UK PPI Soars, Trade Deficit Narrows

123jump.com Staff
12 May, 2008
New York City

UK traded deficit in March narrowed to

[R]5:00AM New York, 7:00PM London - U.K producer prices rise 7.5% in April. Trade deficit narrows to £4 billion in March from £4.3 billion in February.[/R]

Stocks in London advanced after a government report showed that U.K’s trade deficit narrowed to £4 billion from £4.3 billion in February.

In London trading FTSE 100 rose 0.26% or 15.9 to 6,220.60. Of the 102 FTSE 100 stocks 54 gained, 45 declined, and 3 were unchanged. Cairn Energy led advancers in the index shares with a rise of 4.03% followed by Kingfisher rising 3.69%.

U.K producer prices rise 7.5% in April

The Office for National Statistics reported today that the output price index for domestic sales of manufactured products jumped to 7.5% in the year to April from a rise of 6.5% in the year to March. The rise producer price index rise was the most since 1985.

Unadjusted, the index rose 1.4% between March and April, driven by rises in other manufactured product prices.

The ONS added that the output price index excluding excise duties advanced 7.7% in the year to April. Seasonally adjusted, the index rose 1% between March and April.

In addition, the input price index for materials and fuels purchased by manufacturing industry rose 23.3% in the year to April and increased 2.6% between March and April due to the increase in the price of crude oil.

According to the report, prices of imported materials, including imported crude oil, advanced 2.4% between March and April. Seasonally adjusted, the input price index gained 2.4% between March and April.

Also, the input price index for manufacturing industry, excluding food, beverages, tobacco and petroleum industries spiked 12.6% in the year to April and 2.2% in seasonally adjusted terms between March and April.

UK trade deficit narrows

Separately, the ONS reported that the UK deficit on trade in goods and services is provisionally estimated to have narrowed in March to £4 billion from a revised deficit of £4.3 billion in February from earlier estimate of £4.4 billion.

The first quarter deficit on trade in goods and services widened to £13.4 billion compared with £13.1 billion deficit in the fourth quarter of 2007.

The statistics office further noted that UK’s deficit on trade in goods in March is provisionally estimated at £7.4 billion from £7.6 billion in February.

In trade with the EU 27 nations, the trade deficit was £3.7 billion in March compared with £3.5 billion in February and the deficit with non-EU countries in March was gauged at £3.8 billion compared with £4.1 billion in February.

On the overall, total exports of goods in March rose by a half per cent to £20.1 billion while total imports of goods fell by a half per cent to £27.6 billion.

The balance on trade in oil was in deficit by £0.4 billion in March from a deficit of £0.1 billion in February, and in the first quarter, the deficit was £1 billion compared with £1.3 billion in the previous quarter.

Gainers & Losers

Cairn Energy led advancers in the FTSE 100 index shares with a rise of 4.03% followed by increases in Kingfisher of 3.69%, in Centrica Plc of 2.70%, in G4S Plc of 2.67%, and Eurasian Natural of 2.22%.

Kingfisher Plc and other retailers increased after a government report showed that producer prices advanced by 7.5% in March, the highest since 1985. Marks & Spencer gained 1.69% and Next Plc of 1.47%.

Whitbread led decliners in the FTSE 100 index shares with a drop of 2.22% followed by losses in Vedanta Resources of 2.08%, in Lloyds TSB Group of 1.91%, in Barclays Plc of 1.50%, and Antofagasta Plc of 1.42%.

Barclays fell after Chief Executive Officer John Varley said the bank will not rule out raising additional capital, nor mergers and acquisitions. Other financial stocks fell as well. Alliance & Leicester declined 0.87%.

Homebuilders also dropped. Hammerson shed 0.78%, Persimmon edged down 0.74% and Land Securities tumbled 0.74%.


HSBC today reported provision for bad loans of $3.2 billion, which was lower than analyst forecasts of at least $4.2 billion and as high as $4.9 billion.

At the end of March 2008, 5.0% of mortgages in US branch-based consumer lending business were two months or more overdue, compared with 4.2% at the end of 2007. The equivalent figures for our mortgage services business were 12.5% and 11.2%, respectively. This company said that this trend of rising delinquency ratios will continue as balances continue to be run off.

HSBC added 1.9%.

Sharp rise in arrears at Northern Rock

Northern Rock reported today that the number of borrowers behind with their payments by three months has climbed markedly since the bank was nationalized to 0.95% of its outstanding loan book from 0.57% at the end of December.

World markets review

In Tokyo Nikkei 225 Index closed higher 88.02 or 0.64% to 13,743.36, in Australia ASX 200 index higher 56.70 or 0.98% to close 5,828.50. In Malaysia KL Composite index increased 7.82 or 0.61% closed to 1,293.09. Market of Hong Kong was closed today.

In Thailand SET index closed lower 4.49 or 0.53% to 842.22 and Indonesia JSE Index edged increased 2.98 or 0.13% to 2,378.00. Sensex index in India increased 123.90 or 0.74% to 16,860.90. Market of South Korea was closed today.

In London FTSE 100 Index closed higher 15.90 or 0.26% to 6,220.60, in Paris CAC 40 Index increased 15.65 or 0.32% to close at 4,976.21 and in Frankfurt DAX index higher 32.78 or 0.47% to close at 7,035.95. Market of Zurich was closed today.