Rolling coverage of the latest economic and financial news
Chinese imports and exports slide
Exports fall 4.4%; imports slide by 12.5%
CEO pay soars again
But firms attack minimum wage rises
London’s FTSE 100 hits 14-month high
Wal-Mart, the US shopping mega-giant, has just snapped up e-commerce site Jet.com for $3bn.
It’s another gobbet of news to brighten up a quiet day, but a pretty small deal by Wal-Mart’s standards:
When the Jet-Walmart deal is too small to require new debt pic.twitter.com/50WEfQLDxn
Good news for low-paid workers. The British government hasn’t abandoned its plan to raise the minimum wage over the next few years, despite this pressure from business groups.
A spokesperson for the Department for Business, Energy and Industrial Strategy said:
“The Government is committed to building an economy that works for all and ensuring that the National Living Wage works for employees as well as businesses of all sizes, and will continue to back small firms to grow and create jobs by providing an environment in which they can thrive.
“The Low Pay Commission plays a critical role in providing recommendations for National Minimum Wage rates, and now has additional responsibilities to help deliver the National Living Wage. The Government has asked the Low Pay Commission to recommend increases to the National Living Wage towards 60% of median earnings by 2020, subject to sustained economic growth.”
Another reminder of how China’s economy has looked sluggish for some time...
Forward & backward-looking Chinese economic indicators in 1 chart. Imports falling for 21 months; PMI stuck at 50ish pic.twitter.com/rjiV0Z9aZH
Up in Scotland, oil exploration firm Transocean has confirmed that one of its rigs has been blown back onto the coast while being towed.
It says that:
During severe weather, the Transocean Winner lost its tow, and subsequently grounded off the Western Isles of Scotland.
In “news I missed earlier”, eurozone investors appear to have shaken off their initial panic over Britain’s vote to leave the EU.
The Frankfurt-based Sentix research group’s monthly index of investor morale has risen to 4.2, from 1.7 in July.
“The Brexit shock only lasted a short while. Worries about an economic slowdown have not grown further.”
August 2016 Eurozone Sentix index 4.2 vs 3.0 exp https://t.co/9rK3X2AODs pic.twitter.com/mBkR6Bu4xJ
#BREXIT: #EuroArea #Sentix investor confidence rebounded to 4.2 (consensus 3.0). Good news! Yet still early days... pic.twitter.com/LjkjESfSs8
Back to China’s trade data....and economist Des Supple also predicts Beijing will devalue the Chinese yuan against the US dollar, to help its exporters.
China July trade data adds fresh support for long USD/CNY positions: exports -5.3% Y/Y; imports -12.9%. 1/ pic.twitter.com/bK1YglwBlX
4/ 3.0-3.5% global growth is deflationary for China's economy considering the scale of surplus capacity and leverage.
Some breaking news for crisp fans -- Tyrrells, supplier of flavoured fried potato slices to the masses, has been sold to US popcorn maker Amplify Snack Brands in a £300m deal.
Staying with food. @Tyrrells crisps has been snapped up (sorry) by US listed firm Amplify Snack Brands for £300 mn$BETR #Food
Related: William Chase: Potato farmer who struck gold
Here’s a chart of China’s choppy trade stats, showing how exports and imports have been weak (in dollar terms) recently:
It’s been a tough few months for the world’s central bankers, so we’re delighted to see that Bank of England governor Mark Carney had a relaxing weekend at the Wilderness Festival in Oxfordshire:
Oh dear, oh dear, oh dear. Bank boss Mark Carney models an eye tattoo at festival - https://t.co/WXXtU2SauK pic.twitter.com/RqLsL0hVWb
You know who'd carry this off better? Justin Trudeau. https://t.co/6whlgVlk7u
Conor D’Arcy, Policy Analyst at the Resolution Foundation, is also alarmed that UK companies are trying to squeeze pay rates at the bottom, while letting CEO pay surge by another 10%:
“On a day when new figures show that Chief Execs are now paid 140 times as much as the average worker, it’s not the best time for some businesses to focus on slowing the pay growth of those at the very bottom.
“By sensibly pegging the National Living Wage to typical earnings, the government has already built in flexibility to help steer it through choppy economic times. Most employers acknowledge and support this approach, and the government should continue with a policy that will deliver a much-needed pay rise to up to six million workers.
With deliciously poor timing, a group of trade bodies are lobbying the government to change its plans to raise the UK minimum wage.
They are arguing that the uncertainty created by the Brexit vote means companies may not be able to pay staff at least 60 per cent of median earnings by 2020 (which would raise wages to around £9.02 per hour from £7.20 today).
Businesses are trying to persuade the government to slow or even abandon its policy to raise the “national living wage” to one of the highest rates in the developed world by 2020.
At least 16 trade associations have written jointly to Greg Clark, the new business secretary, recommending that he “exercise caution” on the national living wage in light of the “economic uncertainties the country faces” after the Brexit vote.
On the day we're told CEOs pay rose 10%, not best timing for trade bodies to ask for min wage rises to be scrapped pic.twitter.com/g8vbJzejbv
Ana Thaker, market economist at PhillipCapital UK, reckons Beijing will be spurred into action by July’s weak trade data.
The figures highlighted the weakness we have seen in the global economy and as exports slow, we could see the government and central bank engage in more easing policies to weaken the Yuan and stimulate domestic consumption and output.
A weak Yuan would also have the added benefit of stifling imports and leading Chinese consumers to buy more domestically produced goods - leading to the consumption driven economy the country has been aiming for over recent years.
After a lacklustre spring, Germany’s factory sector bounced back in June with a 0.8% increase in production.
If you strip out energy and construction, the figures are even better - with a 1.5% jump in output.
France’s Airbus group is missing out on today’s rally.
Related: Serious Fraud Office starts Airbus inquiry
Europe’s main stock markets are all rising in early trading:
The weak Chinese trade data hasn’t spooked the City, though.
China’s appetite for overseas oil may also be waning.
Imports of crude oil in July dropped to their lowest level since January, new figures show, signalling that energy demand has dipped:
#China Crude #Oil Imports Fall to 6-Month Low as Teapot Demand Slows https://t.co/WDab9TqUBW #OOTT #Opec pic.twitter.com/tDQoKFQhXX
Economist are disappointed by the fall in Chinese imports and exports in July.
“Signs of stronger manufacturing activity among many of China’s key trading partners has so far failed to lift export growth.
“The country’s export growth is likely to remain subdued for some time.”
“I definitely think we could see concern over the surplus...We have a long way to go before we really see a decline in China’s overcapacity.”
In China this morning, July trade data was a disappointment, highlighting that world trade growth remain weak....
In China, there will be several other important economic releases this week, including July inflation (Tuesday), industrial production (Friday), retail sales (Friday) and finally new loans and M2.
The week is beginning with worrying news from China.
Chinese exports shrank by 4.4% year-on-year in July in dollar terms, following a 4.8% decline in June, according to fresh figures from the country’s customs department.
#China's Jul exports, imports fall more than exp, signaling tepid glo demand & China slowing https://t.co/vdmooiilUT pic.twitter.com/mlKrGlV4cz
China July trade (USD)
Trade surplus $52.31b
Exports -4.4% (est -3.5% prev -4.8%)
Imports -12.5% (est 7% prev -8.4%) pic.twitter.com/OUF4H2SpMX
Investors have not paid much consideration to Chinese numbers for some time now, as their attention was very much focused on Brexit and the Fed interest rate. However, the number released over in China has made investors wary once again that the situation both at home and abroad is not improving.
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britons are waking up to the news that the bosses of their largest companies have enjoyed another bumper pay rise.
“There is apparently no end yet in sight for the rise and rise of chief executive pay packages,” said the centre’s director, Stefan Stern. “In spite of the occasional flurry from more active shareholders, boards continue to award ever larger amounts of pay to their most senior executives.”
Leading company bosses now typically earn 129 times more – including pensions and bonuses – than their employees.
Related: UK's top bosses received 10% pay rise in 2015 as average salary hit £5.5m
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