Closing summary
Total orders at UK factories “collapsed” this month to their lowest level since the height of the Covid-19 pandemic in 2020, according to an industry survey.
Providing further evidence of the gloom descending on the economy in recent months, the CBI’s latest industrial trends survey shows that manufacturers suffered the worst slump in orders since November 2020.
Export orders dived along with commissions from UK customers to leave a balance of firms that said total orders were up or down at -40, from -19 in November.
Ben Jones, CBI lead economist, said manufacturers are facing a combination of weakening external demand on the one hand, amid political instability in some key European markets and uncertainty over US trade policy.
Financial markets are waiting for the US Federal Reserve’s interest rate decision at 7pm UK time. The US central bank is widely expected to cut borrowing costs by a quarter point.
Trading is lacklustre ahead of the decision. In particular, investors will be watching for any signals on where rates will go next year when Fed chair Jerome Powell holds a press conference half an hour later.
UK inflation has risen to its highest level in eight months, adding to pressure on the Bank of England to keep interest rates unchanged on Thursday despite a slowdown in the British economy.
The consumer prices index rose by 2.6% last month from 2.3% in October, driven by the rising cost of petrol, groceries and an increase in tobacco duty in the budget.
The reading from the Office for National Statistics, which matched City economists’ forecasts, showed the headline rate rising further above the Bank’s 2% target for a second consecutive month.
The ONS chief economist, Grant Fitzner, said:
Inflation rose again this month as prices of motor fuel and clothing increased this year but fell a year ago. This was offset partially by air fares, which traditionally dip at this time of year, but had their largest drop in November since records began.
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Thank you for reading. We’ll be back tomorrow. Bye! – JK
Updated
Wall Street opens flat ahead of Fed rate decision
Wall Street has opened broadly flat, as markets wait for the US Federal Reserve’s final interest rate decision of the year – most likely a quarter point cut – and clues on whether policymakers may slow down rate reductions next year, with the economy resilient.
Over here, the UK’s FTSE 100 index is 14 points ahead at 8,210, a 0.2% gain, while the Italian market has also edged up by 0.2% and the German and French indices are flat to slightly higher.
ING economist Frantisek Taborsky said:
We expect the Federal Reserve to deliver a consensus 25bp cut today, but also to scale back on guidance for rate cuts next year. We think this will allow the dollar to stay firm into year-end as wide differentials remain highly favourable for the greenback. UK inflation rose as expected in November, which only changes the Bank of England’s picture slightly.
