Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Despite the tides of gloom lapping the UK economy, business confidence has pushed up this month.
The latest poll of business morale from Lloyds Banking Group shows that British businesses’ confidence in their trading prospects has hit the highest level since 2014, after rising sharply this month.
According to Lloyds, manufacturers’ confidence is the highest in a decade – welcome news for the government as chancellor Rachel Reeves and her team work on the autumn budget.
Retailers’ confidence also increased, to a five-month high, but construction confidence fell to a four-month low.
Interestingly, the Lloyds Business Barometer has found that hiring intentions increased for the fourth month in a row, despite cost pressures.
That indicates many businesses are coping with the £26bn increase in employers’ national insurance announced by Reeves last year, and the latest increase in the minimum wage.
Economic optimism edged down for the first time since April, though, indicating increased jitters about the economic outlook.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, explains:
“This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy. Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies.
“Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months.”
A chart of Lloyds business confidence Photograph: LloydsThe agenda
7.45am BST: French GDP and consumer spending data
1.30pm BST: US trade data
1.30pm BST: US PCE inflation measure for July
3pm BST: University of Michigan US consumer confidence report
Key events
Please turn on JavaScript to use this feature
Dollar on track for 2% fall in August
In the financial markets, the US dollar is on track to record a 2% monthly drop as traders anticipate Donald Trump will soon get his way on interest rate cuts.
The dollar index, which measures the U.S. currency against six major peers, is slightly higher this morning but still course for a 2% decline for the month.
The index is down around 10% this year, hit by anxiety over US economic policy as Trump’s trade wars pushed investors towards alternative assets.
Trump’s attempts to remove Lisa Cook from the Fed board, and his plans for a replacement for chair Jerome Powell, show that the White House is determined to push for lower interest rates.
Deutsche Bank told clients this morning:
Investors remain heavily focused on the Federal Reserve’s independence, and today there’s going to be an emergency hearing about Lisa Cook’s position on the Board of Governors that’s due to start at 10am EST.
So this is going to be critically important for markets, as her removal would give President Trump the opportunity to refashion the Board of Governors in a more dovish direction.
UK companies are also eyeing up more price rises.
In August, the net balance of firms expecting to raise prices over the next year was up four points to 65%. 67% (from 65%) of firms said they would raise prices in the coming year, while those anticipating price reductions fell slightly to 2% (from 4%), Lloyds says.
There’s good news for workers, too, in the latest business barometer.
Wage growth expectations increased by four points, with 38% forecasting average pay increases of 3% or more. Firms expecting to increase wages by 4% rose five points to 23%, while those forecasting 5% or higher also climbed five points to 12%.
That would help employees handle the rise in UK inflation, which hit 3.8% in July. But it might concern the Bank of England, where some policymakers fear that increased earnings could lead to a further rise in prices…
Updated at 02.48 EDT
Businesses across five of the UK’s twelve regions and nations saw a rise in confidence in August, but the increase was not universal.
London, the East of England and the West Midlands saw strong improvements this month. However, firms in Wales were less confident, with a fall of 13 points, Lloyds reports.
ShareUK business confidence rises despite jitters over economy
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Despite the tides of gloom lapping the UK economy, business confidence has pushed up this month.
The latest poll of business morale from Lloyds Banking Group shows that British businesses’ confidence in their trading prospects has hit the highest level since 2014, after rising sharply this month.
According to Lloyds, manufacturers’ confidence is the highest in a decade – welcome news for the government as chancellor Rachel Reeves and her team work on the autumn budget.
Retailers’ confidence also increased, to a five-month high, but construction confidence fell to a four-month low.
Interestingly, the Lloyds Business Barometer has found that hiring intentions increased for the fourth month in a row, despite cost pressures.
That indicates many businesses are coping with the £26bn increase in employers’ national insurance announced by Reeves last year, and the latest increase in the minimum wage.
Economic optimism edged down for the first time since April, though, indicating increased jitters about the economic outlook.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, explains:
“This continued upward trend in business confidence suggests UK firms remain optimistic about their own trading prospects while there is a modest cooling of confidence in the wider UK economy. Firms are focusing on what they can control, with many looking to pursue growth opportunities, including entering new markets and adopting new technologies.
“Wage expectations have seen a notable shift this month, but it remains to be seen whether this signals the start of a sustained trend or a temporary uplift, as they have been broadly stable in recent months.”
A chart of Lloyds business confidence Photograph: LloydsThe agenda
7.45am BST: French GDP and consumer spending data
1.30pm BST: US trade data
1.30pm BST: US PCE inflation measure for July
3pm BST: University of Michigan US consumer confidence report