IMF cuts UK growth forecasts, but eurozone recovery continues – business live

Boom! France’s factories are enjoying their best month since 2011, thanks to a surge in new orders.

That’s according to the latest French PMI report from Markit, just released.

Markit found that manufacturing output accelerated to its fastest rate in 75 months, jumping to 55.4 in July from 54.8 in June.

Service sector growth slowed a little, sending the services PMI down to 55.9 from 56.9.

Any reading over 50 shows growth, so this indicates that the French economy is still growing strongly.

French companies reported that new business picked up strongly this month, creating larger backlogs of work and encouraging them to take on more staff.

Annabel Fiddes, Economist at IHS Markit, explains:

“Steep increases in output and employment were key takeaways from the latest release, with manufacturing firms noting the quickest rise in staff numbers for nearly 17 years.

“Further increases in total new orders and backlogs suggest that companies will continue to ramp up output and add to payrolls going forward, and marks a solid start to the second half of the year.”

Despite cutting its UK and US growth forecasts, the IMF still thinks the global recovery is ‘firming’.

That’s because it revised up its growth expectations for the eurozone to 1.9% this year, up from 1.7% in April.

For China, the IMF expects stronger growth of 6.7% in 2017, up 0.1 percentage point. Japan’s growth forecast this year has also been raised, from 1.2% to 1.3%.

In its latest World Economic Outlook, the Fund says:

Growth has been revised up for Japan and especially the euro area, where positive surprises to activity in late 2016 and early 2017 point to solid momentum.

China’s growth projections have also been revised up, reflecting a strong first quarter of 2017 and expectations of continued fiscal support. Inflation in advanced economies remains subdued and generally below targets; it has also been declining in several emerging economies, such as Brazil, India, and Russia….

Growth projections for 2017 have been revised up for many euro area countries, including France, Germany, Italy, and Spain, where growth for the first quarter of 2017 was generally above expectations. This, together with positive growth revisions for the last quarter of 2016 and high-frequency indicators for the second quarter of 2017, indicate stronger momentum in domestic demand than previously anticipated.

This infographic has more details:

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

A new week brings new concerns over Britain’s economy.

The International Monetary Fund has cut its forecasts for UK growth this year, citing recent evidence that the economy is weakening.

The IMF now expects Britain’s GDP to only expand by 1.7% this year, down from 2% growth forecast in April.

If they’re right, it suggests that Brexit uncertainty may be hurting the UK.

Maurice Obstfeld, the IMF’s economic counsellor, pointed to a marked change in early 2017. He said the UK’s growth forecast had been lowered based on its “tepid performance” so far this year, adding:

“The ultimate impact of Brexit on the United Kingdom remains unclear.”

The IMF still expect the UK to grow by 1.5% in 2018, but said one key risk facing the global economy was that the Brexit talks would end in failure.

But the Fund is rather more optimistic about Europe.

Germany’s growth has been revised up by 0.2 points to 1.8%, France by 0.1 points to 1.5%, while Italy and Spain have both been revised up by 0.5 points to 1.3% and 3.1% respectively.

Here’s our full take:

Also coming up today:

We get a new healthcheck on the eurozone economy this morning, with the latest ‘flash PMI’ surveys from data firm Markit.

They are expected to show that private sector companies in Germany and France continued to grow strongly this month, after posting their fastest growth since 2011 earlier this year.

Royal Bank of Canada say:

The day’s main data release are ‘flash’ PMIs for the euro area, France and Germany. These are the readings for July so will provide an important indication of how the euro area economy has begun Q3.

The June readings pointed to a slight loss of momentum at the end of the second quarter but that was coming off their highest level in six years in April and May and, at 56.4, the average composite reading for the quarter was still pointing to activity picking up from Q1.

The fall between May and June was attributable to the service sector; by contrast the manufacturing PMI remained comfortably above its long-run average. With other indicators of domestic activity remaining robust we see some scope for the services PMI to recover a little this month and expect it to rise to 55.6 with the manufacturing reading remaining unchanged from its recent elevated level at 57.4.

The agenda:

• 8am BST: French manufacturing and service sector PMI for July
• 8.30am BST: German manufacturing and service sector PMI for July
• 9am BST: Eurozone manufacturing and service sector PMI for July
• 2.45pm BST: US manufacturing and service sector PMI for July
• 3pm: UK home sales for June