An inconclusive election result in Italy, and fears of a trade war sparked by the Trump administration’s protectionist agenda, formed an uncertain backdrop to the week’s economic news.
In the US, Gary Cohn - Donald Trump’s top economic adviser - resigned, reportedly in response to the President’s insistence on imposing new tariffs on steel and aluminium imports.
Meanwhile in the UK, survey data showed activity in the all-important services sector growing at its fastest rate for four months in February.
The closely-watched IHS Markit/CIPS purchasing managers’ index (PMI) rose to 54.5 in February from 53.0 in January. Readings above 50 indicate expansion. IHS Markit said growth was supported by strong job creation across the sector.
UK car sales slowed again in February, though the pace of decline steadied, according to the Society of Motor Manufacturers and Traders. Sales of new cars fell 2.8% last month compared to the year before. February is traditionally a slow month for the car market ahead of the March number plate change.
House prices continue to soften, according to Halifax. The annual rate of price growth slowed to 1.8% in the three months to February, and property values were 0.7% lower than in the previous quarter.
Managing director Russell Galley said: “House prices continue to remain broadly flat, as they have since the end of last year. The annual rate of growth has slowed from 2.2% in January to 1.8% in February, the lowest rate of growth since March 2013.”
But, he added: “While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.”
The Royal Institute of Chartered Surveyors’ Residential Market Survey also found prices were flat in February, with London seeing price falls. New buyer enquiries - a leading indicator of demand - decreased for an 11th consecutive month in February.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics said: “Demand hasn’t fallen for such a protracted period since the 2008 financial crisis. We fear that demand will continue to fall rapidly over the coming months, as new mortgage rates pick up.”
Meanwhile, manufacturing in the UK notched up its ninth consecutive month of growth - the longest period of expansion on record - boosted by global economic growth and the weaker pound.
Manufacturing grew by 0.1% in January compared to December, the Office for National Statistics said. Total industrial production, which includes the UK’s North Sea oil and gas fields as well as utilities such as water and gas, grew by 1.3%.
However, UK construction output fell at its fastest annual pace in January since 2013, according to the ONS.
“Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in housebuilding,” said ONS senior statistician Ole Black.
Main source of information: Company Report and Accounts, Bloomberg
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