London pre-open: Stocks seen muted as investors mull GDP data

by | Jul 13, 2023

(Sharecast News) – London stocks were set for a muted open on Thursday as investors mulled the latest UK GDP data.
The FTSE 100 was called to open just four points higher at 7,420.

Figures released earlier by the Office for National Statistics showed that the economy contracted by 0.1% in May following 0.2% growth in April. Still, this was ahead of expectations for a 0.3% contraction.

The construction sector eased by 0.2%, following a fall of 0.9% in April – revised down from an earlier estimate of a 0.6% decline – while production output fell 0.6%.

The dominant services sector stagnated, compared to a 0.3% uptick seen a month previously.

The services sector also showed no growth in the three months to May, while production grew by 0.4% and construction by 0.2%.

Overall, GDP was flat in the three months to May when compared to the three months to February.

Monthly GDP is now estimated to be 0.2% above pre-pandemic levels in February 2020.

ONS director for economic statistics, Darren Morgan, said: “GDP fell slightly as manufacturing, energy generation and construction all fell back with some industries impacted by one fewer working day than normal.

“Meanwhile, despite the coronation Bank Holiday, pubs and bars saw sales fall after a strong April. Employment agencies also saw another poor month.

“However, services were flat overall with health recovering, with less impact from strikes than in the previous month, and IT also had a strong month.

“Across the last three months as a whole the economy showed no growth.”

In corporate news, bootmaker Dr Martens said trading since the start of the current financial year had been in line with expectations, adding that progress had been made rectifying the US warehousing fiasco that led to a series of profit warnings.

Elsewhere, Watches of Switzerland posted a big increase in full-year sales and profits. Group sales increased by 19% at constant currencies to reach £1.54bn, helped by an especially strong showing in the US.

That drove a 23% jump in statutory profits before tax to £155m, while free cash flow strengthened 30% to £146m. The watch retailer also reiterated its guidance for its 2024 financial year, voicing confidence in the outlook for organic growth, even as it continued “to actively pursue additional inorganic growth opportunities to enhance that growth”.

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