Archive forDecember, 2015

UK’s economic growth revised down for third quarter

As per the Office for National Statistics, the UK economy grew 0.4% q-o-q in Q3 2015, below the previous estimate of 0.5%. On a y-o-y basis, growth was revised down to 2.1% from the earlier reading of 2.3%. The agency stated that weak expansion in the country’s services sector, particularly financial services, was the prime reason for slow growth.

Public borrowing in UK rises in November

As per the Office for National Statistics, the UK’s public borrowing rose 10% y-o-y to £14.2bn in November. Currently, the government’s borrowing stands at £66.9bn. The borrowing is close to the budget of £68.9bn set by the Office for Budget Responsibility for FY 2015/16.

UK consumer confidence improves in December

According to a GfK survey, the UK’s consumer confidence index increased to +2 in December from +1 in November. This marks the first year since 1974 that the index has remained positive for an entire year.

WTO agrees on farming subsidy deal

The World Trade Organization (WTO)’s member countries reached an agreement to remove subsidies on farming exports. The developed countries have agreed to immediately stop the subsidies, while the developing countries must follow by the end of 2018. This move is expected to help farmers in poor countries to compete more fairly.

UK retail sales rise in November

As per the Office for National Statistics, retail sales in the UK jumped 1.7% m-o-m in November, after a 0.5% fall during the previous month. The improvement in sales was mainly led by more promotions by retailers as well as higher discounts on Black Friday. On y-o-y basis, sales rose 5.0% compared with 4.2% gain in October.

US Fed raises interest rates by 0.25%

The US Federal Reserve’s policy-setting committee increased its benchmark interest rate by 25 basis points to 0.25-0.50%, marking the first increase since 2006. Furthermore, the agency would gradually increase the rate depending on inflation and employment data. The Fed also raised its projected economic growth for the next year to 2.4% from 2.3%.

UK inflation turns positive in November

As per the Office for National Statistics, the UK consumer price index (CPI) rose 0.1% in November, which is its first positive reading in four months, from last month’s reading of -0.1%. The improvement in prices was led by transport costs and alcohol and tobacco prices.

Eurozone industrial output improves in October

As per Eurostat, industrial output in the Eurozone improved 0.6% m-o-m in October, after declining 0.3% m-o-m in September, marking the first increase in three months. The improvement was led by an increase in the production of energy and non-durable consumer goods.

2015 – A Year of False Dawns. 2016 – A Year of Mixed Fortunes?

Looking ahead into 2015 a year ago, the main concerns were the falling price of oil (then at $60 per barrel for Brent crude), the timing of Central Bank interest rate rises and the likely impact on global growth of economic restructuring in China. Twelve months later we can see that, while the rate of change at the macro level has slowed down, the pace of activity at the micro level has accelerated. The uncertainty engendered among investors by the U.S. Federal Reserve’s inability to strike a firm pose and start to raise interest rates sooner has produced on occasions a form of ‘Headless Chicken Syndrome’ in markets. Most major market indices have been erratic, shifting between seemingly committed rallies and falls off a cliff almost within the space of a heartbeat – in essence, schizophrenic.

House prices in UK fall in December

As per the property tracking website Rightmove, the asking price per home in the UK declined 1.1% m-o-m in December after falling 1.3% in November. On a y-o-y basis, house prices rose 7.4% following a 6.2% gain in the previous month.

Bank of England keeps interest rate unchanged

The Monetary Policy Committee of the Bank of England (BoE) retained its benchmark interest rate at 0.5%, with an 8-1 vote in favour of maintaining rates. This move matches market expectations. Falling oil prices and slow wage growth are the prime reasons for BoE maintaining rates. The rate has remained unchanged since March 2009. The committee also maintained its quantitative easing program at £375bn.

House price balance in UK eases in November

As per the Royal Institution of Chartered Surveyors, the monthly house price balance in the UK fell to +49 in November from +50 in October. The drop was largely due to a decline in the sale of properties and fewer properties in the market.

UK manufacturing output falls in October

As per the Office for National Statistics, manufacturing output in the UK fell 0.4% m-o-m in October, after rising 0.9% in September. On y-o-y basis, the output fell 0.1%, marking the fifth consecutive month of contraction. The manufacturing sector has failed to contribute to the country’s economic growth in 2015.

Slowest November since 2011 for retail sales in UK

As per a survey conducted by the British Retail Consortium (BRC), retail sales fell 0.4% y-o-y on a like-for-like basis, the slowest November since 2011, following a 0.2% decline in October. While, total sales improved 0.7% y-o-y in November compared with a 2.2% rise in November 2014.

Greek Parliament Approves Austere Budget

The Greek Parliament approved the 2016 budget, which includes significant spending cuts and tax increases. A total of €5.7bn would be cut in public spending, including €1.8bn from pensions and €500m from defence. In spite of the cuts, the budget would have a higher deficit than the 2015 budget.

UK Services Sector Improves in November

As per Markit, UK’s services purchasing managers index (PMI) improved to 55.9 in November, the highest in four months, from 54.9 in October. Moreover, job creation in the sector remained high despite the introduction of National Living Wage. The agency further stated that the economy is expected to grow 0.6% in Q4 2015 from a 0.5% growth in Q3 2015.

US Fed on track to increase interest rate: Yellen

According to Fed Chairperson Janet Yellen, the agency remains on track to increase interest rates from the record lows in December. The agency stated that a balance of financial and economic data over the past one year and the expected growth in the economy drove its decision to increase rates. However, Yellen warned that poor economic data release over the next two weeks may change the Fed’s decision.

UK shop prices fall in November: BRC

According to the British Retail Consortium, shop prices in the UK fell 2.1% y-o-y in November, compared with 1.8% in October, matching the record decline in March 2015. The decrease was ascribed to a 3.3% y-o-y fall in non-food prices in November.

UK mortgage approvals rise in October

As per data from the Bank of England, mortgage approvals for house purchases rose to 69,630 in October from 69,012 in September. The value of mortgage lending grew by £3.62bn from £3.56bn in September, the biggest increase since April 2008. Meanwhile, consumer credit rose 8.2% y-o-y in October, matching the nine-and-a-half-year high in September