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The slightly softer tone of April’s CBI Industrial Trends Survey suggests that the manufacturing sector started Q2 on a fairly weak footing. But the survey’s forward-looking elements suggest any weakness should not be too prolonged. … CBI Industrial …
24th April 2017
The positive response of the pound to the surprise announcement of a snap General Election suggests that a larger Conservative majority, and stability in Government over the Brexit implementation period, has been judged a boon for the economy. … Brexit …
21st April 2017
By freeing the Government from its previous manifesto commitments, the snap general election on June 8th could give the Chancellor Phillip Hammond (if he is still in the position) more elbow room to fulfil his previous pledge to “reset” the stance of UK …
A poor quarter on the high street in Q1 suggests that the slowdown in consumer spending growth is gathering pace. Moreover, with the full impact of the forthcoming rise in inflation yet to be felt, this slowdown should have further to run. But we don’t …
The jump in sterling after Theresa May’s surprise announcement of a snap general election has posed the question of whether the pound might defy expectations and rise further as Brexit approaches. Conventional wisdom has had it that the pound will fall …
March’s drop in retail sales suggests that the consumer spending slowdown is gathering pace and adds to other evidence indicating that the economic recovery has slowed since the end of last year. … Retail Sales …
With the economy’s strength set to wane somewhat this year, Theresa May’s gamble to go to the polls to increase the Conservative’s majority may have been just in the nick of time. There is some evidence of a strong link between the state of the economy …
19th April 2017
Theresa May’s surprise announcement of a snap election on 8th June adds another element of nearterm political uncertainty as the UK heads into formal Brexit negotiations. However, we doubt that this will have a significant economic effect in the near …
18th April 2017
While the political focus shifted away from Brexit and on to the French presidential election this week, UK labour market data and surveys of exporters suggest that the UK economy has remained resilient to the uncertainty created by the impending …
13th April 2017
After two-and-a-half years of rising real wages, this week’s inflation and labour market figures confirmed that the pay squeeze has returned. And, with inflation rising faster than expected, some further drop in real earnings looks likely over the coming …
The fact that the MPC is unlikely to start to reverse its QE programme for a considerable period supports our view that interest rates will rise sooner and more quickly than is generally expected. … When will the MPC start to reverse …
12th April 2017
While underlying wage growth is still struggling to keep pace with inflation, the continued strength of employment growth is one reason to think that any slowdown in spending growth won’t be too sharp. … Labour Market …
March’s unchanged CPI inflation rate is just a temporary pause in an upward trend which will probably take inflation to just over 3% later this year. … Consumer Prices & Producer Prices …
11th April 2017
March’s BRC Retail Sales Monitor provides further evidence that higher inflation is starting to slow growth in household spending. But the timing of Easter makes it hard to draw any strong conclusions from the latest data. … BRC Retail Sales Monitor …
While there are huge uncertainties ahead, the UK economy has entered the formal countdown to Brexit with decent momentum. Against this background, we see no reason to alter our long-standing view that Brexit will prove to be rather be less damaging than …
10th April 2017
Just over a week since the triggering of Article 50 and the PM Theresa May appears to have softened her stance in relation to Brexit. Despite this, markets have pushed back their expectations for the degree of monetary policy tightening over the coming …
7th April 2017
The survey data have provided evidence that the slowdown in Q1 has not been too stark. And although the official figures have been weak in Q1 so far, temporary factors have been at play suggesting some rebound in March is likely. As such, we still think …
February’s data on industrial production and construction supported over evidence that the economy has lost a little momentum in Q1. But growth is likely to have remained fairly solid. … Industrial Production, Construction & Trade …
The last month has brought further signs that GDP growth has slowed a little from the rapid rates seen towards the end of last year. Output fell in all the main sectors in January. And the timelier survey evidence, such as the Markit/CIPS surveys, points …
6th April 2017
While the outlook for UK monetary policy is highly uncertain, the economy’s continued resilience suggests that interest rates will rise sooner and more quickly than is generally anticipated. … Economy’s resilience points to earlier rise in interest …
5th April 2017
March’s strong Markit/CIPS report on services provides some reassurance that the economy retained a decent amount of momentum in Q1 and that, despite intensifying headwinds, growth won’t slow too sharply later in the year. … Markit/CIPS Report on Services …
The slight fall in the manufacturing PMI in March suggests that the sector saw a modest slowdown in the first quarter. But the bigger picture is that the sector is still performing well by recent standards and the outlook remains relatively bright. … …
3rd April 2017
In a jam-packed week of landmark political events the Brexit process got underway with both the EU and the UK seemingly approaching negotiations in a constructive mood. … Brexit Watch: Constructive tone to first …
31st March 2017
Last week’s historic triggering of Article 50 of the Lisbon Treaty marks the beginning of a lengthy and complex process of leaving the EU. The extent to which this event has a near-term impact on the economy, though, will depend on how it affects …
While the latest Quarterly National Accounts raised further questions about the sustainability of consumer spending growth, we don’t think that a dramatic slowdown is in prospect. Household spending held up remarkably well towards the end of 2016, rising …
The latest Quarterly National Accounts highlighted that the economy as a whole expanded at a solid pace at the end of last year, although at first glance it raises some questions about the sustainability of strong household spending growth. … National …
Consumer confidence appears to be holding up well, providing another reason to think that the likely slowdown in spending growth this year won’t be too severe. … GfK/NOP Consumer Confidence …
The triggering of Article 50 today is a political milestone that brings the UK one important step closer to actually leaving the EU. However, this is still an early step in what is set to be a lengthy process. Meanwhile, the notification itself is …
29th March 2017
February’s money and credit figures suggest that households’ appetite for debt has taken a bit of a hit, after holding up well following the EU referendum. But we don’t think that borrowing growth will slow too much further. … Household Borrowing Monitor …
The Monetary Policy Committee might be relieved to see the pound regaining a bit of ground in recent weeks. But it shouldn’t want the exchange rate to rise too far. … The MPC’s sterling …
28th March 2017
Over the next year, we expect the Fed to hike rates faster than markets expect while the Bank of England keeps policy on hold. If we are right, the gap between US and UK short rates will continue to widen which should increase the wedge between US …
27th March 2017
With the Government set to formally notify the EU of the UK’s wish to leave the bloc next week, some preliminary detail has emerged on how the EU will approach negotiations. It is expected to insist that a withdrawal agreement precedes any trade …
24th March 2017
CPI inflation surprised on the upside again last week, largely due to a few components that tend to be more responsive to exchange rate movements. This begs the question of whether we (and many others) are underestimating the size of the pass-through from …
With CPI inflation picking up quite quickly and nominal wage growth remaining subdued, households are already facing a squeeze on growth in their real incomes. Indeed, there are some signs that it is already contributing to a slowdown in spending growth. …
23rd March 2017
The CBI Distributive Trades Survey held its ground in March. But given that the survey remains much weaker than it was towards the tail end of last year, it still points to a significant slowdown in retail sales growth. … CBI Distributive Trades Survey …
Despite higher UK inflation and solid growth, there are good reasons why the MPC will not quickly follow the US Fed in tightening monetary policy. … Why won’t the MPC soon follow the …
The latest retail sales figures will provide some reassurance that higher inflation has not brought growth in consumer spending to a complete halt. That said, the outlook for spending this year is certainly weaker than in 2016. … Retail Sales …
The latest CBI Industrial Trends Survey illustrates that the drop in the pound continues to have some beneficial effects, with the manufacturing sector in particular appearing to have put in a good performance in the first quarter. … CBI Industrial Trends …
21st March 2017
February’s CPI figures have increased the chances of an earlier interest rate hike than markets have been expecting. Meanwhile, the fall in public borrowing was in line with the OBR’s new downwardly-revised forecasts. … Consumer Prices & Public Finances …
Political uncertainty is back on the agenda, with speculation of an early General Election and confirmation that Article 50 will be triggered on March 29th coming on top of the renewed threat of a second referendum on Scottish Independence. While these …
In the week Article 50 received Royal Assent, sterling halted its latest decline despite renewed calls for a second Scottish independence referendum. While the referendum announcement coincided with a change in fortunes for sterling, the far more …
17th March 2017
While it came as no surprise that the US Federal Reserve pressed ahead and raised interest rates last week, markets were given a jolt by an unexpected split on the UK Monetary Policy Committee, with one member voting for an immediate hike and others …
The decision by the Monetary Policy Committee to leave interest rates on hold and the scale of its asset purchases unchanged, at the same time as the US Fed tightened policy again, highlights the likely divergence in policy rates that is set to occur over …
16th March 2017
The latest labour market data show that average earnings growth is not picking up alongside inflation, resulting in a squeeze on real wage growth. However, we think that the tightness of the labour market – shown by the unemployment rate hitting a joint …
15th March 2017
While the imminent triggering of Article 50 will bring Brexit a step closer and could prompt a rise in uncertainty, there are still good reasons to expect the economy to remain resilient. … Will Article 50 trigger Brexit …
14th March 2017
Scotland’s First Minister and SNP leader Nicola Sturgeon’s announcement that she is beginning the process to enact a second referendum on Scottish independence before the UK exits the EU far from guarantees that the country will leave the rest of the UK. …
The Lords’ amendments to the Article 50 Bill are all but certain to push back the date of notification to the end of the month. Meanwhile, expectations of tighter monetary policy abroad rather than Brexit worries have been the key driver of financial …
10th March 2017
While the Spring Budget has generated a lot of political controversy, it was a fairly dull affair from a macroeconomic perspective. Even if the policy to raise National Insurance Contributions on the selfemployed is excluded from the Finance Bill, as the …
Today’s deluge of economic data as part of the ONS’ “Theme Days” suggest that the pound’s post-referendum slide is helping growth to become more balanced. … Industrial Production, Construction & Trade …
The measures announced in yesterday’s Spring Budget amounted to little and the big picture is still that fiscal austerity will weigh on households’ spending power over the next few years. Meanwhile, although retailers did not come away completely empty …
9th March 2017
