Closing post
Time to wrap up… here are today’s main stories:
The UK’s construction sector rebounded back into growth last month as fears of a recession fade.
The latest PMI survey found there was a “robust increase” in overall business activity across the UK construction sector last month, driven by in commercial work and civil engineering activity, although housebuilding continued to contract.
UK firefighters have accepted a pay offer aimed at averting strike action.
Mining stocks have dropped in London, after China set a conservative growth target of around 5% this year.
The number of cars sold in the UK increased by 26% year on year in February, the seventh successive month of growth as the industry recovers from the depths of the global computer chips shortage.
Luxury car maker Aston Martin is on track for first place on the leaderboard of top-performing shares in London this morning, a day after a very credible performance in the first Formula One race of the season.
Aston Martin is leading the FTSE 250 leaderboard, up 15%, having been up 25% at one stage this morning.
Last week, the company reported that pre-tax losses doubled last year, to £495m in 2022, but did predict “significant improvements in profitability” in the second half of this year.
Today’s rally comes after Fernando Alonso finished third in the Bahrain Grand Prix after a sparkling drive, (shrugging off an early bump from behind from teammate Lance Stroll, the team boss’s son).
So what’s going on?
Anthony Dick, an auto analyst at Oddo BHF, reckons the F1 result could be a factor, although investors who have bet against Aston Martin could be caught in a short squeeze.
He says, via Bloomberg:
“Could be some shorts covering or generally improved perception on the back of reassuring FY22 results.
It’s also possible the F1 performance could have something to do with it.”
Aston Martin surges as much as 22% in an unusual rally that some analysts have attributed to a short squeeze https://t.co/KiTW3Vcku8
— Bloomberg (@business) March 6, 2023
Investment bank Jefferies raised its price target for Aston Martin this morning, from 120p to 160p – today’s rally, though, has taken them from 240p to 275p today.
Jefferies said last week’s results were “interesting”, with a mix of “more confident qualitative comments from management and worsening 2023 financials”.
While we acknowledge progress on product and pricing, the path to organic de-leveraging is unclear. We think shares have run ahead of themselves and we would seek better entry points
British firefighters accept new pay deal, averting strikes
Just in: UK firefighters have accepted a pay offer aimed at averting strike action.
About 96% of Fire Brigades Union (FBU) members who took part in a ballot voted in favour of the new pay offer, the union said. The turnout for the ballot was 84%.
The pay offer includes a 7% rise backdated to last July and another 5% increase from July this year.
This revised offer was made after a previous offer of 2% last summer was rejected as ‘utterly inadequate’
🚨BREAKING: Firefighters have overwhelmingly accepted an improved pay offer following a vote for strike action. 96% of @fbunational members accept on 84% turnout.
— Taj Ali (@Taj_Ali1) March 6, 2023
Offer is 7% backdated to July '22+ additional 5% from July this year.
Initial offer was 2% (increased to 5% in Nov)
The FBU had recommended that members accept the new offer, in a ballot which opened on February 20 and closed today Monday.
FBU general secretary Matt Wrack told BBC Radio 4’s Today programme:
“It’s a step forward but it would not be the end of our campaigning on pay.
“We think there is significant under-investment in the fire service and that needs to be addressed.”
Updated
Steve Gooding, director of the RAC Foundation, is concerned that the UK is not moving towards electric cars fast enough.
Following this morning’s news that new car registrations jumped 26% year-on-year in February, Gooding says:
“Looked at as a barometer for the economy, this rise in overall sales looks like good news.
“But in terms of the cars we are choosing to buy, the battery-electric share of the market is disappointing given the role electric vehicles are set to play in meeting our climate change objectives.
“Unless we choose to drive less, by the end of 2030 we estimate that well over a third of all miles driven by cars must be zero emission from the exhaust.
“At the moment it is under 2%, which suggests a far more rapid take-up of pure electric models is needed.”
Starbucks has revealed plans to invest £30m in the UK and open 100 new cafes, a year after it was reported to be considering selling the British arm of the coffee chain.
The investment plan came as the company reported it paid lower tax on its UK operations in 2022, even as gross profits surged, as royalty payments to other group companies expanded rapidly.
The coffee chain paid £4.6m in corporation tax in the year to 2 October 2022, compared with £5.4m the year before, according to its latest accounts.
Wall Street’s main indexes have opened higher, as investors await testimonies from Federal Reserve chair Jerome Powell to Congress later this week.
The Dow Jones Industrial Average, which tracks 30 large US companies, has gained 57 points or 0.17% to 33,448 points.
The broader S&P 500 gained 0.25% while the tech-focused Nasdaq Composite rose 0.4% at the start of trading.
The main event of this week may be Friday’s Non-Farm Payroll report, showing how many new jobs were created in America in February.
January’s NFP smashed forecasts, with a 517,000 increase in employment, and another strong report could prompt further interest rate increases.
Craig Erlam,senior market analyst at OANDA, says:
The jobs report on Friday will tell us whether the January data was a blip or something to be more concerned about. No one is expecting a repeat of last month but any indication that the labour market is still red-hot could see a fourth 25 basis point hike be more priced in.
Updated
Transport Secretary Mark Harper is urging the RMT union to let its members consider the pay offer on the table from train operating companies, insisting it is a “good” deal.
Last month, members of the TSSA union have voted to accept the pay offers on the table, which are worth 9% over two years, ending their part in the long-running national rail dispute.
The RMT, though, says the offers are inadequate and are planning strikes on 16 March across Network Rail and train operators, and on 18 and 30 March and 1 April at train operators.
Speaking in Northumberland today, where a rail line from Ashington to Newcastle is due to reopen next year, Harper said (via PA Media):
“I was very pleased that the members of the TSSA, one of the rail unions, accepted the offers from both the train operating companies and Network Rail.
“That’s good to see, they are fair and reasonable offers that have been delivered. They’re the best and final offers.
“I would urge the RMT to put the offers that they’ve had to their members and let their members make the decision, and I think they’re good offers.
“And I think that their members ought to accept them and I hope the rail union RMT reconsiders their decision not even to put those offers to their members.
“And if we get those offers delivered, we can all work together to deliver a better railway for passengers.”
Northumberland Line services between Newcastle and Ashington are expected to begin in summer 2024, Secretary of State for Transport Mark Harper has confirmed https://t.co/5aF3Uk9eOC
— Rail Business UK (@RailBusinessUK) March 6, 2023
Russia’s budget deficit has jumped so far this year, as Moscow continues to spend heavily on the Ukraine war and energy revenues fall.
Russia’s federal budget deficit widened to 2.58 trillion roubles (£28bn) in the first two months of the year, the finance ministry reports, as expenditure rose sharply as slumping oil and gas takings hit income.
Reuters has the details:
Russia’s economy proved unexpectedly resilient in the face of Western sanctions last year, but a return to pre-conflict levels of prosperity may be far off as more government spending is directed towards the military and price caps squeeze Russia’s crucial energy export earnings.
Oil and gas revenues were 46.4% lower at 947 billion roubles in Jan-Feb than in the same period last year, the finance ministry’s preliminary data showed, with overall budget revenues for the month down 24.8%.
Spending was 51.5% higher in the first two months of 2023, at 5.74 trillion roubles. In the same period last year, Russia had recorded a surplus of 415 billion roubles.
Tony Danker has said it is “mortifying to hear that I have caused offense or anxiety to any colleague,” following the investigation into complaints about the CBI chief’s conduct.
Danker also says he will cooperate fully with the investigation, launched after the Guardian last week raised several allegations about Danker’s behaviour.
— Tony Danker (@tonydanker) March 6, 2023
Updated
Costa Coffee has unveiled plans to hike salaries for more than 16,000 UK workers, ahead of increases in the minimum wage next month.
The coffee chain, which is owned by the Coca-Cola Company, said it will raise the base rate of pay for workers across its 1,520 company-owned stores in the UK from £10 an hour to £10.70 an hour from April 1.
More experienced baristas will see their base pay rise from £10.53 to at least £11.23 an hour, depending on location and role.
The rises will see pay increase by between 6.1% and 7.3%, excluding bonuses – working out at 6.7% on average.
It follows an announcement by rival Pret A Manger last week that it would increase the base salaries of its workers from the start of next month by 2.9%, from £10.30 an hour to £10.60 an hour.
From 1 April, the UK’s national living wage – the minimum amount that companies are allowed to pay people over 23 – rises 9.7% to £10.42 an hour.
Key event
Mayors in the north of England are meeting to demand the government “get a grip” on appalling rail services, with TransPennine Express (TEP) on track to cancel more than 20,000 trains this year.
The operator has already cancelled about a quarter of services in 2023, with 40% scrapped in one week in January due to a lack of staff.
Commuters are also facing higher costs after rail fares in England and Wales increased by an average of 5.9% on Sunday.
Tracy Brabin, the Labour mayor of West Yorkshire, who will meet counterparts in Newcastle on Monday, said the north could no longer “stagger on”, with TPE alone likely to cancel 23,000 services in 2023 at the current rate.
Brabin said:
“Government have to get involved, they have to understand we need to invest in transport across the north.I don’t think people in the south and across the country really understand the service we’re being forced to endure from TransPennine.”
She told BBC Radio 4’s Today programme:
“If things don’t improve, by the end of the year 23,000 services will have been cancelled. This is totally unacceptable, and ministers must get a grip.”
The chief economist of the European Central Bank has hinted that it will continue to raise interest rates beyond the hike expected this month.
In a speech this morning, Philip Lane said the ECB must take “robust” action if underlying inflation dynamics are at odds with its inflation forecasts.
Data last week showed a surprise rise in core inflation, up to 5.6%, well above expectations for a rise of 5.3%, and further from the ECB’s headline inflation target of 2%.
Headline inflation was also higher than expected, at 8.5% in February.
In a lecture at Trinity College Dublin, Lane suggested that further rate increases will be needed:
The current information on underlying inflation pressures suggests that it will be appropriate to raise rates further beyond our March meeting, while the exact calibration beyond March should reflect the information contained in the upcoming macroeconomic projections, together with the incoming data on inflation and the operation of the monetary transmission mechanism.
Lane added that lifting interest rates to a “sufficiently restrictive level”, to dampen demand and growth, will “counter-act above-target medium-term inflation pressures” and avoid inflation expectations becoming de-anchored.
It will also deter ‘excessive’ pay rises and price hikes, he added:
In particular, the dampening of demand through the tightening of monetary policy means that price setters and wage setters are on notice that excessive price and wage increases will not be sustainable.
Reuters reported last week that the ECB’s governing council has been shown evidence that European companies have been lifting their profit margins, amid fears over ‘greedflation’:
Drax strike over after power station workers secure pay increase
Strike action at the Drax power station in Yorkshire has ended after workers secured a “dramatically improved” pay offer, the Unite union has announced.
Unite says that fresh negotiations have been held after 180 workes held a day’s strike action on Monday 20 February after rejecting an 8% pay increase, below the headline rate of inflation.
Drax has now made a improved pay offer, including back pay, which Unite says is worth 16% to the lowest paid workers.
Workers have accepted this offer in a ballot. Strikes had been scheduled for later this month, and in April.
Unite general secretary Sharon Graham said:
“This was an excellent increase for Unite members at Drax, who by showing unity and standing up to their employer secured a vastly improved pay increase.
“The pay increase at Drax demonstrates how Unite’s absolute commitment to focus on jobs, pay and conditions is delivering for members.”
Citi to double Paris trading staff in post-Brexit adjustment
Investment bank Citigroup is pressing on with a post-Brexit hiring spree in Paris.
Citigroup is building a new trading floor in Paris, as part of a plan to nearly double its staff in the French city, Bloomberg reports.
The new floor in its existing building — located steps from the Avenue des Champs-Élysées and the Arc de Triomphe — will help Citigroup increase staffing for its trading division to 250 in the coming years, up from 130 currently, according to Fabio Lisanti, head of the bank’s trading business across Europe, excluding the UK.
The new floor is set to include at least 85 desks.
Citigroup is growing its Paris operation into a trading hub, having previously only had a sales presence there.
Following Brexit, Wall Street banks such as Citigroup have been adjusting their operations, under pressure to trade European assets within European Union countries.
Lisanti says London remains Citi’s main trading hub, but explains:
But we have and will move certain risk management and risk books in Europe. We’ve already moved quite a few and there’s more to go.”
Worryingly for the City of London, Lisanti says the move to Paris means it can give a better service to clients.
He says:
“We’ve been able to hire talent in Paris that we would never have been able to attract in London.
One of the things we should not forget is us moving to Paris or to Europe, there is a strong commercial reason for that. We will cover our clients better, we will create better teams, stronger teams and ultimately be able to generate revenues more effectively and efficiently.”
CBI boss Tony Danker steps aside amid allegations of misconduct
Tony Danker, the boss of the Confederation of British Industry, has stepped aside amid an investigation into complaints about his conduct, my colleague Anna Isaac reports.
The decision to hire a law firm to investigate him comes after the Guardian approached the CBI last week about a formal complaint that was made in January, as well a number of alleged informal reports of concerns over his behaviour.
The formal complaint involved a female CBI employee who it is understood claimed the director general of the business lobbying organisation made unwanted contact with her and considered this unwanted conduct to be sexual harassment.
Danker continued in his role after the formal complaint was made, representing the influential organisation in the media and at public events, most recently a CBI conference last Wednesday where the keynote speaker was the education secretary, Gillian Keegan.
The CBI confirmed it had received a formal complaint about Danker’s “workplace conduct” in January but opted not to escalate it to a disciplinary process.
“The allegation was investigated thoroughly and was dealt with comprehensively, in line with CBI procedure,” said CBI president Brian McBride.
“The CBI investigation determined that the issue did not require escalation to a disciplinary process.”
After the Guardian inquired on Thursday about the formal complaint and raised several additional allegations about his behaviour towards other members of staff, including concern that the director general had been viewing employees’ personal Instagram profiles, the CBI said it had started an independent investigation and that Danker had asked to step aside during it.
It has hired Joanna Chatterton, head of the employment law at Fox Williams, to lead the investigation. Matthew Fell, the CBI’s chief UK policy director, has replaced Danker on an interim basis.
Back in the eurozone, retail spending was weaker than expected at the start of this year.
Eurostat data shows that retail sales rose by 0.3% month-on-month in January, but were 2.3% lowe than a year before.
Economists had expected a 1.0% month-on-month rise, and a 1.8% year-on-year fall, Reuters says.
It suggests that high inflation, and the squeeze from higher borrowing costs, continues to weigh on the euro area.
The data indicates that Europe hasn’t enjoyed an economic rebound yet – with ING predicting GDP growth will be flat in the first quarter of 2023.
ING economist Bert Colijn says:
This is a weak start to the first quarter and makes growth over the quarter a challenge. Retail sales have been on a declining trend since November 2021, but taking the latest data into account, we can see that there has been a more rapid decline since the autumn of last year.
While surveys about the first quarter have been relatively upbeat so far, these retail sales data don’t give much evidence that a rebound has started. We expect GDP growth in the first quarter to be flat, writes @BertColijn.https://t.co/MGiCgJAxxd
— ING Economics (@ING_Economics) March 6, 2023
Thomas Pugh, economist at audit, tax and consulting firm RSM UK, fears that the UK economy will drop into recession this year, despite the pick-up in construction growth last month.
Pugh says the economy has been more resilient than expected, but suspects February’s PMI surveys may be overstating its strength.
He explains:
“The rebound in the construction PMI is more evidence of just how resilient the economy has turned out to be. But beware a false spring.
We still expect the economy to fall into a mild recession in the first half of this year and the construction industry will be hit hardest by the 400bps increase in interest rates over the last year. As such, it probably won’t be long before the construction PMI resumes its downward trend.
‘The bounce back in the construction PMI in February, to its highest level since May, follows the rebound in the services and manufacturing PMIs.
Undoubtedly, the economy has been much more resilient than expected given the cost-of-living crisis and the massive increase in interest rates. But the across the board rebound the PMIs last month should probably be taken with a pinch of salt.
IoD urges Ofgem to protect business customers
UK energy companies are failing to treat many business customers fairly, the Institute of Directors says today.
The IoD has written to industry regulator Ofgem urging them to take action to secure “a well-functioning energy market” for non-domestic customers.
The IoD survey has found that one in five (18%) businesses encountered at least one form of disadvantageous treatment by energy suppliers in the previous six months.
The most commonly reported problem was energy suppliers requesting a larger share of the bill to be paid in advance (11%). This was followed by refusal to negotiate payment terms when requested to do so (6%) and refusal to renew a contract (6%).
Jonathan Geldart, director general of the Institute of Directors, says Ofgem must heed the concerns of business customers:
At a time when energy prices are at an all-time high, it is important that the energy regulator ensures that any unnecessary burdens for businesses are removed.
The inclusion of take or pay clauses in energy supply contracts to non-domestic customers runs counter to the government’s messaging to business regarding the cost and environmental imperatives to reduce energy consumption.
It is therefore important that Ofgem identifies and recommends the actions needed to address the concerns of business energy customers.”
This morning’s surprisingly strong construction sector report is the latest sign that the risk of recession is easing, says Martin Beck, chief economic advisor to the EY ITEM Club.
Beck points out that there have been other “upbeat indicators” recently, such as rising retail sales, consumer confidence and tax receipts.
Beck says:
February’s construction Purchasing Managers’ Index (PMI) joined its services and manufacturing counterparts in signalling stronger activity in February. Although the economy continues to face significant headwinds, the risk of a recession is receding.
The near-term outlook for the construction sector remains challenging. Higher interest rates will likely weigh on residential and commercial activity, the housing market downturn and changes to planning rules risk discouraging housebuilding, and falling household real incomes are expected to discourage spending on home improvements.
However, the recent improvement in the mood-music surrounding the economy’s prospects, including some recovery in consumer and business confidence, should bolster the construction sector, as will falling energy costs and disinflationary pressures in general. As a relatively cyclical sector, construction firms could be among the first to benefit from the economic recovery that the EY ITEM Club expects to become embedded later this year.
Confidence across the UK construction sector hit its highest level in a year last month, today’s PMI report shows.
Dr John Glen, Chief Economist at the Chartered Institute of Procurement & Supply, says easing supply chain problems and a slowdown in cost inflation cheered building firms.
However, rising mortgage rates continued to dampen the housebuilding sector.
Glen explains:
“The overall figure paints a bright picture of progress in the construction sector with a robust jump in output last month. Supply deliveries were at their most improved since January 2020 and some commentators mentioned sourcing closer to home to avoid logjams in supply chains caused by China’s Covid policy and the war in Ukraine.
New order levels were also at their highest since November 2022 but these strong numbers belie the fact that there is uneven growth in building activity in the UK. Commercial and civil engineering projects dominated this performance with activity on projects such as HS2 and commercial builds. Residential building on the other hand was the odd one out with a third month in contraction as mortgages rates put a dampener on the number of house purchases and buyers were unwilling to commit.
Builders themselves remained cheerful as optimism rose sharply and almost half of the survey’s respondents believed business would improve in 2023. With the slowest inflationary rises for raw materials since November 2020 this offered some relief, and it was cheaper transportation costs that helped offset salary and energy costs which were still rising
The return to growth in the UK construction sector last month will be welcomed by contractors who are hoping the worst of the economy’s storms have passed, says Max Jones, director in Lloyds Bank’s infrastructure and construction team.
Jones explains:
“Despite an uncertain economic picture, many in the industry feel confident. Payment times are proving resilient across supply chains, pipelines on infrastructure and commercial projects are holding up well and inflation, for materials and labour, looks to have passed its peak.
“The industry will be closely monitoring this month’s Budget. While few expect the Chancellor to pull any rabbits out of his hat, clarity around future projects, particularly in the regions, will give contractors the confidence they need to plan and invest in the future.”
UK construction sector rebounds in February despite weak housebuilding
Just in: the UK’s construction sector rebounded back into growth last month as fears of a recession fade.
The S&P Global/CIPS UK Construction Purchasing Managers’ Index (PMI), which tracks activity in the building sector, jumped to 54.6 in February, up from 48.4 in January.
That shows the fastest growth since May 2022, and well above expectations of a reading around 49.1. Anything over 50 shows a rise in activity.
There was a “robust increase” in overall business activity across the UK construction sector last month, S&P Global reports, after two months of decline.
The rate of growth was the strongest since May 2022, supported by a marked rebound in commercial work and a positive contribution from civil engineering activity.
But, activity in the house-building sector decreased for the third month running.
Many housebuilders have been cutting back following a drop in demand, as house prices fall.
Tim Moore, economics Director at S&P Global Market Intelligence, says that housebuilding was the ‘weak spot’ in the sector:
Some firms noted that fading recession fears and an improving global economic outlook had boosted client confidence in the commercial segment. At the same time, work on major infrastructure projects such as HS2 contributed to the expansion of civil engineering activity in February.
Cutbacks to new house building projects remained the weak spot for construction sector activity, with total residential work falling for the third month running in February. Survey respondents often commented on subdued demand and a headwind from elevated interest rates.
Construction companies appear increasingly confident about the year ahead business outlook, with optimism rebounding strongly from the lows seen in the final quarter of 2022. Softer inflationary pressures and the least widespread supplier delays for just over three years were factors supporting business expectations in February.”
A backlog of orders for new cars, which were held up by recent supply chain problems, helped boost registrations last month, says Chris Knight, UK automotive partner for KPMG:
“New car sales headed into March’s plate change month in a relatively healthy state, thanks to a strong order bank built up over previous months of short supply.
“Battery electric vehicles represented 16% of the new car market last year, but aside from uncertainty linked to the cost of living crisis - whether electric vehicle transition can continue to maintain momentum also depends on the pace of rollout of charging points and opening up the market to more consumers via the availability of lower cost new EVs.”
Updated
The jump in new car registrations last month comes as confidence grows across the sector, says Mike Hawes, chief executive of the SMMT:
After seven months of growth, it is no surprise that the UK automotive sector is facing the future with growing confidence. It is vital, however, that government takes every opportunity to back the market, which plays a significant role in Britain’s economy and net zero ambition.
As we move into ‘new plate month’ in March, with more of the latest high-tech cars available, the upcoming Budget must deliver measures that drive this transition, increasing affordability and ease of charging for all.
UK car market grows for seventh month running
It’s official: UK new car registrations grew by 26.2% year-on-year in February as 74,441 new cars joined Britain’s roads.
That’s according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), just released, which shows last month was the busiest February for car sales since 2020.
This is the seventh month of consecutive growth, as the easing of supply chain shortages help the car market to recover.
Britain’s new car market rises 26.2% in February, in seventh consecutive month of growth.https://t.co/BYcodagAGc pic.twitter.com/lcXm4Pji2y
— SMMT (@SMMT) March 6, 2023
Deliveries to private buyers up 5.8%, while purchases by large fleets jumped 46.2%. Business registrations rose by a mere 0.7%, or just nine cars.
The SMMT reports that hybrid electric vehicles (HEVs) recorded the most significant growth of all fuel types, up 40.0%. HEVs have a fossil fuel engine, which can charge an electric battery which can drive an electric drivetrain.
Petrol sales were 35.8% higher than a year ago, while diesel registrations fell by -7.0%.
Battery electric vehicle (BEV) registrations were up 18.2%, and make up one in six new UK car registrations, while sales of plug-in hybrids (PHEVs) were 1.0% higher.
The SMMT are urging Jeremy Hunt to announce measures to support the electric car market in next week’s budget.
They say:
This should include a long-term plan for chargepoint investment, aligning VAT on public charging with domestic energy use, and reviewing the Vehicle Excise Duty premium that will unfairly penalise EV buyers switching to this inevitably more expensive technology in the future.
Mining shares drop on China's growth target
In the City, shares in mining giants are sliding after Beijing announced a surprisingly low growth target for this year.
Anglo American (-3.2%), Rio Tinto (-2.3%) and Antofagasta (-2.3%) are among the top fallers on the FTSE 100 this morning, following China’s decision to aim for an economic expansion of “around 5 per cent” for 2023.
The oil price has dipped a little too, as traders calculate that China’s reopening after Covid-19 restrictions will not provide as much growth as expected.
Neil Wilson of Markets.com explains:
Caution seemed the order of the day across markets early on Monday as China set itself one of the lowest gross domestic product target in many years, hinting to investors that the big reopening boom may not be as positive for the global economy as hoped.
Beijing set a target of around 5% growth this year, creating a relatively low bar for the regime to clear. Oil and other industrial commodities slipped on the news, whilst basic resources stocks in London were hit, dragging the FTSE 100 marginally into the red at the open.
Beijing’s target signals that policymakers are not planning any large-scale stimulus measures now, says Mark Haefele, chief investment officer at UBS Global Wealth Management.
Haefele explains that China is relying on a sharp rebound in consumption, and on investment, adding:
“Our positive outlook on China’s recovery prospects is a key driver for our global equity preference for emerging markets, while in our Asia strategy we rate China equities as most preferred.”
Eurozone construction activity shrinks for 10th month in a row
The eurozone’s construction sector shrank again in February, for the 10th month running.
The S&P Global Eurozone Construction Total Activity Index has risen to 47.6 in February from 46.1 in January – still below the 50-point mark showing stagnation.
The relative improvement in the headline index was supported by softer drops in both residential and civil engineering activity, S&P Global says.
The sector has been hit by rising interest rates since last summer, weak consumer confidence, and increased costs.
Home building dropped again across the eurozone last month, extending a decline that began last May. But more encouragingly, construction firms took on more staff, led by firms in France and Italy.
Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said:
The latest PMI data showed that the eurozone construction sector moved closer to stabilisation in February, with firms signalling the softest reduction in overall activity for nine months.
This was underpinned by weaker falls in construction output across Germany and Italy, which offset a more marked decline in France. The downturn in new business also continued to ease, though sales still dropped considerably overall, which contributed to a sustained fall in purchasing activity.
Zona euro S&P Global Construction PMI febrero: 47,6 (anterior 46,1)
— AudioMercados 🚨🎙 (@AUDIOmercados) March 6, 2023
*Noticia con demora. Acceda tiempo real:https://t.co/rHPVM5Eu3T pic.twitter.com/UgTC5XvRbV
Sir James Dyson warns Britain against tax grabs
Entrepreneur Sir James Dyson is urging the government not to lift taxes on businesses, claiming that a double tax grab will hurt the economy.
In a letter to Jeremy Hunt, seen by The Sun, Dyson warned the chancellor of the “unintended consequences” of hiking corporation tax and bringing in a new global levy on multinationals agreed by the OECD.
Dyson, who has criticised Rishi Sunak’s administration before, told Hunt that the Government has “done nothing but pile tax upon tax on to British companies.”
He reminds the chancellor that pharmaceuticals firm AstraZeneca recently chose to build a $360m advanced manufacturing factory in Ireland, not the UK, and cited ‘discouraging’ UK tax rates.
He writes:
“Is it any wonder that the economy is teetering on recession, or that companies like AstraZeneca are deciding to take their investment elsewhere?”
Dyson wants Hunt to drop plans to lift corporation tax from 19% to 25% in April. He argues that this, and the new Global Minimum Tax on multinationals, “will do nothing” to generate the recovery and growth we need.
More here: Tycoon Sir James Dyson warns Jeremy Hunt against double tax grab on business ahead of Budget
In January, Dyson claimed that the “shortsighted” and “stupid” economic policies pursued by Sunak’s government have left the country in a state of “Covid inertia”, and that “growth has become a dirty word”.
Shell CEO: US is more attractive than Britain for energy investment
The boss of energy giant Shell has warned that America is significantly more attractive than Britain for energy investment
Shell’s new chief executive, Wael Sawan, has told The Times that that UK government should “take a page from some of the things that the US have done recently, through the Inflation Reduction Act”.
The IRA is a $369bn (£300bn) package of subsidies to spur green investment in America, which has spurred the European Union to push on with its own subsidy plans.
The UK, though, has claimed that the IRA package is protectionist, and has not yet responded with a similar package of its own.
Sawan says that the IRA provides “ten-year clarity and tangible, fixed incentives that people know to bank on”.
Instead, he warns, the UK’s focus on windfall taxes, planning delays and uncertainty over subsidies make Britain a less attractive market.
Asked how Britain ranked in terms of attractiveness for energy investments, Sawan said the US was “ahead significantly” and that Europe was also ahead of Britain.
More here: US is more attractive than Britain for energy investment, says Shell chief
Come for the serious energy chat, stay for the unexpectedly relatable lifestyle of Shell’s new bosshttps://t.co/nHyEHJ4ZxZ pic.twitter.com/DkXtk5IJHv
— Emily Gosden (@emilygosden) March 4, 2023
Campaigners call for end to ‘peak fare rip off’ on trains in England and Wales
Campaigners are calling for an end to the “peak fare rip off”, where commuters in some parts of the country face far higher mark-ups to travel at busy times.
The call came after regulated rail fares in England and Wales jumped by 5.9% on Sunday – the biggest hike in a decade – adding hundreds of pounds to the cost of many annual season tickets despite record levels of poor service.
Consumer groups are now urging operators to make peak fares – which are not necessarily affected by the 5.9% rise – more equitable across the country and to reduce them on less popular days to combat overcrowding.
The news that London listed big data firm WANdisco is eyeing New York to create a dual listing (see 7.25am) is a reminder of the City’s struggles to attract tech companies.
Victoria Scholar, head of investment at interactive investor, says London is not facing a ‘mass exodus’, but points out that recent technology floats have struggled:
According to Sky News, it has hired bankers from Evercore Partners to help with the preparations. WANdisco’s chairman and CEO David Richards first discussed the possibility of a US listing in 2017.
The news comes after Arm Holdings abandoned London as a potential location for its IPO, FTSE 100 building business CRH also said it was planning to list in the US and Flutter was considering a secondary listing in New York. This has raised concerns about a potential flight of listed businesses away from the London Stock Exchange post Brexit to the United States. However we are far from seeing a mass exodus from the London market as of yet. The City has so far managed to preserve its position as Europe’s leading global financial hub.
One of the biggest challenges for the UK market has been its struggle to attract tech giants. New York continues to be the go-to destination for tech behemoths with the Nasdaq boasting giants like Apple, Microsoft and Amazon. While the FTSE 100 enjoyed relative resilience last year in part thanks to its shortage of tech stocks, this has long been a criticism and meant that the UK large-cap index missed out on the gains enjoyed stateside from the tech boom prior to 2022.
There have been some high-profile tech disasters in London including Deliveroo’s calamitous IPO and THG’s share price slide, adding to the sense of caution towards the UK among tech businesses deciding where to list.”
Big data company WANdisco eyes US stock market listing
WANdisco, a ‘big data’ business listed in London, has joined the growing ranks of companies considering a listing on the New York stock exchange.
WANdisco, which is headquartered in Sheffield, England and San Ramon, California, has told the City this morning that it is in the early stages of exploring a listing in the US, to run alongside its London listing.
Yesterday, Sky News reported that WANdisco was preparing to list its shares in the US “amid an intensifying debate about the waning attractiveness of the City to public companies”.
Last week, UK chip designer Arm chose to only list in the US, rebuffing London, and building materials giant CRH laid out plans to move its shares to the US.
WANdisco reminds shareholders that it has been considering a listing in New York for some time, and isn’t planning to quit London.
It says this morning that:
As a dual UK and US headquartered technology company, WANdisco has long-stated its intention to consider an additional listing of its ordinary shares in the United States. The company can confirm that it is in the early stages of proactively exploring this option.
The Company also confirms that it remains committed to London’s Alternative Investment Market (“AIM”) and to maintaining its current UK AIM listing.
Sky News has learnt that WANdisco, a 'big data' business, has hired bankers from Evercore Partners to prepare for a listing in New York https://t.co/LaNgQjDO9M
— Sky News (@SkyNews) March 4, 2023
Introduction: UK car sales jumped 25% in February
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK car sales jumped by a quarter last month, while the cost of travelling by train across the country has risen again.
British new car registrations rose by a quarter in February, according to preliminary industry data released on Monday.
The Society of Motor Manufacturers and Traders (SMMT) said the new car market grew by 25% last month in a year-on-year basis, despite the economic pressures from the cost of living crisis on households.
Plug-in electric vehicles made up about a quarter of the registrations, meaning that almost half a million plug-in cars are expected to join the road by the end of 2023.
The final data, from trade body SMMT, is due at 9am this morning.
Last weekend, train passengers were hit by the largest increase in fares for more than a decade on Sunday despite record levels of poor reliability.
Fares in England and Wales rose by up to 5.9% on average, adding hundreds of pounds to the cost of many annual season tickets.
It’s the largest increase in annual fares since a 6.1% hike across Britain in 2012, analysis shows. More here:
Also coming up today
Investors are digesting the news that China’s government has set a modest target for economic growth this year, as the annual session of its National People’s Congress (NPC) begins.
FT UK: Beijing’s 5% expansion target signals end to the era of ‘rip-roaring growth’ #TomorrowsPapersToday pic.twitter.com/z9cDO3CZw9
— Neil Henderson (@hendopolis) March 5, 2023
Beijing is aiming foreconomic growth this year of around 5% on Sunday, below last year’s goal of 5.5%, but above the 3% growth actually achieved.
European Opening Calls:#FTSE 7944 -0.04%#DAX 15618 +0.25%#CAC 7381 +0.45%#AEX 765 +0.52%#MIB 27937 +0.40%#IBEX 9505 +0.43%#OMX 2261 +0.36%#SMI 11204 +0.13%#STOXX 4313 +0.42%#IGOpeningCall
— IGSquawk (@IGSquawk) March 6, 2023
The latest surveys of purchasing managers will show how construction firms in the UK, and across Europe, fared last month.
The agenda
8.30am GMT: eurozone construction PMI report for February
9am GMT: UK new car registrations for February
9.30am GMT: UK construction PMI report for February
10am GMT: Eurozone retail sales for January
10am GMT: European Central Bank chief economist Philip Lane gives a lecture at Trinity College in Dublin
3pm GMT: UK factory orders for January
