Paris Olympics boosts eurozone economic growth; UK business activity accelerates – business live

Just in: the number of Americans filing new claims for unemployment benefit has risen.

There were 232,000 fresh ‘initial claim’s for jobless suppoer last week, the Bureau of Labour Statistics reports.

That’s an increase of 4,000 from the previous week (which has been revised up to 227,000 to 228,000).

But… it’s still a low number of initial claims in historic terms, suggesting the US labour market is holding up pretty well.

More good news! Business activity across the UK is accelerating this month.

Data firm S&P Global’s latest poll of purchasing managers at UK firms found that activity is rising this month, with “resilient demand” encouraging firms to take on more staff.

Staff hiring is growing at the fastest rate since June 2023, firms say – which is welcome as unemployment rose in the last quarter.

The Flash UK PMI Composite Output Index has risen to 53.4 this month, up from July’s 52.8, which is a four-month high – and further above the 50-point mark showing stagnation.

Firms also reported an easing in cost pressures. Input cost inflation eased to its lowest for just over three-and-a-half years.

This led to another “robust increase in average prices” charged by private sector firms in August, the PMI reports – although the latest rise was among the slowest seen since the start of 2021.

Chris Williamson, chief business economist at S&P Global Market Intelligence, says the data suggests the UK economy is growing – although not as fast as in the first half of this year.

“August is witnessing a welcome combination of stronger economic growth, improved job creation and lower inflation, according to provisional PMI survey data.

Both manufacturing and service sectors are reporting solid output growth and increased job gains as business confidence remains elevated by historical standards.

Although GDP growth looks set to weaken in the third quarter compared to the impressive gains seen in the first half of the year, the PMI is indicative of the economy expanding at a reasonably solid quarterly rate of around 0.3%.

Inflationary pressures have meanwhile moderated further in August, including notably in the service sector, which has been a key area of concern for the Bank of England. “The latest survey data therefore help lower the bar for further interest rate cuts, although the still-elevated nature of inflation in the service sector suggests that policymakers will move cautiously.

France’s economy is growing at its fastest pace since March 2023, as the Olympics Games boosts activity.

France’s services sector is charging ahead, like Léon Marchand in the swimming pool this month, with its fastest growth in 27 months.

But France’s manufacturing sector continues to contract, hit by weak demand, so this month could well be a one-off.

Norman Liebke, Economist at Hamburg Commercial Bank, says:

“Service providers will have benefited from the Olympic Games. The HCOB Flash PMI for French services activity jumped to 55.0, its highest level since the second quarter of 2022 when GDP growth reached 0.4%.

The one-off nature of this boost is evident in the worsening employment situation, weaker output expectations and declining backlogs of work.

The Paris Olympics has helped business activity in the eurozone to pick up this month.

Output growth hit a three-month high in August, according to the latest poll of purchasing managers across the euro area. This was driven by a pick-up in the service sector, while manufacturing continued to lag behind.

The HCOB Flash Eurozone Composite PMI Output Index has risen to 51.2 for August, up from July’s 50.2. Any reading over 50 shows growth.

Here’s the details:

• HCOB Flash Eurozone Services PMI Business Activity Index at 53.3 (July: 51.9). 4-month high.

• HCOB Flash Eurozone Manufacturing PMI Output Index at 45.7 (July: 45.6). 2-month high.

• HCOB Flash Eurozone Manufacturing PMI at 45.6 (July: 45.8). 8-month low.

A key factor behind the stronger increase in eurozone business activity in August was a renewed expansion in France, where output rose to the largest extent in almost a year-and-a-half.

Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said:

At first glance, this looks like a pleasant surprise: activity in the Eurozone picked up in August. But a closer look at the numbers reveals that the underlying fundamentals might be shakier than they appear.

The boost largely comes from a surge in services activity in France, with the Business Activity Index jumping by almost five points, likely linked to the buzz surrounding the Olympic Games in Paris. It’s doubtful this momentum will carry over into the coming months, however. Meanwhile, the overall pace of growth in the services sector has slowed down in Germany, and the eurozone’s manufacturing sector remains in rapid decline.

It’s a tale of two worlds. The manufacturing sector remains mired in recession, while the services sector still appears to be growing at a decent clip

Britain’s Bank of Mum and Dad has been busy helping first-time buyers onto the property ladder – but some customers get more help than others.

New research from Zoopla shows that sons, on average, receive £13k more from their parents towards their first home than daughters.

The poll, of 1,013 people who purchased their first home in the past five years, found that nearly two-thirds of people received financial help from family. This increased to more than three-quarters of homeowners under the age of 30.

The average amount of financial support received was £58,129 (roughly in line with the typical UK first-time buyer deposit of £60,100); daughters received an average of £51,671 towards their first property, sons got an average of £65,004.

Over in North America, there are fears of supply chain chaos after Canadian railway unions launched a walkout.

Canadian National Rail (CN) and Canadian Pacific Kansas City (CPKC) began an unprecedented lockout of nearly 9,000 workers on Thursday morning after tense negotiations failed to produce a deal.

A pause to freight traffic will have cascading effects on Canada and the US, my colleague Leyland Cecco explains.

According to the Railway Association of Canada, affected rail carries more than C$1bn ($740,000) worth of goods each day. Nearly half the aviation fuel used at Toronto’s Pearson airport, Canada’s busiest air terminal, arrives by rail. More than 32,000 commuters in Montreal, Vancouver and Toronto rely on the rail network. A strike would also hit the mining, agriculture and retail industries.

The federal labour minister, Steven MacKinnon, said on Wednesday night that he had completed meetings with the companies and the Teamsters union. He called for urgency at the negotiating table and for a deal to be done.

Over in the US, Starbucks’ incoming CEO, Brian Niccol, is facing environmental criticisms following the company’s offer for him to commute from his home in Newport Beach, California, to its headquarters in Seattle via a private jet instead of relocating.

Following reports of Niccol’s super commute, people were quick to point out the apparent hypocrisy in the use of private jets in the context of the company’s sustainability efforts, including its ban on plastic straws.

One user wrote on X:

“The new Starbucks CEO is ‘supercommuting’ 1,000 miles to Seattle on a private jet to work, so don’t be too harsh on that waitress who gave you a plastic straw when you didn’t want one.”

Another person wrote,

“Absolutely wild that it cost $85 million in cash/stock to pry this guy from Chipotle and then they’ll just let him thrash the environment to commute 1000 miles 3 times a week on a corporate jet instead of having him move to the PNW [Pacific north-west].

PwC is preparing to face the music in China over its auditing of collapsed property developer Evergrande.

The Financial Times reports that PwC China has told clients it expects Chinese authorities to hit it with a six-month business ban, which could start as early as next month.

This would be the toughest ever action by Chinese regulators against a Big Four firm.

Back in March, China’s securities watchdog fined Evergrande for inflating its revenue by nearly $80bn over two years before it defaulted on its debt.

Evergrande was forced into liquidation in late January after efforts to restructure its foreign debt failed, following pressure from Beijing for property firms to rein in excessive borrowing.

A six-month ban could be very disruptive for PwC’s China arm, the FT says:

PwC China was the country’s largest accounting firm by revenue in 2022, bringing in Rmb7.9bn ($1.1bn), according to government data.

The ban would prevent PwC China from signing off on financial results and initial public offerings and from conducting other regulated activities, multiple clients told the Financial Times. The firm has assured clients that staff will keep working during the suspension and will be able to certify the audit opinions on their 2024 annual reports once the ban is lifted in March.

More here.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The growing prospect of a US interest rate cut next month is buffeting the dollar, sending the pound up to its highest level in over a year.

The dollar lost more ground last night after the minutes of the Federal Reserve’s July meeting were released. They showed that the “vast majority” of policymakers felt it would probably be appropriate to cut rates in September, if economic data continued to come in as expected.

That knocked the dollar index – which tracks the greenback against major rivals including the euro, yen and sterling – to its lowest since last December.

That drove the pound up to $1.31 last night – the highest since July 2023.

Hopes of a September rate cut were further boosted yesterday by data showing that 818,000 fewer jobs had been created across America than previously thought.

Those revisions add to concerns that the economy has been slowing.

The financial markets indicate there’s a 66% chance that the Fed begins with a quarter-point cut to borrowing costs in September, and a 34% chance of a bumper half-point cut.

Traders are also pricing in a full percentage point cut in US rates by the end of the year – implying a half-point cut at one of the Fed’s three remaining meetings this year.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:

Because a jumbo rate cut wouldn’t arrive unless there is a deeper economic and financial trouble, the market pricing of the moment is unsustainable for either the US dollar – which has gone too low with the expectation of a 100bp cut, or the stock markets – which have gone too high with the same expectation disregarding the fact that economic trouble is never good for profitability.

Central bankers are gathering in Jackson Hole, Wyoming, today for a closely-watched economic symposium. Federal Reserve chair Jerome Powell speaks tomorrow, and is expected to give some guidance about how the Fed may act in the months ahead.

The agenda

• 9am BST: Eurozone flash PMI report for August

• 9.30am BST: UK flash PMI report for August

• 11am BST: CBI industrial trends report

• 12.30pm BST: ECB monetary policy committee meeting minutes are published

• 1.30pm BST: US weekly jobless report