Rolling financial, economic and business news through the day, as Britains builders report strong growth in August but Switzerlands GDP stagnates
Latest: UK construction booming againBut skills shortage could hit the sector
Earlier:
Switzerlands GDP misses forecasts with 0% growthChart: Export growth slows
Todays agenda
11.27am BST
11.20am BST
The pound is continuing to fall against the US dollar this morning, as traders adjust their view of this months Scottish referendum on independence.
Its now down 0.8 of a cent, or 0.5%, at $1.6526 today.
Poll showing surge in support for Scottish independence triggers biggest rise in sterling volatility in 3 years: pic.twitter.com/SUablsXSYF
Scottish referendum: the f/x market has started to take seriously the possibility of a yes vote for the first time. pic.twitter.com/Qdeo5O3ZmJ
Given that there are no terms of reference, or contingency plans for Scottish independence if there is a yes vote, this has the potential to deliver enormous financial, economic and, of course, political risk to the U.K.
11.02am BST
Looking back at the booming UK construction sector....building firm Redrow has revealed it expanded its workforce by a fifth last year to cope with the demand.
My colleague Jennifer Rankin reports:
Redrow said it had created 230 jobs, including 48 apprenticeships, amid the housing market revival.
The new recruits include surveyors, planners, and sales and marketing experts, while the companys expansion may have created up to five times as many jobs on the building sites managed by its contractors, according to John Tutte, Redrow chief executive.
10.47am BST
Howard Archer of IHS Global Insight says this latest drop in eurozone producer prices is a worrying sign for the region:
It is looking ever more likely that the European Central Bank will ultimately have to undertake some form of quantitative easing QE, although we suspect that it will be limited given apparent wariness among some Governing Council members to go down this route.
The ECB may well initially at least limit itself to buying Asset Backed Securities rather than government bonds.
10.43am BST
The latest economic news from the eurozone is less encouraging, though.
Producer prices (which measures the cost of goods and services from euro firms at the factory gate) fell by 0.1% month-on-month in July, and were 1.1% lower than a year ago.
Bye bye PPI, hello PPD - producer price deflation. Euro zone producer prices -1.1% in July, 13th month of decline: pic.twitter.com/maP101extP
Or inflation.. RT @fwred: No pipeline deflation. pic.twitter.com/ltvvMdfJY1
10.26am BST
This shortage of skilled construction workers could suggest that the spare capacity in the UK labour market is being sucked up.
Something for the Bank of Englands monetary policy committee to ponder, as Rob Wood of Berenberg explains:
The strength of construction output has raised capacity pressures, which were reflected in further rises in sub-contractor charges. If that trend of falling capacity is reflected in other sectors in the coming months it could become an issue for the Bank of England, who are currently assuming there is still enough slack in the economy to allow interest rates to stay on hold until next year.
10.15am BST
Paul Kavanagh of City firm Killik & Co reminds me that builders have already seen their wages rise this year:
@graemewearden already has....one house builder recently observed bricklayer rates have moved from £120 per day to £180, £200 soon
@graemewearden in fairness, there has not been inflation here for seven years so they should have 'provisioned' for this day
10.02am BST
Its a good time to be a skilled builder, points out Jeremy Cook, chief economist at the currency exchange company, World First.
Heres his take on todays unexpectedly strong construction data:
The UK construction market is booming at the moment. Output and orders continue to fly higher, while the employment of skilled sub-contractor labour has contracted so much that availability has fallen to a record low and rates to a record high.
It is a good time to be working in construction if you have the skill-set. Gains appear to have been made across all three divisions housing, commercial and civil engineering of the construction sector driving confidence higher still.
9.54am BST
David Noble, Group CEO at the Chartered Institute of Purchasing & Supply, is worried by the shortage of skilled builders, and the pressure on raw materials:
The sector is struggling to find enough skilled tradesmen to keep pace with new work and the labour market will continue to put pressure on costs until the next wave of apprentices begin to enter the jobs market.
Indeed, across the supply chain, delivery times have seen the sharpest rise since the survey began, with input prices growing at the fastest rate since July 2011. With the UKs appetite for building materials growing throughout the summer, suppliers are struggling to ramp up production to pre-crisis levels.
9.39am BST
The UK construction sector has posted its strongest jump in activity in seven month, raising fears of a shortage of skilled staff.
Builders have reported a surge in housebuilding, and a rise in commercial and civil engineering last month.
UK construction firms saw one of the sharpest rises in output for seven years in August, with increasing workloads driven by an array of factors including surging homebuilding activity, greater infrastructure spending and renewed confidence within the commercial development sector.
Acute skill shortages meant that sub- contractor charges rose at the fastest pace since the survey began in 1997. Meanwhile, sub-contractor availability fell at a survey-record pace, which could act to further ignite pay pressures in the short term.
9.29am BST
The pound has dipped against the US dollar this morning after a poll showed the Yes to Independence camp gaining ground in the Scottish referendum battle.
Its not a big move -- sterling is down about 0.3% today. One pound is worth $1.6564, down from $1.66 last night before the poll was released.
A Scottish yes to independence poses far more questions (about the currency, the debt, the oil, the future) than it answers but my best guess is that a Yes would trigger a 3-5% fall by sterling as an initial reaction, compared to an equally unsophisticated guess that the UK leaving the EU sends sterling down 10-15%.
It is now unlikely that the gap is big enough for a no this time around to kick the issue into the long grass for ever. If, for example, the UK were to leave the EU after a referendum, Mr Salmond would leap back on the bandwagon and apply for an independent Scotland to remain in. And so on.
9.13am BST
The latest Spanish employment figures are also out this morning, and show a small rise in unemployment.
But the underlying picture does show signs of improvement within Spains chronically weak labour market.
8.35am BST
Economists are concerned by the evaporation of growth in the Swiss economy in the last quarter.
Maxime Botteron of Credit Suisse is worried that capital investment fell, saying:
For us its really below expectations. We expected a bit more growth. The trend in exports is not a big surprise. Trade data so far already pointed to a rather weak contribution of exports. What is a bit more surprising is the weak investment spending, especially in the construction sector.
The global economy isnt developing as wed expected,
We think the weakness will last into 2015. The pickup will come, but not as strongly as wed thought.
#brexit Stagnant Swiss economy sends warning msg to UK europhobes hailing CH as the model to follow after leaving EU
8.18am BST
Bloomberg pins the blame firmly on the weakness of the Eurozone, saying:
The Swiss economy lost pace in the second quarter with private consumption failing to make up for slowing exports as stagnating growth in the euro-area took its toll....
8.16am BST
These are the worst Swiss growth figures in two years, as our friends at fastFT flag up:
8.10am BST
The full Swiss GDP report is available on the State Secretariat for Economic Affairs (SECO)s website.
It shows that exports of jewellery made a notable positive contribution to growth. However, the countrys banking sector did not:
On the production side many sectors reported virtually no change in value added between the 1st and 2nd quarters.
Industry, energy and water supply made an overall small positive contribution to GDP growth, by contrast the value added in the financial sector and some public sector economic areas showed a stagnating to slightly falling trend.
8.02am BST
Todays GDP report shows that the Swiss economy has suffered a slowdown in export growth.
Exports rose by just 0.6% in April-June, down from robust growth of 2.3% in January-March.
7.49am BST
Heres Reuters first take on the unexpectedly weak Swiss GDP figures released this morning.
Switzerlands economy stalled in the second quarter, with output unchanged from the first, dragged down by weaker exports and falling construction spending, data showed on Tuesday.
Analysts polled by Reuters had forecast a quarterly growth rate of 0.5%.
7.42am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The breaking news this morning is that Switzerland has joined the ranks of European countries suffering a slowdown.
Another housebuilder with record results - North-focused Redrow's FY PBT up 91% to £132m. Help to Buy supported 35% of completions.
It will be a wide-ranging discussion . the bar has been raised. We have to bear in mind who the counterparties are. They are members of the International Monetary Fund, the (European) Commission, and the European Central Bank
You must understand their limits. They cannot speak politically.
Continue reading...Britain's builders enjoyed the strongest growth for seven months in August but the surge in activity put further strains on already tight supplies of both materials and skilled workers.
Against the backdrop of rising house prices, home building continued to lead the construction rebound. Civil engineering was also buoyed by infrastructure spending and commercial construction grew strongly, according to the Markit/CIPS UK Construction PMI survey.
Continue reading...Housebuilder Redrow increased its workforce by more than a fifth in a year when surging demand for housing sent profits soaring.
The revival of the housing market and the government's Help to Buy mortgage-subsidy scheme helped the FTSE 250-listed homebuilder earn record pre-tax profits of £133m in the year ending 30 June, a 91% increase on last year. The average private sale price of a Redrow property increased by 19% to £269,000, but the builder said there were signs that prices were moderating, especially in London.
Continue reading...
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