US economy grew faster than anticipated in Q1
The US economy grew faster than initially anticipated in the first three months of the year, according to the Commerce Department’s final figure released on Thursday.
Gross domestic product increased at a 1.4 percent annual rate, 0.2 percent higher than the 1.2 percent pace reported last month.
The revised growth figure was boosted by a growth in consumer spending, which saw a solid revision from a rate of 0.6 percent to 1.1 percent.
“The economy is expanding at a solid, if unspectacular pace,” said Gus Faucher, chief economist at PNC Financial Services.
The revised figure will go some way to alleviate fears of a slowdown in the world’s largest economy. Earlier this week the International Monetary Fund warned that political uncertainties meant there were “larger than usual” risks to the U.S. economy.
FCA cracks down on unclear pricing structures in investment sector
The Financial Conduct Authority have cracked down on the way the asset management sector charges its customers, in a bid to make the industry more transparent.
The new regulations will aim to promote a clearer pricing structure, with each firm declaring a complete annual fee, rather than the current mix of different charges.
The FCA’s investigation found that firms in the sector had an average profit margin of 36 percent. Yet despite “sustained, high profits” for these firms, there was weak price competition and no link between higher fees and better performance.
“In the current low-interest environment, it is vital we help people earn a return on their savings. We need a competitive sector, attracting investment into the United Kingdom which also works well for the people who rely on it for their financial well-being,” said Andrew Bailey, FCA chief executive.
“We have put together a comprehensive package of reforms that will make competition work better and help both retail and institutional investors to make their money work well for them.”
Kromek shares sink despite recording smaller loss for 2017
Technology company Kromek (LON: KMK) saw shares sink nearly 10 percent on Wednesday, after recording a £1.5 million loss for the year to April 2017.
The company, who focus on the medical, security screening and nuclear markets, saw revenue increase 7.5 percent to £9 million, with product sales accounting for 74 percent of total revenues.
The company still recorded a £1.5 million EBITDA loss for the year, an improvement on the £2.4 million loss seen last year, with loss before tax for the year was £3.8 million. This came despite attracting further investment of £3.5 million.
The company provides radiation detection products for the medical, security screening and nuclear markets, based on cadmium zinc telluride and other advanced technologies.
Shares in Kromek are currently trading down 9.13 percent at 32.83 (1058GMT).
IMF lower growth US growth forecasts on Trump uncertainty
The International Monetary Fund lowered their forecasts for US growth on Tuesday, down to 2.1 percent from their previous figure of 2.3 percent.
Following a review of U.S. economic policies, the IMF lowered their expectation for economic growth to 2.1 percent for both 2017 and 2018. Giving a reason for their decision, the body said that the Trump administration’s push for annual growth of over 3 percent for a sustained period was unlikely, partly because the labor market is already at a level consistent with full employment.
The IMF said they were uncertain over the efficacy of the Trump administration’s plans for the economy, with Alejandro Werner, director of the IMF’s Western Hemisphere Department, saying at a press briefing in Washington that they “have removed the assumed fiscal stimulus from our forecast”.
In a statement, the IMF said:“The U.S. is effectively at full employment. For policy changes to be successful in achieving sustained, higher growth they would need to raise the U.S. potential growth path.”
“The U.S. economic model is not working as well as it could in generating broadly shared income growth,” the IMF added.
“Most critically, relative to historical performance, post-crisis growth has been too low and too unequal.”
Capita shares rise after £888m sale of asset management division
Shares in outsourcing giant Capita (LON:CPI) jumped in early trading on Monday, after the company announced it had sold its fund administration business for £888 million.
Capita sold the division, which administers around £50 billion of fund assets, to Australian firm Link Administration Holdings. The asset management had presented problems for the company, showing stable growth but becoming costly after it provided administration services for the failed Arch Cru and Connaught funds.
“Capita has secured an excellent price for the disposal of Capita Asset Services,’ said Julian Cater, analyst at Numis, told Citywire.
“This will significantly de-gear the balance sheet”.
Shares in Capita rose on the announcement, currently trading up 2.68 percent at 710.00 (1255GMT). However, its shares have fallen nearly 30 percent over the past year, dropping out of the FTSE 100 in March after a spate of profit warnings.
UK business confidence jumps in May, driven by optimism in Wales
Business confidence has jumped to an 18-month high despite political turmoil from both Brexit and June’s general election, according to the latest report from Lloyds Bank.
Britain’s confidence index rose to 24 percent in May, above the average figure for the last 25 years which stands at 23 percent.
However, the number of companies that said they had found it hard to find skilled labour over the past six months rose to a 10-year high of 52 percent, up from 31 percent in January.
Lloyds Bank surveyed 1,500 UK companies, after the general election was called. Tim Hinton of Lloyds Banking Group said: “Although challenges remain in recruiting both skilled and unskilled labour, businesses are anticipating higher sales, increased profits and staffing levels to rise.
“However, the outlook remains mixed at best.”
Businesses based in the North East of England had a particularly optimistic view of the future, with their figure rising to an 18-month high of 33 percent. This was topped only by Wales, who have seen their confidence rise by 19 percentage points since the start of the year to hit 34 percent.
Businesses in Scotland, on the other hand, were less optimistic – the nation had the lowest score in the UK of just 19 percent and was the only place in Britain to experience a fall in confidence since January.
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Brent crude edges up as oil prices remain supressed
The price of oil rose slightly on Thursday but still hovered around seven month lows, as an ongoing supply glut continues to weigh on the market.
Brent Crude slipped below $45 a barrel around midday, before recovering to trade up 1.18 percent at $45.35.WTI Crude is currently up 0.8 percent $42.87.
“Prices were pushed a bit too low,” Hans van Cleef, senior energy economist with ABN AMRO, told Reuters. “The people who believe in higher prices are stepping in.”
Oil prices have continued to hover below the $50 a barrel mark, despite the Organization of the Petroleum Exporting Countries’ decision to extend their output cuts for a further nine months.
The group’s efforts to cut supply are being undermined by increasing output from several countries, including Libya, Nigeria and the US.
British factory orders surge in June, defying Brexit negativity
British factory orders hit their highest level since 1988 in June, according to the latest survey from the Confederation of British Industry.
The CBI’s factory order book balance jumped to +16 in June, almost doubling from May’s figure of +9.
Export orders also hit a 22 year high, helped by the fall in the pound that was triggered by last year’s Brexit vote. The figures will come as good news to those hoping to demonstrate the strength of British industry outside the European Union.
However, Howard Archer, chief economic advisor to the EY ITEM Club, suspects that the CBI may be over-egging the strength of UK manufacturing.
“There is the concern that survey evidence for the manufacturing sector has tended to be markedly more upbeat than the official data from the Office for National Statistics (ONS) so far in 2017.
“Indeed, official data suggests that the manufacturing sector is far from guaranteed to see even modest growth in the second quarter. Specifically, latest ONS figures show manufacturing output edged up 0.2% month-on-month in April after falling in each of the first three months of 2017.”
The figures will also be watched carefully by Bank of England policymakers, who are in the throes of indecision over when to raise interest rates.
The Monetary Policy Committee was split at last month’s meeting by 5 – 3, with Bank of England governor Mark Carney sending the pound into chaos on Tuesday after saying that now was not the right time for a rate hike.
Businesswomen less confident about Brexit than their male counterparts, study finds
UK Businesswomen are less confident about post-Brexit prospects in the UK than their male counterparts, a study has found.
The study conducted by RateSetter Business Finance revealed that of those surveyed, 10 percent of female business leaders believe that Brexit will be positive for their business.
This proved comparatively low to 21 percent polled across male business owners who considered themselves to be positive about future outlook following the UK’s withdrawal from the European Union.
Paul Marston, Managing Director of RateSetter Commercial Finance, commented on the findings:
“Overall, it is clear that small business leaders are not at all optimistic about the impact of Brexit, but we were rather surprised to find such a difference between the views of male and female business people.”
This follows recent research which revealed that gender pay gap was continuing to negatively affect women’s investment abilities.
According to research by Fidelity International, 43 percent of women save into a cash ISA, but only 9 percent invest in a stocks & shares ISA.
The latest figures reveal the gender pay gap in the U.K to be at 18.1 percent.
On average, for women working full time the weekly wage stood at £12.82, 9.4 per cent less than the average of £14.16 earned by men in full time positions.
UK businesses with 250 or more employees are now obliged to publish gender pay gap details, as part of government regulations which came into force bank in April.
The Minister for Women and Equalities, Justine Greening, commented on the measure when it was first introduced:
“We have more women in work, more women-led businesses than ever before and the highest proportion of women on the boards of our biggest companies. This has helped us to narrow the gender pay gap to a record 18.1 per cent – but we want to eliminate it completely.”
Nevertheless, with added pressure on the economy as Brexit uncertainty continues to drive up inflation, women are arguably beginning to feel the squeeze the most.
The government’s Brexit secretary, David Davis, will head to Spain on Tuesday for additional talks after the first round of negotiations with the European Union began on Monday.
In a blow for the government, Mr Davis was forced to concede that the talks would only move on to trade when the EU decided “enough progress” had been made on its three priorities.