UK economy continues to shrink.

September 30th, 2009 by tom | Filed under Central banks, Daily News, Employment, Exchage Rate, Recession, Retail, Stocks and shares, UK Banks, UK employment.

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The UK economy has contracted at a reduced rate for the April to June quarter. Gross domestic product (GDP) was reported to have fallen by 0.6% compared with the previous quarter, an improvement on the previous estimate of a 0.7% contraction. The latest improvement, coming mostly from the manufacturing and construction sectors, suggests that the UK is in recovery mode, and may even have grown in the third quarter.

Union leaders have accused Jaguar Land Rover (JLR) bosses of "taking another trip to Fantasy Island" over promises that there would be no job losses when a West Midlands plant is closed. Dave Osborne, national secretary for the UK car industry for Unite the union, launched a ferocious attack on JLR’s plans to close either Land Rover at Solihull or Jaguar at Castle Bromwich. Meanwhile, politicians in Coventry have reacted with surprise and sadness at Jaguar’s decision to close its wood veneer manufacturing centre at its Browns Lane plant, employing close to 400 people, within the next two years. In a recent interview, a JLR executive pledged that no job losses would come from the plant closure. However Osborne remained skeptical vowing that unions would not accept attacks on pensions nor reduced salary levels for new recruits

The word is that high street giant Marks & Spencer could have better news for investors after a difficult 18 months in second-quarter trading figures due out this week. After a 40% fall in annual profits shareholders had been hit by the first M&S dividend cut in nine years. However, recently chief executive Sir Stuart Rose has indicated that business had been steadily improving. First-quarter sales figures showed a further decline but were better than expected, causing M&S shares to increase in value by almost 25% since the end of May. At the time of the results, Sir Stuart warned that margins would shrink by up to 1.75% in the current year as the firm invested in price cuts and as a weaker pound harmed purchasing power.

Orange rated the UK’s third largest mobile operator in terms of subscribers, has pulled off a coup by signing a deal with Apple to market its popular iPhone in Britain. The deal, represents a significant setback for O2, currently the largest mobile operator in the country, who had held the exclusive British network for the iPhone. Orange is expected to start selling the iPhone in October, in time for the Christmas sales period.

The world’s leading supplier of heating and plumbing products Wolseley, have issued a warning of more job cuts, stating that it was impossible to predict when the difficult trading conditions might end. Wolseley have had to take drastic action to cope with the recession, among them reducing staff by 28,073, representing almost one third of their workforce. The company also initiated a £1 billion rights issue earlier this year as well as spinning its US building materials business, Stock Building Supply, into a joint venture.

London equities moved a little lower by the close after US markets slipped backwards following disappointing consumer confidence data. Financial stocks kept the FTSE 100 anchored over the 5,100-point mark. On yesterday’s trading, the FTSE 100 held firm, dropping just 5.98 points to close on 5,159.72, while the FTSE 250 continued to rise, up a further 46.17 points to 9,215.57

The pound made a recovery yesterday against the major currencies.

Pound/US dollar 1.5928
Pound/Euro 1.10939
Pound/Japanese Yen 143.6783
Pound/Swiss Franc 1.6531

The Dow Jones Industrial Average made a minor downwards adjustment dropping 6.8 points to close on 9,782.56. The NASDAQ remained stable, dropping just 1.13 points to 2129.61.

An unexpected fall in US consumer confidence for September, suggests that Americans are not as convinced that the economic recovery is as close as US policymakers would have them believe. The Consumer Confidence Index from the Conference Board business organisation slipped to 53.1 in September from 54.5 in August.

Meanwhile Japan’s core consumer prices dropped for the fourth successive month, 2.4% in August year-on-year, largely due to lower petrol and other energy costs as well as weak domestic demand.

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