02/09/2016
US employment data disappoints in August
Key US employment figures disappointed on Friday, with just 151,000 jobs being created in August.
The non-farm payroll number came in below analysts’ expectations, many of whom had expected around 190,000. It also falls well below the average monthly rise of 204,000 this year.
The unemployment rate remained flat at 4.9 percent, unchanged from July.
The figures are a key piece of data for the Federal Reserve who are currently deciding when to raise interest rates, and are likely to negate a September rate rise. However, several Fed members have hinted that a change will be made this month, with Yellen herself stating that “the case for an increase in the federal funds rate has strengthened in recent months”.
Morning Round-Up: Data release – UK PMI Construction up, Italian GDP growth flat, EMU PPI improves
UK PMI Constructions enhances in August
The UK’s PMI Construction rose to 49.2 in August, up 3.3 points from July. The figure beat estimates by 3.1 points. The better-than-expected measure comes in, a day after the Markit Manufacturing PMI made a surprise recovery to 53 points, the index’s biggest upward movement in 25 years. Yesterday, the IMF also admitted, data suggest that initial post-Brexit turbulences have “ebbed” and were seemingly only based on short-term uncertainties.Italian GDP growth flat in Q2
Italy’s year on year GDP growth rate remained at 0.8% in the second quarter of the year, beating estimates by 0.1%. The quarter on quarter figure also remained flat, at 0%.European Monetary Union Producer Price Index improves in July
The EMU’s Producer Price Index improved slightly in July. While the index suggests that prices are still falling, the measure of -2.8% represents an improvement of 0.3% from June and beat estimates by 0.1%. Recently published indices on both inflation and manufacturing sector performance, for August, have however indicated that last month saw a contraction in economic activity in the Euro-Zone.Katharina Fleiner 02/09/2016
Southern Rail co-owner sparks anger with £100 million profit
Go-Ahead, part owner of Southern Rail, has sparked anger from unions after disclosing a profit of nearly £100 million.
Go-Ahead’s yearly profits before tax rose 26.8% to £99.8 million. Its annual adjusted operating profit also came in above analysts expectations at £157.4 million.
The company is the co-owner of troubled railway operator Southern Rail, whose unreliable service has led to delays and hundreds of customer complaints this year alone. Union RMT today described Go-Ahead and Southern as “a money-raking disaster”.
Go-Ahead Chief Executive David Brown turned down a bonus and higher pay package this year after the disruptions, and Go-Ahead chairman Andrew Allner nodded to the problems in a statement:
“Whilst we have largely achieved the financial and strategic targets set at the beginning of the year it is clear that we have not delivered the required levels of passenger service on our Southern routes.”
RMT general secretary Mick Cash commented on the results:
“While Go-Ahead have been driving Britain’s biggest rail franchise into total meltdown, the cash has been sloshing through the boardroom at obscene levels. This is reward for total failure on a scale which is off the map.”
Go-Ahead (LON:GOG) shares rose nearly 10 percent this morning, up 9.56 percent at 2,188 (1031GMT).
02/09/2016
US ISM Manufacturing Index falls in August, GBP near one-month high
The US Institute for Supply Management Manufacturing index hit its lowest since January.
August’s figure stood at 49.4, down 3.2 points from July’s measure and missing estimates by 2.6 points. In January the index came in at 48.2 but improved since and remained above 50 for all months from March until July. The ISM Prices Paid, an index for the business sentiment towards future inflation, also fell by 2 points, to 53. The Markit Manufacturing PMI, released by Markit economics came at 52, only slightly lower than July’s 52.1 figure, but also 0.1 point below estimates. A growth measure on construction spending, released by the US Census Bureau, increased from -0.6% in July to 0% in August, missing estimates of 0.5%. However UK indicators for the performance of the manufacturing sector came in higher than expected, supporting the idea that the UK economy is recovering well from an initial post-Brexit shock.Pound rises against Dollar
The unexpected drop in US manufacturing indices and positive developments in UK manufacturing contributed to a surge in the GBP against the USD. The GBP appreciated nearly 1.22% against the USD between 9am and 4pm today, recovering the downfall since Yellen’s Fed speech on Friday and reaching a near one-month high. At 4pm the GBP/USD stood at 1.32984. Bullish movements of the GBP may also be aided by a statement of the IMF, admitting that short term instability seems to have “ebbed” since the Brexit-vote, noting that financial markets have fully recovered from post-Brexit slumps.Katharina Fleiner 01/09/2016
UK Gov provided £250 million in Start Up Loans to small businesses
The UK government has provided a quarter of a billion in Start Up Loans to small UK businesses since 2012, it was announced on Wednesday.
The loans, valued up to £25,000 at a fixed 6% interest rate, are awarded by the government backed British Business Bank. They not only help young entrepreneurs to get a financial footing to further their business, but recipients also benefit from free business support.
The loans have benefited young entrepreneurs from all across the country to start a wide variety of small businesses. Over half of the loans, distributed to people between 18 and 24, were offered to those not previously in formal employment or education, and one in five of the loans went to deprived areas of the UK.
In its first evaluation of the program in March this year, the British Business Bank said the loan program has had a positive impact on the UK’s start-rate of beneficiary businesses.
The loans are also said to generate a return on investment to the economy of £3 for every £1.
Business and Energy Secretary Greg Clark spoke about the Start Up Loans program:
“British entrepreneurs and small businesses are the backbone of our economy. This government will build on the success of Start Up Loans to give entrepreneurs the support and opportunities they need to start a business, grow it in Britain and turn it into a global success story.”Katharina Fleiner 01/09/2016
R/GA to open new UK Venture Studio Program to support start-ups
American digital service agency R/GA will be expanding its Venture initiative by starting a UK based accelerator.
In collaboration with Innovate UK, the new start-up accelerator will support up to 10 early-stage as well as growth-stage start-ups to build and expand their business.
The companies will receive £75,000 in capital investment for up to 6% equity, co-working space at the R/GA’s London office and will also benefit from a set curriculum, a speaker series as well as workshops tailored to enhance their individual goals.
Together with R/GA staff, they will have the opportunity to develop their marketing, design, branding, manufacturing and distribution strategy.
The 100-day program will end with a demo day at which the companies can present themselves to investors.
Katharina Fleiner 01/09/2016
Vietnam to sell entire stakes in sought-after breweries
The Vietnamese government has announced plans to sell all its stakes in the country’s two main breweries, after months of speculation.
The government will fully divest from the makers of its three main beer brands, Ha Noi, Saigon and 333, as part of a plan to raise $2.2 billion over 16 months. The stakes will be open to both domestic and international investors, and have already attracted interest from Thailand’s main brewer ThaiBev and Singha beer maker Boon Rawd Brewery.
Beer is the top drink in Vietnam and has seen consumption rising 40 percent in just five years, making it one of Asia’s top beer markets.
The Vietnamese government need the money from the sales to pump into its worn infrastructure, after rock-bottom oil prices hurt the country’s revenue. The National Financial Supervisory Commission has warned that the budget deficit for 2016 may exceed the planned ratio of 4.95 percent of GDP.
The sale of stakes in the breweries has been on the cards since the 1990s, with little headway being made since.
Morning Round-Up: UK Markit PMI strong, BA cuts back Business-Only flights, 1st US-Cuba flight in 55 years
UK Markit PMI strengthens
The UK’s Markit PMI, an index for the business conditions in the manufacturing sector, stood at 53.3 in August. The figure beat July’s measure by 5 points and exceeded estimates by 4.3 points. The indicator suggests that, only two months past the UK’s Brexit vote, the manufacturing industry has moved towards a positive growth outlook again. The Euro-Zone Markit PMI on the other hand came in at 51.7, down 0.1 point from July as well as analysts’ estimate. The measure adds to a growing cohort of data suggesting that the Euro-Zone is struggling with stagnating economic growth.British Airways cuts back Business-Only Flights
British Airways announced that the company will cut down its exclusive Business-Class-Only flights between London and New York. The flights from London City Airport and JFK Airport will be halved from the 30th October due to low demand. Business-Only operations have in the past always been challenging and BA admitted that it had doubts when launching the new line in 2009. Odyssey Airline seems however more confident about the profitability of such exclusive flight services. The airline is planning to offer a Business-Exclusive service from London City Airport to a range of destinations, starting next year.First US-Cuba flight in 55 years takes off
After some minor delays, the first flight service between the United States and Cuba since 1961 took of this morning at 10.05am. The flight departure from Fort Lauderdale was accompanied by a prolonged party at the gate, which caused a 20-minute delay. Many of the passengers on the plane heading to Santa Clara are previously exiled Cubans who haven’t been able to return to their home country in years. The first commerical direct flight from the US to Cuba is the beginning of a process which will, in the future, see as many as 110 flights departing from US destinations to the Caribbean island daily.Katharina Fleiner 01/09/2016
Equity crowdfunding on Seedrs helps UK start-ups fund ventures
The Brexit vote, rising economic uncertainty and difficulty finding access to funding may have made some sceptical as to the future of the UK start-up industry. However, the UK’s small businesses have no such worries – instead showing resilience and determination to grow their business ideas.
Many start-ups in the UK have turned to crowdfunding to raise the money necessary to develop, launch and expand their businesses and have been successful in doing so.
Equity crowdfunding can be a useful fundraising tool, allowing the sale of shares for companies either not big enough or not willing to go public.For Seedrs, a UK equity crowdfunding platform and itself a successfully funded equity crowdfunding project, success stories are mounting.
DugOut, a Tech start-up offering a fantasy football league on the web and on mobiles, raised 104% of their £175,006 target by offering investors 9% equity in the company. UnderTheDoormat is a London based start-up which allows Londoners to profit from renting out their homes while on holiday. The young business raised 163% of their £175,000 target. DatePlay, the date app which was developed by “The Apprentice” – candidate, Vana Koutsomitis, successfully raised £207,430, 173% of the targeted amount. With a further 24 days to go, “subscription commerce platform for local classes and experiences”, Wonderush reached 83% of their targeted amount, raising more than £200,000. There are many other success stories on Seedrs – as well as the plethora of other equity crowdfunding platforms. It is safe to say that many more UK start-ups will turn to this method to advance their business aspirations further. Investors seem to have noticed this trend and interest has sharply.Seedrs reported that in 2015 the average campaign was funded by 189 investors, a number which is set to grow in this year.
Seedrs itself has enjoyed large success since its launch in July 2012. It has expanded its reach and helped businesses from 24 countries fund their ventures.Katharina Fleiner 31/08/2016
AI for Ads: How Blackwood Seven hopes to compete with UK Media Agencies
Blackwood Seven, a new unconventional media agency, announced plans to expand into the UK in a statement on Wednesday.
Having launched in Denmark only three years ago, the start-up has already successfully expanded into Germany and, in June this year, the United States. The business announced that it has successfully raised €13.5 million for a further expansion of their US operations, and is now hoping to to start competing with traditional media agencies in the UK as well.Carl Erik Kjærsgaard, chief executive and co-founder of the Danish start-up, stated:
“We are looking at the UK and will come back in the autumn with a launch date for when we’ll start in London.” “Before we go into any market we actually go out and talk to all the big media owners and tell them who we are and what the software does so that they know what to expect from us and how our business model works. We say our business model will always ensure that your model will always get fair share; so radio, TV or print gets fair share, since we use maths to work out that fair distribution between the media groups.” The group hopes that Britain will provide another willing market for their unconventional approach, connecting advertisers with media outlets. According to the Paying for Advertisement report from the ISBA and Arc, more than half of British media agency clients currently believe that their agency is making additional revenues from their accounts.Blackwood Seven aims to be different.
Their model is based on an artificial intelligence supported software, which helps advertisers figure out how much they want to spend on advertisement, based on their own company’s sales data and a wider web of data the program collects from sources such as YouGov and Nielsen. The software allows to make an informed and efficient decision on advertisement spending and is easily accessible through the client’s smartphone. Blackwood Seven does not operate on commission but a fixed monthly fee instead, further eliminating the possibility to sell more advertisement spaces than effective to the client to simply boost revenues. The launch date for the UK has yet to be specified, but looking ahead, the agency is likely to make some waves in the UK advertisement business.Katharina Fleiner 31/08/2016