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Markets appear to have taken heed of the MPC’s warning this week that interest rates could rise soon. Admittedly, the MPC has talked the talk before and failed to deliver. But this time, there are a number of reasons why the MPC is likely to walk the walk …
15th September 2017
The Monetary Policy Committee (MPC) gave a pretty clear signal today that it intends to raise interest rates within the next few months. We now expect a 25bp hike in November. … MPC signals rate hike as soon as …
14th September 2017
The latest labour market figures continued the recent pattern of employment growing strongly and the unemployment rate falling further, but wage growth failing to respond. … Labour Market …
13th September 2017
The pick-up in inflation in August took it close to its eventual peak, although it is likely to provide the more hawkish members of the Monetary Policy Committee (MPC) with ammunition ahead of Thursday’s meeting. … Consumer Prices & Producer Prices …
12th September 2017
A position paper on the EU’s approach to Northern Ireland and accompanying statements by Michel Barnier on Thursday highlighted that the EU and the UK will struggle to agree on how to deal with trade in the region post-Brexit. … Brexit Watch: EU concerned …
8th September 2017
After a disappointing first half of the year, the early evidence suggests that the UK economy has failed to re-accelerate much in the third quarter. But talk of the economy losing more momentum looks overdone. Indeed, there are still some reasons to think …
Today’s flurry of activity data suggests that external-facing sectors are still providing little offset to the consumer slowdown. But there are some signs that net trade could provide more support in the quarters ahead. … Industrial Production, …
The MPC is unlikely to spring any surprises at its meeting on 14th September. However, the economy has performed broadly in line with its expectations. Moreover, the pound has fallen further since the Inflation Report, which will put more upward pressure …
7th September 2017
The economy looks unlikely to post a significant pick-up in growth in the third quarter. Indeed, the average level of the Markit/CIPS all-sector PMI in July and August is consistent, on the basis of past form, with quarterly GDP growth of around 0.4%. …
6th September 2017
New car registrations fell again in August, providing a worrying sign that the sector will be a major drag on overall consumer spending growth in the quarters ahead. … Will car sales stay stuck in …
August’s services PMI suggests that the economy is struggling re-accelerate in the third quarter, after a disappointing first half of the year. However, there are still some good reasons to expect growth to pick up a little pace. … Markit/CIPS Services …
5th September 2017
Following a weak CBI retail sales survey in August, the BRC’s retail sales figures for the same month provide some reassurance that retail spending is continuing to prove resilient to the real pay squeeze. … BRC Retail Sales Monitor …
This week’s third round of negotiations saw some limited progress. But the overriding sense from yesterday’s press conference was that Britain is still seeking to negotiate outside the format imposed by the EU in order to use the financial settlement as …
1st September 2017
The latest business investment figures were undeniably disappointing, with quarterly growth flat-lining in Q2. But this week’s money and credit figures, which showed another strong rise in net finance raised by private non-financial companies in July, …
The broad-based strength of August’s manufacturing PMI survey adds weight to our view that the sector will put the disappointing first half to the year behind it, and will probably provide a decent boost to GDP growth in the second half of the year. … …
Despite their concerns about the economic outlook, consumers are still upbeat about their own financial position. As a result, we still think that the slowdown in household spending growth this year won’t be too severe. … GfK/NOP Consumer Confidence …
31st August 2017
There have been some tentative signs that the tight labour market is translating into stronger pay gains. Even so, earnings growth needs to gather more pace in order to match the rise in CPI inflation – which we expect to peak at about 3% later this year. …
30th August 2017
July’s household borrowing figures should help to assuage fears that the housing market slowdown is worsening, while cooling consumer credit growth will be welcome news for the Bank of England’s Financial Policy Committee. The rise in the number of new …
While consumer spending growth has lost pace in the face of the ongoing real pay squeeze, talk of a collapse in spending is overdone. With inflation set to fall back next year as the impact of the drop in the pound fades and a modest acceleration in wage …
29th August 2017
The UK Government’s stated Brexit “red lines” appear to have faded further judging by the latest batch of position papers. However, the lack of a formal UK position on the financial settlement risks a stalemate being reached during the third round of …
25th August 2017
Almost two years on from the start of sterling’s Brexit-related slide, the effects on net trade have been disappointing. Since the pound’s fall, net trade has actually detracted from growth as opposed to bolstering it. This has led some to write off any …
Although August’s CBI Distributive Trades survey was far weaker than expected, it still suggests that retail spending growth has maintained a fairly reasonable pace of growth in the third quarter so far. … CBI Distributive Trades Survey …
24th August 2017
The second estimate of Q2 GDP confirmed that the economy maintained a fairly sluggish pace, while the breakdown was disappointing. However, there are still reasons to expect a modest acceleration in growth in the second half of the year. … GDP: Second …
The CBI Industrial Trends Survey continues to point to a sharp improvement in the fortunes of the manufacturing sector. … CBI Industrial Trends Survey …
22nd August 2017
July’s public finances brought some cheer for the Chancellor after the run of fairly poor outturns seen so far this fiscal year. But this will probably prove to be just a temporary blip, rather than the start of a more sustained improvement. … Public …
Recent rapid growth in car finance has left the industry looking more vulnerable to a downturn. But this type of lending is a small proportion of total borrowing. And with car finance deals shifting the risk from banks to car companies, the implications …
21st August 2017
On the face of it, the two further position papers published this week by the Department for Exiting the EU, on Northern Ireland and potential future customs arrangements, point to a fairly soft form of Brexit in regards to trade. However, both the …
18th August 2017
Despite relatively sluggish GDP growth in the first half of 2017, jobs growth has maintained a solid pace, with the unemployment rate having now fallen below the Monetary Policy Committee’s (MPC) estimate of its “equilibrium” rate. Accordingly, with …
July’s retail sales figures were fairly encouraging given the ongoing squeeze on consumers’ real incomes and suggest that talk of a sharp consumer slowdown has been overdone. … Retail Sales …
17th August 2017
The latest labour market figures showed some signs that the tightening in the labour market may be at long last leading to a recovery in wage growth and provide us with optimism that the real pay squeeze should come to an end next year. … Labour Market …
16th August 2017
In contrast to a number of other forecasters who have suggested that the pound could reach parity with the euro before the end of the year, we think that there are a number of reasons for the pound to reverse some of its recent losses against the euro. … …
15th August 2017
Although CPI inflation held steady in July, we still think that it will inch up a bit further before the end of this year, as well as outpace wage growth for a while yet. … Consumer Prices & Producer Prices …
Sterling has fallen by 7.5% against the euro since mid-May. The fall comes despite relative interest rate expectations pointing to a strengthening of the pound against the single currency. But while conventional monetary policy looks likely to be …
14th August 2017
Ahead of the publication of the UK Government’s next batch of position papers, there has been little in the way of Brexit developments this week. Meanwhile, the latest economic data was rather mixed, although it suggests still that the economy should …
11th August 2017
Given that there have been few signs in the hard data yet of a rebalancing towards the external and corporate sectors, the fate of the economy – in the near term at least – still seems to rest in the hands of the consumer. Reassuringly, though, despite …
This Focus discusses what we have learnt about the Brexit negotiations so far. It addresses four key questions. First, are there now signs that Brexit worries are weighing on the economy? Second, how are the negotiations going? Third, what ‘sort’ of …
The recent slowdown in house price growth looks unlikely to develop into outright falls, and as such shouldn’t undermine our relatively upbeat forecasts for consumer spending and investment. … Will the housing market slowdown weigh on the …
10th August 2017
Today’s deluge of data from the ONS was a bit of a mixed bag. While the manufacturing sector is still underperforming the surveys, and construction output was weaker than expected, net trade looks to have provided more support in Q2. … Industrial …
While the fall in the pound hasn’t yet boosted net trade, there are signs that the external sector will soon start making positive contributions to GDP growth. The depreciation should also support continued strength in corporate profits and, with …
8th August 2017
Following yesterday’s weak Visa expenditure data, it was reassuring to see that the BRC’s survey of retailers still points to resilient growth in retail sales volumes. … BRC Retail Sales Monitor …
Much of the focus of the press conference following the Bank of England’s August policy decision and Inflation Report was on the contribution of Brexit to the downgrade of its near term growth forecast. A closer look at the forecasts reveals that it was …
4th August 2017
The surprisingly-dovish reaction of sterling to the Bank of England’s August Inflation Report has led some commentators to conclude that the prospect of an interest rate hike this year is now dead and buried. However, while our central forecast assumes …
While the Monetary Policy Committee (MPC) remained split on whether to increase interest rates at August’s meeting, the hawks are likely to remain in a minority for a while longer yet. Nonetheless, we still think that the first hike will come earlier than …
3rd August 2017
After a fairly meagre 0.3% expansion in Q2, the economy looks to have made a reasonable start to Q3. Indeed, rises in both the manufacturing and services sector PMIs in July left the all-sector PMI consistent, on the basis of past form, with quarterly GDP …
After the recent run of softer economic news, the improvement in the Markit/CIPS services survey in July provides reassurance that the economy has maintained the momentum it gathered over Q2. … Markit/CIPS Services PMI …
July’s Markit/CIPS manufacturing PMI suggests that growth in the sector has accelerated after the disappointing performance in Q2. It also implies that the fall in the pound is boosting external demand, while resulting price pressures are easing. … …
1st August 2017
June’s household borrowing figures provide another reason to think that the consumer slowdown shouldn’t be too severe. But the figures will clearly add to concerns about household debt. … Household Borrowing Monitor …
31st July 2017
The view on both sides of the channel seems to be that agreeing the terms of the UK’s withdrawal will take longer than initially hoped. As a result, a transitional deal allowing freedom of movement and the jurisdiction of the ECJ in the UK for a period …
28th July 2017
Once again the business surveys provided an over-optimistic reading of the economy’s health in the second quarter. This raises questions about their usefulness as a leading indicator, and suggests that we should perhaps put less weight on their current …
Despite growing concerns about the economic outlook, consumers remain upbeat about their own financial position. As a result, we still think that the slowdown in household spending growth this year won’t be too severe. … GfK/NOP Consumer Confidence …
