September 13, 2016

Pegler’s market report – 13.09.16: UK economy shows resilience

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (13.09.16) Business on page 21 under the title Pegler’s Market Report:

UK economy shows resilience

Exports increased in July as a weaker pound boosted demand for British goods and services from overseas, according to official figures. The construction sector also held up reasonably well, maintaining June’s output levels as a rise in infrastructure output was offset by a fall in housebuilding. The data is relatively volatile and should not be relied upon exclusively as a guide to the performance of the economy. However, when combined with other economic figures since the EU referendum, including a rise in retail sales and a fall in out of work benefit claimants, they generally point to a strengthening economy.

Retail tycoon Sir Philip Green has said he is continuing to work with the pensions regulator to find a solution for its 20,000 pensioners following the collapse of BHS this year. The £571m black hole in the BHS pension pot is now thought to have grown to around £700m as a result of the post-Brexit slump in sterling and the Bank of England’s interest rate cut.

Finance firms have not cut back hiring despite the City of London’s public fears over the impact of Brexit on their businesses. There were 8,285 new finance vacancies on the market last month, according to recruiters Morgan McKinley, which was a rise of 5pc on the month before. The financial technology industry expanded particularly strongly as the recruiters saw strong demand for data scientists and digital development specialists.

Airline stocks found some strength after IAG’s chief executive Willie Walsh told the delegates of an industry conference that consolidation is likely to be on the cards, but added the group is not “actively” looking at any acquisitions at present. IAG is the owner of British Airways. Low cost carrier easyJet advanced as the company’s boss Carolyn McCall highlighted that appetite for holidays had normalised since the Brexit vote, after it felt a short-term impact on consumer demand in the immediate aftermath of the referendum in June. Thomas Cook jumped as they also comforted the market, confirming that summer bookings had showed no signs of a slowdown.

Electronics and mobile phone retailer Dixons Carphone found itself among the risers, on the back of better-than-expected quarterly results. Underlying revenue for the 13 weeks to July 30 rose 4pc.

By David Pegler, Brighton Capital Management