Good morning!

Some interesting macro stats/comments this morning from the Bank of England, in its monthly Agents' Summary of Business Conditions. Key points;

  • Unemployment rate fell to 4.9% in 3m to May, lowest level since 2005, and employment also at record levels (although obviously this is pre-Brexit).
  • Average earnings growth is going up, boosted by Living Wage, and is currently +2.3%. Although note that there will be an offsetting impact from reduced Tax Credits.

Post-Brexit comments;

  • Uncertainty- most companies say won't affect capex plans, but a third expect "some negative effects" in next 12m. 
  • Little evidence of any impact on consumer spending, although "some reports of consumers becoming more hesitant around purchases of higher-value items".
  • Optimism amongst exporters, benefiting from devaluation of sterling.
  • Few reports of companies seeking to pull out of the UK.
  • A few reports of foreign investment in UK being postponed.
  • Prices likely to rise, as impact of more expensive imports is passed on, especially in catering. Retailers feel unable to pass on price rises, and are seeking to protect market share (hence margins likely to come under pressure).
  • Demand for credit easing, but banks "appetite to lend had been maintained following the referendum decision".

Overall then, this confirms my view that nothing dramatic is happening as a result of Brexit. Although it sounds as if the economy is likely to slow down in the next 12 months. The jury is out on whether that turns into a recession or not, nobody knows at this stage.


Howden Joinery (LON:HWDN)

So far, this £2.6bn market cap (at 421p/share) joinery seems to be shrugging off the Brexit result, it says today;

·       Howden Joinery UK depot revenue increased by 5.2% in the first four week period of the second half of the year (to 9 July), which included the EU referendum;

·       Referendum result has created uncertainty about outlook for remainder of year, but no evidence of any impact on demand so far;

·       Continuing with plans but remain watchful and ready to respond;

·       Weaker exchange rate would affect cost of goods sold.


That sounds pretty bullish to me. It suggests that housebuilding & refurbishment is continuing as normal. Although I suppose there could be a time lag for any downturn, because a half-done property project is not going to be abandoned before completion.


Empresaria (LON:EMR)

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