UK GDP monthly estimate

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  • March 18, 2019

The Office for National Statistics (ONS) last week released its rolling three-month estimate for GDP. The November to January period saw the UK economy grow at 0.2%, the same as recorded in the final quarter of 2018. Month-on-month, a 0.4% contraction in December was followed by a strong 0.5% rebound in January, with construction activity in particular driving the change. Over the three months, services continue to be the primary contributor to growth with manufacturing and production lagging the overall economy. Furthermore, a slowing global economy has not supported the UK as it has done over the last couple of years, with demand for exports weakening. This is a trend seen globally.

US Inflation

US inflation data for February came in at 1.5%, lower than the 1.6% expected and beneath the 1.6% seen in January. This is the lowest inflation rate since September 2016, a period which was significantly impacted by the fall in the oil price. Likewise, the core inflation rate which strips out volatile elements, also fell and came in below expectations in February. This data will add important support to the Federal Reserve’s decision to back out of planned interest rate rises this year and will add to expectations that quantitative tightening will be moderated. Lower inflation will lessen the need for tighter monetary policy and will allow the Fed to be more accommodative. Lower inflation will also be good news for workers who will see an increase in their real rate of pay, which is continuing to rise.

Parliament Votes (again)

Although there was another round of Brexit voting in parliament last week, we are little closer to knowing what the ultimate outcome of Brexit will be. It is now likely that there will be a third attempt to get the Prime Ministers plan through and an increasing possibility of an extension to Article 50. In attempts to illustrate policy under a “no-deal” Brexit the government has revealed its plans to reduce tariffs on a wide range of imports in such a scenario. Although to some this looks like an attractive policy, there was a backlash by many business groups, and it appears the manoeuvre was designed to persuade more MP’s to vote for May’s deal and reject a no-deal. Given the outcome of the votes last week it appears that only some were persuaded.

Market Data

Index Open Close Change % Change
FTSE 100 7104 7228 124 1.75%
S&P 500 2743 2822 79 2.88%
Dax 11457 11685 228 1.99%
Cac 40 5231 5405 174 3.33%
Nikkei 225 21025 21450 425 2.02%
UK 10 Year Gilt Yield 1.19 1.21 0.02 1.68%

Posted By Will Dickson

Chief Investment Officer Will Dickson is a Chartered Wealth Manager as part of the Chartered Institute of Securities and Investment (CISI) qualification scheme. This recognition was obtained following an MSc in Finance and Investment from the University of Exeter, and an Accounting and Finance BSc from the University of Bath. Will’s exceptional talent is recognised by CityWire’s Wealth Manager, having been named as one of the UK’s Top 30 investment managers under the age of thirty for the last three years. Will manages and oversees P1’s range of investment portfolios. Working with the Investment Team, Will shapes the investment policy and fund selection for our Passive, Hybrid and Ethical and Sustainable portfolios. In conjunction with managing the fund portfolios, he oversees and our AIM Inheritance Tax and Tier 1 Investment Visa equity portfolios. Will has joint written articles with P1’s Head of Research, Dr Rayer. Their article “Hypothesis: Risk, like Mass and Energy, can neither be created nor destroyed” featured in the CISI’s The Review of Financial Markets. In addition to contributing to articles with Dr Rayer, Will often delivers P1 CISI Endorsed lectures to Independent Financial Advisers. You can see Will’s take on weekly investment news here.