Proactive Investors - A jump in exports in August failed to prevent the UK’s trade deficit from widening in recent months, according to figures on Friday.
The Office for National Statistics reported a £3 billion uptick in the UK’s total goods and services trade deficit over the three months to August, leaving the figure at £10 billion.
This was in spite of a £2.9 billion increase in the value of goods exports during the month of August, as imports declined by £0.1 billion.
According to the ONS, the value of EU imports fell over the month while those from non-EU countries rose.
KPMG chief economist Yael Selfin noted the growing trade deficit was “the UK’s Achilles’ heel”.
“Rising geopolitical tensions and protectionist measures could accelerate the realignment of supply chains and potentially put further pressure on UK exports in the medium term.”
Hays still facing pressure from hiring slowdown
Hays PLC (LON:HAYS) has continued to feel the pinch of a wider slowdown in hiring globally, first quarter results show.
According to a trading update posted on Friday, the FTSE 250-listed company saw a 15% year-on-year drop in net fees, with losses felt across all key regions including Germany, the UK, Ireland, Australia and New Zealand.
Consistent with employers’ cautious hiring trends, temporary placements fared comparatively better, posting an 11% decrease, while permanent placements experienced a sharper 21% drop of 21%... Read more
Budget now the focus as GDP avoids surprises - analysts
An expected uptick in gross domestic product (GDP) through August will now leave attention firmly fixed on the Autumn Budget at the end of this month, analysts have said.
The UK economy ticked up by 0.2% after two flat months, with the figures coming in as expected.
“Overall, I’m not sure there is much for the market to get its teeth into here,” Omnis Investments strategist Patrick O'Donnell said.
He noted the Budget was “much more of a focus,” as questions were asked about how much of a “pro-growth agenda” will be adopted by the government.
The pause in growth throughout June and July was also not likely to be a concern, O’Donnell added.
“Some normalisation was to have been expected after arguably, an unsustainable growth rate earlier in the year.”
Charles Stanley analyst Rob Morgan warned the figures still pointed to “a picture of stagnation rather than healthy growth,” however.
“The government needs to think long and hard about how to kickstart a steeper economic trajectory,” he commented.
“The greater fear at this stage is political.
“With the government having spoken in cautious tones about the economy and warning of ‘difficult decisions’ around tax and spending, it is harder for businesses to retain confidence about the environment going forward.”
UK economy returns to growth in August
Gross domestic product (GDP) picked up in August, following two consecutive months of stagnant growth, the Office for National Statistics has said.
Month on month, the UK economy is estimated to have grown by 0.2%, as service, production and construction output all picked up.
Service output climbed by 0.1% in line with growth seen in July, while construction and production picked up by 0.4% and 0.5% respectively after both declining previously.
GDP was estimated to have increased by 0.2% over the three months to August compared to the quarter to May, with estimates for flat growth in July being left unchanged.
Growth came in at 0.8% against the same three months a year earlier, while the figure climbed by 1.0% when compared to August 2023.
Robinhood (NASDAQ:HOOD) analyst Dan Lane noted the figures would come as a “relief” to the government, but pointed to a slowdown in the second half after the UK racked up the fastest growth among the G7 during the early stage of the year.
Stocks seen lower
Futures had the FTSE 100 falling a further 18 points on Friday after Thursday’s 6-point decline, leaving the index on course for a weekly drop.
This was despite confirmation from the Office for National Statistics that the UK economy returned to growth in August.
Gross domestic product increased by 0.2% in August, official figures showed on Friday morning, following flat readings in both June and July.
Asian markets were largely under pressure overnight, as further volatility was seen among Chinese stocks, which fell.
Another anticipated press conference is due on Saturday over China’s economic stimulus plans, with a lack of new measures during an event earlier this week having hit sentiment.
Back in London, Friday also brings a trading update from Hays PLC (LSE:HAS), while third-quarter earnings season is set to fully kick off in the US with reports from several Wall Street banks.