Posts Tagged ‘March’

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Did you read the one about wind farms that can only produce enough electricity to make a few cups of tea? What a scandal! Why do we need these cursed wind farms? Yet take another look, and it turns out that actually wind farms are growing in importance all the time. The problem is not so much with wind energy; it is the way in which it is portrayed.

The ‘Telegraph’ ran the expose, and its report was widely cited across the Twittersphere. To use the nerdy jargon, it trended. “Some of Britain’s biggest wind farms are at times producing only enough electricity to make a few cups of tea,” stated the ‘Telegraph’ article.

It turns out that official government data has drawn the shocking conclusion that wind farms are not very productive when there is no wind. Here is some more news for you, hot off the press: it is much hotter during the summer. Is that a story? Of course not, to use the jargon, it is somewhat obvious.

So why then run an entire article saying that wind farms don’t do much when the wind is quiet?

But then you might as well ask: why it is that some politicians appear to find it impossible to utter the words wind farm without prefixing them with the word ghastly?

Stuck near the bottom of the ‘Telegraph’ piece, Maf Smith — a spokesperson for RenewableUK — said: “We hit a new record in March, when we generated enough electricity from wind at one point to power four in ten British homes.”

To be fair, the stat saying wind energy powered 40 per cent of British homes is about as meaningless as the one that says at other times it hardly generated wind at all. Presumably this point in March occurred when it wind conditions were optimum and probably in the middle of the night when electricity usage was minimal.

A more interesting quote from the same Maf Smith said: “Government figures show that in 2012 , more than 11 per cent of the UK’s electricity came from renewable sources, with wind providing the lion’s share.”

What we are lacking in the UK is any sense of objectivity. David Cameron jumps on the fracking bandwagon – maybe he is right, but frankly there is no evidence to support the pro or anti lobby yet, so why support it so wholeheartedly at this point?

What we lack in the debate about UK energy be it renewables, shale gas, algae, synthetic energy, or whatever, is any attempt at objectivity.

In fairness, the greens are just as bad as the oil lobby. Bear this in mind, however. According to James Martin in his book ‘The meaning of the 21st century’, the world’s reserves of oil, not counting the undiscovered ones, have a value of about 60 trillion UK dollars. You could say there is an awful lot of money at stake in this one, and the last thing those who hope to make money from these 40 trillion worth of oil reserves want is for us to find a cheaper, and inexhaustible alternative. The last thing they want is an objective debate based on evidence.

© Investment & Business News 2013

The headline figure was nothing to write home about, but drill down and maybe there is reason for real optimism.

The UK’s balance of trade in goods barely moved in March, with the deficit coming in at £9.1 billion. So far, so indifferent.

As for the UK’s deficit on trade in goods and services, this was marginally better than February scoring £3.1 billion from £3.4 billion the month before. Okay that was an improvement , but actually the deficit for March was pretty close to average over the last year or so.

The deficit has not significantly changed over the last ten years. Now, change the perspective, and look outside Europe. Exports to the US soared 21 per cent in March over the month before.

Exports to the BRICS have been steadily rising for some time. See this chart:

Okay, exports to China are still way below imports from China, but the chart makes it clear that exports have been growing much faster than imports for some time. In fact over the last two years, exports from the UK to China have increased by half as much again. Imports from China to the UK have risen 10 per cent.

© Investment & Business News 2013

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Just a hint, but good news may have been lurking in the latest report on UK manufacturing. More to the point, it was exports – the one area in which the UK really does need to see a better performance – that provided the promise. On the surface there was nothing out of the way in the latest Purchasing Managers’ Index – or PMI – for UK manufacturing.

The index rose from 48.6 in March to 49.8. Any score under 50 is mean to suggest contraction. So the index is still suggesting UK manufacturing is in recession.

Furthermore, much of the gain can be put down to clearing backlogs of work, caused partly by all that nasty weather we had in March hitting production. The good news, however, relates to the more forward looking indicators. The output balance jumped from 47.8 to 50.5. Again, a reading of 50.5 is no great shakes, but everything is relative – and relative to recent months that is a good showing.

The sub index measuring exports, however, rose above 50 for the first time in a year, and in fact hit its highest level since July 2011.

Apparently, the companies which were surveyed to form the index reported rises in sales to clients in North America, the Middle East, Latin America and Australia.

Just to reiterate, things are relative.

UK manufacturing is still barely expanding, and export growth is trivial. Some of the improvement may have been down to catching up with output lost during that cold March. Furthermore, last week the CBI industrial trend survey indicated a decrease in total new orders driven by a fall in domestic demand in the last quarter. It recorded the fastest pace of decline since January 2012.

On its own this report does not point to recovery, not even an export recovery, but if other surveys support these findings over the next few weeks, that may not be sufficiently good news to justify opening a bottle of Champagne, maybe not even good enough to open a bottle of Prosecco, but a very small glass of cheap fizz may be forgivable.

© Investment & Business News 2013

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Many have speculated that 2013 will be a year of rising house prices, thanks largely to the funding for lending scheme. Others say changes introduced to supporting both would-be and existing home owners in the recent budget will lead to rising house prices next year and beyond.

These predictions may be right, but property bulls often forget to mention that real wages have been falling for over two years, so low rates or not, there ain’t much spare money out there among households at the moment.

What we can say is that the monthly report from the Royal Institution of Chartered Surveyors (RICS) does not provide much support to the rising house prices theory.

In fact the survey’s main headline index seems stuck at a level consistent with zero growth.

The index is produced by asking surveyors if house prices went up or down in their region. The percentage number who said down is subtracted from the percentage number who said up. So if the index is less than zero that means more said down that up.

The interesting thing about this index is that it has proven to be a good forward indicator. The index is not very volatile, usually recording modest changes on the respective previous month. But when it does change significantly those changes tend to stay in place for a while and other surveys tend to show complementary results for some time afterwards. In short, the RICS index is good at predicting change.

Last year it got steadily better, rising from minus 23 in July to minus seven in October. Since then the steady improvement has either slowed or perhaps stopped completely. In November the index was minus nine, then minus one in December, and it seemed on course for going into positive territory. But in January the index fell back to minus 4 and then minus 6 in February.

So what would the March reading be? Well it was minus one.

That elusive jump into positive territory is proving to be precisely that: elusive.

RICS did say that the number of houses sold in the UK during March was at a three year high. So maybe it is just a matter of time before we see the predicted rise in house prices. Maybe, but as was said earlier, it is difficult to see how households can really afford to run up much bigger mortgages.

©2013 Investment and Business News.

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