Time for a quick recap.

• A flurry of weak economic has highlighted that many advanced economies remain weak - a day before central bankers gather to discuss the situation.
  
  
• In a worrying sign, America’s factory PMI has fallen into contraction territory for the first time since 2009. Data firm Markit reported that new orders have fallen, as manufacturers struggle to find new business.
  
  
• Markit also reported that Germany’s factory sector is still shrinking, adding to concerns that it could fall into recession this autumn.
  
  France, though, is doing better than expected - suggesting it is outpacing the rest of the eurozone.
  
  
• British retail sales have declined at the fastest pace since the 2008 financial crisis, according to the latest healthcheck from the CBI.
  
  The CBI fears that confidence is ‘crumbling’, with retailers growing gloomier about future prospects.

• The pound has rallied after Angela Merkel denied setting the UK a 30-day deadline to solve the Irish border problem.

• Britain’s biggest supermarket chain has threatened to stop stocking products with excessive packaging. Tesco CEO Dave Lewis also hopes to plug his business into a new national recycling network, to tackle the plastic crisis

Newsflash: America’s factory sector is shrinking for the first time in almost a decade – a sign that the trade war with China may be hurting.

Data firm Markit has just reported that its US manufacturing PMI has fallen to 44.9, down from 50.4 in July.

This is the first time since September 2009 that this PMI has dropped below 50.0 – the point that separates expansion from contraction.

US factory bosses reported that new business fell, only a little, but at the fastest rate in a decade. Exports also fell, at the fastest rate since August 2009.

This is going to fuel concerns that the US economy is slowing.

Markit also found that service sector growth also dipped, pulling the overall US Composite Output Index down to 50.9, a three-month low.

Tim Moore, economics associate director at IHS Markit, explains what it means:

August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter. The PMIs for manufacturing and services remain much weaker than at the beginning of 2019 and collectively point to annualized GDP growth of around 1.5%.

The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector. Survey respondents commented on a headwind from subdued corporate spending as softer growth expectations at home and internationally encouraged tighter budget setting.

Manufacturing companies continued to feel the impact of slowing global economic conditions, with new export sales falling at the fastest pace since August 2009.

Business expectations for the year ahead became more gloomy in August and remain the lowest since comparable data were first available in 2012. The continued slide in corporate growth projections suggests that firms may exert greater caution in relation to spending, investment and staff hiring during the coming months.”

In other retail news, supermarket chain Tesco has pledged to ban brands who use too much packaging, to help fight the plastics crisis.

Dave Lewis, the boss of Britain’s biggest supermarket, has decided that Tesco could “reserve the right not to list” products with too much non-recyclable packaging from next year onwards.

Writing on the Guardian website, he points out that some suppliers are simply using too much packaging for their wares:

We have all looked at the settled contents of a cereal packet and puzzled over the comparative size of the bag and box. Or opened a bag of crisps and wondered why the packaging is twice the size of the contents.

This has to stop, Lewis says:

We’re setting ourselves and our suppliers a challenge. The need is urgent, and so from next year we will assess the size and suitability of all packaging as part of our ranging decisions, and if it’s excessive or inappropriate, we reserve the right not to list the product

Lewis says Tesco is already cleaning up its own act, removing non-recyclable packaging and trialling various measure to cut waste. Not before time - the company has been criticised before for using too much plastic and cardboard.

But ultimately, it needs government action:

We need a standardised national collection and a truly complete and national recycling infrastructure. Today, recycling rates vary across local authorities from 65% to 14%. Without a national infrastructure, industry efforts to improve the recyclability of materials used in packaging will not have the impact we need.

The threat of a no-deal Brexit is helping to keep shoppers off the high street, warns Anna Leach, CBI deputy chief economist.

She says:

Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.

“It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures.”

NEWSFLASH: Confidence among UK retailers is ‘crumbling’, as shops suffer the sharpest fall in sales and new orders since the financial crisis.

The CBI’s latest survey of the retail sector, just released, also shows that optimism about upcoming sales has also hit its lowest level in over a decade.

Just 10% of the firms surveyed said that sales volumes this month are higher than in August 2018, while 58% said they were lower. That gave a net balance of -49% -- the worst reading since 2008.

Such a weak reading suggests consumer confidence and spending is deteriorating, with Britain’s economy having already shrunk in the second quarter of 2019.

The survey also showed that retailers are cutting back on new orders, as they brace for tough times ahead.

The CBI says:

• Retailers expect sales volumes to fall at a slower pace next month (-10%), with 14% expecting a rise and 24% expecting a fall
• Sales were seen as slightly below average for the time of year, but to a lesser degree than last month, with 15% saying they were good, 54% saying they were average and 21% saying they were poor. This gave a rounded balance of -6%.
• Orders placed upon suppliers fell at the quickest rate since December 2008, with 10% of survey respondents reporting an increase and 67% reporting a fall, giving a balance of -57%. Orders are expected to fall again in September, albeit at a slower pace (-29%)
• 2% of respondents expect the business situation to improve over the next three months, with 27% expecting a deterioration, giving a rounded balance of -25%.
• 16% of retailers intended to invest more over the next 12 months compared to the previous 12 months, whilst 35% expect to invest less, giving a balance of -19%.
• Average selling prices compared to a year ago picked up somewhat (+67%), but are expected to grow more slowly next month (+35%)

More to follow!!

European stock markets are looking a bit directionless today.

The FTSE 100 has shed 37 points, or 0.5%. Some investors fear the Federal Reserve may not cut interest rates as rapidly as thought, as the minutes of July’s meeting (released last night) showed a big split (see earlier post).

The German DAX is down 0.3%, with some relief that this morning’s PMI survey wasn’t worse.

Italy’s FTSE MIB is bucking the trend, though, up 0.3% on hopes that a new coalition government will be agreed soon.

The plunge in the pound since the Brexit vote has made UK assets more attractive to overseas buyers.

And this morning, shares in healthcare group NMC Health have soared by over 25% due to talk of a takeover bid.

According to Reuters, two groups are vying to buy a significantly sized stake in NMC, which is based in the UAE but listed in London (and currently top of the FTSE 100 risers).

One of the two bidders is backed by Fosun, the Chinese media conglomerate.

Back on Monday, Hong Kong billionaire Victor Li took advantage of sterling’s weakness with an unexpected takeover of pub chain Greene King.

NMC also posted strong results this morning too, with revenues up 32% and net profits rising 30%.

Helal Miah, investment research analyst at The Share Centre,

The global healthcare industry has many supporting factors including rising populations and ageing societies and well as higher incomes and propensities to spend on healthcare and this is no different in the Middle East.

Today’s PMI reports are hardly sparkling – they show that the eurozone economy is staggering along this month, with only modest growth.

But, they’re also better than hoped – not to be sniffed at in the current climate.

Rupert Thompson, head of research at Kingswood, says this is welcome good news:

The Eurozone PMI data in August were not as weak as had been expected, providing a rare bit of good news on the Eurozone economy.

Business confidence unexpectedly recovered a little, both in the Eurozone and also Germany which has led the slowdown in recent months.

Even so, business confidence remains low and growth weak and the ECB still looks all but certain to cut rates next month. A re-starting of its quantitative easing programme is also quite possible.”

Bert Colijn, economist at ING agrees, telling clients:

Small wins should be celebrated.

A small uptick in eurozone’s August PMIs from 51.5 to 51.8 is somewhat a relief today as analysts had expected a further slide. If nothing else, at least it indicates that the economy is unlikely to have slipped into negative growth halfway through the third quarter .

The picture remains more or less unchanged, with slow growth thanks to a sluggish manufacturing sector and service sector strength that keeps the economy growing.

But Morten Lund of Nordea Markets sees trouble ahead:

Newsflash: European company growth has picked up this month, but remains rather subdued.

Markit’s overall eurozone composite PMI, just released, has risen to 51.8, from 51.5 in July. That level implies weak growth – but slightly better than a month ago.

Markit says the ongoing contraction across European factories (excluding France, as we’ve just learned) is dragging the economy back.

The recent soft patch in the eurozone economy continued into August, according to latest PMI data from IHS Markit, with activity rising modestly amid a marginal increase in new business.

The recent pattern of services growth compensating for a downturn in manufacturing was repeated midway through the third quarter. August did see a drop off in confidence among companies in the single currency area, with firms becoming more wary of hiring additional staff as a result.

This PMI is slightly better than expected – which could calm eurozone recession worries.

Just in: Germany’s economy is continuing to “underperform” this month.

Markit’s new PMI survey shows that German factory sector is still shrinking, although at a slower pace, while the service sector continued to cool.

Markit says:

The German economy continued to underperform in August, latest flash PMI data showed.

Growth of service sector business activity was again countered by a marked fall in goods production, while overall job creation slipped to a five-year low. Worryingly for the outlook, total new orders sank deeper into contraction territory and firms’ expectations towards future output turned negative for the first time since late 2014.

Here’s the details:

• Flash German composite PMI rose to 51.4, from 50.9 in July, showing modest growth.
• Germany Services PMI dipped to 54.4, from 54.5, a seven-month low.
• Germany Manufacturing PMI rose to 43.6, from 43.2 - that’s a 2-month high, but still means factories are shrinking

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

France’s economy is picking up speed this month, boosting hopes that a eurozone recession could be avoided.

A new healthcheck on the French private sector, just released, shows that private sector growth accelerated in August.

The monthly ‘flash’ PMIs, from data firm Markit, show that French services sector firms grew at their fastest rate in nine months. Factories returned to growth, after suffering a contraction in July.

This lifted the overall French purchasing managers index to 52.7 in August from 51.9 in July. Any reading over 50 shows growth, so this suggests the French economy is picking up.

French companies reported a jump in orders this month, including export orders. That could show a pick-up in the global economy, after some tough months.

We’ll find out shortly how Germany is faring, along with the rest of the eurozone....

Also coming up today

Central bankers are heading to Wyoming, for the annual Jackson Hole Symposium. This year’s meeting is overshadowed by concerns over the global economy, and speculation that America could drop into recession in 2020.

Financial markets will be looking for hints that US interest rates could be cut soon, with Federal Reserve chair Jerome Powell speaking on Friday

Yesterday, Donald Trump launched his most personal attack yet on Powell’s competence, comparing him to a golfer who can’t putt and raging that US borrowing costs are unfairly high.

Powell surely can’t enjoy the tirade of criticism flowing towards the Fed from the White House; investors are wondering whether he will cave into the pressure and slash rates aggressively.

The Fed has already cut rates in July, of course. But the minutes of that meeting, released last night, showed that policymakers were split.

Most supported the 25 basis-point reduction, but a couple wanted a bigger cut and some wanted to leave rates unchanged. That suggests there will be some big arguments within the Fed about what to do next.....

Traders will also be watching Rome, where the Italian president is leading efforts to form a new government, and Paris, where Boris Johnson and Emmanuel Macron will be discussing Brexit.

The agenda

• 8.15am BST: French flash PMIs for August
• 8.30am BST: German flash PMIs for August
• 11am BST: CBI survey of UK retail sales
• 2.45pm BST: US flash PMIs for August