In the City, shares in housebuilder Persimmon have jumped by 3.5% to the top of the FTSE 100 leaderboard after posting strong financial results this morning.
Persimmon completed 8% more houses in the first half of 2017 than a year ago, and grew its revenues by 12%.
The company, which is Britain’s second-largest builder, bullishly told shareholders that business is pretty good:
“We have continued to experience good levels of customer demand… with the market taking the snap UK general election in its stride.
Consumer confidence remains resilient and compelling mortgage rates continue to offer good support to new home buyers.”
Spanish service sector growth hits 22-month high
Olé! Spain’s service sector has just posted its fastest growth in almost two years, as its recovery continues to build.
The Spanish Services PMI has jumped to 58.3, up from 57.3 in May – a level showing strong growth. That’s the best reading since August 2015.
Spanish firms reported that growth in new business accelerated, job creation was the fastest in a year, and business optimism was high.
Encouragingly, almost a quarter of the firms surveyed said they’d taken on extra staff in June, partly because they’re optimistic about their future workload.
That could help to pull down Spain’s jobless rate – the second highest in the eurozone, after Greece.
Andrew Harker, Senior Economist at IHS Markit, says the
“The Spanish service sector ended the first half of 2017 with a flourish, with PMI data for June signalling the strongest increases in output and new orders for almost two years and employment growth picking up as well.
Firms also took advantage of strong demand conditions to raise their selling prices and provide a welcome boost to profit margins. Companies see little reason to doubt the sustainability of the upturn at present, reflected in our business confidence data remaining around the highest seen over the past two years.
Reuters has jumped the gun, and is reporting that ‘preliminary data’ shows that UK car sales fell again last month.
They write:
British new car registrations fell by around 5% last month year-on-year and overall sales for the first six months of the year dropped by 1%, according to preliminary data from an industry body.
The Society of Motor Manufacturers and Traders will release the full numbers at 0800 GMT [9am UK time].
Reuters UK
(@ReutersUK)UK new car sales drop around five percent in June – preliminary data https://t.co/JeE2Wm6vWM pic.twitter.com/eMPI4lMPSx
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The agenda: UK economy in focus
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britain’s service sector makes up around 80% of the economy, from hotels and restaurants to haulage firms, accountants, and IT companies. So investors are nervously waiting to discover how they fared in June, and if last month’s general election had any impact.
Data firm Markit’s monthly service sector PMI, due at 9,30am, is expected to drop to 53.5 from 53.8 in May.
That would show that growth slowed last month, (50 being the cut-off point between expansion and contraction), and reinforce concerns that the economy is suffering from political uncertainty.
RBC Capital Markets say:
As with the earlier manufacturing and construction surveys, we expect to see some pull back in the services PMI this month; to 53.5 from 53.8 previously as the uncertainty caused by the general election result impacts on the predominantly domestically-focused sector.
Even allowing for the weaker readings in the other sectors, an outcome in line with that expectation would still leave our PMI-based indicator pointing to GDP growth of 0.4% q/q though it would also reinforce the signals from those other sectors of the economy losing some momentum at the end of the quarter.
The PMIs are calculated by asking purchasing managers across the country how their business is performing, so it’s a useful snapshot of the situation. Given the size of the service sector, it could shift the pound – which is hovering around $1.291 his morning.
(@IpekOzkardeskay)Watching the #UK #PMIservices at 9:30am London time. #GBPUSD pic.twitter.com/hI5c9EFdlp
There’s also a flurry of other service sector reports from around the world today, including several European countries during the next couple of hours.
City investors are also bracing for the latest UK car sales figures, due this morning. Sales fell in April and May (partly due to tax changes) so June’s figure are nervously awaited.
A third fall would fuel fears that consumers are cutting back on big-ticket items (and perhaps show that the Bank of England should hold fire on interest rates).
On the corporate front, online supermarket chain Ocado and housebuilding group Persimmon are reporting results to the City.
The agenda:
- 9am BST: Eurozone service sector PMI for June
- 9am BST: UK car sales figures for June
- 9.30am BST: UK service sector PMI for June
- 10am BST: Eurozone retail sales for May
- 3pm BST: UK factory orders for May
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