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Business - Need to Know

Afternoon Edition

Good afternoon. So it turns out that growth in the first quarter was disappointing. Hopes that the abrupt slowdown in the British economy in the first three months of the year was less pronounced than preliminary estimates suggested were dashed today after the Office for National Statistics left its initial estimate unchanged at 0.3 per cent.

Analysts had predicted an upward revision to 0.4 per cent because of more upbeat survey information, particularly from the dominant services sector, but services was revised lower by 0.1 percentage point in today’s estimate.

The biggest drag was trade, which knocked 0.9 percentage points off the quarterly GDP rate, due to high imports of oil, machinery and transport equipment. That was the biggest drag since the third quarter of 2013. Patrick Hosking, our Financial Editor, has the story here.

The pound fell a third of a cent to as low as $1.5332 after the data was published. For all the reaction, log on to the new-look Business Now live blog, which now pops out, making it easier to read.

In better news, particularly for SMEs, the latest figures from the Bank of England’s Funding for Lending Scheme (FLS) showed lending to small businesses increased by £635 million in the first quarter of this year.

The recent shift to concentrate on lending to businesses, instead of households, through the scheme appears to have worked as the first quarter increase reversed an £800 million drop in lending by FLS participants in the previous quarter.

Most of the increase was from Lloyds Banking Group, where lending under the scheme rose by £409 million.

Sticking with lending (although this time to households). The number of mortgage approvals made to home buyers jumped to a 10-month high last month amid wider signs of "broad confidence" in the economy, according to the latest report from the British Bankers’ Association.

Some 42,116 mortgages for house purchase with a total value of £7 billion got the green light last month, marking the highest number seen since June 2014. There was also evidence that business lending may have reached a "turning point", the report said.

Don't forget you can also follow me on Twitter for regular updates throughout the day - @becclancy.

Have a great day.

Rebecca Clancy
Breaking News Editor, Business
The Times
rebecca.clancy@thetimes.co.uk

Investors shopping on a busy high street helped offset weaker mining stocks on a flat FTSE 100, up 11 points to 7,044.

Sports Direct was the biggest riser on the blue-chip index, up 28p to 687p, after the retailer raised its full-year earnings forecast ahead of its annual conference. First-quarter profit at Kingfisher, the home improvement retailer up 13p to 379p, was ahead of expectations thanks to sales at its Screwfix brand.

Elsewhere, B&M, the budget retailer chaired by Sir Terry Leahy, rose 8¾p to 326¾p, above its 270p float price last summer, on a 56 per cent rise in annual profits, prompting analysts at Canaccord Genuity to raise the retailer’s target price.

Away from the shops and in the mid-cap index, Tate & Lyle lost 19p to 580½p after the food ingredients company cut 2016 profit guidance.

Alex Ralph
Market Reporter

The Office for National Statistics confirms earlier estimates that GDP grew a disappointing 0.3 per cent in the first quarter

Recent improvements in economic data from the US has prompted speculation of a rate rise this year and markets will be looking closely at today's data.

First up we get the weekly jobless claims from the US Labor department at 1.30pm BST. Analysts are expecting 270,000, slightly down from the previous week's 274,000.

At 3pm we get pending house sales in April from the National Association of Realtors. Sales are expected to have risen 0.9 per cent, sightly down from March's 1.1 per cent.

On the corporate front, Abercrombie & Fitch is expected to report a fall in sales for the ninth consecutive quarter. The company has been hit by customers turning to its logo-free rivals and is now undertaking a turnaround. However, discounts, fashion missteps and a stronger dollar have made it difficult for the company to return sales to growth. Investors will be looking for any updates on forecasts and an update on the search for a new chief executive which has now been dragging on for five months.

Markets: Futures suggest a negative start to the day on Wall Street. The Dow Jones is expected to open down 28 points at 18,113, the S&P to fall 2.5 points to 2,118.5, and the Nasdaq to ease 6 points to 4,536.25.

"British businesses and consumers have started to put their foot on the gas."
Richard Woolhouse, chief economist at the British Bankers' Association, on signs of growing confidence in the economy after the BBA reported a rise in mortgage approvals and business lending
Today's FTSE 100 risers and fallers
Up (%)
Sports Direct International 4.25
Kingfisher 3.29
Dixons Carphone 2.11
ARM Holdings 1.75
Tui 1.62
* As at noon
Down (%)
Smiths Group -1.47
Intertek Group -1.47
RSA Insurance Group -1.46
Marks and Spencer Group -1.42
easyJet -1.20
* As at noon
The Markets Today
FTSE 100 7,044.94 0.17%
FTSE 250 18,229.52 -0.04%
Cac 5,153.58 -0.56%
Dax 11,726.70 -0.38%
Brent Crude 62.91 0.40%
Gold 1,187.56 0.14%
GBP/US 1.5292 -0.40%
GBP/euro 1.3989 -0.62%
10Y Gilt 128.287 0.47%
* As at noon
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