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U.K. Services Accelerate Amid Signs Consumer Clouds Gathering



  • U.K. Services Accelerate Amid Signs Consumer Clouds Gathering

The U.K.’s services sector grew faster than expected in March and surging costs prompted companies to raise their prices at the quickest pace in 8 1/2 years.

The momentum in IHS Markit’s monthly Purchasing Managers’ Index was accompanied by stronger growth in new business. Even so, the survey reflected gathering storm clouds for the U.K. economy as hiring slowed and the pickup in prices added to pressure on consumers already facing the fastest inflation since 2013.

The headline activity gauge rose to 55 from 53.3 in February, far better than the 53.4 predicted by economists. That’s still not enough to counter cooling manufacturing and construction growth though. Taking into account all three sectors, Markit predicts economic growth of 0.4 percent in the first quarter, which would be the weakest in a year.

“It could be a fairly tough year for consumers, who will have to contend with falling disposable incomes,” said James Smith, an economist at ING in London. “With that in mind, and given the heightened Brexit uncertainty now that Article 50 has been triggered, we suspect that the PMIs will trend lower.”

The pound rose 0.3 percent to $1.2473 after the report and was at $1.2473 as of 10:24 a.m. London time, though it didn’t erase Tuesday’s slide.

While some services companies cited uncertainty relating to Britain’s exit from the European Union as holding back investment, Markit said strong domestic and global economic conditions were supporting sales and companies were optimistic about the year ahead.

Still, it warned of “intense cost pressures” because of the weaker pound and reported the fastest rise in selling prices since 2008. That could prove to be a curb on demand and growth. Already consumer-focused firms such as hotels, restaurants, gyms and hairdressers have proved this year’s growth laggards.

“This sector makes up the majority of the U.K. economy and the prognosis is poor,” said Jeremy Cook, chief economist at the international payments company World First. Firms raising prices “means a turning of the screw for the man in the street.”

Some firms said that squeezed margins and rising wage bills meant they weren’t replacing staff who quit, with the rate of job creation the weakest since August.

Williamson said the latest numbers back the argument that the Bank of England should keep policy on hold as it balances accelerating inflation against maintaining demand after the U.K. started formal Brexit talks last week.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd




The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins



Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020




Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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