UK Deficit Grows; Tesco Sales Rise

Darlington Musarurwa
13 Jan, 2009
New York City

U.K. trade deficit widens to

[R]1:00PM New York, 6:00PM London - U.K. trade deficit widens to £4.5 billion in November. Latest month real estate sales per agent fall. Tesco comparable sales in UK rise 2.5%.[/R]

London stocks shed 0.6% led by realty and financial stocks. In London trading FTSE 100 index fell 0.6% or 27.04 to 4,399.15.

Of the FTSE 100 index stocks, 27 increased, and 75 declined. Randgold led advancers in the index shares with a rise of 6.4%.

U.K. Economic Situation Deteriorates

British Chambers of Commerce reported today in its fourth quarter economic survey involving 6,000 companies that the economic situation for both manufacturing and services worsened the most since the survey began in 1989.

BCC said the manufacturing sector’s balance for home sales declined 25 points to –38 and the net balance for manufacturers’ home orders dropped 31 points to –48 in the fourth quarter.

The service sector net balance for home sales also dropped 24 points to –31and the net balance for service home orders declined 23 points to –36.

The report said the manufacturing sector’s export sales balance plunged 15 points to –12 and service sector’s export sales balance shed 22 points to –9.

Manufacturing and service sector employment balances plummeted 17 points to –17 and 24 points to –22 respectively.

Business confidence also fell in the fourth quarter as the manufacturing sector turnover confidence fell 36 points to –32, while the service sector turnover confidence declined 33 points to –23. Profitability confidence dropped 28 points to –39.

Director General of the British Chambers of Commerce David Frost said, “We have to focus on holding the productive sectors of the economy together. If we are to climb out of this morass we will need a strong business base.”

U.K. Trade Deficit Widens to £4.5 billion in November

Office of National Statistics reported today that deficit on trade in goods and services has widened to £4.5 billion in November from £3.9 billion in October.

However the deficit in trade in goods and services in the three months to November narrowed to £11.9 billion from a £12.6 billion deficit in the previous three months.

The ONS also said the U.K’s deficit on trade in goods soared to £8.3 billion from £7.6 billion in October.

The deficit with the E.U. eased to £3 billion in November from £3.2 billion a month ago, while the trade deficit with non-EU countries in November was £5.3 billion from £4.4 billion in October.

In addition, total exports of goods declined 6% to £19.8 billion and total imports of goods fell by 2% to £28.2 billion.

Real Estate Sales Fall in December

Royal Institution of Chartered Surveyors reported today that the seasonally adjusted net balance of surveyors reporting falling rather than rising prices eased to 73.5 from 75.8 to 73.5 in December.

Prices remain subdued owing to large stocks that are still on estate agents books.

New vendor instructions are currently rising in England and Wales at six out of ten.

The RICS also said new buyer enquiries increased, but completed sales per surveyor dropped to 10.1% in the review period from 10.6.

The average inventory stock on surveyor’s books was gauged at 78.1.

Gainers & Losers

Randgold led gainers in the FTSE 100 index shares with a rise of 6.4% followed by increases in Unilever Plc of 3.1%, in Reed Elsevier of 2.7%, in Shire Plc of 2.3%, and Centrica Plc of 2.2%.

Barclays led decliners in the FTSE 100 index shares with a drop of 10.1% followed by losses in Friends Provident of 8.9%, in Aviva Plc of 8.2%, in Royal Bank of Scotland of 7.1%, and Hammerson Plc of 6.5%.

Other realty stocks dropped. British Land Co fell 5.1% and Land Securities dipped 5.1%.

Tesco Group’s Sales Increases 11.6%

Tesco Group reported today that sales in the seven weeks to January 10 advanced 11.6% despite the challenging economic conditions on strong performance at home and abroad.

International sales soared 32.7% buoyed by favorable exchange rates in Europe and rising sales in Asia. Sales in Europe gained 24%, while sales in Asia edged up 43% on strong growth in Korea, China and Malaysia.

In the U.K. comparable sales excluding petrol climbed 2.5% in the period.

European Markets Review

In London FTSE 100 Index closed lower 27.04 or 0.61% to 4,399.15, in Paris CAC 40 Index decreased 48.23 or 1.49% to close at 3,197.89 and in Frankfurt DAX index lower 82.68 or 1.75% to close at 4,636.94. In Zurich trading SMI decreased 57.46 or 1.03% to close at 5,534.33.