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US growth revised down; Brexit worries weigh on pound - business live US growth revised down; Brexit worries weigh on pound - as it happened
(32 minutes later)
Finally, here’s our news story on the US growth figures:
US economic growth slowed at the end of 2018, falling well below the Trump administration’s projections and closing a strong year on a more worrying note.
The commerce department said on Thursday that the US expanded at an annual rate of 2.2% in the last three months of the year, down from an initial estimate of 2.6% and below the 3.4% growth achieved in the previous three months.
The figure is well below the 5% growth rate that Donald Trump recently forecast and comes as evidence is mounting of a slowdown in other major markets including the eurozone and China.
Analysts have forecast that the situation is likely to worsen following a slew of weak economic indicators, including figures from the European commission showing eurozone economic confidence slumped last month to its lowest level since 2016.
Earlier this month the US Federal Reserve indicated that the slowing US and global economy meant it was unlikely to raise interest rates until next year at the earliest.
US economic outlook darkens as late 2018 growth figures revised down
Goodnight! GW
Trouble’s brewing at Royal Bank of Scotland, over CEO Ross McEwan’s pension -- which looks a lot more lucrative than the package available to less senior staff.Trouble’s brewing at Royal Bank of Scotland, over CEO Ross McEwan’s pension -- which looks a lot more lucrative than the package available to less senior staff.
RBS faces shareholder rebellion over chief executive's pensionRBS faces shareholder rebellion over chief executive's pension
Traders are bracing for the pound to become more volatile....Traders are bracing for the pound to become more volatile....
A recent hobby of mine is watching implied $GBPUSD overnight volatility pic.twitter.com/ipvweSbjtsA recent hobby of mine is watching implied $GBPUSD overnight volatility pic.twitter.com/ipvweSbjts
Here’s our news story about British businesses losing what little patience they’ve got left with our political masters:Here’s our news story about British businesses losing what little patience they’ve got left with our political masters:
Business chief calls on MPs to 'stop chasing Brexit rainbows'Business chief calls on MPs to 'stop chasing Brexit rainbows'
The pound is continuing to lose ground tonight, now down one and a half cents at $1.3044.The pound is continuing to lose ground tonight, now down one and a half cents at $1.3044.
Traders have noticed a big political row kicking off in Westminster, over the government’s plan to only vote on the Brexit withdrawal agreement, not the political declaration laying out the post-Brexit strategy.Traders have noticed a big political row kicking off in Westminster, over the government’s plan to only vote on the Brexit withdrawal agreement, not the political declaration laying out the post-Brexit strategy.
Labour are opposing the move, which appears designed to ensure Britain can leave the EU on 22 May. The DUP - whose support would be crucial for Theresa May - are also not swayed.Labour are opposing the move, which appears designed to ensure Britain can leave the EU on 22 May. The DUP - whose support would be crucial for Theresa May - are also not swayed.
Brexit: MPs to only vote on withdrawal agreement tomorrow - live newsBrexit: MPs to only vote on withdrawal agreement tomorrow - live news
Jeremy Thomson-Cook, Chief Economist and Head of Currency Strategy at WorldFirst, says investors are struggling to value the pound in the current mess:Jeremy Thomson-Cook, Chief Economist and Head of Currency Strategy at WorldFirst, says investors are struggling to value the pound in the current mess:
“How can a currency accurately price the risk of both a no-deal and a revocation of Article 50? It is not the job of the pound to be optimistic and hence, following the DUP’s announcement last night that they cannot back the deal as it stands, GBP strength continues to slip away.“How can a currency accurately price the risk of both a no-deal and a revocation of Article 50? It is not the job of the pound to be optimistic and hence, following the DUP’s announcement last night that they cannot back the deal as it stands, GBP strength continues to slip away.
“Whether the next step in the Brexit soap opera is a General Election, a Tory leadership challenge, a customs union, a long extension or all of them together, GBP is stuck waiting for a sign, full in the knowledge that there is almost no room for error.“Whether the next step in the Brexit soap opera is a General Election, a Tory leadership challenge, a customs union, a long extension or all of them together, GBP is stuck waiting for a sign, full in the knowledge that there is almost no room for error.
We could end tomorrow with a deal or we could end it in No Man’s Land, ready for indicative votes and confidence motions.We could end tomorrow with a deal or we could end it in No Man’s Land, ready for indicative votes and confidence motions.
“March 29th was meant to be the day we leave the EU but will likely be the day where we realise just how few options we have.“March 29th was meant to be the day we leave the EU but will likely be the day where we realise just how few options we have.
Here’s Andrew Hunter of Capital Economics on the downgrade to US growth last quarter:Here’s Andrew Hunter of Capital Economics on the downgrade to US growth last quarter:
The downward revision to Q4 GDP – which is now estimated to have expanded by 2.2% annualised rather than 2.6% – was mainly driven by weaker gains in consumption and business investment, underlining that domestic demand lost some momentum at the end of last year. We expect the personal income and spending data due on Friday to show that the economic slowdown continued into 2019, with a rebound in real spending in January unlikely to prevent consumption growth from slowing further over the first quarter as a whole.The downward revision to Q4 GDP – which is now estimated to have expanded by 2.2% annualised rather than 2.6% – was mainly driven by weaker gains in consumption and business investment, underlining that domestic demand lost some momentum at the end of last year. We expect the personal income and spending data due on Friday to show that the economic slowdown continued into 2019, with a rebound in real spending in January unlikely to prevent consumption growth from slowing further over the first quarter as a whole.
Newsflash: German lightbulb maker Osram has issued a profits warning, adding to concerns that the global economy is slowing.Newsflash: German lightbulb maker Osram has issued a profits warning, adding to concerns that the global economy is slowing.
The Munich-based firm blamed the slowdown in the auto industry, which has hit demand for its car bulbs, adding:The Munich-based firm blamed the slowdown in the auto industry, which has hit demand for its car bulbs, adding:
“This has led to significant inventory build ups, particularly in China. In addition, business development is facing an ongoing impact by the general economic slowdown.”“This has led to significant inventory build ups, particularly in China. In addition, business development is facing an ongoing impact by the general economic slowdown.”
Shares in Osram have slumped by 10% in late trading, with carmakers’ shares also weakening.Shares in Osram have slumped by 10% in late trading, with carmakers’ shares also weakening.
Back at the BCC’s annual conference, Legal & General CEO Nigel Wilson has declared he’s ready for Brexit.... whatever form it takes.Back at the BCC’s annual conference, Legal & General CEO Nigel Wilson has declared he’s ready for Brexit.... whatever form it takes.
Wilson says;Wilson says;
“We invest for the long term, Brexit is a noise on that very long journey. It’s not throwing us off course in any way whatsoever.”“We invest for the long term, Brexit is a noise on that very long journey. It’s not throwing us off course in any way whatsoever.”
“We’ve stressed everything so don’t worry. The one thing we’ve learnt from the financial crisis is how to stress things.”“We’ve stressed everything so don’t worry. The one thing we’ve learnt from the financial crisis is how to stress things.”
But he’s not so confident about some other companies, particularly smaller firms...But he’s not so confident about some other companies, particularly smaller firms...
“A lot of other people have had to work on their no-deal plans. Hopefully they’ll never come around. But you feel very sad for business that haven’t got the scale to prepare for it.”“A lot of other people have had to work on their no-deal plans. Hopefully they’ll never come around. But you feel very sad for business that haven’t got the scale to prepare for it.”
Brexit jitters are pushing sterling lower this afternoon, as the government prepares to hold another Brexit vote on Friday.Brexit jitters are pushing sterling lower this afternoon, as the government prepares to hold another Brexit vote on Friday.
The pound has lost almost a cent against the US dollar, to below $1.31 for the first time since last Friday.The pound has lost almost a cent against the US dollar, to below $1.31 for the first time since last Friday.
It’s not clear what MPs will vote on tomorrow, but apparently it won’t be the much-anticipated Third Meaningful Vote. It’s possible that Theresa May might try removing the Political Declaration section of the deal, in the hope of persuading House of Commons speaker John Bercow to allow a third run at victory.It’s not clear what MPs will vote on tomorrow, but apparently it won’t be the much-anticipated Third Meaningful Vote. It’s possible that Theresa May might try removing the Political Declaration section of the deal, in the hope of persuading House of Commons speaker John Bercow to allow a third run at victory.
Paul O’Connor, head of Janus Henderson’s UK-based Multi-Asset Team, says the ongoing impasse has left MPs gridlocked:Paul O’Connor, head of Janus Henderson’s UK-based Multi-Asset Team, says the ongoing impasse has left MPs gridlocked:
The clock is ticking and the pressure is building. If Parliament cannot establish support for either Theresa May’s plan or one of the other Brexit options in the days ahead, then the UK will need to request an extended delay to the Brexit process to avoid the alternative “no deal” Brexit on April 12.The clock is ticking and the pressure is building. If Parliament cannot establish support for either Theresa May’s plan or one of the other Brexit options in the days ahead, then the UK will need to request an extended delay to the Brexit process to avoid the alternative “no deal” Brexit on April 12.
Before granting a longer extension, the EU is likely to demand that the UK can identify some way of breaking the deadlock. A general election is a growing possibility here, although it is far from obvious why this will be an effective solution given how polarised and entrenched political opinion on Brexit is in the UK.Before granting a longer extension, the EU is likely to demand that the UK can identify some way of breaking the deadlock. A general election is a growing possibility here, although it is far from obvious why this will be an effective solution given how polarised and entrenched political opinion on Brexit is in the UK.
As the eight votes showed last night, it is not hard to get agreement on rejecting options for Brexit but establishing consensus for a way forward remains elusive.”As the eight votes showed last night, it is not hard to get agreement on rejecting options for Brexit but establishing consensus for a way forward remains elusive.”
In better news, the number of Americans filing new claims for unemployment benefit fell last week, by 5,000.In better news, the number of Americans filing new claims for unemployment benefit fell last week, by 5,000.
Initial claims for #unemployment down 5,000 to 211,000. The 4-week moving average down 3,250 to 217,250. #wkdev #economy #jobs https://t.co/VH1fE1haYd pic.twitter.com/6JxJqJM4x1Initial claims for #unemployment down 5,000 to 211,000. The 4-week moving average down 3,250 to 217,250. #wkdev #economy #jobs https://t.co/VH1fE1haYd pic.twitter.com/6JxJqJM4x1
Market analyst Fiona Cincotta of City Index says this is helping markets to recover:Market analyst Fiona Cincotta of City Index says this is helping markets to recover:
The mood was positive across the board on Thursday with global shares climbing higher. A rebound in treasury yields, progress in US – Sino trade talks and better than forecast jobless claims have boosted sentiment, increasing demand for riskier assets. However a downward revision to US economic growth is keeping gains capped.The mood was positive across the board on Thursday with global shares climbing higher. A rebound in treasury yields, progress in US – Sino trade talks and better than forecast jobless claims have boosted sentiment, increasing demand for riskier assets. However a downward revision to US economic growth is keeping gains capped.
US jobless claims fell to their lowest level in 2 months last week. This offered traders some reassurances as to the health of the US labour market after February’s surprisingly weak jobs report. The news lifted spirits grabbing attention away from disappointing US GDP data.US jobless claims fell to their lowest level in 2 months last week. This offered traders some reassurances as to the health of the US labour market after February’s surprisingly weak jobs report. The news lifted spirits grabbing attention away from disappointing US GDP data.
Andy Bruce of Reuters makes a good point about today’s consumer confidence stats --- Britons are gloomier, but it’s not hit spending.Andy Bruce of Reuters makes a good point about today’s consumer confidence stats --- Britons are gloomier, but it’s not hit spending.
BUT... what's interesting is this doesn't really seem to be affect spending. Economic confidence has been bad for a while.BUT... what's interesting is this doesn't really seem to be affect spending. Economic confidence has been bad for a while.
Stock markets in Europe and America are shaking off today’s weak economic news, with some investors pinning their hopes on a breakthrough in the US-China trade talks.Stock markets in Europe and America are shaking off today’s weak economic news, with some investors pinning their hopes on a breakthrough in the US-China trade talks.
Mike Loewengart, vice president for investment strategy at E-Trade Financial Corp, says traders should heed today’s downgraded US growth report:Mike Loewengart, vice president for investment strategy at E-Trade Financial Corp, says traders should heed today’s downgraded US growth report:
He says (via Marketwatch):He says (via Marketwatch):
“Global growth is stagnating both at home and abroad, and this kind of GDP read may flash as a warning signal to market watchers that there is more turbulence ahead,”“Global growth is stagnating both at home and abroad, and this kind of GDP read may flash as a warning signal to market watchers that there is more turbulence ahead,”
“Some may see this as a data point confirming their worries that we are headed to the end of the business cycle, especially after the inverted yield curve news last week.”“Some may see this as a data point confirming their worries that we are headed to the end of the business cycle, especially after the inverted yield curve news last week.”
“That said, there are a fair amount of positive indicators out there—strong jobs numbers, an uptick in wages, and a solid earnings season—to pump some confidence back into the market.”“That said, there are a fair amount of positive indicators out there—strong jobs numbers, an uptick in wages, and a solid earnings season—to pump some confidence back into the market.”
Another slowdown signal: fewer Americans bought houses last month.Another slowdown signal: fewer Americans bought houses last month.
The National Association of Realtors reports that homebuyers signed 1% fewer contracts to buy existing homes in February compared with January. On an annual basis, these pending home sales have fallen by almost 5%.The National Association of Realtors reports that homebuyers signed 1% fewer contracts to buy existing homes in February compared with January. On an annual basis, these pending home sales have fallen by almost 5%.
Pending Home Sales decreased 1.0% to 101.9 in February, down from 102.9 in January. #NARPHS pic.twitter.com/Q7JHem2oiBPending Home Sales decreased 1.0% to 101.9 in February, down from 102.9 in January. #NARPHS pic.twitter.com/Q7JHem2oiB
As you can see, there was a surge in pending home sales in January - but the longer-term trend looks weak.As you can see, there was a surge in pending home sales in January - but the longer-term trend looks weak.
Lawrence Yun, chief economist for the Realtors, says:Lawrence Yun, chief economist for the Realtors, says:
“In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern.“In January, pending contracts were up close to 5 percent, so this month’s 1 percent drop is not a significant concern.
As a whole, these numbers indicate that a cyclical low in sales is in the past, but activity is not matching the frenzied pace of last spring.”As a whole, these numbers indicate that a cyclical low in sales is in the past, but activity is not matching the frenzied pace of last spring.”
Financial analyst Paul Sommerville thinks America’s economy is underperforming, given the boost from Donald Trump’s tax cuts:Financial analyst Paul Sommerville thinks America’s economy is underperforming, given the boost from Donald Trump’s tax cuts:
2019 USA Annual GDP growth was 2.9%, Considering the amount of tax cuts, stimulus and increased debt a poor performance ( and likely to decrease from here)#USA #GDP2019 USA Annual GDP growth was 2.9%, Considering the amount of tax cuts, stimulus and increased debt a poor performance ( and likely to decrease from here)#USA #GDP
This financial analysts also fears the US economy is slowing:This financial analysts also fears the US economy is slowing:
No particular funnies in US Q$ GDP data, though most categories were revised down a tad with the final revision. The carry-over effect from weak consumer spending in December suggests, absent funnies, that Q1 will be weaker. pic.twitter.com/Frf2nJJ713No particular funnies in US Q$ GDP data, though most categories were revised down a tad with the final revision. The carry-over effect from weak consumer spending in December suggests, absent funnies, that Q1 will be weaker. pic.twitter.com/Frf2nJJ713
Today’s GDP report further muddies the water about whether Donald Trump achieved his target of 3% growth last year, or not.Today’s GDP report further muddies the water about whether Donald Trump achieved his target of 3% growth last year, or not.
The Commerce Department estimates that GDP rose by 2.9% in 2018, just shy of Trump’s 3% target.The Commerce Department estimates that GDP rose by 2.9% in 2018, just shy of Trump’s 3% target.
However, it also reckons GDP was 3% higher in Q4 than in Q4 2017 -- which the president could chalk up as a win.However, it also reckons GDP was 3% higher in Q4 than in Q4 2017 -- which the president could chalk up as a win.
Either way, if the economy does keep slowing, Trump will take some blame.Either way, if the economy does keep slowing, Trump will take some blame.
The New York Times says:The New York Times says:
Economic data suggests that slowdown is already underway in the first quarter. Manufacturing is losing some of its steam from last year’s rapid growth, and job creation is also moderating.Economic data suggests that slowdown is already underway in the first quarter. Manufacturing is losing some of its steam from last year’s rapid growth, and job creation is also moderating.
Chief executives of some of the nation’s biggest companies see investment, hiring and sales growth all slowing this year. Three-quarters of business economists say they are more worried about growth undershooting their forecasts than overshooting it, and half have revised those forecasts downward for this year.Chief executives of some of the nation’s biggest companies see investment, hiring and sales growth all slowing this year. Three-quarters of business economists say they are more worried about growth undershooting their forecasts than overshooting it, and half have revised those forecasts downward for this year.
Another sign the economy is slowing: 4Q GDP revised to 2.2% from 2.6%. Trump's economic policies now face a major test. https://t.co/CKhn0MJfdnAnother sign the economy is slowing: 4Q GDP revised to 2.2% from 2.6%. Trump's economic policies now face a major test. https://t.co/CKhn0MJfdn
US #GDP grows +2.2% QoQ in 4Q less than expected 2.4%, a further signal US economy is slowing down pic.twitter.com/q2POCPuCHbUS #GDP grows +2.2% QoQ in 4Q less than expected 2.4%, a further signal US economy is slowing down pic.twitter.com/q2POCPuCHb
Here’s some instant reaction to the US GDP report.Here’s some instant reaction to the US GDP report.
Marketwatch’s Jeffry Bartash highlights why growth has been revised lower:Marketwatch’s Jeffry Bartash highlights why growth has been revised lower:
U.S. 4th-quarter GDP cut to 2.2% from 2.6%, but increase in 2018 left at 2.9%. Consumer spending and biz investment marked down and drop in state & local spending deeper than originally reported. Adjusted pretax corporate profits fall 0.4% - first decline in 7 quarters.U.S. 4th-quarter GDP cut to 2.2% from 2.6%, but increase in 2018 left at 2.9%. Consumer spending and biz investment marked down and drop in state & local spending deeper than originally reported. Adjusted pretax corporate profits fall 0.4% - first decline in 7 quarters.
Guy LeBas of Janney Capital Management argues we shouldn’t panic about it:Guy LeBas of Janney Capital Management argues we shouldn’t panic about it:
Downward revision on 4Q GDP +2.2% missed expectations but only by a hair. Real final sales +2.1% is right near post-GFC trend.Anyone who tells you this number is "terrible!" is either thrashing a bearish mkt thesis or politicizing. It's right on trend. pic.twitter.com/mKSvrOePPyDownward revision on 4Q GDP +2.2% missed expectations but only by a hair. Real final sales +2.1% is right near post-GFC trend.Anyone who tells you this number is "terrible!" is either thrashing a bearish mkt thesis or politicizing. It's right on trend. pic.twitter.com/mKSvrOePPy
Newsflash: America’s economy grew more slowly than previously thought in the last three months of 2018.Newsflash: America’s economy grew more slowly than previously thought in the last three months of 2018.
Newly revised data shows that US GDP only expanded at an annualised rate of 2.2% in October-December. That’s down from a previous estimate of 2.6%, and slower than the 3.4% annualised growth recorded in the third quarter of 2018.Newly revised data shows that US GDP only expanded at an annualised rate of 2.2% in October-December. That’s down from a previous estimate of 2.6%, and slower than the 3.4% annualised growth recorded in the third quarter of 2018.
That’s the equivalent of a quarter-on-quarter growth rate of 0.55% -- still faster than the UK or the eurozone, which both only expanded by 0.2% in Q4.That’s the equivalent of a quarter-on-quarter growth rate of 0.55% -- still faster than the UK or the eurozone, which both only expanded by 0.2% in Q4.
US GDP (Q4 T) +2.2% versus +2.4% expected, previous +2.6% $USD $DXYUS GDP (Q4 T) +2.2% versus +2.4% expected, previous +2.6% $USD $DXY
The Commerce Department revised down its earlier estimate after concluding that corporate profits were only flat in the last quarter, after growing by 3.5% in Q3.The Commerce Department revised down its earlier estimate after concluding that corporate profits were only flat in the last quarter, after growing by 3.5% in Q3.
Consumer spending was also weaker than previously thought, at 2.5% compared to 2.8% estimated before.Consumer spending was also weaker than previously thought, at 2.5% compared to 2.8% estimated before.
Business spending and investment was also revised down.Business spending and investment was also revised down.