All the day’s economic and financial news, including healthchecks on the world’s service sectors
- UK service sector can’t find enough workers
- But growth still picked up in August
- Introduction: Chinese service sector firms slowed last month
- Markets in the red
- Full story: Thinktank demands UK economic overhaul
Cambridge, Oxford, Warrington, Reading and Swindon are all feeling the brunt of the worker shortage, apparently.
Jobs site Adzuna says each of these cities have more than 15 vacancies for every jobseeker, putting labour in a strong position (theoretically, anyway).
Despite the hiring struggle, the UK economy is on track to grow by 0.4% in the current quarter, Markit estimates.
That would match the UK’s growth rate in April-June, and beat some City forecasts.
Duncan Brock, group director at the Chartered Institute of Procurement & Supply, is concerned that UK firms can’t find the staff they need.
Here’s his take on the PMI report:
“The services sector was a little more upbeat than the other sectors this month maintaining a steady level of activity growth, and the number of new orders ticked higher.
“Despite this, optimism was more subdued and lower than the survey average. With the weakest business optimism since March, uncertainty around the UK’s decision to leave the EU continued to dampen client operations. Struggles around securing talent and the right skills were also a drag on a sector highly-dependent on trained staff even though job creation rose to its highest levels for half a year.
UK firms are also suffering from uncertainty over Britain’s exit from the EU.
Business confidence about future prospects hit the lowest level since March, today’s PMI report shows.
“Business expectations for the year ahead meanwhile sank markedly lower, down across all three sectors to one of the lowest levels seen since the EU referendum, largely reflecting increased anxiety over Brexit negotiations.
“Given the increasingly unbalanced nature of growth and the darkening business mood, risks to the immediate outlook seem tilted to the downside.”
Good news for UK workers — the staff shortage is forcing some services firms to pay them more.
Difficulties recruiting suitably skilled staff contributed to higher salary payments in August.
Breaking: Growth in Britain’s service sector rose last month…but firms are finding it harder to recruit the workers they need.
That’s according to data firm Markit’s monthly survey of Britain’s services companies.
Backlogs of work increased for the fourth month running in August, which pointed to sustained pressure on operating capacity at service sector companies. A number of firms linked rising volumes of unfinished business to difficulties replacing departing staff.
Just in: Britain’s car sales rose by almost a quarter in August.
Just over 94 thousand new cars were registered in the UK last month, a jump of 23.1% compared to August 2017.
Demand was up across the board, with consumers and fleets boosting year-on-year registrations by 23.3% and 19.7% respectively, while the smaller business sector rose 166.4%, equivalent to an uplift of around 1,500 units against August last year.
Superminis remained the most popular buy, followed by small family and dual purpose cars, with the luxury saloon and city car segments recording the most notable growth, up 120.8% and 39.6%.
European companies are also worried about trade wars.
Markit’s new survey of eurozone purchasing managers, just released, show that business expectations in the service sector hit a 21-month low in August. It blamed “geo-political trade tensions”.
Commodity prices are also being hit by the drop in Chinese company growth.
The price of copper in Shanghai has hit a 14-month low, while prices in London are down 2.6%.
Global stock markets are in the red this morning, as the slowdown across China’s companies worries investors.
The Shanghai Composite Index has dropped by 1.7%, while Hong Kong’s Hang Seng index has shed 2.7%.
The main preoccupation for investors continues to be on whether the US is serious about arriving at some form of deal with Canada over NAFTA in the wake of President Trump’s tweets at the weekend, that it wasn’t and isn’t a political necessity to get a deal
In addition to that anxiety levels are growing ahead of the weekend and the possible imposition of another $200bn worth of tariffs on Chinese goods later this week.
Hong Kong’s companies are also feeling a chill from the US-China trade wars.
Growth across Hong Kong’s private sector declined in August, data firm Markit says. Output and new orders both shrank, forcing job cuts.
Notably, export sales to China fell again amid escalating trade tensions. Companies remained pessimistic about future output, which was also accompanied by another drop in purchasing activity and input inventories. Consequently, firms reduced selling prices to support sales despite a further rise in input costs. Both employment and backlogs continued to decline.
Hong Kong’s private sector is on track for a second quarterly decline after latest #PMI data indicated another deterioration in business conditions in Aug. Other survey indicators suggest the downturn is likely to continue. More here: https://t.co/QRuELZ0hY3 pic.twitter.com/UGqpcr2MlT
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Inflationary pressures were pronounced as increases in both input prices and output prices accelerated. The future output sub-index went up after falling in August, which was likely boosted by the fine-tuning of macro policies. The employment sub-index was unchanged from July’s reading and remained in contraction territory.
“August’s PMI readings indicated that the effects of expansionary credit policy and active fiscal policy are yet to kick in. Signs of stagnation emerged as upward pressure on prices remained even though demand weakened at a faster rate.”