Weak UK Manufacturing; Elan, Miners, BA Drop

123jump.com Staff
01 Aug, 2008
New York City

UK manufacturing index in July dropped to a decade low as domestic orders fell the most in nine years. Separately, corporate insolvencies rose 15% from a year ago in the second quarter. British Airways first quarter plummeted 90% to

[R]1:00PM New York, 6:00PM London - U.K manufacturing falls to a decade low in July. Retailer Kingfisher sold its Italian unit for 560 million euros to Grupo Adeco.[/R]

Market Sentiment

In London trading FTSE 100 fell 1.06% or 57.2 at 5,354.70.

Of the 102 FTSE 100 stocks 38 rose, 62 declined, and 2 were unchanged. Kingfisher led advancers in the index shares with a rise of 4.90% after the retailer agreed to sell its Castorama Italy unit to Groupe Adeo SA for 560 million euros in cash.

UK Manufacturing Slumps to Decade-Low in July

The Chartered Institute of Purchasing Supply reported on its Web site today that according to the latest CIPS/Markit Purchasing Managers'' Index for UK manufacturing, activity in the sector sank the lowest in a decade to 44.3 in July.

Also the level of domestic orders fell the most in nine years at 40.5 from 43.7 a month earlier on the current economic difficulties and deteriorating conditions in the housing market.

The volume of uncompleted work fell to a new record low, with the backlog of work shrinking to 39.9 in June.

However, the output index rose fractionally from the nine-year low of 43.6 in June to reach 43.8 in the month under review. Supplier lead times and shortages of raw materials disturbed production schedules.

Input prices increased to 82.4 from 82.1 a month ago as high as high price of oil boosted chemical, energy, plastic and transport costs.

Consequently staff levels fell to 43.3 and the employment index registered 46.2.

Corporate Insolvency’s Rise 15%

The Financial Times reported on its Web site that the number of insolvent UK companies in the second quarter rose 15% from a year ago due to the prevailing turmoil on the credit markets.

Statistics from the Insolvency Service show that in the period under review there were 3,560 compulsory liquidations and creditor voluntary liquidations in England and Wales.

U.S. Unemployment Rate Rises 5.7%

The US Department of Labor reported on its Web site today that the unemployment rate increased to 5.7% and nonfarm payroll employment fell by 51,000 in July matching the declines in June. Service sector shed job for the first time this year and only government added net jobs in the month.

Over the past 12 months, the number of unemployed persons has increased by 1.6 million, and the unemployment rate has risen by 1.0 percentage point.

Also among the unemployed, the number of reentrants to the labor force in July rose by 207,000 to 2.7 million and the number of unemployed persons who had lost their last job was about unchanged over the month at 4.4 million.

Gainers & Losers

Kingfisher led advancers in the FTSE 100 index shares with a rise of 4.90% followed by increases in Shire Plc of 4.33%, in HBOS of 4.04%, in Friends Provident of 2.37%, in BAE Systems of 2.22%.

Kingfisher rose after the company agreed to sell its Castorama Italy unit to Groupe Adeo SA for 560 million euros in cash.

Other retailers rose. Marks & Spencer increased 1.84%, Next Plc gained 1.68% and Sainsbury edged up 1.66%.

Centrica led decliners in the FTSE 100 index shares with a fall of 5.64% followed by losses in Rio Tinto of 5.49%, in Xstrata Plc of 5.49%, in Antofagasta of 5.36%, and Vedanta of 5.30%.

Commodity stocks fell after copper prices fell 1.8% and crude oil prices increased by 3.6%. BHP Billiton Plc slipped 5.20%, Kazakhmys slumped 5.07% and Anglo America shed 5%.

British Airways Profit Falls 90% in Q1

British Airways reported on its Web site today that first quarter profit plummeted 90% to £27 million from £ 274 million in the comparable period a year ago on rising oil prices.

Europe Markets Review

In London FTSE 100 Index closed lower 57.20 or 1.06% to 5,354.70, in Paris CAC 40 Index decreased 78.02 or 1.78% to close at 4,314.34 and in Frankfurt DAX index lower 83.10 or 1.28% to close at 6,396.46. Market of Zurich was closed today.