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UK manufacturing activity contracted for the first time in three years in April due to concerns about the strength of the global economy.

The Markit/CIPS manufacturing Purchasing Managers’ Index fell from 49.2 in April from 50.7 in March, which is the first time that activity in the manufacturing section has dropped since March 2013. Anything under the 50 mark indicates falling output.

Firms have said that a fall in new business from overseas and uncertainty due to the EU referendum are to blame. As the oil and gas industry is currently slowed, it is hitting production as this is a major company for UK businesses.

Matching February’s three-year low, the index for new orders fell to 50.4 in April, which is lower than 51.9 the previous month.

Official figures revealed last week that UK economic growth slowed to 0.4% in the first quarter of the year from 0.6% later in 2015.

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In the fourth quarter of 2015 the UK economy grew 0.6%, which is higher than the previous estimate of 0.5%.

According to the Office for National Statistics (ONS), the economy grew by 2.3% for the whole of 2015. This is higher than the 2.2% previously thought. Analysts forecast that the figure would remain unchanged.

The figures for the UK’s current account deficit were at a record high in the final quarter of last year. In the three months to December it was £32.7 billion, which is the equivalent of 7% of GDP.

Considering the whole of 2015, the deficit was £96.2 billion or 5.2% of GDP. Since records began in 1948, both figures were the highest since. As a result, the deficit means that the UK imported more goods and services than it exported.

The Bank of England’s Financial Policy Committee stated that uncertainty over the UK’s membership of the EU could put financial stability at risk. This includes the current account deficit.

The UK inflation rate stayed at 0.3% in February, the same as January.

The Office for National Statistics (ONS) said that the rising food prices, in particular vegetables, helped to keep the Consumer Prices Index unchanged.

Last year inflation reached zero and the annual inflation has continued to be below the Bank of England’s 2% target for the past two years. The Bank expected inflation to stay below 1% this year.

Under the separate Retail Prices Index (RPI) measure, inflation was 1.3% in February, which also showed no change from the previous month. The measure includes housing costs.

The ONS reported that government borrowing fell less than expected in February at £7.1 billion. Chancellor George Osborne is close to missing his target for cutting the budget deficit in the 2015-16 financial year. The total deficit now stands at £70.7 billion for the 11 months of the year. The chancellor’s full-year target is £72.2 billion.

UK unemployment rate has hit its lowest rate in more than a decade but wage growth shows a slower rate than forecast.

In the three months to November, UK unemployment rate settled at 5.1%, which is its lowest rate since the three months to October 2005. This is according to the Office for National Statistics.

Over the three-month period, the number of people out of work fell to 1.68 million, showing a 99,000 fall.

However, average weekly earnings that include bonuses were up 2%, which is its slowest increase since February. This was also below the 2.1% growth forecast in a Reuters survey.

The Office for National Statistics also said that average weekly earnings growth, which does not include bonuses, slowed to 1.9%.

Employment rate hit 74%, which is the highest since records began in 1971.

Despite this, the most recent ONS figures state that almost 23 million people are now in a full-time job, which is 436,000 more than the year before. There are also 8.4 million people in part-time jobs, which is an increase of 152,000.

 

 

 

Oil prices fell to $32.62 per barrel on Thursday due to rising US energy stockpiles and a weakening currency in China.

US oil was at its lowest point since December 2008 when it reached $32.40 per barrel during the financial crisis.

Brent crude fell 4.7%, which is a new low in 11-years as the last time it was this low was during April 2004.

Oil prices have been affected by a huge oversupply and near-record outputs, which are currently 70% lower in value than in June 2014 when the downturn first started.

This is not good news for companies and governments who rely on oil revenues and they have suffered as a result of the falling prices. It was also affected by China, who depreciated the yuan on Thursday as this sent regional currencies and stock markets plummeting.

Countries are running out of storage for the amount of oil because it is so heavily oversupplied and the demand for crude usually falls when the US dollar is stronger against currencies of purchasing countries.

The US Department of Energy’s weekly reported showed that US commercial crude inventories dropped from 5.1 million barrels to 482.3 million. However, government data showed a fourth consecutive week of increases as US crude production gained 17,000 barrels a day, taking it to 9.22 million barrels each day.

 

 

 

 

Official figures have shown that the UK economic growth for the second quarter of the year was unrevised at 0.7%. The figure that was released in July was increased because of a sharp rise in oil and gas production.

On Friday, the Office for National Statistics (ONS) did not change the reading for the three months to June. The figure was higher than the 0.4% growth recorded for the first quarter of the year.

The biggest contribution to trade in four years came from net trade boosting GDP by one percentage point in the second quarter as exports jumped. However, economists believe that this could be temporary because the strength of sterling means that British goods are more expensive abroad.

Business investment is on the rise as it rose 2.9% in comparison with the first three months of 2015. In the first quarter, household spending had a 0.9% rise whereas it only increased by 0.7% recently.

Last year the UK economy expanded by 3% and the Bank of England has forecast a 2.8% growth this year.

The chancellor has stated that he will attempt to bind future governments to maintaining a budget surplus at times when the economy is growing. George Osborne made his annual Mansion House speech and outlined his plan to make sure that governments run a surplus. In January, Osborne first proposed the changed to the fiscal policy.

The government plans to sell its stake in the Royal Bank of Scotland, the chancellor confirmed in his speech. Since the financial crisis, concerns over the national debt have doubled. However, the plan would legally prevent future governments from spending more than they receive in tax revenue whilst the economy is growing.

National debt refers to the amount of money owed by the UK government and has been built up over many years by different governments. During April this year, the national debt stood at £1.48 trillion, which is the equivalent of 80.4% of the UK’s annual economic output, the Office for Nation Statistics (ONS) announced. Back in 2008, the debt was about £600 billion, or 42% of economic output.

An independent watchdog called the Office for Budget Responsibility (OBR) will be responsible for policing the new rules. As well as this, the OBR is set to have the power to decide when the government should be able to spend more than it is taking in revenue.

A vote by the House of Commons will be taken concerning Osborne’s proposal and is due to take place later on this year.

The Confederation of British Industry (CBI) has cut its growth forecast for the UK economy and has warned of further risks posed by the end of the Greek crisis and uncertainty about the EU referendum.

CBI predicts growth of 2.4% and 2.5% in 2015 and 2016. This is down from 2.7% and 2.6%, which were the forecasts made in February. The decision to lower the expected growth is in line with other organisations that have revised figures, one being the Bank of England who recently revised its growth forecasts to be lower.

The blame was pointed towards the weaker-than-expected growth in the first quarter and the 0.3% expansion marked the UK’s weakest growth since the end of 2012. The CBI stated that if productivity continues to be weak, it could pose a threat to the UK economy. It also warned that the uncertainty over the EU referendum’s outcome meant that investment spending could also be delayed.

It is possible that this may not be a trend but a blip because it mostly reflects a sharp slowdown in Britain’s official economic growth rate in the first three months of this year and the employers’ group wants the government to stick to its plan to fix the public finances.

John Cridland, who is the CBI director-general, continues to feel confident that the UK economic recovery was on track and as a result of this, UK employers were feeling positive.

However, the CBI forecast came as the accountancy firm and services group BDO said that UK manufacturing firms’ confidence had dropped at its highest rate in two years. In addition to this, its monthly manufacturing optimism index, which is based on the UK’s main business surveys, had also seen a four-point drop. This is its biggest drop since March 2013. Low oil and gas prices had curbed investment in the sector and therefore slowed orders for manufacturing firms and a combination of the strong pound and a weak Eurozone hit exports, said BDO.

Recent forecasts suggest that the East Sussex economy could expand by about £2,900 million gross value added (GVA) between 2013 and 2025. GVA is the value of goods and services produced in the area.

Over this period, between 18,270 and 25,490 jobs could be created which includes full and part-time as well as self-employed.  Sectors that are anticipated to grow at the fastest rate in terms of employment between 2013 and 2020 include construction and financial and business services. Manufacturing and government services are fastest to contract.

Sectors such as construction, accommodation and food services, information and communication and financial and business services are expected to grow at the fastest rates in GVA between 2013 and 2020. The East Sussex economy is expected to grow at the same rate as the South East with the only sector predicted to decline being mining and quarrying.

The construction sector however is forecast to recover and is expected to grow at a quicker rate in East Sussex compared with regionally.

In 2013, when many of these statistics were complied, there were 2,645 more business starts across the county than there were closures, which were just below at 2,100. This is the first time this has happened since the recession. Although this is a step in the right direction, it is far more delayed compared to the regional and national trends as business starts began to rise and exceeded closures in 2011.

The only exception was Hastings as this area managed to follow the national trend. The town presents successful survival rates with 45.3% of new businesses surviving for 5 years.

The information for this report came from East Sussex in Figures and this is from their latest economic update.

Posted by: In: Economy 07 Aug 2014 Comments: 0 Tags: , ,

The Bank of England has today announced that they are to hold UK interest rates at their historically low rate of 0.5% for another month. This is great news for businesses in the area but not so for savers who have taken the brunt of low interest rates over the last few years.

As these are the lowest interest rates seen for a very long time, people should expect a rise at some point in the near future. The Bank of England has said that any rate rises will be gradual.

As with anything like this we’ll have to wait and see and will report on it as and when it happens, however the general feeling is that that they will be going up at some point in 2014.