UK GDP Shrinks 1.9%, Retail Sales Rise

123jump.com Staff
24 Apr, 2009
New York City

UK GDP shrinks in the first quarter at 1.9%, the fastest pace in 30 years as weakness in manufacturing and services intensifies. Retail sales volume increased in March and in the three months to the quarter. Banks, retailers and miners closed higher in trading. Barclays and Debenhams surged 8%.

[R]3:30 PM New York, 8:30 PM London – UK GDP shrinks in the first quarter at 1.9% as weakness in outputs in manufacturing and services intensifies. Retail sales volume increased in March and in the three months to the quarter.[/R]

European stocks regained new momentum after banks and auto stocks closed higher. Earnings from American Express and less than expected loss at Ford lifted stocks in the sector.[/R]

FTSE 100 index surged 3.4% or 137.76 to 4,155.99 and for the week increased 1.5%. The FTSE All-Share Index added increased 3.3%.

Energy and mining companies rose after crude oil and copper prices edged higher. Kazakhmys Plc surged 8.2% to after a recommendation by the broker. BHP Billiton increased 3.6% to 1,435 pence and Xstrata Plc surged 14% to 600 pence.

UK GDP Shrinks at 1.9%

The Office of National Statics in a statement said that the UK economy shrank 1.9% in the first quarter from the fourth quarter. The economy shrank 4.1% from a year ago on weak service sector and fall in production output.

The decline in the first quarter is the third quarterly economic shrink and the deepest decline since 1979. The economy is likely to shrink in the second quarter at a rate between 0.7% and 1.1% according to economists surveyed by 123jump.com in London.

Slowdown in manufacturing output deepened and contributed the most to the GDP decline the most with the fall of 6.2% compared to 4.9% decline in the previous quarter.

Services output declined at 1.2% in the quarter after dropping at 0.8% in the fourth quarter. Business services and finance declined 1.8% compared to 0.5% fall in the previous quarter.

UK Retail Sales Increase

UK retail sales increased 0.3% in March from February and increased 1.5% from a year ago driven by higher food stores sales. Retail sales volume remains mixed across all sectors. Total sales volume in three months to March increased 2% from the March quarter 2008 and gained 0.9% from the three months ending in December.

Sales volume of textile, clothing and footwear showed the rise of 5.3%, the largest since November 2001 when it increased at 5.9%.

The data lifted the food and grocery retailers in trading.

Retailers increased after Debenhams reported first quarter profit increase of 25%. Debenhams Plc increased 8.7% to 84 pence. Tesco declined 1.60 pence to 355.40 pence, J Sainsbury added 6.75 pence to 323.25 pence and Marks & Spencer added 1.75 pence to 341.75 pence.

UK Auto Production Plunges

The Society of Motor Manufacturers and Traders reported car production decline of 51.3% to 61,829 and for the first quarter dropped 56.6% to 183,010.

Commercial vehicles sales in the month plunged 57.1% and 63% in the first quarter this year.

Gainers & Losers

Of the stocks in FTSE 100 index, 91 increased, 11 declined.

Xstrata Plc led gainers in the FTSE 100 index stocks with a rise of 14.2% followed by gains in Aviva Plc of 14.21%, in Legal & General Group of 10.8%, in Eurasian Natural of 9.5% and in Barclays Plc of 8.6% and in Kazakhmys Plc of 8.2%.

Autonomy Corp led decliners in the FTSE 100 index with a loss of 2.7% followed by losses in Smith & Nephew of 2.1%, in Drax Group Plc of 1.7% and in British Airways Plc of 1.4%.