Ear to the Ground

08 September 2023

There was very little in terms of UK economic data this week, anyone would think that it was the end of the summer school holidays!  What we did have was the latest UK house price data, this time from Halifax.  Their news, much like that previously from Nationwide, was negative.  In their August data print they recorded that house prices had fallen by 1.9%, greater than the consensus forecast fall of 0.3%.  Year on year, therefore, house prices have fallen 4.6%.  This represented the largest decrease since August 2009.  There is an expectation that house prices will continue to fall for the remainder of this year and into next, particularly as they are still 17% higher than pre-pandemic levels.  Higher interest rates and increased mortgage costs are reportedly to blame.

In the US, meanwhile, there was a little more data to go at.  The pick of the data was the release of the Institute for Supply Management (ISM) Services data, which showed that the index had unexpectedly jumped to 54.5 in August, with a reading above 50 indicating expansion in the sector.  This reading compared to the July figure of 52.7 and considerably above the consensus forecast of 52.5.  Looking behind the headline figure, there were improvements across most of the underlying categories.  A pickup was seen across business activity, new orders, employment and inventories.  These figures suggest that sentiment and hope across the sector is stronger than anticipated.  Could it be that we will continue to kick the US recession can further down the road?

There are perhaps some figures to keep an eye on.  Figures from Moody’s Analytics/Equifax show that delinquencies on private debt, including consumer loans, credit cards and car loans, are on the rise.  Looking at data since 2006, the current rates are nowhere near as high as they were for consumer loans and credit cards back in 2009.  Car loans are fast approaching that level, however.  It will be interesting to see what effect this, if any, has on car prices.  We have already seen Tesla take an axe to some of their car prices, who, if any, will be next!