March alone suggested. Retail sales volumes in March were 3.1% lower than a year earlier. "That said, even though the worst of the declines in retail sales are in the past, higher interest rates will restrain spending this year," he said. The BoE is expected to raise interest rates for the 12th consecutive meeting in May, taking Bank Rate to 4.5% from its current level of 4.25%.
Analysis: Why is UK inflation so high?
  + stars: | 2023-04-19 | by ( Andy Bruce | )   time to read: +4 min
Annual consumer price inflation (CPI) in Britain fell to 10.1% last month but defied forecasts for a bigger drop from February's 10.4%, according to data published on Wednesday. "Inflation in the UK has risen further and stayed higher than elsewhere as the UK has experienced the worst of both worlds: a big energy shock like the euro zone and labour shortages - even worse than the U.S.," said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics. British consumer energy prices were 79% higher in March than their level two years earlier, the biggest increase in western Europe. Britain's high rate of energy inflation reflects its heavy reliance on gas for power generation and home heating as well as the poor energy efficiency of its housing stock. But domestically generated price pressures are likely to slow the pace of decline in headline inflation.
UK mortgage approvals rose more than expected in February: BoE
  + stars: | 2023-03-29 | by ( )   time to read: +1 min
The increase follows reports from the Royal Institution of Chartered Surveys and mortgage lender Halifax that show the downturn in the housing market is no longer accelerating, even if conditions remain weak. Britain's housing market slowed sharply after September when former prime minister Liz Truss's economic plans triggered a spike in mortgage rates and a dramatic fall in approvals. "Reflecting the partial unwinding of the spike in mortgage rates following the 'mini' budget, mortgage approvals rose to their highest level for three months in February," said Andrew Wishart, economist at consultancy Capital Economics. "However, with mortgage rates unlikely to fall much further in the near term, lending will remain weak." Net mortgage lending value terms, which lags approvals, fell in February to 738 million pounds from 2 billion pounds in January, the lowest reading since July 2021.
LONDON, March 10 (Reuters) - Children returning to school after an illness-ravaged December provided an unexpected, one-off boost to Britain's economy in January, when growth in output exceeded forecasts, data showed on Friday. The Office for National Statistics (ONS) said Britain's economy expanded 0.3% month-on-month, after a drop of 0.5% in December - a reading that is likely to further allay recession fears. ONS Director of Economic Statistics Darren Morgan said the economy had shown zero growth over the last three months and the past year. The ONS said half of the 0.3% growth rate comprised the education sector, as a result of children returning to school after a significant drop in attendance in December. Fear of contracting COVID-19 over Christmas may also have contributed to children being taken out of school early.
UK government runs unexpected budget surplus in January - ONS
  + stars: | 2023-02-21 | by ( )   time to read: +2 min
LONDON, Feb 21 (Reuters) - Britain's government ran an unexpected budget surplus in January, reflecting strong income tax receipts that could give finance minister Jeremy Hunt a little more leeway than he thought as he prepares his annual budget. The Office for National Statistics (ONS) on Tuesday reported a seasonal budget surplus of 5.42 billion pounds ($6.51 billion) in January, a month in which millions of Britons pay their income tax receipts. A Reuters poll of economists had pointed to public sector net borrowing, excluding state-owned banks, of 7.85 billion pounds for January. The ONS reported self-assessment income tax receipts of 21.9 billion pounds, the highest January figure since monthly records began and 5.5 billion pounds more than last year. The government spent more than 10 billion pounds on its energy support for households in January, while it also paid 2.3 billion pounds to the European Union to settle a dispute over customs duties.
UK government runs unexpected budget surplus in January: ONS
  + stars: | 2023-02-21 | by ( )   time to read: +1 min
Britain's government ran an unexpected budget surplus in January, reflecting strong income tax receipts that could give finance minister Jeremy Hunt a little more leeway than he thought as he prepares his annual budget. The Office for National Statistics (ONS) on Tuesday reported a seasonal budget surplus of £5.42 billion ($6.51 billion) in January, a month in which millions of Britons pay their income tax receipts. The ONS reported self-assessment income tax receipts of £21.9 billion, the highest January figure since monthly records began and £5.5 billion more than last year. "This suggests that the Chancellor will have some wiggle-room in the budget to fund near-term tax cuts and/or spending rises," said Ruth Gregory, deputy chief UK economist at consultancy Capital Economics, of the January surplus. The figures, which are not adjusted for inflation, showed the tax receipts were offset by £6.7 billion of interest payable on index-linked government bonds, the highest January total on record.
Sterling rises after UK economy beats expectations
  + stars: | 2023-01-13 | by ( Harry Robertson | )   time to read: +2 min
LONDON, Jan 13 (Reuters) - The pound rose on Friday against both the dollar and euro after data showed U.S. inflation cooled in December and the British economy beat expectations in November. Sterling was 0.17% higher against the dollar at $1.223, and was heading for a weekly gain of more than 1%. The euro remained on track for a weekly increase against the pound. "We still think a recession is on its way," said Ruth Gregory, senior UK economist at consultancy Capital Economics. "It is too soon to conclude the economy will be able to get through this period of high interest rates and high inflation largely unscathed."
LONDON, Jan 4 (Reuters) - Britain's housing market slowed dramatically in November and people ramped up borrowing on credit cards, according to Bank of England data on Wednesday that underscored the effects of rising interest rates and the cost-of-living crisis. British lenders approved 46,075 mortgages in November, down from 57,875 in October and marking the lowest level since June 2020, when the housing market slowed to a crawl following the onset of the COVID-19 pandemic. Other gauges of the housing market show a sharp slowdown underway after house prices surged by around a quarter during the pandemic. The BoE said lending to consumers rose in net terms by 1.5 billion pounds ($1.8 billion) in November - driven by a 1.2 billion jump in credit card borrowing, the largest such increase since March 2004. "November's money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market.
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