UK GDP Expands at 1.2%; Indexes Dip

Arthi Gupta
28 Sep, 2010
New York City

The UK indexes fell after GDP expanded 1.2%, current account deficit narrowed, and business investment improved in the second quarter. The UK high street sales rose in September and home price growth slowed in August.

[R]4:30 PM London – The UK indexes fell after GDP expanded 1.2%, current account deficit narrowed, and business investment improved in the second quarter. The UK high street sales rose in September and home price growth slowed in August.[/R]

In London trading, FTSE 100 Index fell 17.89 or 0.32% to 5,556.30 and the pound edged lower to close at $1.5739.

The International Monetary Fund said that the British government''s multi-year fiscal deficit reduction plan is ""essential"" and ""supports a balanced recovery.""

The IMF added, ""The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery.""

The British economy recorded its fastest expansion since 2001 during the second quarter of this year as estimated in August. The economy grew 1.2% sequentially in the second quarter, according to data from the Office for National Statistics released today. Gross domestic product was 1.7% higher than the second quarter of 2009.

Manufacturing output grew 1.6% in the second quarter compared to the 1.5% increase seen in the first quarter.

The UK''s current account deficit narrowed to £7.4 billion, equaling 2% of GDP, in the second quarter from a revised £11.3 billion deficit, amounting to 3.1% of GDP, in the first quarter, latest figures from the Office for National Statistics showed today.

Portfolio investment income recorded a deficit of £1.5 billion in the second quarter, following a deficit of £3.4 billion in the previous quarter.

Business investment in the UK increased a revised 0.7% to £29.2 billion between April and June compared to three months ago, the Office for National Statistics said today.

Manufacturing investment soared 10.4% in the second quarter to £2.7 billion. Private sector non-manufacturing investment fell 0.4%, while public sector non-manufacturing investment rose 6.1% in the second quarter.

The latest quarterly Distributive Trades Survey from the Confederation of British Industry showed that the UK high street sales were higher than a year ago in September, representing the third consecutive annual increase.

The survey found that around 60% of retailers said that the volume of sales advanced during September; while 11% said that it declined, giving a balance of positive 49%.

Looking to October, a balance of plus 47% of firms expect a higher volume of sales than a year ago. The survey was conducted between August 26 and September 15, and covered 118 companies.

Data from Land Registry stated that home prices in England & Wales slackened in August. On a monthly basis, prices rose 0.3% in August, slower than 0.6% in July. The average home price was £167,423 in August compared with July''s £166,978.

Gainers & Losers

Camco International Limited fell 1.39% to 17.75 pence after the climate change and sustainable development company reported first-half revenue more than doubled 121% to €10.96 million from €4.97 million in the comparable period, mainly due to increased carbon revenue of €4.0 million. Pre-tax loss in the period narrowed significantly 98% to €396,000 from €18.12 million a year earlier.

Craneware plc declined 2.90% to 543.75_pence after the provider of revenue integrity solutions for the U.S. healthcare market signed a four year contract for the delivery of Supplies ChargeLink, to a long-standing U.S. hospital customer.

The deal is worth over $1.5 million over the term of the contract and takes the total number of Craneware products in use at the hospital to four.

Crimson Tide plc surged 15.04% to 1.30 pence after the provider of mobile data solutions, software and related activities reported first-half revenue declined 2.7% to £733,000 from £753,000 in the prior year, due to the company''s continued focus on recurring revenue. Profit generated in the period was £1,000 or breakeven per share, compared to a loss of £35,000 or 0.05 pence per share last year, reflecting lower operating and financing costs.

Man Group plc fell 2.42% to 214.00 pence after the hedge fund manager in its pre-close trading update for the first-half ending September 30 said it estimates funds under management or FUM to be $39.5 billion at the end of the period, an increase of 2.6% from the preceding quarter, helped by foreign exchange movements.

Ricardo plc climbed 1.18% to 300.00 pence after the provider of engineering solutions and strategic consulting to the automotive industry reported fiscal year 2010 revenue dipped 9% to £162.8 million from £178.8 million a year earlier. Profit for the year from continuing operations fell 30% to £10.3 million or 20.0 pence per share, compared with profit of £14.7 million or 28.6 pence per share a year ago.

The Game Group PLC plunged 10.27% to 59.00 pence after the PC and video games products retailer first-half revenues decreased 9.6% to £624.55 million from £690.75 million in the comparable period of last year. On a like for like basis, sales were down 10.9%. Loss for the period was £15.40 million or 4.44 pence per share, versus a profit of £7.72 million or 2.23 pence per share a year ago.

Thomas Cook Group PLC slumped 7.42% to 169.70 pence after the travel services firm said its UK bookings and prices have been relatively stable for the summer program and trading in other markets has been in line with or above its expectations. Further, the company said it has begun a review of its UK cost base.