UK manufacturing sector returns to growth despite budget uncertainty<\/p>\n
Happier news: The UK\u2019s factory sector returned to growth last month for the first time in over a year.<\/p>\n
The latest poll of UK purchasing managers across manufacturers shows that output across the sector rose last month, and that business optimism hit a nine-month high.<\/p>\n
This pushed up the S&P Global UK Manufacturing Purchasing Managers\u2019 Index (PMI) to a 14-month high of 50.2 in November, up from 49.7 in October. This is the first time since September 2024 that the PMI, which tracks activity in the sector, has come in above the 50-point mark that shows stagnation.<\/p>\n
Rob Dobson, director at S&P Global Market Intelligence, says:<\/p>\n
The numbers are especially encouraging as this improvement occurred despite November seeing elevated levels of business uncertainty, and in some cases an element of gloom, ahead of the Autumn Budget. \u201cThe lifting of this uncertainty caused by the long lead-in to the Chancellor\u2019s budget announcement should hopefully provide a boost in December, but it will be interesting to see the extent to which business might react to the absence of any significant growth-promoting measures. After all, despite the improvement in the performance of the manufacturing sector, any growth is still worryingly weak.<\/p>\n
Rising competitive pressures and slower cost inflation meanwhile led to factory gate prices being cut for the first time in over two years. This combination of soft industrial performance and subsiding price pressures will add to the shift in policy debate away from inflation fears towards supporting economic growth.\u201d<\/p>\n
Share<\/a><\/p>\n Updated at\u00a005.13 EST<\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n Airbus shares down 6% on fuselage panel problem<\/p>\n Airbus\u2019s shares are on track for their worst day in eight months, as it confirms that it has (as flagged earlier<\/a>) found a problem with fuselage panels on its A320 planes.<\/p>\n Airbus has confirmed \u201ca quality issue affecting a limited number of A320 metal panels\u201d, Reuters reports.<\/p>\n The company says it is taking \u201ca conservative approach\u201d and inspecting all aircraft potentially impacted, even though only a portion of them will need further action to be taken.<\/p>\n Shares in Airbus are currently down 6.5%, which would be their worst biggest fall since April.<\/p>\n Share<\/a><\/p>\n If the fall in cryptocurrency prices continues, it will cause problems for the new wave of bitcoin treasury companies who have been accumulating crypto assets.<\/p>\n The most notable bitcoin treasury company is Strategy (formerly Microstrategy) which has been bullishly acquiring Bitcoin using capital raised through equity and debt offerings.<\/p>\n Strategy\u2019s plan drove its share price sharply higher in 2024.<\/p>\n But the share price has been sliding this year, down 40% during 2025, and has been under pressure since bitcoin began slipping from its record high of $125,000 in early October, to back below $90,000 today.<\/p>\n Bloomberg reports that Strategy\u2019s CEO told a podcast<\/a> on Friday that the Bitcoin-buyer could sell the token if its mNAV \u2014 a ratio of enterprise value to Bitcoin holdings \u2014 turned negative.<\/p>\n \u201cWe can sell Bitcoin and we would sell Bitcoin if we needed to fund our dividend payments below 1x mNAV,\u201d said Phong Le, adding that it would be a last resort.<\/p>\n Share<\/a><\/p>\n Britain\u2019s financial regulator is laying out plans to clean up the environmental, social and governance (ESG) ratings sector.<\/p>\n The Financial Conduct Authority, which is being given responsibility for ESG ratings, says it wants to tackle conflict-of-interest concerns and improve transparency.<\/p>\n It is explaining that it wishes to bring in clear, proportionate rules for transparency and governance, with proposals which will focus on four areas:<\/p>\n Increased transparency \u2013 allowing easier comparisons for the benefit of both those who use ratings and those who are rated.<\/p>\n Improved governance, systems and controls \u2013 to ensure clear decision-making and strong oversight and quality assurance.<\/p>\n Identification and management of conflicts of interest.<\/p>\n Setting clear expectations for stakeholder engagement and complaints handling<\/p>\n Share<\/a><\/p>\n Airbus\u2019s technical glitches may not be over, once it has finished updating the software on its A320 fleet.<\/p>\n Reuters are reporting that the aerospace manufacturer has discovered an industrial quality issue affecting fuselage panels of several dozen A320-family aircraft, citing industry sources.<\/p>\n The suspected production flaw is delaying some deliveries but there are no immediate indications that it has reached aircraft in service, the sources said, asking not to be named.<\/p>\n Share<\/a>Markets fall in ‘downbeat’ start to the week<\/p>\n A risk-off mood is gripping the markets at the start of December, knocking shares and crypto assets.<\/p>\n Most European markets are in the red, with Germany\u2019s DAX down 1.2% and France\u2019s CAC 40 losing 0.55%.<\/p>\n The UK\u2019s FTSE 100 is less affected, down just 0.13%, with shares in mining companies rising.<\/p>\n The bitcoin price has fallen 5%, taking the largest cryptocoin down to around $86,650.<\/p>\n Joshua Mahony, chief market analyst at Scope Markets, says it\u2019s a \u201clargely downbeat start to the week\u201d, adding:<\/p>\n Crucially, crypto has provided one area of particular concern, with the continued flush lower bringing financial stress for many that will also have positions across a raft of traditional assets.<\/p>\n The main piece of news for markets has come from overnight comments out of the BoJ, with Governor Ueda noting that the group will weigh up the pros and cons of a rate hike in December. While this provided a rare rise for the yen, it also saw yields spike with the 2-year hitting the highest level since 2008.<\/p>\n With a huge amount of Japanese funds invested abroad off the back of cheap local borrowing, the continued rise in Japanese bonds does raise risk of liquidity returning home to the detriment of international financial asset prices.<\/p>\n Share<\/a><\/p>\n The Bank of England has also reported that consumer credit growth slowed in October.<\/p>\n Net borrowing of consumer credit by individuals decreased for the second consecutive month, to \u00a31.1bn in October , down from \u00a31.4bn in September.<\/p>\n The Bank adds:<\/p>\n Within this, net borrowing through credit cards slightly decreased, to \u00a30.6bn from \u00a30.7bn. Net borrowing through other forms of consumer credit was \u00a30.5nb in October, down from \u00a30.7bn in September.<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.28 EST<\/p>\n UK mortgage approvals dip<\/p>\n Britain\u2019s property sector did not shrug off budget uncertainty as well as the factory sector, it appears.<\/p>\n New Bank of England data shows that mortgage demand cooled in October.<\/p>\n There was a 600 drop in net mortgage approvals for house purchase in October, to around 65,000, the BoE reports. Approvals for remortgaging fell by 3,600 to 33,100, the lowest since February 2025.<\/p>\n Net borrowing of mortgage debt by individuals fell back to \u00a34.3bn in October, after a rise to \u00a35.2bn in September.<\/p>\n A chart showing UK mortgage approvals Photograph: Bank of England<\/p>\n The BoE also reports that the \u2018effective\u2019 interest rate \u2013 the actual interest paid \u2013 on newly drawn mortgages dipped to 4.17% in October, down from 4.19% in September. That\u2019s the lowest since January 2023.<\/p>\n This morning\u2019s report also shows that UK companies paid down some debts in October.<\/p>\n Private non-financial corporations repaid, on net, \u00a34.8bn of finance during the month, the highest level of net repayments since October 2023.<\/p>\n Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK, says:<\/p>\n \u201cThe drop in consumer credit growth, mortgage approvals and net finance raised by private corporations suggests that households and firms were easing back on borrowing and major transactions ahead of last week\u2019s budget. This will probably have been even worse in November as speculation reached fever pitch, but given the lack of any significant tax increases next year activity may bounce back in December and into next year.<\/p>\n \u201cThe drop in consumer credit growth to \u00a31.1bn, down from \u00a31.4bn in September and well below the \u00a31.5bn six-month average was mainly driven by a drop in other loans, which would be consistent with households holding off from making major purchases ahead of the budget. However, the smaller increase in households saving balance suggests they weren\u2019t rushing to hoard cash.<\/p>\n \u201cWhat\u2019s more, the drop in mortgage approvals to 65,018 is consistent with the recent weakness in house prices reported in a number of surveys. Now that there is some certainty around property taxes and interest rates are likely to be cut again in December, the housing market should pick up. But given the budget will boost demand slightly next rather than subtracting from it, the Bank of England is unlikely to cut rates significantly further or faster than priced in.<\/p>\n Share<\/a>UK manufacturing sector returns to growth despite budget uncertainty<\/p>\n Happier news: The UK\u2019s factory sector returned to growth last month for the first time in over a year.<\/p>\n The latest poll of UK purchasing managers across manufacturers shows that output across the sector rose last month, and that business optimism hit a nine-month high.<\/p>\n This pushed up the S&P Global UK Manufacturing Purchasing Managers\u2019 Index (PMI) to a 14-month high of 50.2 in November, up from 49.7 in October. This is the first time since September 2024 that the PMI, which tracks activity in the sector, has come in above the 50-point mark that shows stagnation.<\/p>\n Rob Dobson, director at S&P Global Market Intelligence, says:<\/p>\n The numbers are especially encouraging as this improvement occurred despite November seeing elevated levels of business uncertainty, and in some cases an element of gloom, ahead of the Autumn Budget. \u201cThe lifting of this uncertainty caused by the long lead-in to the Chancellor\u2019s budget announcement should hopefully provide a boost in December, but it will be interesting to see the extent to which business might react to the absence of any significant growth-promoting measures. After all, despite the improvement in the performance of the manufacturing sector, any growth is still worryingly weak.<\/p>\n Rising competitive pressures and slower cost inflation meanwhile led to factory gate prices being cut for the first time in over two years. This combination of soft industrial performance and subsiding price pressures will add to the shift in policy debate away from inflation fears towards supporting economic growth.\u201d<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.13 EST<\/p>\n Manufacturing activity across the eurozone has slipped back into contraction territory last month, as demand weakened and firms cut staff.<\/p>\n The HCOB Eurozone Manufacturing Purchasing Managers\u2019 Index (PMI), compiled by S&P Global, fell to 49.6 in November from 50.0 in October. That\u2019s a five-month low, and shows a small contraction.<\/p>\n Share<\/a>Most Airbus A320 planes have received crucial software update<\/p>\n Airbus staff have been working hard over the weekend to fix a software problem that affected thousands of its planes.<\/p>\n The glitch, revealed late on Friday, required an urgent system update on Airbus\u2019s most widely-flown jet to ensure safe use of flight inputs.<\/p>\n And this morning, Airbus said the vast majority of around 6,000 A320-family aircraft have received the necessary modification, with fewer than 100 still to be fixed.<\/p>\n UK budget airline easyJet told the City this morning that it had completed the required software updates on all operational aircraft requiring the update over the weekend, and maintained its flying programme during the operation.<\/p>\n WizzAir also carried out the mandatory maintenance with zero flight cancellations, having identified 83 operational aircraft within its fleet which required immediate software amendment.<\/p>\n Share<\/a>UK borrowing costs inch up a little<\/p>\n There\u2019s a small increase in UK government borrowing costs this morning, as investors digest the row over Rachel Reeves\u2019s comments in the run-up to the budget.<\/p>\n UK gilt prices have dropped slightly this morning, which nudges up the yield, or interest rate, on the bonds to the highest levels since Budget Day last Wednesday.<\/p>\n It\u2019s a small move, though, and broadly in line with other bond market moves.<\/p>\n The yield, or interest rate, on UK 10-year gilts is up 2.6 basis points (0.026 percentage points) to 4.475% this morning. US 10-year bonds, as a comparison, are up 2.3 basis points.<\/p>\n UK 30-year gilt yields are up 4 basis points, again slightly more than the US equivalent.<\/p>\n As well as Reeves\u2019s denial that she lied to the public in the buildup to last week\u2019s budget<\/a>, traders will also be watching a speech from prime minister Keir Starmet later today, where he\u2019ll outline plans for a multiyear economic plan based around deregulation, further welfare reform and closer European ties.<\/p>\n Share<\/a><\/p>\n Updated at\u00a004.40 EST<\/p>\n The pound is weakening a little this morning.<\/p>\n Sterling has lost 0.2% against the euro, to \u20ac1.138. Against the dollar, it has lost almost a third of a cent to $1.321.<\/p>\n Share<\/a><\/p>\n Alexander Wheeler, analyst at RBC, had correctly predicted the market reaction to the collapse of the \u00a35.3bn infrastructure merger, telling clients:<\/p>\n HICL and TRIG have announced the proposed combination of the two funds will not be pursued following broad engagement with HICL shareholders which means it no longer expects the transaction to achieve sufficient shareholder approval.<\/p>\n We think a larger, higher-return combined vehicle had merits but the pricing of the deal on a NAV-NAV basis despite a c.11% delta in the funds\u2019 share price discounts to NAVs had been a key focus for HICL shareholders.<\/p>\n We would expect this announcement to be positive for HICL shares and negative for TRIG shares this morning.<\/p>\n Share<\/a><\/p>\n The stock market is open, and investors are giving their verdict on the collapse of the HICL\/Trig merger.<\/p>\n Shareas in HICL have jumped 4.2%, putting them on the top of the FTSE<\/a> 250 index of medium-sized companies.<\/p>\n But Trig are the worst-performing FTSE 250 member \u2013 its shares are down 4.9%.<\/p>\n Share<\/a>Oil price up 2% after Opec+ decision and Ukraine attacks<\/p>\n The oil price has jumped this morning, after the Opec+ cartel agreed to leave output unchanged and Ukraine attacked two Russian \u2018shadow fleet\u2019 tankers.<\/p>\n Brent crude is up around 2% this morning, hitting $63.82 per barrel for the first time since 20 November.<\/p>\n The rise comes after Opec+ decided to stick with their existing plans to pause production increases during the first quarter of 2026, amid growing signs of a glut in global oil markets.<\/p>\n Ipek Ozkardeskaya, senior analyst at Swissquote, explains:<\/p>\n US crude is up more than 2% this morning as OPEC reiterated yesterday that they want to stabilise oil prices into next year, implying tighter control of output to address the supply glut that has weighed on prices \u2013 except during brief periods of geopolitical tension.<\/p>\n And even those tensions haven\u2019t been enough lately to bring buyers back, which shows how much oil is currently sloshing around the planet. As discussed in previous reports, OPEC alone can\u2019t reverse the broader negative price dynamic, but it can help put a floor under the latest selloff.<\/p>\n The attack by Ukrainian naval drones on two sanctioned tankers in the Black Sea could also indicate that supplies from Russia will be lower than expected, especially as the Caspian Pipeline Consortium, which handles more than 1% of global oil, halted operations last weekend after a mooring at Russia\u2019s Black Sea terminal was significantly damaged by a Ukrainian naval drone attack.<\/p>\n Share<\/a><\/p>\n China\u2019s factory activity unexpectedly contracted last month, new data today shows, with demand remaining soft.<\/p>\n The RatingDog China General Manufacturing PMI, conducted by S&P Global, dropped to 49.9 in November, below analysts\u2019 expectations of 50.5. That suggests a very small dip in activity.<\/p>\n \u201cManufacturing production growth came to a halt as new orders nearly stalled in November,\u201d S&P Global and RatingDog said in a statement.<\/p>\n Yao Yu, founder of financial technology company RatingDog, added:<\/p>\n \u201cManufacturers reduced their workforce and purchasing volume, and became more cautious in inventory management.\u201d<\/p>\n Share<\/a>\u00a35.3bn infrastructure merger collapses after investor revolt<\/p>\n Just in: A deal to create the largest listed UK infrastructure investment company has collapsed.<\/p>\n The propsed combination of two UK infrastructure investment companies, HICL Infrastructure and the Renewables Infrastructure Group Limited (TRIG), would have created a new investment trust worth \u00a35.3bn. However, it has failed to win enough support following a revolt by investors in HICL, which had proposed the merger with fellow FTSE<\/a> 250 member, TRIG.<\/p>\n In a statement this morning, the two companies say the proposed combination will not proceed, adding:<\/p>\n Both Boards remain convinced of the strategic rationale for the combination. However, following broad engagement with shareholders, the HICL Board determined that it cannot progress the transaction without a substantial majority of support from its own investors.<\/p>\n HICL\u2019s investments are focused on infrastructure in hospitals, schools and transport, while Trig invests renewable energy sources such as wind farms, solar and battery plants.<\/p>\n A group of HICL investors had opposed the deal, claiming it had been priced and structured to favour Trig.<\/p>\n Trig\u2019s board say they regret that investors won\u2019t get to vote on the deal.<\/p>\n Richard Morse, chair of TRIG, says:<\/p>\n \u201cOur focus now returns to delivering TRIG\u2019s attractive standalone strategy. TRIG is a well-established platform with high quality assets, a competitive pipeline of opportunities, and deep renewables and energy storage expertise.<\/p>\n We are uniquely placed to capitalise on the demand growth for low carbon, reliable power and to capture the commercial opportunities as economies across the UK and Europe electrify and decarbonise. Doing so will allow us to deliver sustainable value and growth for our shareholders, with whom we will continue to engage on the path ahead.\u201d<\/p>\n Share<\/a><\/p>\n Updated at\u00a002.33 EST<\/p>\n Introduction: UK economic growth forecast to slow next year as unemployment rises<\/p>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n