Back to the UK, where Bank of England deputy governor Nemat Shafik has said that knowing precisely when interest rates will rise is not what really matters. (Britain’s homeowners and businesses may disagree with that.) Shafik, a former deputy managing director of the International Monetary Fund, also insisted that the central bank’s system of “forward guidance” was not failing.
Shafik, known as Minouche, defended the Bank’s failure to give any clearer signal as to when the first rate hike in years will come, and rejected claims that it was failing to give promised advance notice. She told BBC Radio 4’s Today programme:
No, I don’t think that’s the case. Isn’t it better that the Bank of England give the public and the markets a sense of what our best collective judgment is of what is going to happen in the economy than to catch people by surprise?
The consistent message that we have given is that future interest rate rises will be limited and gradual and I think everybody on the monetary policy committee signs up to that guidance and so far that has proven to be right. Even though I understand why people are concerned about the actual date of the first rate rise, what really matters to the economy is the path, and the path will be limited and gradual.”
China to lift IPO freeze by year end
China will lift a freeze on initial public offerings by the end of the year, removing one of its key measures of support for the stock market as equities recover from a $5 trillion rout, Bloomberg reports.
Ronald Wan, Hong Kong-based chief executive officer told the news agency:
There will be short-term damage to sentiment in the market. But the government has to proceed with market reform and the timing for IPOs will be better now than next year as the market seems to have some strength.”
Liam Neeson calls for help for laid-off Michelin workers
Meanwhile, Hollywood star and Ballymena’s most famous son Liam Neeson has called for help for the workers who are going to lose their jobs at the Michelin tyre plant in the North Antrim town, writes Henry McDonald.
The actor expressed outrage today over the 860 redundancies at the factory which were announced earlier this week. “It’s tragic and the fallout will be felt throughout the whole community,” Neeson said on Friday.
The star of ‘Schindler’s List’ and the ‘Taken’ series added:
I am a great believer in the character and worth ethic of my people in the North. I’ve always maintained that our wee corner of the globe is one of the world’s best kept secrets, not least in its potential for developments in all areas of industry.”
Neeson urged the semi-dysfunctional power sharing executive in Belfast alongside Invest Northern Ireland to “get to work now and promote the ‘hell’ out of the province. They have and always will have my full support.”
After the loss earlier this year of 800 jobs at the JTI Gallaghers tobacco plant in Ballymena coupled with Tuesday’s Michelin’s grim announcement the Co. Antrim town is going to need plenty of star-quality support in its quest to bring in new employment.
While manufacturing contracted in the last quarter there are signs that some parts of industry were at least were mounting a comeback after a summer lull. Together with the sharp rebound in October’s PMI, we may yet see some more positive data readings in the remainder of 2015 but the risks, reinforced in yesterday’s Inflation report, from weaker activity in emerging markets are likely to present some headwinds for manufacturers into next year.
Indeed, another disappointing set of trade figures for manufacturing show that these effects are already being felt with a significant fall in goods exports to China over the past three months.”
However, despite the latest improvement the ONS said trade was likely to make a negative contribution to Britain’s economic output in the third quarter.
And while manufacturing was strong in September, a weak start to the third quarter meant that over the quarter as a whole the sector disappointed with a 0.4% decline, and remained in recession.
Ruth Miller, UK economist at Capital Economics, says:
September’s trade and industrial production figures provide further signs that the UK’s economic recovery remained unbalanced in the third quarter…
Looking ahead, the improvement in August’s Markit/CIPS report on manufacturing in October has offered some hope that the sector may now have passed the worst. But it is still early days and we will need to see some more upbeat data before a renaissance in UK manufacturing can be declared. Accordingly, while we expect the overall economic recovery to maintain a solid pace, it is set to remain unbalanced in the near term at least.
UK factory output posts biggest rise since April 2014
Here in the UK, factory output has come in stronger than expected. Manufacturing rose 0.8% in September, the biggest monthly increase since April 2014. City economists had expected a rise of 0.4%.
Overall industrial production, which also includes mining and utilities, fell 0.2% on the month after rising 0.9% in August.
Over the third quarter, industrial output was up 0.2%, down from a 0.7% gain in the second. This was a tad below the 0.3% rise that the Office for National Statistics assumed in its initial estimate of third-quarter GDP growth.
The ONS said the figures will have a negligible impact on the third-quarter GDP figures. The statistics office’s first stab at the numbers showed economic growth slowing to 0.5% between July and September from 0.7% in the previous quarter.
The dollar is rallying again boosted by comments from Atlanta Fed president Dennis Lockhart yesterday. Seen by many as a swing voter at the US central bank, he left the door wide open to a rate rise at the December meeting.
He said at a speech in Bern, Switzerland.
Going into that [October] meeting, I felt a successful outcome would be expectations aligning with the view that ‘liftoff’ at our upcoming December meeting is a possibility, but not a certainty. I am satisfied that was accomplished.”
He reckons the case for what will be the first rate hike in about a decade will continue to strengthen before the Fed’s December meeting.
At this juncture, it’s my assessment that the US economy is likely in an above-potential growth phase, with labor markets continuing to improve, and with an underlying inflationary trend that, if not rapidly moving toward the [Fed’s] objective, is at least not moving away from that objective. I think the case for liftoff will continue to firm up.”