Knight Frank Daily Update Thursday 7th May
Chinese exports, bad handwriting and the return of property viewings
3 minutes to read
Good morning,
Economic headlines
The Bank of England this morning said its policy committee had voted unanimously to maintain the base rate at 0.1%.
In an illustrative scenario the Bank anticipates a very sharp fall in UK GDP in 2020 H1, though it said "given the assumed path for the relaxation of social distancing measures, the fall in GDP should be temporary and activity should pick up relatively rapidly."
Global markets painted a mixed picture overnight as investors were buffeted by a range of conflicting economic data points.
China’s exports unexpectedly rose 3.5% in April compared to a year earlier, marking the first positive growth since December last year. This compares with the 15.7% drop tipped by a Reuters poll of economists.
Meanwhile in the UK, IHS Markit’s purchasing managers’ index fell to 8.2 in April, down from 39.3 in March, signalling the weakest reading since records began in 1997. A figure below 50 indicates a contraction. The fall was driven by the shut-down of construction sites as measures to restrict movement hit construction supply chains, leading to widespread shortages of key materials.
Prime Minister Boris Johnson said social distancing restrictions will begin to be lifted from Monday. More than one form of daily exercise is expected to be among the first freedoms allowed, along with plans to restart open-air sporting activities such as tennis, golf and fishing. Some businesses, from DIY shops to fast food restaurants, are already open.
The government is eager for construction sites to reopen wherever it's safe to do so.
The three-week review of the lockdown restrictions will take place tomorrow but the Prime Minister is unlikely to set out any changes until Sunday, according to this morning's Times.
Property market headlines
This morning we publish Tom Bill’s interview with Savvas Savouri, chief economist at asset manager Toscafund. Mr Savouri expects a one-off £350 billion loss to the economy in Q2 of this year, followed by a bounce back in Q3, before the largest increase in GDP on record in Q4 - or what he likes to call, a V shaped recovery "drawn by someone with bad handwriting."
Kate Everett-Allen has today published our weekly round up of key data and insight from residential markets around the globe. Her analysis comes as several countries take tentative steps towards the reopening of their economies. Next week is a critical date for France and Spain, with property viewings recommencing, although still in line with social distancing guidelines. In the same markets transactions will be able to complete, and people will once again be able to move house.
These changes will have a multiplier effect on other industries such as builders, solicitors and removal companies.
Chris Druce continues to explore how Knight Frank agents are faring day-to-day. His interview with Ross Davies in Tunbridge Wells and Oliver Beales in Beaconsfield. Both identify growing momentum with the prospect of viewings resuming in a few weeks.
Finally today, we launched our global housing market forecast earlier this week, sharing our views on the prospects for 20 leading world cities. A video of our presentations and the Q&A with 80 leading journalists can be found here.
Due to the bank holiday weekend here in the UK, we will be back on Monday. If you have any questions, please contact me, or the team.