The Worst Is Over

14th August 09 - The worst is over

According to the National Institute for Economic and Social Research (NIESR), May 09 could prove to have been the trough of economic activity for the UK. “Output is stabilising and, in the absence of further shocks, the period of sharp recession is over." Other optimistic statistics arose simultaneously:-

• The Royal Institute of Chartered Surveyors expects house prices to rise this year (2009) in a reversal of its earlier forecast of a fall of between 10% to 15%

• The Halifax house price index rose by 1.1% in July being the second increase in three months. It halved its forecast for a drop in house prices to 7% or less for 2009

• The purchasing managers’ index for the services sector rose to a 17-month high reaching 53.2. A reading above 50 denotes expansion

• Government data showed a 0.5% increase in industrial production, the strongest figure since October 2007

• Investment banking profits have boomed again at HSBC and Barclays

• The FTSE is reaching the upper plains towards the 4,700 mark

• The value of commercial property has risen for the first time since June 2007 (CB Richard Ellis - property agents)

While these dry statistics might seem a little high-flown and academic, two UK companies that deal with the mass market have both posted upbeat trading statements this week. One was Carpetright whose product is pretty obvious and the second Premier Foods who provide such staple items for the UK palate as Branston pickle and Hovis bread.

It is the end of a muggy and rainy, dull week. Was there a sight of the sun today?

Pearl of the week

"Forecasting, after all, is difficult - especially when we are dealing with the future."

Peter Bickley, Deutsche Bank.

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