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The sharp monthly drop in retail sales volumes in January is unlikely to herald the start of a consumer spending slowdown. Meanwhile, the fiscal consolidation remains on track despite January’s disappointingly small budget surplus. … Retail Sales & …
21st February 2014
The latest labour market data showed that there is still plenty of spare capacity in the job market. Since the minutes of February’s MPC meeting confirmed that the Committee is committed to eliminating most of the slack in the economy before tightening …
19th February 2014
After falling for six years in a row, real pay should finally rise this year, providing a more sustainable foundation for further robust growth in real consumer spending. Rising employment and a continued recovery in the housing market should also boost …
18th February 2014
January’s consumer prices figures showed that inflationary pressures are continuing to ease steadily and so presented another reason to be upbeat about the outlook for GDP growth this year. … Consumer Prices & Producer Prices …
Wednesday’s labour market figures seem likely to indicate that there is still considerable slack in the economy which will keep inflationary pressures subdued for some time to come. Indeed, by our reckoning, the unemployment rate looks likely to have held …
17th February 2014
The Monetary Policy Committee’s decision to drop the unemployment threshold and introduce phase two of forward guidance does not guarantee that interest rates will stay on hold for a long time yet. However, if we are right in expecting inflation to fall …
The revamp of the Bank of England’s forward guidance unveiled in February’s Inflation Report is likely to shift the emphasis back to the benign outlook for inflation and should therefore ensure that monetary policy remains very loose for some considerable …
12th February 2014
January’s BRC sales figures provided further evidence that 2014 got off to a good start for retailers. And, nothwithstanding the erratic nature of the monthly indicators, the outlook for the consumer sector appears bright. … BRC Retail Sales Monitor …
11th February 2014
The likely change to the MPC’s forward guidance alongside next week’s February Inflation Report could result in more changes to the contents of the Report. But the Committee’s inflation forecast should make it clear that monetary policy is on hold for …
10th February 2014
December’s figures on industrial production and trade offered mixed signals on the economy’s attempts at rebalancing. And this so-so picture is unlikely to change anytime soon. … Industrial Production & Trade …
7th February 2014
The MPC’s decision to leave policy on hold today was almost certainly the last to be taken under the unemployment-focused forward guidance adopted just six months ago. But whatever replaces it, interest rates are likely to remain at very low levels for a …
6th February 2014
Provided that low inflation allows monetary policy to remain very loose for some time yet and a further sharp rise in the pound can be avoided, policy should not be major hindrance to the economic recovery. But it’s not likely to be a great a help either. …
5th February 2014
The economic recovery appears to have remained strong at the start of 2014. Although the composite CIPS/Markit activity index weakened again in January, it still points on the basis of past form to robust GDP growth. In addition, confidence amongst firms …
The further deterioration of the CIPS/Markit services survey in January after the slight slowdown in GDP growth in Q4 may raise concerns that the recovery is starting to lose momentum. But there are many reasons to remain optimistic. … CIPS/Markit …
With the unemployment rate likely to fall below 7% soon, February’s MPC meeting will set the scene for the demise of forward guidance, at least in its current form. Comments by MPC members suggest that the next ‘phase’ of guidance will not involve …
3rd February 2014
Although the CIPS/Markit manufacturing survey weakened further in January, it continues to suggest that the industrial sector is enjoying a robust recovery and making a punchy contribution to overall GDP growth. … CIPS/Markit Report on Manufacturing …
Against a positive economic backdrop in recent quarters, one blot on the UK economy’s copybook has been the continuing dismal performance of productivity. Indeed, both output per worker and output per hour are likely to have fallen in Q4. But rising …
January’s GfK/NOP confidence survey suggested that consumers started the year in high spirits. And with real earnings likely to rise this year for the first time since 2007, there is scope for confidence and spending growth to strengthen further. … …
31st January 2014
The broad money supply continues to grow at a rate which should reassure those fearing that the economic recovery might be building up steam too rapidly. Indeed, with bank lending remaining subdued, the financial sector seems more likely to slow the …
30th January 2014
Household borrowing reached its highest level since July 2008 in December. But while credit conditions appear to be easing, rising borrowing costs and possible intervention by the Bank of England could limit borrowing growth further ahead. … Household …
The ongoing decline in real average earnings is often presented as a threat to the recovery. But the flip side of falling real pay has been rising employment. This has supported growth in total real earnings, albeit to the benefit of some retailers more …
29th January 2014
The main political parties have recently been fighting amongst themselves for the mantle of fiscal responsibility. But ambitions on both sides for a budget surplus exaggerate the influence politicians have over the public finances. And this goal could …
This year looks set to be the first since 2004 that the average inflation rate is below the 2% target. And with output still below its potential, a strong recovery is unlikely to generate price pressures. Indeed, by raising productivity, stronger growth …
The preliminary estimate of Q4 GDP confirmed that the UK economy’s recovery is becoming increasingly entrenched. While risks remain, 2014 looks set for a further acceleration in growth. … Preliminary GDP …
28th January 2014
The fall in unemployment has not been out of line with the wider evidence on the labour market or the economy. But the uncertainty over the implications for inflation suggests that the Monetary Policy Committee should still adapt its forward guidance to …
27th January 2014
The UK's image as a 'nation of homeowners' overlooks the fact that homeownership has dropped significantly in recent years. And, to the extent that soaring property prices push down owner occupation further, the reviving housing market may not be as …
The combination of November’s further sharp fall in unemployment and hints from the Governor of the Bank of England suggest that the Monetary Policy Committee’s policy of formal, state-contingent, forward guidance might be about to expire just six months …
Following mixed reports on Christmas sales, January’s CBI Distributive Trades Survey suggests that retailers have seen only a slow start to the new year. But retail prospects should brighten as 2014 proceeds. … CBI Distributive Trades Survey …
23rd January 2014
Although the unemployment rate is falling rapidly, there is plenty of evidence that it is still well above a level that would generate inflation and require official interest rates to rise soon. … Unemployment still well above an "equilibrium" …
A shift in the driver of growth from consumers to investment and exports continues to be the great white whale of economic policy. While there are good reasons to aspire to a more balanced recovery, hefty obstacles lie in the way. But the recovery should …
Today’s figures show that conditions are continuing to improve rapidly in the labour market. But the further fall in the unemployment rate is unlikely to trigger an imminent interest rate hike by the MPC. … Labour Data, MPC Mins (Jan.) & Pub. Fin. …
22nd January 2014
The CBI’s Industrial Trends Survey for January and the first quarter of 2014 provided grounds for optimism on the pace and balance of the economic recovery. … CBI Industrial Trends Survey (Jan. & …
21st January 2014
A continuation of the UK’s recent combination of increasing growth and falling inflation would seem too good to be true. But several factors, including a return to health in the banking sector and the slope of firms’ cost curves, suggest that rising …
While Wednesday’s labour market figures are likely to show that the unemployment rate fell again in November, a swift fall to the 7% threshold used for the MPC’s forward guidance is not assured. A revival in productivity and strong workforce growth may …
20th January 2014
Having finally fallen to the 2% target in December, there are increasingly clear signs that CPI inflation is on course to fall well below it this year. In particular, administered, food and consumer goods prices all look set to make a smaller contribution …
2013 ended with a mixed picture for the consumer sector, with surprisingly strong official data set against some softness in the surveys and in the anecdotal evidence from the high street. Nonetheless, real spending probably saw another rise in the fourth …
17th January 2014
With December’s hefty monthly growth in retail sales, the consumer recovery seems to be at full steam. That said, the official data is at odds with other evidence and suggests that the retail sector provided only a modest boost to GDP growth in Q4. … …
The fall in CPI inflation in December to the 2% target for the first time in four years shows that the economic recovery is not prompting price pressures to build. Indeed, CPI inflation looks likely to spend more time below 2% than above it during 2014. …
14th January 2014
With employment, real incomes and consumer confidence all likely to rise this year, the economic environment appears to be conducive to further growth in car sales in 2014. That said, some of the important drivers of sales growth last year are set to fade …
13th January 2014
November’s industrial production and construction figures signal that Q4 GDP growth is unlikely to have been quite as strong as the activity surveys have indicated. Nonetheless, GDP still seems likely to have grown at a respectable rate. … Industrial …
10th January 2014
December’s BRC sales figures supported anecdotal evidence that retailers had a somewhat mixed Christmas period and added to evidence that sales growth slowed in Q4. But 2014 looks set to present a more favourable environment for spending. … BRC Retail …
While today’s Monetary Policy Committee (MPC) meeting passed without event, the Committee may soon adjust its forward guidance. Since there are no signs that falling unemployment is stoking inflation, the MPC could do more to support the recovery by …
9th January 2014
The trade figures have continued to pour cold water on hopes of an export-led recovery. And with little sign that a noteworthy recovery is emerging in the euro-zone, exports look set to remain subdued in 2014. … Trade …
The UK economy has leapt towards the top of the international growth table and there are good reasons to think it can stay there. We now expect the economy to grow by 3% this year and next. … The leader of the …
8th January 2014
While unemployment is falling swiftly towards the 7% threshold above which the Monetary Policy Committee (MPC) has pledged to keep official interest rates on hold, it remains unlikely that rates will rise in 2014. … Falling unemployment unlikely to …
7th January 2014
Although the CIPS services survey softened again in December, it still suggests that the recovery was strong at the end of 2013. And with the survey showing confidence rising and new business growing strongly, 2014 is shaping up to be another year of …
6th January 2014
With the unemployment rate falling rapidly, the MPC has continued to stress that the reaching of the 7% threshold will not automatically trigger a rise in interest rates. Indeed, there have been hints that the threshold attached to forward guidance could …
While the strength of the economic recovery surprised in 2013, the economy may have seen a softer end to the year. For some retailers, the Christmas period looks like being a bit of a washout, both literally and figuratively. But this shouldn’t have too …
While further robust growth in the broad money supply supports signs that the economic recovery has remained strong, the continued weakness of bank lending remains one reason to doubt that the pace of the UK economy's recovery will accelerate in 2014. … …
3rd January 2014
The economic recovery is still not being accompanied by any marked pick-up in household borrowing. And with borrowing costs likely to increase in coming months, the chances of a credit boom in 2014 soon seem remote. … Household Borrowing Monitor (Nov …
