Detailed below is the weekly news for 7th August. I will now be taking a summer break from the Weekly News which will resume again in September. Hope you all have a good summer break.
Economic News
CBI Economic Update: Softest half-year of GDP growth since 2011. Economic growth remained lacklustre in the second quarter, but business surveys point to a possible strengthening in July.
At its August meeting, the Bank of England’s Monetary Policy Committee voted 6-2 to maintain the Bank Rate at 0.25%, with McCafferty and Saunders once again dissenting by calling to hike it to 0.50%. The committee were unanimous in voting for no change to the level of quantitative easing that was last extended a year earlier. Alongside the decision, the Bank also released its quarterly Inflation Report in which it lowered its expectations for GDP growth in 2017 (to +1.7% from +1.9%) and trimmed its forecast for 2018 (+1.6% from +1.7%).
Economic growth remained sluggish in the second quarter, with GDP expanding 0.3% (around half of the UK’s long-run average of 0.6%) following similarly tepid growth of 0.2% in the first quarter. By a small margin, the first half of 2017 has been the softest half-year period of growth in six years. Growth in the second quarter was predominantly driven by services (particularly retail and the film industry), whereas both manufacturing and construction output subtracted from growth.
The IHS Markit composite PMI for July ticked up to 54.1, from 53.8 in June – chiming with the CBI’s Growth Indicator, which also picked up in the three months to July. Within the headline PMI, manufacturing activity picked up for the first time in three months, underpinned by near-record growth of new export orders, while the services sector also saw a modest uptick. Meanwhile, growth in the construction industry – which is excluded from the weighted composite – dropped to an 11-month low on the back of weakness in new business volumes.
Echoing the strengthening in the PMI, the CBI’s Industrial Trends Survey found that manufacturing output had grown at the fastest pace since 1995 in the three months to July. Headcount increased at the fastest rate for three years and hiring intentions also improved. Growth in total orders moderated in line with expectations, but remained robust. Expectations for demand growth in the quarter ahead remain strong, with the outlook for export order growth at a four-decade high. Meanwhile, input cost pressures cooled and are expected to soften further in the near-term.
The CBI’s Distributive Trades Survey found that retail sales growth had picked up in the year to July, driven by stronger grocery and clothing sales, while orders placed on suppliers rose at a solid pace for a second consecutive month. Looking ahead, retailers expect steady expansions in both sales and orders in the year to August, at rates similar to those seen this month.
Bank of England Inflation Report : Monetary Policy Summary: The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 2 August 2017, the MPC voted by a majority of 6–2 to maintain Bank Rate at 0.25%. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion. The Committee voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion. The Committee voted unanimously to close the drawdown period for the Term Funding Scheme (TFS) on 28 February 2018, as envisaged when the scheme was
introduced. Please find below a link to the full August 2017 Inflation Report: http://www.bankofengland.co.uk/publications/Pages/inflationreport/2017/aug.aspx
Other News
Harvest Report From nabim: At the time of writing very little wheat has been harvested. Many farmers have cut headlands but the main campaign is yet to begin. Rainfall in many areas at the end of July meant that crops are taking time to dry and subsequent showers further delays the drying process. On this basis it is likely that this will be a ‘catchy’ harvest with an increased risk of low Hagbergs. Early indications suggest a relatively low risk of both DON & ZON mycotoxins this year, although rainfall at harvest time always increase the risk of ZON developing late in the life of the crop. nabim will, once again, be collecting mycotoxin test results as the new crop appears at mills and issuing weekly reports to member companies.
Government to Analyse Migrant Workers’ Future After Brexit: Home Secretary Amber Rudd has commissioned the Migration Advisory Committee (MAC) to examine the British labour market, the overall role of migration in the wider economy and alignment of UK’s immigration system with modern industrial strategy. Plans for the UK’s future immigration system have proven to be a key part of negotiations, with many seeking far greater clarity as to how the government plans to manage the bi-lateral flow of people. The study will focus on patterns of EU and EEA (European Economic Area) migration, considering regional distribution, skill levels, industry sectors, and the role of the self-employed, part-time, agency, temporary and seasonal workers.
Amber Rudd also commented that leaving the EU gives the UK the opportunity to take control of immigration from the EU and the government will ensure that UK continue to attract those who benefit the country economically, socially and culturally. She also commented that the new immigration system will give government the control of volume of people coming here giving the public confidence that the UK is applying its own rules on who government wants to come to the UK and helping the UK to bring down net migration to sustainable levels.
Food Manufacturers Urged for Automation Investment: Food and drink manufacturers in the UK have been urged to invest in robots and automation in their operations as labour costs continue to rise, robots become easier to use and their cost falls. Mike Fiilson, Chairman of the British Automation & Robot Association, stated that one of the biggest challenges UK food and drink manufacturers is facing is productivity. Manufacturers are employing a lot of people, but are not being as productive as major competitors.
He further stated that other challenges manufacturers are facing are increasing energy and raw material costs, and skills shortage. He remarked that the introduction of the national living wage, the apprenticeship levy and pension provision requirements were also driving labour costs up. furthermore, he commented that technological advances that are reducing the price of vision systems and gripper systems that could handle more delicate foodstuffs should also make investment in robotics more attractive to the food sector.
He also commented that the UK productivity has not grown very much over the past few years, just 0.6% a year from 2010 to 2015 and the growth has been achieved by employing more people rather than investing in capital assets.
BEIS/Carbon Trust:New Industrial Energy Efficiency Accelerator for UK Industry
- BEIS is funding a new £9.2 million Industrial Energy Efficiency Accelerator (IEEA), which is being run by The Carbon Trust to strengthen the global competitiveness of British industry
- The IEEA aims to lower costs and increase numbers of available energy efficient technologies across all UK industry sectors
- The IEEA programme seeks innovations that will have the largest cross-sectoral impact on industrial energy efficiency and reducing carbon emissions
- Up to 20 projects will be co-funded with grants from £150k – £750k per project
- Applications should come from a combination of an industrial company and a technology supplier, but in rare cases we will consider innovations driven by industrial companies
Upcoming workshops:
Sign-up for workshops here:
16 August 2017 – Manchester 24 August 2017 – London 7 September 2017– Glasgow 13 September 2017 – Birmingham
For further information on either the IEEA programme, competition or workshops, please visit the IEEA website, call the Carbon Trust helpdesk on 02071 707001, or respond to this email directly.