Week Ahead

GDP data to show UK recession was ‘short-lived’

Persimmon’s homes in Edinburgh. The company reports this week

Figures due this week should confirm that the UK recession was short-lived, providing some relief for Rishi Sunak’s under pressure government.

The UK economy the UK entered into a technical recession at the end of last year and Pantheon Macro believes the January data, to be published on Wednesday, will show the UK “leaving last year’s minor recession firmly behind”.

The consultancy adds that the 3.4% jump in January retail sales will explain “almost all” of the 0.2% month on month expansion.

Furthermore, Pantheon is of the view that strength in the upcoming release will not be a “flash in the pan” given that PMI data has continued to recover since October.

Shares in housebuilders rose on hopes of early interest rate cuts and enthusiasm that followed Barratt’s bid for Redrow. The mood has softened as rate cuts have yet to come through and some lenders have raised mortgage rates.

Persimmon, which reports on Tuesday, has seen its shares come back as its peers have not exactly lit up the market in recent weeks.

Its net cash pile has dwindled, thanks to generous dividends and a slowdown in sales and profits, but it is still perfectly healthy at more than £400 million, say analysts AJ Bell. “This gives the firm scope to start buying land more aggressively, should it feel the market is primed to turn for the better.”

AJ Bell adds that It will probably be too early in the process for Persimmon to make any reasoned comment on the Competition and Markets Authority’s investigation into alleged information sharing.

“Even the regulator seems keener to finger slow local planning authorities rather than land hoarding or collusion as the key reason for the ongoing shortage of good housing stock and the industry’s failure to meet government construction targets.

“A notable decline in Persimmon’s landbank should help to assuage concerns about wanton land bank accumulation, at least to some degree.”

Challenger banks are back in the spotlight after Nationwide’s bid for Virgin Money, and Barclays acquisition of Tesco’s retail banking operations.

This week sees Metro Bank and OSB report full-year results with the former attempting to reassure investors by raising £325 million fresh capital in the autumn, when it also unveiled a new cost-cutting plan, designed to save at least £30 million a year. It is cutting headcount further, but remains committed to its branches and there will be interest in whether it identifies suitable sites for branches beyond its M25 core. There will be some relief if it confirms that it made a small profit in 2023.

OSB’s shares have ticked up, despite taking a £181 million impairment charge against the value of its loan book.

DIARY

Tuesday 12 March

  • Full-year results from Hill & Smith, Domino’s Pizza, Persimmon and Costain
  • UK unemployment data
  • German inflation
  • US inflation

Wednesday 13 March

  • Full-year results from Balfour Beatty, Metro Bank, IP Group, Ferrexpo, 4imprint and Keywords Studios
  • UK GDP growth
  • UK manufacturing, industrial and construction output

Thursday 14 March

  • Full-year results from Endeavour Mining, OSB, Vistry, Savills, Restore and Bridgepoint
  • Trading statements from Halma, Trainline and Moonpig

Friday 15 March

  • Full-year results from Bodycote
  • First-half results from Kin & Carta, Trufin and Volution
  • US industrial production and capacity utilisation rates
  • In Europe, quarterly results from HelloFresh


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