UK INDUSTRIAL PRODUCTION TRADE, CMA BANKING REVOLUTION & MARKET UPDATE

June’s UK industrial production and trade numbers were fairly disappointing, suggesting that April’s strength in manufacturing growth could not be sustained, while net trade will probably provide little support to GDP growth in Q2. After a torrid 2015, today’s industrial production figures confirmed that the UK manufacturing sector put in a strong performance in Q2 as a whole. Quarterly manufacturing growth accelerated to 1.8% in Q2, while overall production was up by 2.1% on the quarter in Q2 – matching that in the first estimate of GDP. However, with production activity almost entirely driven by a 2.3% monthly surge in growth in April, this suggests that growth slowed to a standstill even before the referendum. Indeed, activity fell by 0.6% in May and rose by just 0.1% in June. What’s more, July’s survey data have been broadly consistent with quarterly contractions in manufacturing output, pointing to a further deterioration ahead.

June’s trade figures were characteristically rather dreary, showing that the trade deficit widened from an upwardly-revised £4.2bn in May to £5.1bn, much higher than the consensus expectations of a deficit of £2.6bn. This left the trade deficit in Q2 as a whole at £12.5bn, higher than Q1’s £12bn outturn. The outlook is perceived to be on the sluggish side.

 

The COMPETITION & MARKETS AUTHORITY have pioneered the introduction a technological revolution in banking and have concluded that new phone apps should be introduced by 2018 providing information to consumers in regard to identifying the best accounts based on individual borrowing patterns.

 

Banks will also have to set maximum monthly fees for unarranged. However there will be no cross-industry cap leaving banks to set their own charges. There will also be further measures to encourage people to switch accounts. It is hoped that these measures will ensure that personal and SME clients get a better deal from their bank. Banks will be forced to share customer data on new apps with prior customer consent. This new open banking policy will hopefully harness the technological changes will provide transparent banking charges thus making the industry more competitive and charges cheaper.

 

Again as a leading Luddite I protest that we are now far too reliant on technology, which make life more efficient, but also vulnerable to security matters and issues and consequently further distances bank manager and customer relationships to dangerously detached levels. With all this technology few managers know their clients and vice-versa. How a manager can make measured judgements on loans, mortgages and financial advice when they hardly know the counter party totally escapes me. Yes, digital banking is hugely convenient as well as global but it encourages managers taking short cuts when managing accounts and exacerbates idleness and sloth! I have just been ridiculed very mildly on ‘Twitter’ by BBC Rory Cellan-Jones for suggesting such arrant nonsense!

 

As to the markets it has been another astonishingly tedious session – real mid-August blues – mingled with some extraordinary violent news on stocks, mainly concerning companies that posted numbers today. The FTSE 100 had only added 35 points at 6845 at 2.30pm. Oil, banks, drugs and consumer sectors are all quite steady today with only property and building having come under the cosh. Standard Life has added 5% today with L&G losing 5.8%. Headline numbers looked decent, but some analysts felt they looked messy and lacking a full explanation. AMEC Foster was up as much as 12% but at the time of writing had settled up 9.5%. Regus was unchanged. Ocado, thanks to a better deal with Morrison was up 5%. SIG were 3.5% to the good with BP up 1% mainly due to a possible sale of a Chinese asset which may bring in $3 billion. The opening skirmishes on the Street of Dreams were sepulchral – up 20 points at 2.35pm BST.

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