Time for a recap

• Britain’s retailers have suffered their worst September on record. Total retail sales fell by 1.3% year-on-year last month, taking monthly growth to a record low.
  
  
• The British Retail Consortium, which compiles the data, fears that Brexit uncertainty is to blame. It urged the UK government to reach a deal with the EU, rather than crash out at the end of this month.

• German factories are also struggling. Orders fell again in August, for the 15th month running, raising new fears that Europe’s largest economy could fall into recession.
  
  
• Berlin’s finance ministry warned that German manufacturing remains subdued. Some economists, though, believe the slump could be bottoming out.

• Eurozone investors confidence has dropped to its lowest level in over six years. Research firm Sentix reported that morale dropped again this month, amid worries about the global economy.
  
  
• Hopes of a breakthrough in the US-China trade war have taken a knock. Beijing insiders have said China has “narrowed the range” of topics that are up for negotiation, when the two sides meet again later this week.
  
  
• Sources at Pizza Express are playing down concerns over its future, following reports that it could be heading into dent restructuring talks.

• Stock markets are mixed, with investors jittery after last week’s selloff. Wall Street has opened in the red, but European markets are currently higher.

Newsflash: UK retailers have suffered their worst September in at least 24 years, as the threat of a no-deal Brexit looms over the sector.

That’s according to the British Retail Consortium, which just published its latest sales figures.

It found that

• Total retail sales decreased by 1.3% year-on-year in September. This is the worst September since the BRC’s records began in 1995.
• The average monthly retail sales growth has slumped to +0.2% over the last year -- a new all-time low.
• Like-for-like retail sales shrank by 1.7% - the lowest 12-month average since August 2009.
• Over the three months to September, In-store sales of non-food items fell 3.2% on both a Total and Like-for-like basis. This is worse than the 12-month Total average decline of 2.9%.

These figures were due to be released at midnight, but have been accidentally released to the industry a day early.

Helen Dickinson OBE, chief executive of the BRC, says Brexit uncertainty and the unusually warm summer both hurt retailers.

“With the spectre of a no-deal weighing increasingly on consumer purchasing decisions, it is no surprise that sales growth has once again fallen into the red. Many consumers held off from non-essential purchases, or shopped around for the bigger discounts, while the new autumn clothing ranges suffered from the warmer September weather. The longer-term prospect continues to be bleak, with the 12-month average once again plumbing new depths at a mere 0.2 per cent. Online non-food sales growth was the lowest on record, though still compared favourably to the decline in growth at physical stores.

Dickinson also warns that a disorderly Brexit would cause serious disruption:

“With four months of negative sales growth since March, the ongoing political gridlock surrounding Brexit is harming both consumers and retailers. Clarity is needed over our future trading relationship with our closest neighbours, and it is vitally important that Britain does not leave the EU without a deal.”

Shares in UK construction and building materials firms are taking a bath this morning, after a profits warning from UK company SIG.

SIG makes specialist insulation, roofing and air handling products across Europe - from cladding and tiles to fans and ducts. And this morning, it warned shareholders that its business is struggling, due to weak demand and rising political uncertainty.

SIG told the City that underlying profits this year will be “significantly lower” than last year:

The Group has been reporting during the year a deterioration in the level of construction activity in key markets and highlighting a number of key indicators pointing to further weakening of the macro-economic backdrop, notably in the UK and in Germany.

This deterioration in trading conditions has accelerated over recent weeks, and political and macro-economic uncertainty has continued to increase.

This sent its shares sliding by up to 20% this morning.

Other companies across the sector have been hit too, with joinery firm Howdens falling 4.5%, heating and ventilation firm Polypipe down 4.2%, and building supplies firm Travis Perkins down 3.4%.

Newsflash: Eurozone investors have grown even gloomier about economic prospects, particularly those based in Germany.

The Sentix survey of euro-area investor morale has fallen to its lowest level in six and a half years, dropping from -11.1 in September to -16.8 in October.

That’s a sharp decline, suggesting that worries about a global downturn are increasing.

Sentix, the Frankfurt-based research firm, warns that

“Fears of a recession are imminent”.

The survey found that investors’ hopes of an economic recovery have “completely evaporated”; they’re also more worried about the current economic situation.

Sentix’s managing director, Patrick Hussy added:

There hasn’t been a positive reaction to the support measures taken by central banks, with economic assessments falling in October on a broad front.

Sentix also found that German investors are now at their gloomiest since the global recession a decade ago:

Germany’s economy ministry has responded to August’s weak factory orders, saying:

“The weakness in demand in industry continues.

The industrial sector remains subdued for the time being.”

European stock markets have dropped in early trading, as investors digest this morning’s German factory data.

In Frankfurt the DAX index has dropped by 0.2%, or 22 points, to 11,990. Major German manufacturers are leading the fallers, including tire maker Continental (-2%), chemicals firm Covestro (-1.3%), and car manufacturers BMW (-1.2%) and Daimler (-0.9%).

France’s CAC has lost 0.35% in early trading, while the UK’s FTSE 100 is flat.

Last week the pan-European STOXX 600 index lost almost 4%, in its worst week in a year, after weak economic data alarmed the markets. No sign of a recovery yet.....

Christophe Barraud, chief economist at Market Securities, says the ongoing slump in German factory orders does not bode well for the global economy:

Holger Zschaepitz of German newspaper Die Welt says Germany’s manufacturing recession is deepening.

Blogger Jeroen Blokland points out that factory orders have now fallen for 15 months running.

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

The slowdown fears that gripped markets last week are intensifying this morning, as the slump across Germany’s manufacturing base deepens.

German factory orders slumped by 6.7% year-on-year in August, new figures from Destatis reveal, extending the decline which began almost two years ago.

On a monthly basis, factory orders were down 0.6% compared with July - weaker than that 0.3% which economists expected. That follows a 2.1% slump in July, compared with June.

The slump was driven by a decline in orders from within Germany, which highlights the risk that Europe’s largest economy is in recession. There was a small pick-up in orders from abroad.

Destatis explains:

Domestic orders decreased by 2.6% and foreign orders increased by 0.9% in August 2019 on the previous month. New orders from the euro area were up 1.5%, new orders from other countries rose 0.4% compared to July 2019.

German manufacturers also reported a 1.6% monthly decline in orders for ‘capital goods’, or heavy-duty machinery and equipment. Consumer goods orders fell 0.9%, while intermediate goods jumped by 1.1% compared with July.

Germany’s factories have suffered badly from the US-China trade war, the slowdown in the eurozone, and economic problems at home.

Last week, a flurry of PMI reports showed that global manufacturing is shrinking, so Germany’s falling factory orders could worry the markets today.

Also coming up today

The latest Sentix survey of eurozone investors morale is expected to show another deterioration.

Traders will also be watching the pound, as the Brexit deadline looms, and the Middle East, after president Trump announced US troops will withdraw from northern Syria, allowing Turkey to launch military action in the region.

The agenda

• 9.30am BST: Eurozone Sentix investor confidence for October - expected to drop to -13 from -11.