UK GDP Expands 0.5%, Home Price Index Drop 2.2% in May

Arthi Gupta
28 Jun, 2011
New York City

The UK indexes rose after GDP expanded 0.5%, employment rose 1.4%, business investment and consumer spending slid in the first quarter. Irish consumer confidence deteriorated to a 4-month low in June. Cable & Wireless plunged 14% on weak fiscal year 2012 outlook.

[R]3:30 PM London – The UK indexes rose after GDP expanded 0.5%, employment rose 1.4%, business investment and consumer spending slid in the first quarter. Irish consumer confidence deteriorated to a 4-month low in June. Cable & Wireless plunged 14% on weak fiscal year 2012 outlook.[/R]

World markets traded cautiously ahead of Greek austerity vote on Wednesday. Investors tiptoed back to market as Greece faces a 2-day strike as lawmakers debate austerity measures to access funds to repay 6 billion euros bonds due in August.

In London, FTSE 100 Index gained 51.41 0.9% to 5,773.30 and the pound edged higher to $1.6003.

UK GDP Rises, Employment Up 1.4%

UK GDP increased 0.5% in the first quarter compared to a decrease of 0.5% in the previous quarter and 1.6% higher from a year ago. GDP in first quarter returned to the level last seen in the third quarter of 2010.

Construction output fell by 3.4% and revised production output fell 0.1%. First quarter trade deficit in real terms decreased to £6.6 billion.

In the three quarters total employment rose 1.4% or 416,000.

UK Consumer Spending Drops

First quarter consumer spending fell 0.6% compared to fourth quarter with the largest decrease of 9.7% in the quarter on from the previous in electricity gas and other fuels.

UK Business Investment Decrease

UK business investment slipped by seasonally adjusted 3.2% sequentially in the first quarter to £30 billion, smaller than a 7.1% fall estimated initially, revised data from the Office for National Statistics showed.

UK Deficit Narrows

The UK current account balance registered a shortfall of £9.4 billion in the first quarter, down from a revised £13 billion deficit in the previous quarter, according to the Office for National Statistics.

England/Wales Home Prices Fall

Home prices in England and Wales decreased at a faster pace in May, data released by Land Registry showed on Tuesday.

The home price index dropped 2.2% annually in May, faster than the 1.7% decline recorded in April. The latest fall was the sharpest since October 2009, when home prices fell 2.6%.

On a monthly basis, home prices decreased 0.4% in May, reversing the 0.4% increase in April.

The average property price in England and Wales decreased to £161,823 in May from £165,499 last year.

Irish Consumer Confidence Worsens

Consumer sentiment in Ireland deteriorated to the lowest in four months in June, data from a survey conducted by the National Economic and Social Research Institute showed today.

The KBC Bank Ireland/ESRI consumer sentiment index dropped to 56.3 in June from 59.4 in May. The latest reading is the lowest since February.

Gainers & Losers

Cable & Wireless Worldwide Plc plunged 13.82% to 45.03 pence after the telecommunications group appointed John Pluthero, current Chairman as its new chief executive after Jim Marsh resigned.

The company also said it expects gross margin for fiscal 2012 to be “somewhat below current market expectations” and decided to reduce the fiscal dividend by half.

Centrica Plc rose 0.15% to 324.20 pence after the utility operator estimated earnings in the first-half to decline from last year, reflecting the impact of higher costs and lower consumption on its downstream UK business.

Daisy Group plc surged 4.17% to 125 pence after the telecom operator stated fiscal year 2011 revenues of £266.32 million. Annual loss attributable to shareholders was £7.69 million or 3.02 pence per share.

James Cropper Plc soared 16.53% to 215.00 pence after the specialist paper manufacturer said fiscal year 2011 revenue rose 18% to £83.26 million compared with £70.71 million in the previous year. Profit for the period surged 369% to £8.49 million or 97.6 pence per share versus £1.81 million or 21.1 pence per share in the prior-year period.

Thorntons Plc slumped 4% to 60.00 pence after the confectionery and sweet foods maker said at least 120 stores will be closed over three years.