ECONOMIC OUTLOOK
ECONOMIC data released at the start of this week presented a mixed picture. In America, the Institute for Supply Management said US manufacturing growth cooled slightly last month. In China, the Caixin-Markit manufacturing PMI slipped from 51.7 in February to 51.2. However, the eurozone manufacturing PMI for March was at a near six-year high of 56.2.
On Tuesday morning, the UK construction PMI for March showed a slowdown in growth across the UK construction sector.
Lenders approved fewer mortgages in February than January, according to Bank of England data, with house purchase loans falling from just over 69,000 to 68,300.
IHS Markit economist Howard Archer said the slowdown in mortgage approvals “suggests that housing market activity may now be starting to be affected by the increasing squeeze on consumers and their concerns over the economic outlook”.
The banking, telecoms and energy sectors have been key to the UK’s productivity slump, according to data from the Office for National Statistics (ONS). It said these sectors were responsible for a disproportionate amount of the fall in productivity growth.
Overall, the quantity of goods and services produced by each UK worker has hardly increased since 2008, said the ONS. Before the financial crisis, productivity grew by an annual rate of 1.6%. Now it is just 0.3%.
Theresa May triggered Article 50 of the Lisbon Treaty to begin the formal Brexit process from the EU. In her speech to Parliament she emphasised that Britain was not turning its back on Europe.
Lloyd’s of London is set to move an estimated 100 staff to a new subsidiary in Brussels to maintain its presence in the EU post-Brexit, while US investment bank JP Morgan Chase has reportedly been negotiating the purchase of a prime office property in Dublin as a new home for 1,000 employees.
The UK economy grew by 0.7% in the final quarter of 2016, the ONS said, while growth for the full year was revised down from 2% to 1.8%. Darren Morgan, Head of GDP at the ONS, said “the longterm picture is still one of robust growth” despite a slight recent slowdown in services.
However, the household savings ratio fell to a record low of 3.3%. The ONS noted rising inflation is “putting downward pressure on real wages and incomes”.
The US economy grew faster than previously thought in the final quarter of 2016. GDP growth was revised up from 1.9% to 2.1%, with consumer spending the key factor.
The annual rate of UK house price growth slowed to 3.5% in March, according to Nationwide Building Society.
Consumer confidence remained weak in the run-up to the triggering of Article 50, according to researchers GfK. GfK’s consumer confidence index was unchanged at -6 in March, the 11th month in a row it has been below zero.