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The Week Ahead: Economic Data and Retailer Updates

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Once the presents are unwrapped, Christmas dinner is eaten and New Year's Day hangovers have eased, retailers will begin compiling market updates on this key trading period.

Several economic updates will take place in the coming week and reports are expected to reveal more about footfall figures and bricks and mortar vs online performance over the Christmas period.

The first retailer to report on trading is Next (3rd January) which recently stated it was to send less stock to its annual Boxing Day sale than in previous years.  Shares rose 1.2% on the 27th December amid hopes of positive trade; while data from Springboard revealed that Boxing Day footfall had declined at a lower pace than last year - a 3.1% drop compared with a 3.3% fall in 2017.

Economic data 

With just over three months until the UK exits the EU and no deal in place, economic confidence is subdued and this is expected to be reflected in upcoming reports on economic data.

The latest UK services purchasing managers index (PMI) dropped to 50.4, citing “subdued business and consumer spending” and the upcoming results (to be reported on 4th January) is expected to drop further.

Manufacturing PMI figures (due on 2 January) are predicted to decline to 52.5 from 53.1. 

Rob Dobson, Director at IHS Markit, which compiles the PMI surveys, said:

“The November PMI provided a lacklustre picture of the UK manufacturing sector, as ongoing global trade tensions and Brexit uncertainty weighed on current business conditions and dampened the outlook for the year ahead.

"Although November saw the headline PMI regain some lost ground and trends in output, new orders and employment picked up slightly from a weak October, growth is still among the weakest seen over the past two-and-a-half years. Based on its relationship against official ONS data, the survey indicators suggest manufacturing output is on course to make no contribution to GDP growth in the final quarter, with a clear risk of output contracting unless December proves a stronger month.

"While demand from the domestic market was a positive spur, in some cases as clients built up stocks in response to Brexit and other supply-chain uncertainties, manufacturers also reported a further decrease in new export business as slower global economic growth and Brexit worries took a bite out of foreign demand. Brexit worries also increasingly dominated the outlook for the sector. Although still forecasting growth for the year ahead, manufacturers’ confidence fell to its lowest ebb since August 2016."

Wednesday, January 2:
Economic data: UK manufacturing PMI

Thursday, January 3:
Trading update: Next PLC
Economic data: UK construction PMI

Friday, January 4:
Economic data: UK services PMI

Source : Insight DIY Team

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30 December 2018

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