UK Home Repossions Surge; Weak Manufacturing

123jump.com Staff
22 Jan, 2009
New York City

UK home repossessions rose 92% in the third quarter and manufacturing survey showed weak sentiment in the sector. For the three months to January, the CBI survey indicated a decline in demand, fall in employment and a drop in capacity utilization. In a listless trading, Lloyds Banking led gainers.

[R]1:00PM New York, 6:00PM London - U.K. home repossessions rose 92% to 13,161 properties in the third quarter.[/R]

Stocks declined after weakness in the manufacturing sector and rising home repossessions in the third quarter.

In London trading FTSE 100 index slipped 0.2% or 7.65 to 4,052.23.

Of the FTSE 100 index stocks, 43 gained, 58 declined, and one was unchanged. Lloyds Banking led gainers in the index shares with a rise of 8.9% on the expectations that the government steps to strengthen financial system will help stem further losses.

U.K. Manufacturing Sector Activity Deteriorates

Confederation of British Industries reported today that the quarterly Industrial Survey showed that demand for products in the manufacturing sector fell, with 56% of companies reporting a fall of in the volume of new orders in the three months to January. 14% of the companies reported an increase, giving a balance of –43.

In October, the balance for volume of new orders was –30 compared with –3 in July.

The CBI survey noted that 70% of the companies are less optimistic than three months ago, and 6% are more positive, giving a read on the sentiment of –64%.

Employment in the sector also declined markedly, with 45% of companies saying that they employed fewer people than in the previous quarter, while 7% said they employed more, giving a balance of -38.

In addition, 70% of companies said they were working below capacity, compared with 62% in October. The survey reported that firms have more stocks of unsold goods than is deemed adequate to meet demand.

The survey noted that 38% of firms reported a fall in export orders, while 14 reported a rise, to give a balance of -25, falling the most in seven years.

Manufacturers expect export orders to be even lower in the current quarter, with a balance of -27 expecting them to be down on last quarter. Prices have also been cut for the first three years.

Firms project even weaker demand, with 62% saying the volume of new orders will be lower than last quarter, and 8% saying they will be higher, giving a balance of –54.

About 50% of companies said they expected output to be lower in this quarter than in the previous quarter, compared with 7% expecting a rise, giving a balance of –43.

Manufacturers forecast that they will spend less on investment over the next 12 months compared with the previous period.

CBI’s chief economic advisor Ian McCafferty said, “Sentiment and the outlook for the next three months are also very negative. Most firms expect conditions to get even worse, with further falls in orders expected, leading to more job cuts. Companies unsurprisingly plan to cut back investment sharply over the next year.”

U.K. Home Repossession Rise 92% in Q3

The Financial Services Agency reported today the country’s home repossessions increased 92% to 13,161 in the third quarter from the same period a year ago.

Home loan repayments that were late rose by 10% to 60,000 from 54,000.

Gainers & Losers

Lloyds Banking led gainers in the FTSE 100 index shares with a rise of 8.9% followed by increases in Amlin Plc of 4.4%, in Standard Chartered of 4.4%, in Friends Provident of 4.2%, and Tate & Lyle of 4%.

Financial stocks rose on optimism that government support will prevent further losses.

Barclays led decliners in the FTSE 100 index shares with a fall of 10.4% followed by losses in BT Group of 9.1%, in Man Group of 6.3%, in Aviva Plc of 5%, and WM Morrison Sup of 4.4%.