A week in advance 8th - 12th September 2008
By Keith Bowman | 05 Sep, 2008
This coming week sees the UK corporate calendar remaining relatively quiet, whilst major economic events also prove somewhat sparse. In the US, economic announcements are likely to continue dominating investor sentiment, with the more significant data due over the latter end of the week.
Economics
In the UK, the prospects for inflation (rising prices) come back into focus. On Monday, pricing data for industry (during August) is due to be announced in the form of the Producer Price Index (PPI) or as sometimes known, factory gate prices. In July, UK manufacturing prices rose at their fastest rate since records began 20 years ago – up 10.2pc from a year earlier. The increase was largely driven by rising oil prices earlier this year. However, allowing for some time lag effect, the recent decline in oil prices is eventually expected to lead to the rate of growth in factory gate prices slowing – a situation which would be warmly welcomed by the Bank of England and its fight against rising inflation.
Over in the USA, Producer Price figures for August – due to be announced on Friday are also likely to prove a key feature over the week. With high oil prices proving a problem for much of the world, the USA has been a major victim. The Producer Price Index for July rose by its biggest increase in 27 years (+9.8pc). Like the Bank of England, the US Central Bank (The Federal Reserve) is also hoping that the recent decline in the oil price will soon help to curtail its rise. On the same day (Friday), US Retail Sales figures are also scheduled for release. Despite severe difficulties in the housing market, US retail sales have recently held up relatively well, supported by government tax rebate funds. Investors will be watching avidly with regards to this health gauge for US consumers and its overall implications for the US economy.
Companies
On the corporate front, the UK consumer also moves into the spotlight, courtesy of results from general retailer Next and supermarket group Morrisons. Clothing and household goods group Next is due to report its half year results on Wednesday. At its most recent trading update back in late July, management noted a 1.8pc decline in overall group like-for-like sales for the half year period, led by declining sales for its high street outlets (-6.0pc on a like-for-like basis). On the positive, the group’s catalogue Directory division had enjoyed a 2.0 rise in like-for-like sales. Management then remained happy with already reduced full year profit expectations (the consensus forecast is currently £427m pre-tax profit – down 14pc on last year), although continued to take a highly cautious view of the outlook for the company. Ahead of the results, market consensus opinion currently denotes a strong hold.
Moving towards the supermarket sector, William Morrison is due to report its half year results on Thursday. The group proved to be the industry winner over the Christmas 2007 period and its more recent first quarter trading statement, back in early June, saw its success continuing. Like-for-like sales over the first quarter (excluding fuel sales) rose by 7pc, although analysts were quick to note at the time that this was down from the 9.5pc achieved over the Christmas period. Nonetheless, recent industry surveys continue to bode well for Morrisons, although like management teams across the wide retail sector, management has expressed caution with regards to the outlook. Current consensus analyst estimates for full year pre-tax profits stand at around £628 million, +11.6pc over last year. Market consensus opinion is currently tentatively positive in tone.
Other corporate announcements expected over the course of the week include results and trading updates from housebuilder Barratt Developments and electrical component wholesaler Premier Farnell.
Week Ahead Diary
Half Year Results
Monday – n/a
Tuesday – n/a
Wednesday – Next
Thursday – Morrison (Wm) Supermarkets, Premier Farnell
Friday – n/a
Full Year Results
Monday – n/a
Tuesday – n/a
Wednesday – Barratt Developments
Thursday – n/a
Friday – n/a
Economic Diary
Monday – UK Producer Price Index
Tuesday – n/a
Wednesday – n/a
Thursday – n/a
Friday – US Producer Price Index, US Retail Sales
Note: This list represents what we believe are the highlights of the coming week and is not an exhaustive list of company announcements or economic events. Source: Digital Look.
