In further encouraging signs of the improving UK economy, the OECD, in their latest assessment of the global economy, has raised its forecast for growth in UK Gross Domestic Product (GDP) in 2013 from 0.8% to 1.5%, due to the momentum achieved in the first two quarters of the year.
They went on to say that several economies, including Japan and the United States have seen productivity and activity grow at “encouraging rates”. They did, however, add a caveat in that they believe global growth will be sluggish, as a result of problems in some of the emerging markets that may counter better developments in the advanced economies.
Echoing this improved sentiment, the latest Markit/ CIPS purchasing managers index for the UK’s construction industry, a widely followed indicator of economic activity, showed an improvement to 59.1 from the previous level of 57.0 reported in July. Any figure above 50 indicates economic expansion. Residential building was seen as the major contributor to this data.
Tim Moore, the Senior Economist at Markit, commenting on these findings said: “The latest construction PMI figures are yet another indication that the UK economy has performed impressively over the summer months.”
“A steep upturn in civil engineering activity suggested that public sector demand has joined residential building as a key driver of construction output growth during August”
UK manufacturing output also grew in the first quarter of 2013 by 0.4%, reversing its steady decline seen since the start of the recession in 2008.
Risk warnings
This document has been prepared based on our understanding of current UK law and HM Revenue and Customs practice, both of which may be the subject of change in the future. The opinions expressed herein are those of Cantab Asset Management Ltd and should not be construed as investment advice. Cantab Asset Management Ltd is authorised and regulated by the Financial Conduct Authority. As with all equity-based and bond-based investments, the value and the income therefrom can fall as well as rise and you may not get back all the money that you invested. The value of overseas securities will be influenced by the exchange rate used to convert these to sterling. Investments in stocks and shares should therefore be viewed as a medium to long-term investment. Past performance is not a guide to the future. It is important to note that in selecting ESG investments, a screening out process has taken place which eliminates many investments potentially providing good financial returns. By reducing the universe of possible investments, the investment performance of ESG portfolios might be less than that potentially produced by selecting from the larger unscreened universe.
