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30 September 2019
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Manufacturing data indicates that UK companies are stockpiling ahead of the Brexit deadline, but that the sector could still be heading for recession. IHS Markit's UK Manufacturing Purchasing Managers' Index (PMI) hit a four-month high but remained in contractionary territory, while job losses stacked up in September as some companies shifted supply chains away from the UK.
European manufacturing activity fared even worse, falling to its lowest level (45.7) in seven years in September. Germany's PMI of 41.7 was its manufacturing industry's worst performance in over a decade. The latest pessimistic readings are part of a downward trend which, according to IHS Markit, shows signs of worsening.
In other economic news, UK house price growth touched an eight-month low in September, according to Nationwide. Prices rose 0.2% last month compared to last year, less than the 0.6% increase in August. Meanwhile, UK GDP growth in the first quarter has been revised upwards from 0.5% to 0.6%, attributed to corporate stockpiling ahead of the original Brexit deadline.
Boris Johnson's latest attempt to ensure that the deadline is not extended again is to ask the European Union to rule it out as part of a new Brexit deal. The prime minister is expected to publish a legal text explaining his proposed alternative to the Irish backstop within days; he has rejected claims that those plans include a buffer zone of customs centres but said that some kind of customs checks in Ireland are a “reality”.
Global equities broadly fell last week with further concern over global trade and political concerns in the US as well as the UK. The FTSE 100, however, bucked the trend to rise over 1% as sterling fell. The US Dollar Index reached its highest level in over two years as investors continue to be attracted to its relative safety in the face of uncertain markets.
Ferguson reported an 11.5% increase in annual profits this morning off the back of a 6% rise in revenue. The FTSE 100 company announced last month that it plans to spin off its UK business under the old Wolseley brand, with the company's current US chief executive taking over the remaining business.
Greggs posted strong revenue growth in its third quarter, but the rate of 12.4% reflected a slowdown for the bakery chain. Greggs said, however, that its success last year will make any comparisons skewed and that its expectations for the full-year remain unchanged, although it also warned that Brexit was creating pressure on labour and food input costs.
Woodford Patient Capital Trust has drawn up contingency plans for the potential collapse of Neil Woodford's firm that manages it. The investment trust revealed as much yesterday in its half-year results, highlighting the crisis for Woodford that has developed since his Equity Income Fund was suspended in June.
The chief executive of Credit Suisse will keep his job after being cleared in an internal investigation into a spying scandal at the bank. Tidjane Thiam was found not to have approved the company's hiring of private detectives to follow an employee who defected to UBS.
We Company, which controls the Wework brand that provides shared offices, has shelved its plans to float on the stock exchange. The embarrassing move follows a short-term postponement last month and comes a week after the company removed Adam Neumann, its co-founder and chief executive. It said it would focus on its core business and revisit the idea in the future.
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