The UK services PMI made it a hat trick of strong data points in consecutive days this week, with the reading rising to a 17-month high of 56.2. Following the manufacturing and construction equivalents beating forecasts, today’s release suggests that the UK economy is performing well and is predicted to now show a 0.5% increase for fourth quarter GDP. The pound has risen off its lows in the past half hour since the data was released whilst the FTSE 100 continues its impressive march, printing yet another record high.
Persimmon (LON:PSN) looks to rebuild
The best performing stock on the FTSE 100 this morning is housebuilder Persimmon which has risen by more than 5% after posting an upbeat trading update. The firm reported an 8% rise in revenues to £3.14bn, with sales of homes increasing by 4%. Whilst share prices still remain 13% below its pre-Brexit vote highs it has done well to recover since the vote to leave the EU, which triggered a dramatic 38% fall in its share price. Since then, investor confidence needed to be rebuilt. The firm expects gross margins to improve in the second half of the year and forward sales remains strong at new land sites, which will help maintain that restoration of confidence. Nevertheless, the Brexit vote remains a significant thorn in the firm’s side and may continue to hold the share price back at a time when UK stock indices are hitting record highs.
Record UK car sales but lower forecast for 2017
The number of new cars sold in the UK hit an all-time high in 2016 - the second consecutive year that records have been smashed. The Society of Motor Manufacturers and Traders (SMMT) said demand hit 2.7 million last year, a rise of 2% on 2015. A combination of factors can be attributed to the rise with strong consumer confidence, low-interest finance packages and a number of new models being launched all playing their part in driving higher sales. Whilst the trend has been higher with five consecutive years of increased sales seen since the recession of the late 2000s, the SMMT predict that this run will come to an end this year with new registrations expected to fall by 5-6%. Perhaps in light of this Rolls Royce (LON:RR) has seen its share price decline today, falling by just shy of 4% at the time of writing. As is the case with many industries in the UK, the impact of Brexit has yet to be seen on the car market - however this doesn’t mean that there will be no tangible effect. The SMMT forecast that if the UK was unable to trade freely with the EU and tariffs were introduced, it would add about £1500 to the price of each imported car.