Good morning! Here’s what you need to know on Friday.
Every single sector of the British economy is now doing better than expected and has defied the forecasts of economists in December, according to the latest services PMI data from IHS Markit on Thursday. It completes a trilogy of much better than expected post-Brexit economic figures released this week, following strong growth in the manufacturing and construction sectors. The services sector — which includes everything from banking to waitressing — drew a reading of 56.2 in the month, that’s compared with a 55.1 reading in December, and ahead of the flash estimate of 54.7.
Researchers at the University of Cambridge’s Centre for Business Research say the Treasury’s pre-referendum forecasts of the economic impact of Brexit were “pessimistic rather than realistic.” Graham Gudgin and Ken Coutts of the University of Cambridge and Neil Gibson from the Ulster University Economic Policy Centre write in a recent paper that the Treasury’s analysis is “found wanting” and has “little basis in reality.”
The Bank of England’s chief economist warned of a crisis in economics after Britain’s vote to leave the European Union. “It’s a fair cop to say that the profession is to some degree in crisis,” Haldane said in a speech on Thursday, citing the fact that there were shortcomings in the BoE’s pre-Brexit predictions, saying that “the data has surprised to the upside.”
The price of bitcoin crashed on Thursday. The cryptocurrency saw its value fall more than 20% at one point on the day, before staging something of a comeback and ending trade around 13% lower. Earlier this week, on its first trading day of the new year, bitcoin crossed above the $1,000 mark for the first time since 2013, but it has now tumbled below that level.
The appointment of Sir Tim Barrow as the UK’s new ambassador to the EU was “vigorously opposed” by a senior figure within the Department for Exiting the EU. According to the Financial Times, which cites several officials close to the process, Olly Robbins, Dexeu’s permanent secretary “attempted a land grab following the resignation of Sir Ivan Rogers from the Brussels post this week.”
Sales surged for global automakers in China in 2016. That rise came as consumers rushed to buy cars to make the most of a tax incentive, with Honda seeing a particularly brisk pace of business ahead of Ford and Toyota. Toyota has traditionally led Honda in China — the world’s largest auto market — but last year Honda sped past with a year-on-year sales growth of 24% to 1.25 million vehicles, helped by a steady stream of fresh models particularly in the hot sport-utility vehicle segment.
Shares in Toyota briefly plunged after President-elect Trump took aim at the Japanese carmaker. Trump tweeted his displeasure at Toyota on Thursday, threatening to impose taxes on the company if it produced its Corolla model in Mexico. “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for US. NO WAY!” the president-elect tweeted. “Build plant in US or pay big border tax.”
Mother nature may delay the release of the December US non-farm payrolls report, due Friday morning in America. According to Bloomberg, forecasts for snow in the Washington, D.C. area raise the possibility of a delayed opening for government agencies, potentially impacting the release of payrolls and trade data scheduled for 8.30am ET (1.30 p.m. GMT).
Regardless of any delay to the release, U.S. employers likely maintained a solid pace of hiring in December while raising wages. That puts the economy on a path to stronger growth and further interest rate increases from the Federal Reserve this year. Nonfarm payrolls probably increased by 178,000 jobs last month after a similar rise in November, according to a Reuters survey of economists. The unemployment rate is forecast ticking up to 4.7 per cent from a nine-year low of 4.6 per cent in November.
The incoming Trump administration may seek help from Congress to pay for a wall along the US-Mexico border, according to Republican lawmakers cited by Politico and CNN on Thursday. Such a move would break Trump’s pledge that Mexico would pay for the wall, which was central to the president-elect’s campaign.