Adding to the bullish sentiment in the UK economy, the previously estimated first-quarter Gross Domestic Product (GDP) figure of 0.8% could well be revised upwards to 0.9% as a result of better than expected growth in the construction sector. The Office for National Statistics (ONS) had originally estimated the construction sector output to be 0.6% in Q1, however, their latest estimates for the period have been more than doubled to 1.5%, representing its strongest growth since 2010. The ONS also stated that growth in the sector rose by 1.2% in April, compared to the previous month. Whilst private sector housing saw output grow by 2.5% in April, and private sector industrial work increased by 3.8%; the public sector saw a dramatic decline in activity, dipping by 45.7%, which is the greatest fall seen in this area for 50 years. However, new orders in Q1 were seen as being 6.3% lower than Q4 2013 and there were also falls in infrastructure, and private commercial work. The ONS, commenting on this, said that they believe the main factor in this decline in public work was the fact that new investment in housing associations was now coming from private funds, rather than public money. This data adds credence to the comments made by the Governor of the Bank of England (BoE), Mark Carney, this month, when he warned that the growth in the UK housing sector is beginning to overheat, and that he may well have to raise interest rates sooner than previously advised to address this. At the same time the Chancellor of the Exchequer, George Osborne, said he would give the BoE additional powers to limit the loan to income ratios that lenders apply to mortgage applications, but he did not set a target for these.
Markets (June) (Data supplied by the Outsourced Marketing Department)
Geo-political events, such as continued unrest in the Ukraine and Syria and renewed sectarian unrest in Iraq, managed to subdue most global equity markets, with many investors deciding to sit on their hands to await resolutions. The FTSE100 declined 1.47% to finish June on 6,743.9, with the wider FTSE250 falling a similar 1.79% to close on 15,723.56, whilst the junior AIM market fared worse, losing 3.67% to end the month on 785.39. Across the pond, despite disappointing economic predictions, and a downward revision of their 2014 gross domestic product growth prospects, the Dow Jones index managed to rise a modest 0.65%, finishing the half- year at 16,826.6. The Nasdaq market, meanwhile, rose strongly, closing at 4,408.1 to record a respectable 3.9% advance. In Europe there was little investor activity, as the Eurostoxx50 lost a modest 16 points, to close little changed at 3,228.56. Japanese markets saw a little stronger demand, with the Nikkei 225 gaining 3.62% across the month, to close June at 15,162.1. On the foreign exchange markets, slightly contradictory comments from the Governor of the Bank of England, Mark Carney, on possible interest rate rises, resulted in sterling seeing strong demand, gaining 2.4% against the greenback over the month to finish at $1.71. Sterling also improved against the Euro, where at €1.25 it saw a 1.63% rise. The Euro itself remained almost flat against the US Dollar, closing June at $1.37. The same geo-political events resulted in oil spiking to $115 during the month, but fell back to close at $112.3 a barrel, as measured by the Brent Crude benchmark and Gold saw demand, ending the month on $1,325.63 an ounce, for a healthy 6.5% gain. Download full report here