British factory output has declined for the first time since the first coronavirus lockdown

By Suzanne Evans, Director, Political Insight

British factory output has declined for the first time since the first coronavirus lockdown in May 2020, according to the S&P Global's Purchasing Managers' Index PMI, which fell to 52.8, the lowest since February 2021, and down from June's 53.7. The latest data also indicated that demand from clients has softened, meaning cost inflation “eased considerably” against the previous month, and price rises are currently the slowest they have been since January. Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Although not yet in decline, with pent-up demand for vehicles and consumer-oriented services such as travel and tourism helping to sustain growth in July, the PMI is now at a level consistent with just 0.2% GDP growth”. He added: “Forward-looking indicators suggest worse is to come. Manufacturing order books are now deteriorating for the first time in one-and-a-half years as inflows of new work are insufficient to keep workforces busy, which is usually a precursor to output and jobs being cut in coming months”. The monthly survey of business executives and private companies considers any score above 50 to mark growth.
 
The Platinum Jubilee failed to prevent a fall in retail sales in June, The Office for National Statistics (ONS) says. Overall, retail sales volumes dipped 0.1%, after a 1.2% rise in food and drink sales failed to offset a slide in clothing. Non-food stores, such as clothing and household goods, were hit particularly hard, the ONS says. They slumped by 4.7% and 3.7% respectively. Automotive fuel sales volumes also fell 4.3% amid record high prices. Commenting, Helen Dickinson, CEO of the British Retail Consortium(BRC), said: "The cost-of-living crunch caused by record inflation continues to damage consumer confidence and stifle household spending. Discretionary spending and particularly bigger purchases were put off as consumers become increasingly concerned about the future”.
 
The Co-op is axing 400 jobs at its head office in Manchester, after announcing that supply chain chaos, higher staff wages, and record food prices have slashed its annual profits in half. Like-for-like sales, excluding fuel and VAT, fell 6.4% in the 13 weeks to 1 May, The Grocer magazine says, leading to a fall in underlying profit of 57% to just £100m in 2021. Although total revenues were up 2.6% on the same quarter last year, reaching £4.6bn, helped by a 54% jump in fuel sales as prices soared, tough trading conditions in which the Co-op is facing inflation and "increasingly subdued consumer confidence," means the group will bring forward changes planned for 2023. "These changes, designed to simplify our approach to business, will sadly mean a number of colleagues in central functions will leave the business," a statement read. It added: "There are no changes to customer-facing roles in our food stores and funeral homes and, where possible, we will reduce roles by not filling vacancies and through preferences to exit”. The Co-op employs more than 63,000 people nationwide in its stores, funeral service and insurance sectors.
 
A summer strike by British Airways workers at Heathrow Airport has been called off following a new pay offer by the airline. The GMB union said on Friday that 75% of the 700 staff it was representing backed the pay deal, which consists of an 8% pay rise, a one-off bonus and the reinstatement of extra pay for irregular shifts. Both GMB and Unite say that in total, the deal is worth 13%. BA’s owner, IAG, cut pay by 10% during the Covid pandemic and had refused to reinstate it.
 
The Competition and Markets Authority has cleared the broadcasting joint venture between BT and Warner Bros. The FTSE 100 telecoms giant’s agreement with the US-based media giant is a 50-50 joint venture that will provide a "premium sport offering" for the UK and Ireland.
 
Sky News says it has learnt that Hilco Capital is among a small number of parties considering buying Paperchase. Hilco has at some point owned some of the best-known brands in British retailing, including Habitat and HMV. It currently owns DIY chain Homebase, and recently bought modern vintage brand Cath Kidston. Permira Credit,  which has controlled the chain for the last 18 months after it became one of the numerous covid lockdown retail casualties, appointed advisers to oversee a sale earlier this year following unsolicited enquiries from potential buyers, following an improvement in its financial and operating performance. This was aided by Permira’s investment in online sales, executive recruitment, and new shop openings. Paperchase also plans to expand into seven European countries through an Amazon Marketplace offering. At the time of its brush with insolvency, Paperchase employed nearly 1300 people, and traded from more than 125 sites across the UK, including concessions at House of Fraser, Selfridges and a number of Next stores. Its current physical retail estate comprises 96 standalone shops and 32 concessions. PricewaterhouseCoopers is handling the sale. Hilco and Permira Credit declined to comment on Friday.
 
The Guardian says the collapse in the value of the pound has led the global super-rich to buy up 61 luxury London properties each worth more than £10m in the first six months of 2022, the highest number in a decade. The total value of £10m-plus homes changing hands so far this year has topped £1bn as international buyers continue to be attracted to London, “despite Brexit,” the newspaper says. It understands the sales include a 12-bedroom mansion on Belgrave Square that sold for more than £90m. Other ultra-luxury homes sold so far this year, according to Land Registry filings analysed by property service LonRes, include a mansion on the Boltons in Chelsea that sold for £42m, a King’s Road pad for £40m and Mayfair home near Hyde Park for £40m. Anthony Payne, managing director of LonRes, said the drop in the value of the pound, which has fallen by 11% since the start of the year to $1.20, had attracted overseas buyers looking for “a deal”.
 
The German government has agreed a bailout for energy firm Uniper by taking a 30% stake in it, as reported by Reuters last week.  
 
Evergrande, the world’s most indebted property developer, is expected to deliver a preliminary restructuring plan this week, following the resignation of its CEO and CFO after an internal probe found they misused around $2bn (£1.7bn) in loans. The Chinese firm has more than $300bn (£250bn) in liabilities and defaulted on its debts late last year, the BBC reports. A $2.6bn deal to sell a majority stake in the unit to a rival developer fell through in October, and Evergrande has been struggling to make debt interest payments. Its shares have fallen by more than 75% over the last year in Hong Kong and have been suspended from trading for months. China is facing a property crisis; home sales in China have fallen for 11 consecutive months, official data shows, the longest slump since China created a private property market in the late 1990s, and an estimated trillion dollars has been wiped off the value of the sector. This has led several Chinese developers to halt construction of homes that had already been sold, because of concerns over cash flow, but now home buyers are threatening to stop paying their mortgages until the work restarts. The potential fallout from developers such as Evergrande collapsing has led some analysts to suggest that Beijing may step in. Financial information provider Redd cites anonymous sources this morning as saying that China plans to start a real estate fund worth up to 300bn yuan (£37bn) to support over a dozen property developers, including Evergrande.

Why Media is an award-winning design, marketing, digital communications and PR agency offering tailored solutions to companies on a global scale. We have extensive experience in delivering design and marketing services to a spectrum of companies including professional services, property companies, financial institutions and shopping centres. We have offices in London UK, Hertford UK, Finestrat ES & Brescia IT.

Marketing Contact

Name:  Claire White
E-Mail:  claire@whymedia.com
Telephone:  01992 586 507