OECD boost
Forecasts up
The Organisation for Economic Co-operation and Development (OECD) has caught the more positive economic mood and upgraded its forecasts for growth in the UK and other developed countries. This week it said UK GDP growth is likely to come in at 1.5 per cent this year, virtually double the previous forecast of 0.8 per cent. The OECD also upgraded its forecasts for French and German economic output for this year although it shaved its forecasts for US growth to 1.7 per cent. But there could be clouds on the horizon with the OECD warning that slowing emerging markets economies are a cause for concern for the global economy as a whole.
UK building
Construction boost
The UK construction industry is joining in the recovery party according to the latest data from the sector. The Markit/CIPS purchasing managers index for August showed a score of 59.1, up from 57 in July and the fourth consecutive month of expansion. The rate of growth is the highest recorded since 2007 as housing construction continues to pick up due to government initiatives to reflate the housing market and civil engineering construction is also picking up pace. Meanwhile, manufacturing posted its fifth consecutive month of expansion with a score of 57.2 in August with output and new orders expanding at the fastest rate for 19 years.
Indian slump
Growth worry
The rapidly deteriorating state of the Indian economy is causing increasing concern for politicians there. The latest data from the country this week showed its manufacturing sector output shrank in August for the first time in four years with domestic and export orders both falling. These figures corroborated last week’s data which showed that Indian GDP growth slowed in the second quarter of 2013 to 4.4 per cent, down from 4.8 per cent in the first quarter of the year. This was its most pedestrian quarter of growth since the aftermath of the global financial crisis in 2009.
See India's diminishing foreign reserves
Altitude warning
Fuel hurts
A profit warning from budget airline Ryanair this week sounded alarm bells in an airline sector which is already reeling from the recent rise in jet fuel prices due to the spike in the oil price. Ryanair warned investors that recent weakness in trading could see profits undershoot previous expectations as demand has been hit by a better UK summer and margins face pressure from higher fuel prices. Share prices across the sector have come under pressure as jet fuel prices have risen and consumers face the prospect of air fare hikes as carriers scramble to protect their margins.
Eurohope
Recession over?
The recession in the eurozone appears to be over judging by the latest GDP figures to emerge from the economic bloc which showed growth of 0.3 per cent with countries across both the core and periphery posting markedly improved performance. The improvement has been broadly supported by both improving exports and domestic spending. Portugal was the standout performer with GDP growth of 1.1 per cent in the second quarter with Cyprus the laggard as its GDP shrank by 1.4 per cent. To add to the sense of growing optimism, August represented the strongest month for the eurozone's private sector companies for two years.
High street hope
Grimsey review
Veteran retailer Bill Grimsey has proposed some radical medicine in his review into the state of the UK’s high streets and what can be done to revitalise them. One of the key recommendations among his 31 point plan published this week suggested a one-off levy on UK sales of all retailers of just 0.25 per cent which could raise up to £550m to be directed into initiatives across the country aimed at improving the high street shopping experience and access to high streets. Former Iceland, Wickes and Focus DIY boss Mr Grimsey said his ‘fighting fund’ would have far greater economic impact that the government’s piecemeal efforts. Meanwhile, retail sales continued their recent strong run, rising 1.8 per cent in August following a 2.2 per cent rise in July.
