Pound jumps as UK manufacturing activity rebounds

The pound has jumped to a one-month high against the dollar after a survey indicated the UK's manufacturing sector rebounded sharply in August.

The Markit/CIPS purchasing managers' index (PMI) for the sector rose to 53.3 in August from July's figure of 48.3. A figure above 50 indicates expansion.
The weakening of the pound following the Brexit vote boosted exports, the survey found.
However, it also indicated that the weak pound had pushed up firms' costs.
A weakening of the pound makes UK goods cheaper for overseas buyers, but increases the cost of goods imported into the UK.
Since the Brexit vote, the pound has fallen in value by more than 10% against both the US dollar and the euro.
Following the release of the latest PMI survey, the pound jumped by 1%, more than a cent, against the dollar, hitting $1.3267.

'Marked recovery'

"The August PMI data indicate a solid rebound in the performance of the UK manufacturing sector from the steep downturn that followed the EU referendum," said Rob Dobson, senior economist at IHS Markit.
"The domestic market showed a marked recovery, especially for consumer products, while the recent depreciation of sterling drove higher inflows of new business from the US, Europe, Scandinavia, Middle East and Asia," he added.
Mr Dobson also said that inflation was "raising its ugly head".
"Rates of increase in input prices and output charges both hit five-year highs, which manufacturers placed squarely at the door of the cost impact of sterling on import prices," he said.

The latest PMI survey chimes with last week's CBI survey, which showed that export orders were rising at their fastest rate in two years.
At the time, the July PMI figure was taken as immediate evidence of an impending downturn, following June's referendum vote in favour of the UK leaving the EU.
It was one of the pieces of evidence that contributed to the Bank of England's recent decision to cut its interest rate to 0.25%.

'Robust data'

But Laith Khalaf, from the investment firm Hargreaves Lansdown, said the latest PMI figures now called the Bank's decision into question.
"It certainly seems that companies and consumers alike are carrying on with business as usual now the referendum is disappearing into the rear view mirror," he said.
"There's still a long way to go until Britain leaves the EU, and in the meantime, businesses still need to make money, so they can't just sit on their hands.
"However, the gathering pile of robust economic data might start to dissuade policymakers from any further monetary easing," he added.
Next week, another PMI survey, of the much larger services sector, will provide another snapshot of the state of the UK economy.

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US airlines given go-ahead for Havana flights

The US government has given approval to eight airlines for flights to the Cuban capital Havana.

The announcement comes on the same day as the first commercial flight between the two countries in 55 years.
Under President Obama, the US has begun normalising relationships with Cuba.
The list of US airlines now granted permission to fly to Havana includes: American Airlines, Jet Blue, Delta, Southwest, United, Alaska Air, Spirit, and Frontier Airlines.
Most airlines plan to launch flights later this year or at the beginning of 2017.
Until now only chartered flights flew from the US to the Communist country. Most Americans travelled to the island, which is just 90 miles (144km) from the tip of Florida, via a third country.

Easing relations

Relations between the US and Cuba had been frozen since the 1960s when the US placed an embargo on the communist nation.
In 2014 President Obama announced he would take steps to normalise the relationship, and in August 2015 the US reopened its embassy in Havana after more than five decades.
The president is unable to lift the trade embargo and under US law Americans are still not permitted to travel to Cuba for tourism.
Travel even on commercial flights must fit into twelve pre-approved categories that include family visit, education and journalism.
A Jet Blue flight from Miami landed in Santa Clara, Cuba on Wednesday morning, marking the changing relationship.

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Australia sues Volkswagen unit over alleged emissions fraud

Australia is suing the local arm of Volkswagen for allegedly misleading customers by selling modified vehicles that covered up emissions fraud.

Its consumer watchdog claims Volkswagen intentionally sold more than 57,000 such vehicles over a five-year period.
The Australian Competition and Consumer Commission (ACCC) is seeking a public declaration of misconduct, financial penalties and corrective advertising.
Volkswagen Australia said it is reviewing the ACCC claims.
In a statement, the firm said it does not think that the court action "provides any practical benefit to consumers because software solutions for cars affected by the voluntary recall are expected soon".
"The best outcome for customers whose vehicle is affected is to have the voluntary recall service updates installed," Volkswagen Group Australia managing director Michael Bartsch said.

Global backlash

The ACCC lawsuit covers 10 Volkwagen car models including the top-selling Golf, Passat and Polo,
"These allegations involve extraordinary conduct of a serious and deliberate nature by a global corporation," ACCC chairman Rod Sims said in a statement.
"We expect higher standards of behaviour from all companies that supply to Australian consumers."
Volkswagen, the world's second-biggest car maker, is also facing several private class action lawsuits in Australia.
The carmaker has suffered a global backlash since revealing last year that around 11 million of its vehicles had software or so-called "defeat devices" designed to bypass official emissions tests.
It has since had to pay billions of dollars in fines and settlements with both regulators and customers around the world.
Last month Volkswagen told a court it plans to compensate American car dealers affected by the scandal.

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Apple chief Tim Cook says tax ruling 'maddening'

Apple chief executive Tim Cook says the European Commission ruling that Apple should pay billions of euros in back taxes to the Republic of Ireland is "maddening" and "political".

He told Irish broadcaster RTE that Apple had not been given preferential tax breaks in Ireland.
The EU ruling said Apple had been given €13bn of "illegal" tax benefits.
Mr Cook said he was "very confident" the ruling would be overturned on appeal.

'Outrage'

On Tuesday, the European Commission said Ireland had granted undue tax benefits of up to €13bn (£11bn) to Apple.
Speaking about the ruling, Mr Cook told RTE: "It's maddening, it's disappointing, it's clear that this comes from a political place, it has no basis in fact or in law, and unfortunately it's one of those things we have to work through."
"When you're accused of doing something that is so foreign to your values, it brings out an outrage in you, and that's how we feel. Apple has always been about doing the right thing.
"We haven't done anything wrong, and the Irish government hasn't done anything wrong."
Mr Cook disputed the Commission's finding that Apple had effectively paid a corporate tax rate of just 0.005%, or €50 out of every €1m, from one of its Ireland-based subsidiaries in 2014.
"It's a false number. I have no idea where the number came from. It is not true. Here is the truth. In that year, we paid $400m to Ireland, and that amount of money was based on the statutory Irish income tax rate of 12.5%."
Apple says that it was the largest corporate taxpayer in Ireland in 2014.
He said Apple paid income tax on products sold in different European countries to those countries, and an additional income taxes on profits in the US at a rate of 35%.
In addition, Apple has provisioned "several billion dollars" from its profits in 2014 to be repatriated to the US, he said.
"Right now I would forecast that repatriation to occur next year. It's not true that we paid just $400m or even just $800m [to Ireland and the US combined] - the number is materially larger."
"In 2014 our worldwide income tax rate was 26.1%," Mr Cook added.

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Analysis: BBC Business editor Simon Jack
It was a skilful and very nuanced performance [by Mr Cook on RTE], but one which obscured a few key truths.
He claimed that Apple paid tax at a rate of 26% around the world, that isn't the whole story.
Apple works out its tax rate as if it had paid taxes due in the US at a rate of 35%.
But the actual payment of those taxes is deferred - till when, nobody knows.
Maybe until US taxes come down or some special tax amnesty is agreed to repatriate hundreds of billions that Apple and others keep off US shores in the tax equivalent of outer space.
In fact, the scramble to avoid paying tax at 35% is the reason the whole structure exists in the first place.

 

Apple's chief executive, Tim Cook, has dismissed the ruling by the European Commission as politically motivated.

He then went on to show he's no slouch as a politician himself.
In comments in Irish media, Mr Cook circled his own wagons in what is undoubtedly a political as well as a financial tussle.
First there was the personal touch. He spoke of the outrage he personally felt at being charged with conduct so "contrary to our values".
Then he tried to shore up the support of the Irish government by talking about 37 years of achieving great things together through some thick and thin times.
He described a time in 1998 when Apple almost closed its Cork facility before he realised how great its Irish employees were.
Just in case anyone missed the fact they were on the same side he repeated, "Apple hasn't done anything wrong and the Irish government hasn't done anything wrong".

Lastly, there was a bone thrown to the US government with a promise to repatriate "several billion dollars" to the US next year - lest we forget that in the minds of US politicians, if anyone is owed back taxes, it sure as hell ain't Ireland.
He knows that back home in the US, his bafflement at European officials exacting retrospective taxes on American companies will be shared.

No 'sweetheart' deal

It was a skilful and very nuanced performance, but one which obscured a few key truths.
He claimed that Apple paid tax at a rate of 26% around the world, that isn't the whole story.
Apple works out its tax rate as if it had paid taxes due in the US at a rate of 35%.
But the actual payment of those taxes is deferred - till when, nobody knows.
Maybe until US taxes come down or some special tax amnesty is agreed to repatriate hundreds of billions that Apple and others keep off US shores in the tax equivalent of outer space.
In fact, the scramble to avoid paying tax at 35% is the reason the whole structure exists in the first place.
Tim Cook flatly denied that Apple had any kind of sweetheart deal - anyone else could have parked money in Ireland untaxed for years if they had just asked he said.
That is a bit like saying any pub team could win the FA Cup - in theory they can, but without the Pogbas and Ibrahimovices of the tax lawyer world, they can't.
The European Competition Commissioner, Margrethe Vestager, has enormous powers thanks to her personal role in determining what constitutes illegal state aid.
She has used them to the full with this bold move against one of the world's most powerful companies. She has also picked a very wily political opponent.
                        

'Illegal deal'

On Tuesday, the European Commission ruled that Apple's Irish tax benefits were illegal.
After a three-year investigation, the Commission said Ireland had enabled Apple to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%.
Apple said on Tuesday that the decision would be harmful for jobs.
"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process," the company said.
The Irish cabinet met on Wednesday to discuss the tax ruling. But it failed to agree a position, and will meet again on Friday to decide whether to appeal against the Commission's decision.

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SES company first to use 'second-hand' SpaceX rocket

Luxembourg-based SES says it is going to be the first commercial satellite operator to launch a spacecraft on a "second-hand" rocket.

The company is booked to fly its SES-10 platform on a SpaceX Falcon 9 rocket that was previously used to send cargo to the space station in April.
The booster, after completing its ascent, returned to a touchdown on a drone ship in the Atlantic.
It has since been serviced and declared fit to fly again.
The launch of the Falcon, with its SES-10 payload, is likely to take place towards the end of this year.
It will be a historic moment in commercial rocketry. The traditional booster is expendable; all parts of it are discarded in the climb to orbit.
But now that California-based SpaceX has developed a means to recover flown stages intact, the rocket business looks set to enter a new era.
"We think it's a big moment," Martin Halliwell, the chief technology officer at SES, told BBC News.
"This is the way things are going to go for the industry in general. It's going to manage the price point of the launchers, I hope.
"It will also give us more vehicles. At the moment, after a spacecraft is built and ready, we have a wait of about seven months to launch it."

Mr Halliwell said SpaceX was offering SES a discount on the normal price of a Falcon 9, but that insurers had made "no material change" to the premium being asked to cover the mission.
"Both we and SpaceX have given very detailed answers to all the insurers' questions, and they've come away with the feeling that we've done our due diligence, that we're working closely together and that we're ready to go," he said.
The booster to be used is the first stage of the Falcon 9 that sent more than 1.5 tonnes of supplies to the International Space Station on 8 April.
It lifted off from Cape Canaveral Air Force Station, Florida, at 20:43 GMT and touched down nearly 10 minutes later on a barge stationed roughly 300km to the north east, in the Atlantic Ocean.
This drone ship, appropriately named Of Course I Still Love You, then brought the rocket stage into port, from where it was sent to the SpaceX testing facility in McGregor, Texas.
The booster was put on a stand and its nine engines fired again to prove their flight worthiness.

SpaceX has so far recovered six boosters. The very first, which made its successful return to Earth following a mission in December 2015, now stands outside the company's HQ in Hawthorne, California.
"Re-launching a rocket that has already delivered spacecraft to orbit is an important milestone on the path to complete and rapid reusability," Gwynne Shotwell, the president and chief operating officer of SpaceX, said in a statement.
"SES has been a strong supporter of SpaceX's approach to reusability over the years and we're delighted that the first launch of a flight-proven rocket will carry SES-10."
Reusability has long been rocketry's holy grail.
The space shuttle was famously designed as a partially reusable system, and yet the complexities of servicing the vehicle swamped any savings. The shuttle main engine, for example, although an engineering marvel, contained 50,000 parts.
SpaceX has tried to develop a far more practical model of fly-again rockets.
It says the Falcon's Merlin engines should be able to complete 40 firing cycles or more without significant parts exchange.
SES-10 has been built in the UK and France by Airbus Defence and Space.
Once in orbit, it will provide telecommunications services to Mexico, Central America, South America and the Caribbean.

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US consumers expect economy will keep improving

US consumer confidence reached its highest point in nearly a year in August as economic conditions continue to improve.

The level indicates that Americans expect the economy to remain strong through the second half of the year.
According to the Conference Board, which tracks consumer sentiment, the index reading for August was 101.1, up from 96.7 in July.
The index has not reached such a high point since September 2015.
"Consumers' assessment of both current business and labour market conditions was considerably more favourable than last month," Lynn Franco, the Conference Board's head of economic indicators.
"Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months."
Increases in consumer confidence typically indicate more people are willing to spend money. As more than two-thirds of the US economy is generated by consumer spending, the increase signals likely economic growth.

Labour market strength

The percentage of Americans who expect business conditions to continue to improve over the in the next six months rose from 15.7% to 17.3%, while the number who expected worsening conditions fell from 12.4% to 11.1%.
The figure beat expectations by analysts, who predicted consumer confidence would stand at 97 on the index.
Earlier on Tuesday, the Federal Reserve's vice-chairman, Stanley Fischer, said in an interview with Bloomberg News that the US labour market was close to full strength.
Mr Fischer did not say whether the improvements in the labour market meant the Fed would increase interest rates at its upcoming meeting in September.

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TTIP in further doubt as Hollande questions timing

The TTIP trade deal was dealt another blow on Tuesday as the French president cast doubt on when an agreement would be reached.

Francois Hollande said it would not be finalised before Barack Obama left office later this year.
Meanwhile, Germany's economy minister, Sigmar Gabriel, said it had no chance of being agreed before the US presidential election in November.
The Americans were unwilling to compromise with Europe, he said.
Mr Gabriel, who said over the weekend that the talks had in effect failed, also questioned whether the deal had any chance after the election.
"But if the Americans don't move towards the Europeans, then Europe can't agree to a 'TTIP light'. And with this, the project - at least how it was all planned for this year - has failed," he said.
EU trade commissioner Cecilia Malmstroem said on Tuesday that talks had not broken down and the aim was still to strike a deal before President Obama left office.
"I do not agree that TTIP negotiations have failed," she said. "They have been difficult, of course, we knew from the beginning, but they have not failed."
US trade representative Michael Froman told German magazine Der Spiegel that talks on TTIP were progressing.
The US and the European Union have been negotiating the Transatlantic Trade and Investment Partnership, also known as TTIP, for three years. Both sides had aimed to agree a deal this year.
TTIP aims to reduce or remove a wide range of barriers to transatlantic trade and investment, but has proved controversial in both Europe and America.
Its supporters say the deal could deliver bring economic gains of more than $100bn to both sides of the Atlantic, but critics argue it would give too much power to multinationals at the expense of consumers and workers.

'Bogged down'

President Hollande said in a speech to French diplomats that France wanted to "see things as they are".
"These discussions cannot result in an agreement by the end of the year. The negotiations have bogged down, the positions have not been respected, the imbalance is obvious," he added.
The French leader's comments followed a call by trade minister Matthias Fekl to end negotiations, which he said no longer had political support in France because US negotiators "give nothing or just crumbs".
He wanted a "clear, clean, definitive stop" to the talks, which could resume if wider EU-US trade relations improved.
Mr Fekl said France would ask the European Commission to suspend the talks when trade ministers meet in Slovakia next month.

Italy's trade minister said that a TTIP deal would be reached, but the talks would take longer than expected.
Carlo Calenda said that "TTIP will be sealed - it is inevitable", adding that it was essential for Italian exporters.
The minister admitted it would be difficult to reach a deal before Mr Obama left office, but added: "We have to carry on. This accord is essential for Italy."

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