Closing post
Time to wrap up, after another busy week.
Here’s today’s main stories so far, starting with the surprise pick-up in house prices last month.
Low UK potato harvests raise fears about Christmas supplies
More bad news! There are fears over UK potato supplies this Christmas.
UK farmers are struggling with one of the lowest potato harvests on record after an autumn of heavy rain, raising fears about supplies for this year’s Christmas dinners, my colleague Sarah Marsh reports.
Experts are warning that supermarkets could be forced to turn to imports from as far afield as Egypt to fill potential gaps on shelves, pushing up the environmental impact of the festive meal.
Fred Searle, the magazine editor of the Fresh Produce Journal, said potato planting had reduced significantly and the sector was “looking at the lowest UK crop on record this season”, with an estimate that about “4.1m tonnes of potatoes would be harvested, 2m less than five or six years ago”.
As well as the recent rain, Searle blamed the smaller harvest on businesses “dropping out of the sector due to cost pressures” exacerbated by years of erratic weather.
US manufacturing sector deteriorates
Ouch! Two rival surveys of the US manufacturing sector have both painted a rather worrying picture.
First, S&P Global’s manufacturing PMI survey has shown that US manufacturers reported a renewed deterioration in operating conditions in November, as they were hit by a fall in new orders.
This contraction in new sales led to a slower expansion in production and a further cut to headcounts, while inventories continued to be run down and input buying stagnated.
This pulled the S&P Global’s US manufacturing PMI down to 49.4 in November, showing a small contraction, after stagnating in October (when the PMI was 50.0).
The Institute for Supply Management has added to the gloom – its manufacturing PMI has shown a sharper contraction, remaining at 46.7% in November for the second month running.
Recession Alert:
— Nik Bhatia (@timevalueofbtc) December 1, 2023
The slowdown in ISM is unequivocal: GDP will follow after enough time and revisions. pic.twitter.com/MYwizNQoKy
According to the ISM, last month the US manufacturing sector saw:
New Orders and Backlogs Contracting
Employment and Production Contracting
Supplier Deliveries Faster
Raw Materials Inventories Contracting; Customers’ Inventories Too High
Prices Decreasing; Exports and Imports Contracting
Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, says:
. “The past relationship between the Manufacturing PMI® and the overall economy indicates that the November reading (46.7 percent) corresponds to a change of minus-0.7 percent in real gross domestic product (GDP) on an annualized basis.”
Britain’s most famous living inventor, Sir James Dyson, today lost a libel claim against the publisher of the Daily Mirror, after a columnist at the newspaper stated that he had “championed Vote Leave … before moving his global head office to Singapore”.
My colleague Alexandra Topping reports:
The inventor gave evidence at the Royal Courts of Justice for two days during a trial against Mirror Group Newspapers (MGN) over an article published in January 2022.
In the Daily Mirror article, the journalist Brian Reade wrote that it must be confusing to be a young person who “wants to do the right thing”, before discussing the actions of a series of individuals including the former prime minister Boris Johnson, Prince Andrew and Dyson.
He referred to the entrepreneur as “the vacuum-cleaner tycoon who championed Vote Leave due to the economic opportunities it would bring to British industry before moving his global head office to Singapore”.
Reade continued: “Kids, talk the talk but then screw your country and if anyone complains, tell them to suck it up.”
Dyson described the article published last year as a “personal attack on all that I have done and achieved in my lifetime” and said it was “highly distressing and hurtful”.
In a written witness statement, the 76-year-old said he had made “huge investments” in the UK and prioritised “setting a good moral example to young people”.
He continued: “So to be accused by the defendant in the articles of being a hypocrite who had screwed the country and who set a poor moral example to young people is not only wrong but incredibly harmful to my reputation.”
However, MGN defended the claim, including by arguing that Reade’s article was “honest opinion”.
In a ruling on Friday, Mr Justice Jay dismissed the inventor’s claim, finding that MGN’s defence had succeeded and that Dyson had not proved he suffered serious harm to his reputation.
More here:
Pfizer shares fall 5% after weight-loss drug setback
On Wall Street, shares in Pfizer have dropped 5% in pre-market trading after it suffered a blow with its weight-loss drug danuglipron.
Pfizer has decided not to advance danuglipron, an oral weight-loss drug taken twice a day, into late-stage studies after a trial found that most patients dropped out due to high rates of side effects such as nausea and vomiting.
Pfizer said today that the trial did show “statistically significant change in body weight from baseline”, but added:
While the most common adverse events were mild and gastrointestinal in nature consistent with the mechanism, high rates were observed (up to 73% nausea; up to 47% vomiting; up to 25% diarrhea).
It will now focus on developing a once-daily formulation of danuglipron.
But even so, today’s news is a blow to Pfizer’s ambition of entering a booming market for weight control medicines, where Novo Nordisk is having success with its Wegovy product.
Pfizer shares plunge after after the drugmaker dropped an experimental weight-loss pill due to a high rate of side effects https://t.co/1vxPCfLZ7I
— Bloomberg Asia (@BloombergAsia) December 1, 2023
Updated
Over in Canada, the unemployment rate has risen to 5.8% in November, from 5.7%, continuing an upward trend that started in April.
That’s despite a 25,000 pick-up in in employment, with Statistics Canada saying growth in the population continued to outpace employment growth.
Aaverage hourly wages rose 4.8% year-on-year, which may be too hot for the Bank of Canada to consider cutting interest rates soon…
Elsewhere in the world economy today, Switzerland has returned to growth.
Switzerland’s economy grew by 0.3% during the third quarter, the government said on Friday, having stagnated in April-June.
Growth in the service sector helped offset stagnating manufacturing growth.
The Gross Domestic Product (GDP) in Switzerland expanded 0.30 percent in the third quarter of 2023 over the previous quarter.https://t.co/lQFKu9cPWV pic.twitter.com/yKfVv4CqUf
— TRADING ECONOMICS (@tEconomics) December 1, 2023
Back in the housing sector, the UK’s Office for National Statistics has unveiled a new way of measuring private rental prices… which would have raised the rate of inflation if it had been applied in the past.
The ONS’s new method, called the Price Index of Private Rents (PIPR) is 0.7 percentage points higher than the existing Index of Private Housing Rental Prices (IPHRP).
That means average annual growth in rental prices between January 2016 and October 2023 is now estimated at 2.8%, up from 2.1% under the existing method.
As this chart shows, the new method shows a rather sharper increase in rental prices than the old assessment of rental changes.
The ONS also reports that:
Rental prices for flats and maisonettes in Great Britain grew at the fastest rate of all property types in the year to October 2023 (9.0%), while terraced houses saw the slowest growth (7.8%).
Rental prices for one-bedroom properties in Great Britain grew at the fastest rate of all bedroom categories in the year to October 2023 (8.7%), while four or more-bedroom properties saw the lowest growth (8.0%).
The stats body has also created a new interactive map, that lets you check rental increases in areas across the UK:
Go North East bus workers accept strike-ending pay offer
There’s a breakthrough in another transport dispute, though.
A bus strike across North East England will end after workers at Go North East accepted a pay offer, the Unite union says.
Drivers, engineers and administrators at Go North East will receive a pay rise of 10.5%, backdated to 1 July 2023, plus a further 0.7% rise in January 2024. Pay will also increase on 1 July 2024 in line with the RPI inflation measure, but at least 4%.
Unite national lead officer Onay Kasab says:
“I’m delighted our members have secured this substantial pay increase. Thanks to their tireless efforts on picket lines and at protests they have secured the pay increase they deserve.”
BREAKING: 1,300 Go North East bus drivers, engineers and administrators, members of @unitetheunion, have won an 11.2% pay rise following strike action.
— Taj Ali (@Taj_Ali1) December 1, 2023
Bus services will resume from tomorrow.
Aslef members vote to continue rail strike action
Aslef, the train drivers’ trade union, has announced that its members have voted overwhelmingly to continue strike action in their ongoing national dispute over pay.
Mick Whelan, Aslef’s general secretary, says:
‘We are in this for the long haul. Our members – who have not had a pay rise for nearly five years now – are determined that the train companies – and the Tory government that stands behind them – do the right thing.
‘The cost of living has soared since the spring and summer of 2019, when these pay deals ran out. The bosses at the train companies – as well as Tory MPs and government ministers – have had increases in pay. It’s unrealistic – and unfair – to expect our members to work just as hard for what, in real terms, is considerably less.
The result of the vote comes as ASLEF members begin an overtime ban today, to run until Saturday 9 December, which could lead to disruption for operators that rely on rest-day working.
Aslef staff are also holding a series of strikes between December 2 and 8.
Drivers will go on strike at East Midlands and LNER this Saturday; at Avanti West Coast, Chiltern, Great Northern Thameslink and West Midlands on Sunday; at C2C and Greater Anglia on Tuesday; at Southeastern, Southern/Gatwick Express and SouthWestern on Wednesday; at CrossCountry and GWR on Thursday; and at Northern and TransPennine Express next Friday.
Updated
UK manufacturing export orders drop again
Depressingly, today’s UK manufacturing PMI report shows that new export orders fell again, extending a slide to 22 months in a row.
The report blames “strong international competition” hurting sales to several overseas markets including mainland China, Europe and the US.
Dr. John Glen, chief economist at the Chartered Institute of Procurement & Supply, said:
“A huge injection of uncertainty amongst customers meant new work fell for the eighth month in a row, as the UK economy continued along a fragile path unable to sustain solid marketplace activity.
Orders from overseas were in an even more dire state and fell for the 22nd month.”
The UK lost nine breweries in the last quarter, as brewers were hit by tough trading conditions and rising cost.
Industry body the Society of Independent Brewers (SIBA) reports that the number of UK breweries dropped to 1,817 on 30 September, from 1,826 at the end of June. That follows a net increase of 2 breweries in April-June.
Andy Slee, chief executive of SIBA, says:
Brewery numbers have been more stable than many would have predicted, with no large percentage decreases but it is still concerning to see numbers slip back slightly, and whilst it was positive to see beer duty frozen in the Autumn Statement, the Chancellor could have gone further and boosted the Draught Relief to 20% or more which guarantees that beer sold in pubs has a lower rate of duty.”
Boudewijn Driedonks, partner at McKinsey & Company, sees a ‘ray of hope’ in today’s UK manufacturing PMI report, even though it shows another drop in activity.
Driedonks says:
“The rate of UK Manufacturing activity decline is starting to turn the corner – the figure is finally starting to creep up towards the magic 50, bringing a ray of hope to producers.
Declining inflationary pressure and stable interest rates – although still high – likely add to this momentum. But let’s not forget – we have experienced nearly 12 months of declining activity and new orders have continued to fall. Even if the decline is starting to bend the curve, the UK may start 2024 with a manufacturing economy at significantly lower levels than previous years.
Across the Eurozone, the rate of decline also seems to have turned a corner, but their PMI shows how brittle the economy is, Driedonks adds:
Sentiment across Europe shows a similar picture with both Germany and France, despite being very different economies, displaying a slight upward trend.
While the outlook remains muted, manufacturers seem to take confidence from flattening inflation rates and there are some signs of business confidence returning as the worst concerns about the macro-economic environment start to soften.”
Italy’s economy is showing more verve than first thought.
Italian GDP for the third quarter of 2023 has been revised higher, to show growth of 0.1%. That’s an improvement on the 0% growth initially recorded.
Consumer spending and exports helped the economy grow in the quarter, statistics body Istat says.
The Gross Domestic Product (GDP) in Italy expanded 0.10 percent in the third quarter of 2023 over the previous quarter.https://t.co/4KYXd8Q0GK pic.twitter.com/qCDzNxDmvS
— TRADING ECONOMICS (@tEconomics) December 1, 2023
This is a better picture than in France, which yesterday saw its first estimate of 0.1% growth revised down to a 0.1% contraction.
UK communications regulator seeks comments on Telegraph deal
Do you think the Telegraph newspapers should be owned by a consortium backed by the UAE? Or do you oppose the idea?
Either way, the UK communications regulator wants to hear from you.
Ofcom has published an invitation to comment on the public interest test concerning the potential deal. It is seeking responses by 13 December.
Ofcom’s interest has been triggered by the culture secretary, Lucy Frazer, who yesterday issued a public interest intervention notice (PIIN) over the Barclay family’s efforts to strike a deal to transfer control of the Telegraph newspaper and Spectator magazine to a consortium backed by the UAE.
That means Ofcom is now holding an in-depth inquiry, which will examine how the transaction may affect the public interest, with relation to “accurate presentation of the news” and “free expression of opinion”.
The Barclays family are trying to push through a deal with Lloyds Bank, which took control of the titles in June after the family failed to repay £1.16bn in debt. Under the Barclays’ plan, investment firm RedBird IMI would repay that debt with new loans, which would then be converted to equity, allowing them to take ownership of the titles.
This plan has prompted Lloyds to pause its auction of the Telegraph and Spectator, while it waits to see if the Barclays can repay that debt.
To take part, you can sent a Word document by email to PublicInterestTest2023@ofcom.org.uk, along with a coversheet (full details are here)
Or write to:
Public Interest Test Team 2023
Ofcom Riverside House
2A Southwark Bridge Road
London
SE1 9HA
Updated
UK factories are suffering from weak consumer demand, at a time when customers are also running down stocks build up in the pandemic.
So explains Glynn Bellamy, UK Head of Industrial Products for KPMG.
Following this morning’s increase in the manufacturing PMI, Bellamy says:
“A slowdown in inflation and a pause in interest rate hikes has slightly eased the pressure on manufacturers, but costs remain high in relative terms.
“Manufacturers exposed to weaker consumer demand, from both domestic and export markets, continue to suffer most from new order downturn - with post-pandemic destocking also a factor.
“The performance of other parts of the sector, such as aerospace and defence, are faring much better – but do still face their own supply chain challenges that limit output.”
UK factory downturn eases, but little festive cheer
The UK’s manufacturing downturn also slowed in November (as we just saw in the eurozone).
The latest survey of purchasing managers at manufacturing firms found that production contracted for the ninth consecutive month (bad news), but the rate of decline eased sharply to its second-weakest during that sequence (which is mildly encouraging).
The S&P Global / CIPS UK manufacturing PMI rose to 47.2 in November, up from 44.8 in October. That’s the highest level since April, and the third successive monthly increase.
However, it’s still below the 50-point seperating expansion from contraction, indicating another drop in activity.
And new orders, output, employment, suppliers’ delivery times and stocks of purchases were all at levels “consistent with a deterioration in operating conditions”.
Job losses, for example, were registered for the fourteenth successive month.
The downturn in production was led by manufacturers focussed towards business-to-business and capital spending, showing that companies are cutting back on investment.
Rob Dobson, director at S&P Global Market Intelligence, says the finer details of the PMI report bring “little festive cheer”, adding:
With new order inflows and exports continuing to fall sharply, and clients destocking, a sustained meaningful growth revival still looks elusive. Manufacturers are preparing for tough times ahead, with their continued caution leading to cutbacks in staffing, inventories and purchasing.
Over in the eurozone, the manufacturing downturn has eased slightly last month.
The latest poll of purchasing managers across eurozone factories has found that the contractions in output, new orders, purchasing activity and inventories slowed last month.
Business confidence at manufacturers edged up to a three-month high, but they kept cutting jobs for the sixth month in a row, according to the latest data from S&P Global.
Its HCOB eurozone manufacturing PMI rose to 44.2 for November, up from October’s 43.1, which is a six-month high.
However, it’s still some way below the 50-point mark showing stagnation, indicating the sector continued to contract.
🇪🇺Eurozone manufacturing activity contracted at a slower pace
— Trading.com UK (@tradingdotcomuk) December 1, 2023
🏭 Manufacturing PMI rose to 44.2 in Nov, up from 43.1
📈 This was above the preliminary reading of 43.8#EURUSD 🔼 0.08% #DAX 🔼 0.64%#tradingdotcomuk #MarketUpdate
RW: 70.53% of retail clients lose money.
The PMI survey also found that eurozone manufacturers continued to cut their prices, as their import costs fell again.
That could add to the deflationary pressures in the euro area, where inflation has tumbled to 2.4%.
Average fixed mortgage rates have dropped again
Data provider Moneyfacts has just confirmed that mortgage rates are continuing to ease.
They say:
The average 2-year fixed residential mortgage rate today is 6.04%. This is down from an average rate of 6.05% on Thursday.
The average 5-year fixed residential mortgage rate today is 5.65%. This is down from an average rate of 5.66% on Thursday.
Back in July, the average two-year fixed mortgage rate hit 6.66%, the highest since 2008.
But since then, market expectations for UK interest rates have fallen (see chart at 8.47am), leading to the drop in mortgage rates since the summer.
FTSE 100 starts December with a rally
In the City, the stock market has started December with solid gains.
The FTSE 100 shares index has gained 67 points, or 0.9%, to hit 7520 points, the highest level for the blue-chip index in over two weeks.
Mining stocks are leading the risers, with iron ore-to-diamonds producer Anglo American up 6.3%, and copper miner Antofagasta gaining 4.1%.
Housebuilders’ shares are also higher after this morning’s news that price rose (seasonally-adjusted, anyway) in November, with Berkeley Group up 2% and Taylor Wimpey up 1.7%.
Last night, the US Dow Jones Industrial Average closed at its highest level since January 2022, lifting optimism among investors.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, says:
“The FTSE 100 has regained some confidence from investors, helping to erase losses of recent days. The unexpected increase in house prices helps support the builders and also paints a picture of an economy with a reasonable pulse. Optimism is also being brought over from the US.
The US market is well and truly behaving like we are at peak interest rates in an early Christmas present for investors.
The more UK-focused FTSE 250 index (of medium-sized companies) is up 0.5%.
Bloomberg: Ryanair finds suspect engine components
Ryanair Holdings has said it found unauthorized parts in two aircraft engines, Bloomberg reports.
This makes the budget carrier the latest airline to be caught up in the distribution of components backed by falsified certification documents.
Bloomberg explains:
The suspect parts were discovered during scheduled maintenance checks in Texas and Brazil over the past few months and have since been removed from the engines, Chief executive officer Michael O’Leary said in an interview in Dublin on Thursday.
Ryanair finds unauthorized parts in two aircraft engines, CEO Michael O’Leary says, becoming the latest major airline caught up in the distribution of components backed by falsified certification document https://t.co/J0EIw1h2iY
— Bloomberg (@business) December 1, 2023
This issue has been brewing in the airline industry for some months.
In September, the US Federal Aviation Administration issued an alert that unapproved parts might be installed in certain General Electric model CF6 jet engines, and urged owners to inspect their planes or inventories for the parts.
The FAA says UK-based AOG Technics sold bushings for GE Model CF6 engines without having FAA approval (details here).
By October, the Independent reported that almost 100 aircraft had been grounded, as regulators and airlines scrambled to assess the scale of the issue.
How longer-term interest rates have dropped
Nationwide has also provided this chart, showing how UK interest rate expectations in the financial markets have eased back, after surging earlier this year:
Robert Gardner, Nationwide’s chief economist, explains:
These shifts are important as they have led to a decline in the longer-term interest rates (swap rates) that underpin fixed rate mortgage pricing, as shown below.
If sustained, this will help to ease the affordability pressures that have been stifling housing market activity in recent quarters, where the number of mortgage approvals for house purchases has been running at c.30% below pre-pandemic levels.
EY Item Club: house prices likely to drift
Economist forecasters at the EY ITEM Club reckon that a “serious correction” in UK house prices is now an increasingly remote prospect.
Following Nationwide’s latest house price index, released this morning, they say:
Nationwide’s measure of house prices in November delivered a third successive month-on-month increase. The rise of 0.2% was modest, but prices are proving resilient in the face of an increase in mortgage rates and a sluggish economy. The EY ITEM Club thinks the odds of a serious correction in prices are increasingly remote.
Average rates on new mortgages are at a 15-year high and activity in the housing market, as measured by mortgage lending and approvals, is weak. And the Monetary Policy Committee’s (MPC) ‘high for longer’ message on interest rates means markets have reined back expectations of how much borrowing costs will be cut next year.
But the MPC’s decision to pause rate rises in its last few meetings has contributed to a decline in quoted mortgage rates. The EY ITEM Club thinks inflation will recede quicker than the committee expects, opening up the prospect of rate cuts late next spring. Households’ finances remain in good shape and a rebound in mortgage approvals in the latest data suggests the housing market’s weakest point may have passed.
None of this suggests a rebound in house prices anytime soon. But a period of drift, rather than serious decline, looks in prospect, easing at least one previously expected headwind to the economy.
Bloomberg points out that Britain’s housing market has defied forecasts for a sharp correction this year.
One reason is that prices have been buoyed by a lack of properties available for purchase.
Bloomberg’s Lucy White adds:
The average value is now about 5.6% below where it peaked in August 2022, roughly half the 10% drop expected for this year.
Strength in the housing market is another sign of life in the UK economy, which the Bank of England expects to stagnate through much of the next year. In an effort to tame inflation, the central bank has lifted interest rates from near zero at the end of 2021 to 5.25%, the most since 2008.
UK house prices rise unexpectedly for a third month, mortgage lender Nationwide says https://t.co/e5xaaxRviY
— Bloomberg Economics (@economics) December 1, 2023
The UK’s strong employment levels is supporting the housing market, reports Jeremy Leaf, north London estate agent.
Leaf says:
These figures confirm what we’ve seen in our offices – the market is still baring its teeth. Despite a 15-year high in base rate and continuing inflation, buyers are showing there is little chance of a correction, although sales are taking longer and prices are softening. Strong employment is also supporting activity.
‘We don’t expect to see much change in the months ahead but a gradual improvement as optimism always seems to become more apparent at the beginning of the year.’
The Bank of England’s decision to leave interest rates on hold at 5.25% in both September and again in November has lifted confidence in the housing market, argues Alex Lyle, director of Richmond estate agency Antony Roberts.
Lyle says:
“At this time of year, competition is more muted so there are opportunities for buyers who are brave enough not to sit on the fence.
‘Two consecutive holds in base rate has brought some confidence back to the market, helping buyers plan for the future with a little more certainty.
‘Stock levels are lower, as expected at this time of year, but those properties which are coming to the market are at the right price and at less ambitious levels than in the past.”
Knight Frank: We must be close to bottom of the slowdown
The UK housing market could see a spring bounce next spring, unless a general election is called in the first half of 2024, predicts Tom Bill, head of UK residential research at Knight Frank
Bill says:
“If we are not at the bottom of the current slowdown in the UK housing market, we must be close. Price indices are potentially more volatile due to low transaction numbers but sentiment has improved in recent weeks as the worst of the economic data moves behind us. Inflation is below 5%, the best five-year fixed-rate mortgage has fallen to less than 4.5% this week and speculation is focussed on the timing of the next rate cut not the size of the next rise.
After a flat autumn, the UK housing market should see a spring bounce in 2024 provided a general election is not called in the first half of next year.”
Here’s a chart from Nationwide, showing the state of the housing market:
Tentative optimism that borrowing costs are “on the turn” are bringing some buyers out ahead of the new year, reports property agent Emma Fildes of Brick Weaver, nudging prices a little higher.
House prices limp upwards for a 3rd consecutive month inc’ing 0.2% in Nov 2023 reducing the reduction in annual house price growth from -3.3% in October, to -2.0%. Tentative optimism that rates are on the turn nxt year brings some buyers out ahead of the new year @AskNationwide pic.twitter.com/MBdIfFcbzP
— Emma Fildes (@emmafildes) December 1, 2023
Nationwide: rapid rebound still appears unlikely
Nationwide also warns that the housing market prices are unlikely to rebound rapidly anytime soon.
Chief economist Robert Gardner says:
“While mortgage rates are unlikely to return to the lows prevailing in the aftermath of the pandemic, modestly lower borrowing costs, together with solid rates of income growth and weak/negative house price growth, should help underpin a modest rise in activity in the quarters ahead.
“Nevertheless, a rapid rebound still appears unlikely. Cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, but consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries.
“Moreover, while markets are projecting that the next Bank Rate move will be down, there are still upward risks to interest rates. Inflation is declining, but measures of domestic price pressures remain far too high.
“Policymakers have cautioned that it is too early to be talking about interest rate cuts. Indeed, three of the nine members of the Bank of England’s Monetary Policy Committee voted to increase Bank Rate at its meeting in early November, though the remaining six preferred to hold at 5.25% for the time being.”
Introduction: UK house prices gained 0.2% in November
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK’s house price recovery “continued in November”, according to the Nationwide Building Society, as falling mortgage rates help to warm up demand.
After a bumpy year for the housing market, Nationwide has just reported that UK house prices rose 0.2% month-on-month in November, on a seasonally-adjusted basis. That’s the third monthly rise in a row – surprising City economists who expected a 0.4% monthly fall.
On an annual basis, prices were 2% lower than a year ago – a weak result, but the strongest reading since February.
According to Nationwide, the average price of a house sold in November was £258,557, which (you may note) is actually slightly lower than October’s £259,423 – but that’s before seasonal adjustments.
This data only covers lenders who take out a mortgage, rather than cash buyers, but it’s still a good test of the housing market.
The housing market is benefitting from the drop in UK inflation, which is leading to expectations that UK interest rates will be lower than previously feared. Several mortgage lenders have cut their rates in recent weeks.
Robert Gardner, Nationwide’s chief economist, says:
“There has been a significant change in market expectations for the future path of Bank Rate in recent months which, if sustained, could provide much needed support for housing market activity.
“In mid-August, investors had expected the Bank of England to raise rates to a peak of around 6% and lower them only modestly (to c.4%) over the next five years. By the end of November, this had shifted to a view that rates have now peaked (at 5.25%) and that they will be lowered to around 3.5% in the years ahead.
But even so, the housing market has clearly cooled this year. Data yesterday showed that the number of home sales in October was 21% lower than the same month last year.
Also coming up today
Rail passengers are being warned to expect days of disruption as train drivers in the Aslef union start an overtime ban and a series of rolling strikes halting services across Britain, in a long-running dispute over pay.
Drivers will be taking industrial action at train operating companies contracted to the Department for Transport, striking for 24 hours at each one on different dates between Saturday 2 December and Friday 8 December.
The strikes will stop most or all trains at the affected operators in England and also hit some cross-border services to Scotland and Wales.
We also get a healthcheck on UK and eurozone factories this morning.
And later today, global investors will hear from America’s top central banker, Jerome Powell, and hope to hear hints as to when the US Federal Reserve might start cutting interest rates.
The agenda
8am GMT: Switzerland’s Q3 GDP report
9am GMT: Eurozone manufacturing PMI report for November
9.30am GMT: UK manufacturing PMI report for November
3pm GMT: US manufacturing PMI report for November
4pm GMT: Federal Reserve Chair Jerome Powell participates in a fireside chat at Spelman College, US
Updated
