Property market set for a good year, but economic imbalances remain

Economic Highlights

The final estimate for UK GDP in Q4 2013 came in at 0.7%, with full year GDP growth of 1.7%. The Office for Budget Responsibility expects an expansion in output of 2.7% in 2014, with levels of business investment expected to pick up.

CPI grew by 1.6% in the year to March, down from 1.7% growth last month.

The employment statistics for November 2013-January 2014 compared to the previous three month period showed total employment rising by 105,000 and the unemployment rate falling to 7.2%. However, the number of employees actually fell by 60,000, with the growth in employment driven by a 211,000 rise in the number of self-employed.

The UK current account balance was recorded at -£22.4bn in Q4 2013, only a marginal improvement on the record deficit of -£22.8bn seen in the previous quarter.

Sector Highlights

Industrial – UK Manufacturing PMI continued to suggest growth in March at 55.3 (Markit/CIPS).

Construction – the UK Construction PMI for March also reported expansion at 62.5 (Markit/CIPS).

Office – the UK Services PMI came in at 57.6 in March (Markit/CIPS).

Retail – sales volumes in February increased by 1.7% from January, with annual growth in sales of 3.7%.

Residential – UK house prices rose 2.6% in Q1 2014 and increased 9.2% on an annual basis. Greater London saw prices rise 5.3% over the quarter, and they are now 18.2% higher than Q1 2013 (Nationwide HPI).

Debt – the latest Credit Conditions Survey from the Bank of England reports that the availability of credit to the commercial real estate sector improved strongly in Q1 2014, with a balance between positive and negative responses of +14.6.

View the full Economics & Real Estate Q1 2014.