More sad times for the UK high street as off-licence chain Oddbins is the latest retailer to call in administrators.
Guardian correspondent Jasper Jolly reports:
Oddbins, the chain of more than 100 off-licences, has fallen into administration for the second time in a decade, putting 550 jobs at risk.
Duff & Phelps were appointed as administrators, having previously warned staff that job losses were likely as it explored options for the company following a difficult Christmas.
The stores will continue to operate in the short term while the administrators look for a buyer of the company and its assets. Oddbins, which started in 1963, was bought by European Food Brokers (EFB) - owned by Walsall-based entrepreneur Raj Chatha - in 2011 when it previously fell into administration.
The administration covers Wine Cellar Trading Limited, Whittalls Wines Merchants 1 Limited, Whittalls Wines Merchants 2 Limited and EFB Retail Limited, but EFB continues to trade.
Phil Duffy, one of the joint administrators at Duff & Phelps, said:Retailers are undoubtedly feeling the strain. The continued decline in consumer spending, pointing to a squeeze on household finances, combined with rising living and national wages have put increased pressure on retailers’ bottom lines.
UK manufacturing recession a 'distinct possibility': experts react
Howard Archer, chief economic advisor to the EY ITEM Club:A weaker January purchasing managers survey points to the manufacturing sector struggling at the start of 2019 amid a lacklustre domestic economy, a less robust global economic environment and heightened Brexit uncertainties. The survey fuels our belief that GDP growth will likely be limited to 0.2-0.3% quarter-on-quarter in the first quarter of 2019.With this and the continuing Brexit saga, we continue to encourage manufacturers to take positive steps to understand their supply chains, mitigate risks and ensure, to the best of their ability, that financing is available in case conditions deteriorate further.
James Knightley, chief international economist at ING:The trends of UK business hunkering down to protect themselves from disruption is likely to mean that inventory building continues. With auto manufacturers announcing factory closures for April (bringing forward annual retooling) it implies that the manufacturing output numbers will continue to soften over the next few months irrespective of what sort of Brexit agreement is made.
Pound falls after weak manufacturing data
It is down 0.3% against the dollar at $1.3068, and down 0.5% against the euro at €1.1399.
The pound’s loss is the FTSE’s gain, with the benchmark UK index now back above the 7,000 mark. It is currently outperforming its European peers, up 37 points or 0.5% at 7,007.
A weaker pound is often a positive for the FTSE 100 because so many of the firms featured have major overseas earnings.
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UK manufacturers stockpile at record rate ahead of Brexit
Stockpiling hit its highest level since the survey began 27 years ago as firms ramp up preparations for a no-deal Brexit and potential customs hold-ups at borders.
Dobson says:The start of 2019 saw UK manufacturers continue their preparations for Brexit. Stocks of inputs increased at the sharpest pace in the 27-year history, as buying activity was stepped up to mitigate against potential supply-chain disruptions in coming months.
There were also signs that inventories of finished goods were being bolstered to ensure warehouses are well stocked to meet ongoing contractual obligations.
January also saw manufacturing jobs being cut for only the second time since mid-2016 as confidence about the outlook slipped to a 30-month low, often reflecting ongoing concerns about Brexit and signs of a European economic slowdown.
With neither of these headwinds likely to abate in the near-term, there is a clear risk of manufacturing sliding into recession.
'Clear risk of recession' for UK manufacturing
That’s according to IHS Markit, which has just published the UK manufacturing PMI for January.
The headline index fell to 52.8 from 54.2 in December. It was well below expectations of 53.5.
The 50 mark separates expansion from contraction:
- Netherlands: 55.1
- Greece: 53.7
- Austria: 52.7
- Ireland: 52.6
- Spain: 52.4
- France: 51.2
- Germany: 49.7
- Italy: 47.8
However, there appears to be a more deep-rooted malaise setting in, which reflects widespread concerns about the destabilising effect of political uncertainty and the damage to exports from rising trade protectionism.
Eurozone manufacturing growth slows in January
The headline index - which combines output, orders and jobs - was 50.5, down from 51.4 in December and bang in line with expectations. Anything above 50 signals growth.
Output rose, but new work fell at the fastest rate since April 2013 suggesting a knock-on effect to production in the coming weeks.
Though the details what of happens next are still unclear, with Donald Trump claiming he will meet President Xi Jinping soon and reports of a potential mid-February meeting in Beijing for yet more negotiations, the overall tone from the January-ending trade talks was one of cautious optimism. This includes China agreeing to ‘vigorously expand’ its US imports, alongside further discussions about intellectual property theft and technology transfer.
The lack of concrete deal, however, meant the markets were reticent to celebrate anything just yet. A disappointing Caixin manufacturing PMI from China also contributed to the muted atmosphere after the bell, resulting in the most modest of gains as Friday got underway.
European markets rise in early trading
It’s a fairly subdued start though, as investors weigh the negative China manufacturing data against optimism over US/China trade talks.
- FTSE 100: +0.4% at 6,999
- Germany’s DAX: +0.1% at 11,186
- France’s CAC: +0.2% at 5,004
- Italy’s FTSE MIB: +0.4% at 19,817
- Spain’s IBEX: -0.1% at 9,048
- Europe’s STOXX 600: +0.3% at 360
Cost of TSB's IT meltdown rises to £330m
The attempt went badly wrong, locking customers out of their accounts, showing incorrect balances, and even allowing some customers to see the accounts of others.
The bank, owned by Spain’s Sabadell, says that the bill for last year’s IT meltdown has reached £330m, pushing the high street challenger bank to a large loss for the year.
One in three UK firms plan for no-deal relocation
The lobby group says 29% of firms in a survey of 1,200 members had either already moved part of their business or were planning to do so in response to threat of a hard Brexit.
Edwin Morgan, the IoD’s interim director general:
Source: The Guardian
Full story here:We can no more ignore the real consequences of delay and confusion than business leaders can ignore the hard choices that they face in protecting their companies.
Change is a necessary and often positive part of doing business, but the unavoidable disruption and increased trade barriers that no deal would bring are entirely unproductive.
With the headwinds from cooling global growth and the lagged impact of slower credit growth set to intensify, China’s economy is likely to weaken further over the coming months.
The agenda: global manufacturing, US non-farm payrolls
The Chinese manufacturing data has come in below expectations this morning, adding to the picture of a slowdown in the world’s second largest economy.
The headline index on the Caixin manufacturing PMI fell to 48.3 in January, from 49.7 in December, where anything below 50 signals contraction. It was the lowest number in three years, and weaker than the 49.5 predicted by economists.
Later today all eyes will turn to the US non-farm payrolls report for January, which could provide clues about the impact of the government shutdown on the jobs market.
The figures are expected to show that America created 175,000 jobs - down from December’s blistering 301,000.
We’ll also get manufacturing PMIs for the UK, the eurozone and the US. Data firm Markit’s monthly survey of purchasing managers is expected to show that eurozone factories only managed modest growth last month - with a PMI of just 50.5 - barely above stagnation.
That would be worrying, a day after Italy fell into recession.
UK factory growth is expected to have slowed (to 53.5 from 54.2), but still faster than the eurozone.
- 9am GMT: Eurozone manufacturing PMI for January
- 9.30am GMT: UK manufacturing PMI for January
- 10am GMT: Flash estimate of eurozone inflation in January
- 1.30pm GMT: US Non-Farm Payroll for January
- 3pm GMT: US manufacturing PMI for January