Morning Round-Up

Friday Feeling, Labour majority overturned by Workers Party of Britain in Rochdale by-election, PCE index for the US comes in line with expectations, prices rose by more than expected in the Nationwide House Price Index, and growing GDP for Canada.

Friday Feeling

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Rochdale by-election

George Galloway has won the Rochdale by-election for the Workers Party of Britain overturning an existing Labour majority having secured close to 40% of the vote.

Following the death of Sir Tony Lloyd, the Rochdale seat was up for contest. With Labours lead in the national polls and their existing majority of 10,000 in the seat, many had considered it a secure victory for the party.

However, the Labour Party subsequently suspended their candidate Azhar Ali from the party following an anti-Semitism row and incendiary comments over the Israel-Gaza conflict. The conflict in the Middle East continued to dominate the by-election, with Galloway campaigning in opposition to Sir Keir Starmer’s position on Gaza. Since nominations had closed, Ali remained on the ballot sheet and took some 7.7% of the vote share which represented and 44 pt swing against Labour.

Sir John Curtice this morning said that Labour’s vote “literally collapsed” suffering the greatest drop-in support at a by-election since the Second World War.

Galloway now takes on his fourth roll at Westminster. The former Labour MP lost the whip in 2003 following comments around the Iraq War. The following year he became a member of the Respect Party and its leader in 2013. Following Labour’s defeat during the 2019 General Election, Galloway formed and led the Workers Party of Britain.

Coming second behind Galloway was independent David Tully, who took over 6,600 votes, in what some commentators are seeing as a nod to the electorate’s dissatisfaction with Westminster.

The shift away from the main parties has been seismic, with for example Labour, the Conservatives and the Liberal Democrat’s getting less than 27% of the vote share between them. This was a far cry from the 9 in 10 votes these parties got in the 2019 General election.

US PCE Index

Yesterday’s personal consumption expenditure price index – the Fed’s preferred method of gauging inflation – came in line with expectations. On a month-on-month basis the index rose 0.3% while the annualised print eased 20bps to 2.4%, marking the lowest level in three years.

When stripping out the volatile indexes of food and energy, core PCE rose 20bps from 0.2% to 0.4% on a month-on-month basis. This uptick represented the most significant increase in core inflation in a year and is indicative of how the Fed continue to face headwinds in bringing ‘sticker’ service-related inflation down.

Nationwide House Price Index

This morning’s Nationwide House Price Index indicated that prices rose 1.2% on a annual basis, beating expectations of a 0.7% rise. This represented the first annualised increase for over a year and makes the average home worth £260,420.

Commenting on the data Nationwide’s Chief Economist Robert Gardner said that “The decline in borrowing costs around the turn of the year appears to have prompted an uptick in the housing market. Indeed, industry data sources point to a noticeable increase in mortgage applications at the start of the year, while surveyors also reported a rise in new buyer enquiries.”

Canadian GDP

Yesterday, data from Canada indicated that the country’s GDP grew 0.2% over the final quarter of 2023, following a 0.1% contraction during the third quarter. A rise in the country’s export of crude oil and crude bitumen (which rose 6.2%) helped support growth while household spending rose 0.2%.The economy continues to adjust to interest rates being at a 22-year high of 5%, having been held for four consecutive policy meetings.