Europe:
U.K. Construction Growth Unexpectedly Slows to Weakest in a Year
U.K. construction growth unexpectedly slowed to the weakest in a year in August, as the industry was hit by reduced business investment and heightened economic uncertainty, according to IHS Markit. The Purchasing Managers’ Index fell to 51.1, the lowest since August 2016, and down from 51.9 in July. That’s below the 52 forecast by economists in a Bloomberg survey, although it remains above the 50 level dividing expansion from contraction. New business volumes fell for the second straight month, according to Markit, with survey respondents highlighting a lack of fresh orders to replace completed projects. Companies also exercised greater caution in their approach to hiring, with staff numbers growing at the slowest pace since July 2016. Reduced levels of commercial work were also a major reason for the continued slowdown, offsetting more robust growth in residential building. Meanwhile, cost pressures were the weakest in almost a year, as the impact of the falling pound on material prices was counteracted by successful negotiations with suppliers amid weaker market conditions. The report is latest to highlight the struggles the U.K. economy is facing is the wake of last year’s European Union referendum, as growth slows and inflation continues to squeeze the pockets of consumers.
Asia:
China August data to show economy solidly poised before key Party congress
After surprising pretty much everyone with solid growth in the first half, China’s economy has continued to motor along nicely with a flurry of data for August expected to show momentum will largely hold up through to the end of the year despite tighter policy. Annual growth in the world’s second-biggest economy picked up to 6.9 percent in the first six months of the year, as brightening global demand boosted Chinese shipments and resilient domestic consumption helped to cushion the impact of policy makers’ efforts to reduce debt and cool the property market. The growth momentum has surprised most China observers, especially in light of Beijing’s campaign to wean the economy off a years-long debt-fueled binge, with early fears of a sharper downturn well and truly put to bed. According to a Reuters poll of analysts, over the next few weeks a flurry of data for August is likely to back market expectations for growth to taper off only modestly from the first half’s pace, with some such as smaller firms seen bearing the brunt of tightening financial conditions.
U.S.:
Stocks Fall as Korea Tensions Flare; Dollar Drops: Markets Wrap
Stocks fell and gold and the yen climbed as geopolitical tensions flared up again, with U.S. President Donald Trump weighing new economic sanctions that could target China after a nuclear test Sunday by North Korea. The dollar dropped for a third day. The Stoxx Europe 600 Index declined, with all but two industry sectors in the red, after a report that Pyongyang is preparing to launch an intercontinental ballistic missile heightened investors’ unease. S&P index futures also fell, while most European government bonds advanced and the yen and Swiss franc led currency gains. The euro strengthened even as economists expect European Central Bank President Mario Draghi to express concern Thursday about the currency’s rise. Industrial metals including copper and nickel extended a rally. The White House warned any nation doing business with Kim Jong Un’s regime would be met with economic sanctions and trade embargoes, and his defense chief said the U.S. has “many military options.” North Korea said Sunday it successfully tested a hydrogen bomb with “unprecedentedly big power.” The test, the first since Trump took office, is a new hurdle for markets that have proven resilient to recent bouts of tension on the Korean peninsula.
