02/02/2016
UK construction off to weak start in 2016, German unemployment falls
Britain’s construction sector grew at its slowest pace for nine months in January, according to the latest figures from financial data analysts Markit.
The UK Construction PMI figure fell from 57.8 in December to 55.0 in January, well below the 57.5 forecast by analysts. According to Markit, housebuilders were one of the biggest influences on the slowdown:
“UK construction firms struggled for momentum at the start of this year, with heightened economic uncertainty acting as a brake on new orders”, said Markit economist Tim Moore.
The index showed falling optimism amongst construction companies, to its lowest since December 2014, indicating that construction companies are heading for a relatively weak first quarter in 2015.
German unemployment falls to record low
German unemployment saw a larger-than-expected drop in Janary, signalling a positive start to 2016 in Europe’s biggest economy and providing hope for many.
According to Germany’s Federal Labour Office, seasonally adjusted unemployment declined by 20,000 to 2.732 million, compared to a 7000 drop forecast by analysts.
Disastrous results see BP shares slide
Oil giant BP has reported its worst annual loss in 20 years and announced that a further 3000 jobs will be cut, as decreasing oil prices continue to weigh heavily on the company.
Their annual loss for 2015 totalled $6.5 billion, after the company put aside another $440 million to cover costs from the Deepwater Horizon oil spill, which happened six years ago in the US Gulf. The 3000 job cuts will be on top of the 4000 already announced and amount to around 9 percent of their workforce. Fourth quarter underlying replacement cost profit, seen as BP’s net income figure, fell to $196 million – well below analysts expectations of around $730 million.
Oil prices have fallen significantly over the last 15 months, down around 70 percent, with Brent Crude trading at an average of $33 a barrel so far in 2016. BP have blamed falling oil prices for the results, with Chief Executive Bob Dudley saying that BP are currently trying to “adapt and rebalance” to cope with the changing environment.
Shares in BP have taken a hit on the news, trading down over 7 percent already this morning. They are currently down 7.64 at 338.9 (0946GMT).
02/02/2016
January is over: it’s time for the markets to rise
Royal Bank of Scotland warned of a “cataclysmic” year for the global economy, whilst Chancellor George Osborne made it clear that 2016 will not be easy for the UK. So far, these predictions have been largely accurate; markets had the worst start to the year on record and January has been plagued with releases of worrying economic data. But it is really all doom and gloom?
Chris Williamson, chief economist at financial data provider Markit, says that if scare-mongering talk like this continues we risk a “self-fulfilling prophecy”; investors will start to panic sell and both households and businesses will start to save, instead of the spending that is needed.
After all, things in the near future may not be so bad – the U.S. has raised interest rates for the first time in over a decade, showing that policymakers in the world’s biggest economy have faith that the future is looking bright. December’s US jobs data beat all expectations, with unemployment falling to a low unseen in months. And whilst oil’s lows are a still a blight on the landscape, combined with low wages and interest rates there is room for businesses and entrepreneurs to use this to their advantage.
Issues in China and Russia may be harder to make positive – growth in China has fallen from 12 percent in 2010 to 6.9 percent in 2015, an undoubtedly worrying fall. Similarly, low oil prices have caused Russia’s GDP to fall sharply, as it depends heavily on oil exports. However, Russia is starting to appreciate that butting heads with the EU and the U.S. will only exacerbate economic difficulties, and better global relations may well solve some of Russia’s problems. As for China, it remains important not to over exaggerate the country’s significance – as of 2014, the U.S., Japan and the Eurozone accounted for nearly half of the world’s global economy. A slowdown in China does not necessarily need to impact on the world’s economic health.
So whilst January may have been a bleak month for the markets, perhaps it is time to concentrate on the future. Dwelling too much on weak growth figures risks dampening investor sentiment and creating problems ourselves, and overall market forecasts have been better than 2015 – the IMF, for example, forecast growth of 3.6 percent this year, up 0.5 percent on the year before.
Ryanair on target despite 6 percent fare decrease for 2016
Budget airline Ryanair have announced that it will hit its annual profit target, despite falling ticket prices and the impact of terrorism threats on passenger numbers.
Ryanar expects fares to fall 6 percent this quarter, an upwards revision from 4 percent..However, net profits for the last three months of 2015 doubled year on year to €103 million, leading the company to maintain its profit forecast for the full year.
The company was one of many in the travel industry to be hit by a fall in passengers after the Paris attacks, forcing fares to be lowered 1 percent in order to sell seats. This, and the drop of 6 percent heading into 2016, has been offset by a fall in oil prices, which have led to Ryanair’s costs to fall by 5 percent in the last quarter of 2015.
In a statement, Chief Executive Michael O’Leary said that he expects “the lower fare environment to continue for the foreseeable future.” Last year, Ryanair became the first airline in the world to carry 100 million international passengers.
Shares in Ryanair (LON:RYA) are trading up 2.98 percent on the news, at 14.16 per share (0946GMT).
01/02/2016
Good time for BT as revenue growth soars on EE deal
Telecoms group BT posted its best revenue growth in seven years on Monday, just days after the completion of a takeover deal which renders it’s the UK’s largest telecoms provider.
BT announced that it would undergo a restructuring to incorporate EE, creating a new division to serve businesses and the public sector. BT’s share price rose again today on the news, and is currently up 2.54 percent (0924GMT).
Chief Executive Gavin Patterson called it an “exciting time” for the group, saying that it had had a “stand out quarter, increasing its overall line base for the first time in well over a decade”.
BT’s share price also climbed on Friday after the announcement that it’s takeover of EE, the mobile service provider, had been completed. The deal was uncertain for a while after several other large telecoms groups expressed competition concerns. Whilst some predict the demise of the EE brand, for the time being BT are insistent that it will remain.
the BT group will now serve around 10 million households, providing a mixture of broadband, telephone, TV and mobile services under a variety of brands.
01/02/2016
US economy sees large slowdown in fourth quarter
The US economy saw a sharp slowdown in the fourth quarter, with GDP growth slowing significantly alongside weak export figures.
Gross domestic oroduct grew 0.7 percent in the fourth quarter, a significant decline from the 2 percent growth in the third quarter. Consumer spending also slowed, affected by an unseasonably warm winter, with a strong dollar and lack of demand having an impact on US exports.
The U.S. Federal Reserve, who recently took the decision to raise interest rates for the first time in a decade, acknowledged that growth had slowed, but insisted that “labour market conditions” improved. Though the Fed’s original plans was to continue raising rates slowly, recent market volatility is likely to weigh in on the decision.
29/01/2016
Japan slashes interest rates into sub-zero territory
The Bank of Japan shocked markets on Friday by lowering the benchmark interest rate into negative territory, as part of their effort to stimulate their faltering economy.
Governor of the Bank of japan Haruhiko Kuroda told a news conference: “What’s important is to show people that the BOJ is strongly committed to achieving 2 percent inflation and that it will do whatever it takes to achieve it.”
Japan has long been battling deflation and economic difficulties, which are likely to be worsened by China’s downhill slide. However, Kuroda confirmed that the country was well on its way to recovery, and that the sub-zero internet rate move was the next logical step.
Markets around the world jumped upon hearing the news, the first positive piece on information for a while. The FTSEurofirst 300 was up 1.2 percent, after a 1.7 percent fall yesterday, and the MSCI index rose 0.5 percent. However, the yen fell on the news, with the dollar up 0.4 percent.
Crowd2Fund offer investment opportunity in artisan ice cream La Gelatiera
Healthy London-based artisan ice cream maker La Gelatiera, winner of two Golden Fork awards and four UK Top 50 Foods at Great Taste Awards, are expanding and offering the public an opportunity to invest through a crowdfunding campaign.
The company offers its own modern take on the age-old delicacy of ice cream making and combines the owners family heritage of artisanal gelato making with their slow food ethic, incorporating healthy seasonal ingredients into their creations. La Gelatiera was co-founded by Antonia Parisi and Stephene Leyvraz, who grew bored of working in the corporate world and set up the business instead. Parisi, whose grandfather made gelato in Italy, is carrying on a family tradition, and the shop’s original recipes were based on his grandfather’s creations. Freshness and healthiness are key factors in the creation of their product range; all ice creams are produced daily, with 100% natural ingredients, and the company exclusively uses un-homogenised organic Jersey Cow milk from dairies in Somerset. Additionally, they are very transparent about their supply chain and where their ingredients are procured from.
Following the success of the gelato shop, opened in 2011 in Covent Garden La Gelatiera are now planning to expand their operations to open up a second retail outlet. They are planning to raise the funds to open and launch the second shop by seeking a £40,000 revenue loan (with a 9.5% APR) on Crowd2Fund.com. The funds will be used to launch and market a second London based shop, increase the size of the kitchen, and help scale up the business to serve growing demand business customers.
The company is seeking financing through the crowd, as it provides an opportunity to reach and engage with their enthusiastic customer base. Parisi says, “Using Crowd2Fund is a great way to reach out to our existing brand ambassadors as well as new customers. The loan will go towards our expansion of the brand, by opening a new shop in the Olympic village in Stratford, as well as allowing us to grow revenues by selling to supermarkets and to businesses.”
For more information, visit their campaign page here.
UK economic growth slowest for three years
Britain’s economy ended 2015 at its slowest pace of growth for nearly three years, according to the latest figures from the Office for National Statistics.
Fourth-quarter gross domestic product grew by 0.5 percent, up slightly from 0.4 percent in the three months to September but setting the annual figure at 2.2 percent; a considerable fall from last year’s growth of 2.9 percent. According to the International Monetary Fund Britain is set to retain this rate of growth throughout 2016 and 2017, one of the highest rates amongst advanced economies.
Output figures were stronger, with growth in the three months to December 1.9 percent higher than a year earlier, but down from 2.1 percent in the third quarter. These figures are the latest in a string of evidence that global economies are facing a difficult period, that may well continue throughout 2016.
28/01/2016
US rates remain unchanged as economy slows
The US Federal Reserve decided against raising interest rates further, citing the month’s global slowdown and saying that it would continue “closely monitoring” economic conditions.
US exports have fallen because of the strengthening dollar, and crises in China in January led to volatility on Wall Street. Due to this, the Fed held interest rates between 0.25% and 0.5%, after raising them for the first time in nearly a decade in December. In a statement, they said that “the committee is closely monitoring global economic and financial developments and is assessing their implications for the labour market and inflation.” Policymakers indicated that they were reluctant to abandon a plan to tighten monetary policy this year, saying that the economy was still on track for moderate growth and a stronger labor market even with “gradual” rate increases. Another rise in March has not been ruled out. In reaction to the news, Asian shares rose slightly on Thursday and oil prices fell back after climbing in the previous session.28/01/2016