LONDON (Alliance News) - UK industrial production logged marginal growth in February as the expansion in manufacturing was largely offset by a decline in oil and gas output, data from the Office for National Statistics revealed Friday.
Industrial output rose 0.1% on a monthly basis in February, offsetting January's 0.1% fall. This was the first rise in three months, but the rate was weaker than a 0.3% growth forecast by economists.
At the same time, manufacturing output advanced 0.4% reversing a 0.6% drop a month ago. The monthly increase came in line with expectations. On the other hand, oil and gas extraction slid 3.8%.
IHS Global Insight Chief UK Economist Howard Archer said it now looks like industrial production was essentially only flat in the first quarter.
The first quarter GDP data to be released on April 28, ahead of the UK general election may be very unwelcome news for the Conservatives and Liberal Democrats, given their hopes that many undecided voters will ultimately decide to reward them for the economy's improvement, Archer said.
Unless momentum has built in the services sector, the initial estimate of the first quarter GDP looks set to reveal that quarterly growth has slowed to about 0.4% from 0.6% in the fourth quarter, Samuel Tombs, a senior UK economist at Capital Economics said.
The National Institute of Economic and Social Research is due to release its monthly GDP estimate of UK at 1500 BST. The data "should give us some indication of how well the economic recovery has continued into this year ahead of the first official release in a few weeks," said Oanda analyst Craig Erlam. "We have been seeing a small slowdown in growth over the last couple of quarters although not enough to be particularly concerned about."
"The only question is, will the numbers seen in the first quarter have any impact on the upcoming election given that the Conservatives have placed so much emphasis on the economic recovery. A poor showing in the first quarter would be very unwelcome in the weeks leading up to the closest fought election in years," writes Erlam.
The pound fell to a low of USD1.4623 against the dollar, a level not seen since June 2010, following the release of the industrial and manufacturing data. Sterling hasn't recovered yet from Thursday's losses after data showed the UK trade deficit in goods widened by more than expected in February.
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Markets: UK shares are trading mostly higher Friday, with the FTSE 100 led by drugmaker Shire, up 5.2%. US futures also point to a higher open, with the DJIA seen up 0.2%, and the S&P 500 and Nasdaq 100 both up 0.1%.
FTSE 100: up 0.4% at 7,039.69
FTSE 250: up 0.5% at 17,803.16
AIM ALL-SHARE: flat at 732.37
GBP: down at USD1.4627
EUR: down at USD1.0585
GOLD: up at USD1,203.69 an ounce
OIL (Brent): up at USD56.84 a barrel
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Top Corporate News
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EasyJet has cancelled hundreds of flights as strike action by French air traffic controllers moved into its second day on Thursday, the BBC reports. The budget carrier did not operate 331 flights on Thursday, having cancelled 248 on Wednesday. A spokesman for easyJet told the BBC the "unnecessary" strike has caused "considerable and disproportionate disruption for passengers and airlines across Europe".
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Shire said late Thursday its new drug application for lifitegrast, a treatment for dry eye disease in adults, has been granted a priority review designation by the US Food and Drug Administration. This designation means that the new drug application has a review target of eight months, compared to the standard twelve months. The FDA is expected to provide a decision on October 25, 2015.
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Vedanta Resources said its oil and gas production and its zinc production for the full year were both hit by disruptions, though it said its fourth quarter oil and gas production stabilised and it reported better zinc production in the quarter. Vedanta said its oil and gas production for the full financial year to the end of March was 220,876 barrels of oil equivalent per day, down 3% from the 226,808 barrels produced a year earlier. In the fourth quarter, production fell to 224,294 boepd from 232,884 boepd, though Vedanta said oil and gas production has now stabilised following maintenance work carried out in the second quarter, which dragged on its production.
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Tritax Big Box REIT said it has struck a deal with FTSE 250-listed LondonMetric Property to acquire the Brake Bros Distribution Centre in Harlow in a GBP37.2 million deal. Tritax said the acquisition of the site reflects a net initial yield of 5%. It expects the deal to complete in June 2015.
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Hays said it expects to see strong operating profit growth in its full year, as it saw group net fee growth of 5% in its third quarter to end-March. The recruitment company said it expects its second half operating profit to be slightly ahead of its first half level of GBP81.5 million. At constant currency, and excluding acquisitions, net fees rose 8% in the quarter compared to the previous year, as the depreciation of the euro and Australian dollar against sterling held back performance at actual exchange rates.
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Acacia Mining said it has signed a deal to expand its land holdings in the Houndé belt in Burkina Faso via two earn-in agreements. The FTSE 250-listed miner has signed earn-in deals with Canyon Resources and Thor Explorations Ltd. The deal with Canyon will give Acacia a 75% earn-in interest in the Pinarello and Konkolikan projects, and the Thor deal will give it a 51% interest in the Central Houndé project. Acacia said the deals have cost around USD1 million and are part of its USD20 million exploration budget for 2015.
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Majestic Wine said it will acquire online wine retailer Naked Wines International for up to GBP70 million in cash and shares, with founder and chief executive officer of Naked Wines Rowan Gormley to head up the enlarged group. Majestic will pay GBP50 million in cash, funded by new debt facilities, and up to GBP20 million of contingent consideration in shares. In order to reduce its leverage and ensure it has sufficient working capital resources to invest in the business, Majestic said it has decided to withhold its final dividend for the its current financial year 2015, and its interim dividend for the financial year 2016. It said it expects to progressively re-instate dividends by the financial year 2018.
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AIM Movers
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OMG, up 14%. The imaging technology company said it has struck a USD25 million deal to sell its 2d3 defence software business to Insitu Inc, a subsidiary of US aerospace company Boeing Co. OMG said it expects to make a USD16.4 million pretax profit on the sale and said it expects to pay a significant portion of the proceeds from the sale to shareholders via a special dividend.
Blur Group, off 31%. The company, which runs an online marketplace for business services, said it expects its recognised revenue for 2014 to be substantially lower than expected owing to protracted contract delays. It said that following discussions with accountant KPMG, it has determined that a number of older projects started between late 2013 and early 2014, which have experienced delays, are showing a "lower likelihood of completion". Falkland Islands Holdings, down 14%. The company said it would suspend its dividend payments until further notice, as the company said it expects a fall in underlying pretax profit for the year to the end of March, with a good performance in the second half for its Falkland Islands Company business but lower activity levels at its Momart art handling and logistics unit.
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Other Top Economics And General
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Job placements in the UK increased at a stronger pace in March, while salaries rose at the fastest rate in six months, data from a survey by Markit Economics and KPMG revealed. Permanent job placements in March rose at a rate unchanged from the previous month's considerable pace. Meanwhile, temp billings growth was only slightly slower than the five-month high of February. The number of job vacancies climbed to a five-month high in March, underpinned by robust demand for staff.
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The Conservatives pushed into the lead in both the ComRes and YouGov polls but lost ground and the lead to Labour in the latest polls from TNS, Panelbase and Survation, as the Populus Election Outcome Predictor moved slightly in Labour's favour, even as the Scottish National Party extended its lead over Labour north of the border. The Daily Mail/ITV News/ComRes poll saw the Tories retain their lead at 34%, albeit down two percentage points, a fall which allowed Labour to gain ground on the Tories, adding a percentage point to be at 33%. The biggest gain came for the Liberal Democrats, up three percentage points to 12%, drawing level with an unchanged UKIP.
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The Conservatives outlined plans for volunteering leave and rail fare freezes, as businesses started to indicate the impact election uncertainty is having in the UK and doubts were raised about the details of the Scottish National Party's public spending plans. Prime Minister David Cameron said a Conservative government would offer up to 15 million workers in the UK three days' paid leave per year for volunteering. The move has been announced alongside a pledge to extend the freeze on some rail fares to 2020 in real-terms, meaning going up only in line with inflation.
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Chinese inflation remained unchanged in March and producer prices continued to remain in negative territory, giving room for the central bank to adjust its policy to spur economic growth. The consumer price index gained 1.4% in March from last year, the same rate of growth as seen in the prior month, the National Bureau of Statistics reported. Inflation was forecast to ease marginally to 1.3%. In a separate report, the NBS said producer prices declined for the 37th consecutive month in March. The decline largely reflects lower mining and raw material prices. Producer prices slid 4.6% from the prior year, which was slower than a 4.8% fall seen in February. Economists had forecast prices to drop 4.8% again in March.
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Switzerland's jobless rate remained unchanged in March, the State Secretariat for Economic Affairs reported. The unemployment rate held steady at a seasonally adjusted 3.2% in March, in line with expectations. On an unadjusted basis, the jobless rate fell to 3.4% from 3.5% in February.
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Afternoon Watchlist (all times in BST)
13:15 Canada Housing Starts
13:30 US Fed's Lacker speech
13:30 Canada Unemployment Rate
14:30 US Import and Export Price indices
15:00 UK NIESR GDP Estimate
17:20 US Fed Minneapolis's Narayana Kocherlakota speech
19:00 US Monthly Budget Statement
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Monday's UK Corporate Events
Carr's Milling Industries - Half Year Results
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Monday's Key Economic Events (all times in BST)
00:50 Japan BoJ Monetary Policy Meeting Minutes
03:00 China Trade Balance
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
Copyright 2015 Alliance News Limited. All Rights Reserved.
1 Sep 2016 10:07
