Growth concerns hit markets as more UK companies struggle to fill vacancies – business live | Business
Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.
Growth concerns weigh on markets amid warnings of an economic slowdown on both sides of the Atlantic, as the pandemic continues to disrupt global supply chains.
Concern over an economic slowdown intensified, after the US Federal Reserve warned that the US economy “had shrunk slightly” in August, amid rising coronavirus cases and growing chain problems supply and labor shortage.
In its latest roundup of current economic conditions in the United States, the Fed warned that the new wave of coronavirus has hit restaurants, travel and tourism, saying:
“The deceleration in economic activity was largely due to a decline in restaurants, travel and tourism in most districts, reflecting security concerns due to the rise of the Delta variant and, in a few cases, to international travel restrictions. “
The Fed’s âBeige Bookâ also reported that companies are suffering from inflationary pressures and are struggling to obtain raw materials and parts and to hire staff (a familiar story this year).
âWith widespread resource shortages, pressures on input prices continued to be pervasive. ”
The companies also reported:
‘Substantial escalation in the cost of metals and metal-based products, freight and transport services and construction materials’,
It cooled the mood on Wall Street a bit and sent Asia-Pacific stocks tumbling today. European markets are also expected to fall, adding to yesterday’s drop.
from Japan Nikkei 225 was down 0.7%, while Australia S & P / ASX 200 fell by 1.9%, that of Hong Kong Hang Seng lost 2% and South Korea Kospi 200 is down 1.75%.
Hong Kong’s tech giants led the sell-off after China further tightened its grip on the gaming industry, summon companies like Tencent and NetEase to make sure they implement new rules for the industry.
And a sign that the pandemic continues to cause disruption, Japan announced Thursday that it will extend emergency COVID-19 restrictions in Tokyo and other areas until the end of this month.
The move is aimed at curbing infections and preventing hospitals from being overwhelmed, with Tokyo saying it was too early to let their guard down.
The Bank of England is also seeing signs of a slowing recovery in the UK, as the supply of goods remains disrupted and businesses struggle to fill vacancies.
Governor Andrew Bailey told MPs:
For now, we are witnessing a stabilization of the recovery, short-term indicators suggest.
The Bank Governor has suggested that the disruption of Covid in global supply chains, which has shaken industries from car manufacturing to hospitality, has proven to be more persistent than expected by Threadneedle Street earlier this year, as higher rates of coronavirus infections and increased demand for manufactured goods put pressure on shipments.
He said it was expected that consumer demand for goods would turn increasingly to services as pandemic restrictions were relaxed, but this had not happened so far so far. provided that.
âThere is this underlying story of imbalanced demand, which we now thought is on the way to correcting itself.
The European Central Bank will assess the state of the euro area economy, as it meets to set monetary policy.
Some ECB policymakers are pushing to ease its stimulus package, after inflation hit a decade-high.
Ipek Ozkardeskaya, senior analyst at Swissquote, said:
One of the reasons the ECB hawks are back in the driver’s seat is rising inflation. The European CPI hit the 3% mark in August. The latest jump in the CPI spurred fears among inflation-skeptical member states such as Germany, Austria and the Netherlands which began to call for cuts in ECB asset purchases on as soon as possible.
The question is when and how? I think the divergent views within the ECB will not allow the bank to make any sudden moves in the near future. We would most likely see the ECB slow down its purchases of PEPP, but a reduction in the overall size of the pandemic program, a regular APP change, or a normalization of rates are highly unlikely.
Today’s meeting will provide insight into how the ECB will deal with rising inflation and stressed hawkish members, what the conciliatory-hawkish balance will look like and where the euro should be heading next. . It’s likely we’ll see President Christine Lagarde ease the nerves of the doves at today’s press conference – which should trigger some weakness in the euro against the greenback in the near term.
We also get the latest roundup of UK economic indicators from the Office for National Statistics, and weekly US unemployment figures – where job vacancies hit a new record yesterday.
- 7 a.m. BST: German trade balance for July
- 9:30 a.m. BST: business outlook and impact on the UK economy
- 12:45 BST: European Central Bank decision on interest rates
- 1:30 p.m. BST: European Central Bank press conference
- 1:30 p.m. BST: US Unemployment Weekly Report