Soft Housing Market, Unemployment Falls

123jump.com Staff
13 Feb, 2008
New York City

UK housing market survey indicated continued soft market conditions according to a survey published by RICS. January survey indicated declining housing prices and rising inventories of unsold homes in January, except in Scotland. Home builders and lenders fell after the report. Unemployment fell in January by 0.2%according to ONS report, a consecutive 16-month decline.

[R]3:00PM New York, 9:00PM London – Housing market survey show continued softness and price decline across UK, except Scotland. Unemployment rate falls in January.[/R]

London stock indexes closed down after a report showed that house price falls accelerated in January. However other government reports indicating that the unemployment rate fell to a record and strong earnings from British Energy helped trimmed losses.

In London trading FTSE 100 fell 0.52% or 29.9 to 5,880.10.

Of the 102 stocks in FTSE 100 index 44 gained and 58 declined. British Energy led advancers with a rise of 9% after reporting that EBITDA for nine months ended December 31st stood at £745 million, 5% more than forecasted by analysts.

House Price Falls Accelerates in January

The Royal Institution of Chartered Surveyors reported its RICS UK housing market survey for January 2008. RICS house price balance declined for the sixth month in succession signaling half a year of negative market sentiment, adding that 54.7% more Chartered Surveyors reported a fall than a rise in house prices, from 49.1% in December.

Prices are increasing in Scotland only with the net balance of surveyors in that country reporting price-rise increasing to 7% from 3%. In addition, buyer enquiries fell at the fastest pace since October.

RICS notes that the fallout from credit crunch continues to prevent many would-be-buyers from entering the market and it is likely that demand will remain subdued while mortgage-lending criteria is tight.

The stock of unsold property on surveyors’ books jumped by more than 10% and has increased by 40% since September 2007, while the current average level of unsold property per surveyor stands at 85, the most since in 9 years.

Unemployment plummets

The Office of National Statistics reported today on its web site that the employment rate of people of working age rose 0.3% for the three months to December from the previous month and 0.2% on the year to 74.7% in January.

People in employment for the three months to December rose by 175,000 over the quarter and 296,000 to 29.40 million, the highest since the beginning of comparative records in 1971. However, total hours worked declined by 2.3 million to reach 935.6 million.

Statistics also showed that unemployment fell 0.2% over the previous quarter and 0.3% over the year at 5.2%, and the number of unemployed people fell by 61,000 for the quarter and 86,000 for the year at 1.61 million.

People claiming unemployment benefit declined for 16 consecutive months by 10,800 from December and 128,500 from the previous year to 794,600 in January. The figure is the lowest since June 1975.

The statistics office also added that the inactivity rate for people of working age fell 0.2% from the previous quarter and unchanged for the year at 21.0% for the three months to December 2007.

Economically inactive students has reached a record high of 1.94 million while the number of economically inactive people looking after the family or home has reached a record low of 2.26 million.

Average Earnings Rise

Separately, ONS reported that the annual rate of growth in average earnings, excluding bonuses, rose by 0.1% from the previous month at 3.7 % in December 2007.

Average earnings including bonuses rose by 3.8% in the year to December 2007 from 4% in November. Job vacancies in the three months to January rose by 7,300 over the previous quarter and 72,000 over the year to 677,400.

According to the statistics office December pay growth in the private sector was 4%, while it was 3.3% for the public sector.

Gainers & Losers

British Energy led gainers in the FTSE 100 index shares with a rise of 9% followed by gains in Experian Group of 4.19%, in Man Group of 4.04%, in International Power Plc of 2.59%, and in Reckitt Benckise of 2.56%.

British Energy rose after income exceeded analyst estimates as nine months EBITDA was £745 million. Net income for the three months ended December 31st, however dropped 18% to £140 million from £171 a year earlier.

Alliance & Leicester led decliners in the FTSE 100 stocks with a fall of 6.99% followed by losses in BG Group of 4.21%, in Vedanta Resources of 3.36%, in Taylor Wimpey of 2.70%, and in Persimmon of 2.62%. Homebuilders fell after RICS reported house prices continued to deteriorate in January.

Financial stocks fell on weak housing market survey. Royal Bank of Scotland fell 1.27%, and HBOS shed 1.19%.

Company News

Rio Tinto Plc reported today that net income in the six months ended December jumped from $3.64 billion a year earlier to $4.06 billion, while sales climbed 49% to $17.7 billion on increased production of iron ore. Full-year dividend was increased 31% to $1.36.

International Markets Update

In Tokyo Nikkei 225 Index closed higher 46.34 or 0.36% to 13,068.30, in Hong Kong Hang Seng index increased 247.88 or 1.08% closed to 23,169.55. Australia ASX 200 index decreased 66.00 or 1.18% to close 5,542.10.

In South Korea Kospi Index decreased 11.55 or 0.70% to close at 1,631.78, in Thailand SET index closed higher 11.92 or 1.46% to 829.41 and Indonesia JSE Index edged increased 18.71 or 0.72% to 2,610.78. Sensex index in India increased 341.10 or 2.05% to 16,949.14.

In London FTSE 100 Index closed lower 29.90 or 0.51% to 5,880.10, in Paris CAC 40 Index increased 14.69 or 0.30% to close at 4,855.40 and in Frankfurt DAX index higher 5.83 or 0.08% to close at 6,973.67. In Zurich trading SMI decreased 10.44 or 0.14% to close at 7,536.45.