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December's CIPS/Markit manufacturing survey indicated that the industrial recovery has remained strong and so provided another sign that the economic recovery is the product of more than just an unsustainable revival in household spending. … CIPS Report …
2nd January 2014
We expect the broadening out of the recovery from consumer spending to the rest of the economy to be one of next year’s main developments. Other key things to watch out for in 2014 include a modest easing of the near-term fiscal squeeze, stronger …
23rd December 2013
Today's news on the state of households' finances shows that the recent growth of household spending has been driven partly by households saving less. However, 2014 should see a more resilient basis for the consumer recovery. … Consumer recovery …
20th December 2013
While the national accounts showed that the economic recovery has been stronger than previously thought this year, they also provided a few reasons to doubt that it will be able to maintain its recent strong pace for much longer. … Nat. Acc., Bal. of …
December’s GfK/NOP confidence survey suggested that consumers have become slightly less optimistic in the run-up to Christmas. But as the squeeze on real earnings eases, there is scope for confidence and spending growth to pick up. … GfK/NOP Consumer …
Data for the early part of December suggest that consumers are in a reasonably positive mood in the run-up to Christmas. And there is still the potential for retailers to enjoy a further pick-up in sales by the close of the festive period. But it is less …
19th December 2013
While retail sales volumes rose in November, this made up only part of the previous month’s drop. So it is touch-and-go as to whether Q4 will see an expansion in sales volumes. But 2014 should see the foundations of the consumer recovery strengthen. … …
Following a subdued few months, December’s CBI Distributive Trades Survey suggests that retailers are enjoying a decent run-up to the Christmas period. And sales growth may pick up further before the close of the festive season. … CBI Distributive …
18th December 2013
While the latest labour market figures have raised the chances that the jobless rate falls below the MPC’s 7% threshold in 2014, December’s minutes suggested that the benign inflation outlook will enable it to keep rates on hold for a long time yet. … …
The fall in CPI inflation to a four year low in November confirms that the economy is enjoying a favourable mix of strong growth and low inflation. And with inflation on track to dip below 2% in 2014, it seems likely that the Monetary Policy Committee …
17th December 2013
The odds seem in favour of Wednesday’s labour market figures revealing another fall in the jobless rate. While in recent months the MPC has tried to downplay the importance of the unemployment threshold, another fall would probably put renewed upward …
16th December 2013
Recent survey evidence suggests that wage growth may finally be starting to recover. The latest surveys from both the Recruitment and Employment Confederation (REC) and the British Chambers of Commerce (BCC) suggest that wage growth has begun to pick up …
The MPC’s forward guidance has continued to be relatively unsuccessful in decoupling markets in the UK from those in the US. However, investors seem to have largely priced in the prospect of tapering, suggesting that gilt yields are unlikely to jump …
12th December 2013
October’s figures on industrial production and trade offered some good news for the Government’s oft-proclaimed ambition for an economy more biased towards manufacturing. But, on the external side, the picture remains weak. … Industrial Production & …
10th December 2013
Some have argued that strong job creation will rapidly push down unemployment to the MPC’s 7% threshold. But this overlooks developments in another determinant of the unemployment rate – growth in the workforce. This should continue at a decent pace, …
9th December 2013
While the Office for Budget Responsibility unveiled much stronger forecasts for the economy in last week’s Autumn Statement, with correspondingly more favourable projections for the public finances, there are some reasons to think that it might be being …
Recent rises in inflation and interest rate expectations might contradict claims by Mark Carney that households understand the MPC’s forward guidance. But we are not too concerned about the former at the moment, and consumers’ interest rate expectations …
6th December 2013
With sizeable improvements in the economic and fiscal forecasts, December’s Autumn Statement gave the Chancellor leeway to announce measures which will provide some modest support to consumers’ budgets. But this will only go some way to offsetting the …
This is a responsible package which is broadly fiscally neutral. The key message is that the UK’s fiscal consolidation still has a long way to go. … Autumn Statement 2013: Mr Osborne sticks to the …
5th December 2013
While the MPC’s communications have arguably become a little less clear over the last month or two, Committee members seem united in the fundamental belief that inflation pressures will remain subdued as the economy recovers. As such, interest rates …
CPI inflation fell sharply from 2.7% to 2.2% in October and it looks likely to fall below the 2% target soon. Past falls in global agricultural commodity prices suggest that food price inflation will ease significantly in the coming months. The …
4th December 2013
While the CIPS services survey softened slightly in November, the strength of the manufacturing and construction surveys suggests that the economic recovery is maintaining its momentum. Quarterly GDP growth in the final three months of the year could well …
New data on UK business births and deaths show that both are on the rise. With productivity growth driven largely by the impact of firms entering and exiting industries, evidence of more ‘creative destruction’ should support a revival in productivity and …
3rd December 2013
November’s BRC retail sales figures brought more evidence of a slight slowdown in the recovery in consumer spending. But retail sales should grow at a faster pace soon as the drags on consumer spending subside. … BRC Retail Sales Monitor …
With November’s Inflation Report indicating favourable prospects for growth and inflation, there is little reason for the MPC to change course on policy. And while unemployment may be falling more rapidly towards the 7% way station than the MPC expected, …
2nd December 2013
November’s CIPS manufacturing survey signals that the sector’s revival is continuing to gather pace and so should help to ease concerns that the economic recovery is entirely dependent on an unsustainable housing market boom. … CIPS Report on …
One of the key questions faced by the Office for Budget Responsibility in producing its economic forecasts for this week’s Autumn Statement is whether the recent outperformance of the UK economy compared to the rest of the G7 can be sustained. While the …
The latest broad money supply figures support signs that the economic recovery has remained strong in the fourth quarter. Meanwhile, bank lending has begun to show some tentative signs of improvement, increasing the chances that the recovery is sustained. …
29th November 2013
Talk of a recovery fuelled by lending growth continues to be overdone. Accordingly, while the willingness of the Bank of England to curb lending may hold back any strong revival in credit, this need not undermine the economic recovery. … Household …
November’s fall in consumer confidence suggests that households are still not feeling the full benefit of the economic recovery. Nonetheless, some solid props to consumer spending are on the horizon. … GfK/NOP Consumer Confidence …
Alongside the release of its Financial Stability Report, the Bank of England has unveiled new measures to blunt the incentives for banks to make new mortgage loans. While these initiatives may do little directly to cool the housing market, the Financial …
28th November 2013
With the economic recovery yet to have much impact on the Government's popularity, Chancellor George Osborne may be tempted to use the proceeds of stronger growth to fund a small giveaway in the Autumn Statement. But the big picture is that the fiscal …
November’s CBI Distributive Trades Survey suggests that the recovery in retail sales has lost some pace recently. But there are a few signs that retailers are anticipating a healthier Christmas period. … CBI Distributive Trades Survey …
27th November 2013
The second estimate of Q3 GDP confirmed that the UK economy is experiencing a period of strong growth. And while the expenditure breakdown showed that household spending has remained the main driver of overall growth, the pick-up in investment provides …
Growth in household spending continues to drive the economic recovery. In the near-term, rising house prices and consumer credit should support further expansion. But a solid foundation of rising real earnings will be needed before a return to the rates …
Although small retailers suffered much more than large ones during the economy’s post-2008 weakness, more recently, small retailers have started to outperform their larger competitors. But we doubt that large retailers are at risk of losing much market …
26th November 2013
This week’s second estimate of GDP looks set to confirm that the UK economy was the fastest growing G7 economy in the third quarter. But the Government’s shortfall in the opinion polls suggests that it is still struggling to take much of the credit for …
25th November 2013
Although October’s public finance figures were a little disappointing, borrowing this year still looks set to come in substantially below the OBR’s March forecast. While the Chancellor is likely to exercise restraint, he has some scope to fund for a …
21st November 2013
November’s MPC minutes echoed the message of the Bank of England’s November Inflation Report that UK monetary policy is on hold for the foreseeable future. … MPC minutes …
20th November 2013
The recovery in the housing market has so far had little impact on total sales of household goods. But digging a little deeper, spending on items linked more closely with house purchases has risen quite strongly. As the housing market continues to revive …
18th November 2013
The changes to the MPC's unemployment forecasts revealed in its November Inflation Report last week forced the Committee to play down the strict interpretation of its own forward guidance that interest rates could be on the rise as soon as the end of next …
Attention on what has been termed the “cost of living crisis” has fuelled speculation that December’s Autumn Statement will include measures to cut energy bills. And even if funding of the ‘green’ measures currently pushing up bills was shifted to …
15th November 2013
Data for the early part of Q4 suggests that the consumer recovery may be stumbling slightly. But the picture should improve in the run-up to Christmas. October’s sharp drop in inflation, combined with recent strong labour market data, may herald a …
14th November 2013
October’s surprise fall in retail sales volumes highlights that, despite the hype over the economic recovery, the revival in the consumer sector remains a fragile one. That said, October’s disappointing outturn is hopefully only a temporary setback. … …
November’s Inflation Report provided some superficial support for expectations that interest rates will rise sooner than the MPC suggested back in August. But we still think that the disinflationary effects of the spare capacity in the economy will keep …
13th November 2013
October’s inflation figures suggest that the UK economy is hitting a sweet spot of accelerating GDP growth and declining price pressures. And inflation is likely to fall further in the near future. … Consumer Prices & Producer Prices …
12th November 2013
Underemployment, where people are in employment but want to work more hours, reached a record high in the first half of 2013. This means that there is more slack in the labour market than the unemployment rate suggests and implies that wages will recover …
This week’s Bank of England Inflation Report looks likely to include a downward revision to the MPC’s forecast for the unemployment rate, bringing forward the date at which it is expected to hit the 7% level at which the Committee will re-assess policy …
11th November 2013
September’s trade figures show that the UK economy continues to see an imbalance between domestic and overseas demand. And while export surveys have been positive, consumer demand may mean the trade deficit is slow to narrow in the near-term. … Trade …
8th November 2013
The ONS’ latest population projections suggest that the UK’s population will age even more rapidly than previously expected. But we doubt this will feed into a one-for-one fall in workforce growth and hence the future unemployment rate. … Ageing …
