UK Retail Sales, Home Prices Fall; Slower Economic Growth

Arthi Gupta
12 Oct, 2010
New York City

The UK indexes slid after retail sales growth slackened and home prices fell in September. The UK economy slowed in the third quarter but annual inflation remained at 3.1% in September and trade deficit narrowed in August.

[R]4:00 PM London – The UK indexes slid after retail sales growth slackened and home prices fell in September. The UK economy slowed in the third quarter but annual inflation remained at 3.1% in September and trade deficit narrowed in August.[/R]

In London, FTSE 100 Index traded lower 36.58 or 0.65% to 5,635.88 and the pound edged lower to close at $1.5836.

The British Retail Consortium said the UK retail sales rose 0.5% on a like-for-like basis compared to a year ago in September, following a 1% expansion in August. Total sales rose 2.2%.

Food sales growth picked up in September, while non-food sales were down on a year ago for the first time since mid-2009.

The British economy slowed considerably in the third quarter of 2010, following unusually strong growth recorded in the second quarter of the year, according to the latest Quarterly Economic Survey from the British Chambers of Commerce.

The manufacturing sector turnover confidence balance advanced 7 points to plus 49%, the strongest result since the third quarter of 2007, according to the survey data. However, profitability confidence of manufacturers declined by 3 points.

The UK home prices continued the downward trend in September as supply continued to outstrip demand, according to a survey of real estate agents and surveyors.

The Royal Institution of Chartered Surveyors said that a net 36% of surveyors reported falling home prices in September, compared to a net 32% in August.

The Department of Communities and Local Government said today that the UK home prices increased 8.3% on a yearly basis in August, compared to the 8.4% growth recorded in July. On a monthly basis, home prices rose a seasonally adjusted 0.7% in August from a 0.3% drop in July. The mix-adjusted average home price in the UK was £213,116 in August.

Seasonally adjusted house prices rose 0.8% in the quarter to August compared to an increase of 1.7% in the May quarter.

UK consumer price annual inflation remained at 3.1% in September, unchanged from August, according to data released from the Office for National Statistics today. However, it continues to stay above the central bank''s 2% target.

Excluding volatile food and energy prices, core inflation in September slowed to 2.7% from 2.8% in August.

The UK trade deficit narrowed to £8.2 billion in August from £8.7 billion in July, according to the Office for National Statistics today. The surplus in services was £3.6 billion in August, compared to a surplus of £3.7 billion in July.

The deficit with EU region shrank to £3.5 billion in August from a deficit of £4.0 billion in July. On the other hand, the non-EU trade deficit was £4.7 billion in August, broadly unchanged from July.

Soco International PLC announced that it would plug and abandon Te Giac Den appraisal well, TGD-2X, as it failed to flow oil and gas at sub-commercial rates. The company said that the well encountered significant hydrocarbons in a clastics reservoir sequence at about 4,550 meters measured depth and produced both black oil and gas.

Gainers & Losers

C&C Group Plc rose 1.3% to €3.1 after the beverage manufacturer reported first-half net revenue soared 68.4% to €305.5 million from €181.4 million for the comparable period last year. Profit for the period attributable to equity shareholders surged 432% to €276.1 million from €51.9 million in the year-ago period.

Imperial Innovations Group plc gained 0.51% to 495.00 pence after the technology commercialization and investment group stated fiscal 2010 revenue increased marginally 0.5% to £4.34 million from £4.32 million in the comparable period. Pre-tax profit in the period grew 4% to £5.53 million from £5.32 million last year.

N Brown Group Plc increased 2.39% to 248.60 pence after the British home shopping retailer reported first-half revenue increased 3.2% to £349.7 million from £338.7 million last year. Profit before taxation in the period rose 27% to £42.3 million from £33.3 million in the prior-year period.

Punch Taverns Plc plunged 8.73% to 82.10 pence after the pub operator fiscal 2010 revenue declined 11% to £1.283 billion from last year''s £1.441 billion as drink and food revenues as well as rental income declined year-over-year. Net loss for the year narrowed 9.4% to £159.9 million or 24.8 pence per share from £176.4 million or 56.1 pence per share in 2009.

Summit Corporation Plc surged 11.20% to 2.78 pence after the biotechnology company said first-half revenues surged 300% to £432,000 from £108,000 in the previous year. Loss from continuing operations narrowed 40% to £1.78 million or 1.07 pence per share, as against a loss of £2.95 million or 5.20 pence per share in the comparable period a year earlier.