The Week Ahead: UK house prices, housebuilders and construction, plus BoE minutes


Monday 8 May

  • France wakes up to a new president

Jaisal Pastakia, investment manager at Heartwood Investment Management, says Emmanuel Macron beating Marine Le Pen could encourage global investors to look at Europe once again. But he warns it is unlikely that Macron will secure a parliamentary majority, since he does not belong to a traditional political party.

The composition of the parliament will be important in terms of the new President’s ability to actually implement any electoral programme. The risk is that we get a fragmented parliament, resulting in ineffective government.”

Parliamentary elections are set to take place on 11 and 18 June. According to an OpinionWay-SLPV Analytics poll for Les Echos, Macron’s En Marche! would take 249 to 286 seats while Le Pen’s far-right National Front would win 15 to 25 seats, making her plans for a referendum on an EU or euro exit extremely difficult. The French lower house of parliament consists of 577 members.

  • Halifax House Prices

IHS Markit predicts house prices will be flat month-on-month in April. Chief UK and European economist Howard Archer says: “This would cause annual house price inflation to dip further to 3.7 per cent in the three months to April, which would be the lowest year-on-year increase since the three months to June 2013.”

Archer attributes softening house prices to increasing pressure from weakening fundamentals and softer consumer confidence.

“Consequently, we expect house price gains over 2017 will be limited to no more than 2 per cent – and it could very well be lower than that.”

Tuesday 9 April

  • British Retail Consortium Retail Sales Monitor for April

IHS Markit chief economist for UK and Europe Howard Archer says Easter is likely to help lift April figures and also warmer weather supporting sales of summer clothing at the start of the month. 

A decent BRC survey would fuel hopes that the UK consumer still has some life left in him/her and would add to signs that the UK economy saw a spike up in activity in April after the marked first quarter GDP growth slowdown,” Archer says. Industrial Production in March

Wednesday 10 May

  • Barratt Developments (Q3 trading update)

Like most other housebuilders, Barratt has staged a good recovery since the referendum outcome on the back of resilient consumer sentiment, says The Share Centre’s Graham Spooner. “The shortage of housing, attractive mortgage rates, good employment levels and government policies should see this trend continue into the latest trading update.”

Spooner expects the group’s forward order book to be at record levels, but adds the shortage of skilled labour and rising material costs will soon begin to pose problems for the sector.

Thursday 11 May

  • Bank of England – monetary policy notes

Inflation report, monetary policy summary and minutes of the monetary policy committee meeting ending on 10 May 2017 are all released today. 

Three months ago, the Bank of England revised its projections for UK growth in 2017 upwards to 2 per cent, but Q1 growth has already disappointed at 0.3 per cent. It had previously forecast inflation to peak towards the end of this year or beginning of next, a little shy of 3 per cent.

  • Industrial Production in March

IHS Markit predicts the Office for National Statistics (ONS) is expected to report (on Thursday) that manufacturing output dipped 0.6 per cent month-on-month in March as it continued to correct from a sharp jump at the end of 2016.

  • Manufacturing Output in March

IHS Markit says a predicted 0.6 per cent month-on-month drop in manufacturing output in March would still mean that it grew a solid 0.5 per cent quarter-on-quarter in the first quarter of 2017 and was up 2.6 per centyear-on-year in March itself.

“The manufacturing sector currently appears to be a relatively bright spot for the UK economy helped by the weakened pound boosting its competitiveness, but it does face challenges that look likely to intensify over the coming months,” Archer says.

“Increased prices for capital goods and big-ticket consumer durable goods, diminishing consumer purchasing power and likely increasing business concerns and uncertainties over the economy look likely to increasingly hamper manufacturers.”

  • Construction Output in March

Construction output (out on Thursday) is expected to have risen a modest 0.3 per cent month-on-month in March, causing it to be up 2.8 per cent year-on-year, according to IHS Markit. 

However, Archer says “significant clouds” hover over the construction sector.

“Weakened economy activity (we expect the economy to continue to struggle after GDP growth slowed to just 0.3 per cent quarter-on-quarter in the first quarter) and lacklustre housing market activity are likely to seriously hamper the construction sector.”

Archer adds: “Construction companies will be hoping that government measures aimed at boosting infrastructure and housebuilding (including in last November’s Autumn Statement) have a material beneficial impact.”

  • Trade Deficit in March

IHS Markit predicts the total trade deficit is expected to have narrowed to £2.6bn in March after rising to a five-month high of £3.4bn in February from £3.0bn in January and £1.8bn in December.

Archer says: “The total trade deficit is expected to have narrowed in March due to some pick-up in exports, while it is notable that imports had been lifted in February by erratic items which include gold and aircraft.” Archer adds that sterling is still very competitive despite firming recently from its lows.

Friday 12 May

  • US Consumer prices

US inflation fell last month from 2.7 per cent to 2.4 per cent. Graham Spooner, investment research analyst at The Share Centre says: “Some speculated that the surprisingly low level of US inflation in the month may persuade officials at the Fed to stay their hand, and not increase rates in June, as widely expected. Conversely, it seems likely that the main factor behind the weak inflation figures was seasonal, namely weather related factors.  If this is so, then April should have seen a reasonably sharp jump in US inflation.”