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Recovery flattens out The drop in the composite IHS Markit/CIPS Flash PMI suggests that the recovery has already started to flatten out in September. And reinstating restrictions on business opening hours and encouraging people to work from home again …
23rd September 2020
Retail spending rises further above pre-pandemic levels The further rise in retail sales in August was particularly encouraging as we know non-retail spending picked up at the same time, suggesting that consumer spending has rebounded strongly. The 0.8% …
18th September 2020
Inflation bottoms out The sharp drop in CPI inflation in August probably represents the low point for inflation. But a sustained rise to 2.0% seems unlikely within the next few years. The plunge in inflation from +1.0% in July to +0.2% in August …
16th September 2020
No fallout from unwinding of the furlough scheme…yet It’s encouraging that the start of the unwinding of the furlough scheme in August has not led to a surge in job losses. But we think it is only a matter of time before that happens and the unemployment …
15th September 2020
The last of the big rises The strong 6.6% m/m rise in GDP in July suggests that the record-breaking negative growth rate of GDP in Q2 will be followed by a record-breaking positive growth rate in Q3. However, July was probably the last of the big step ups …
11th September 2020
Households resume pre-virus borrowing habits July’s money and credit data confirm the resurgence in the housing market while recovering consumer credit suggests that households’ appetite for big ticket purchases is returning. The rise in mortgage …
1st September 2020
Economic recovery already starting to fizzle out The small fall in the UK Economic Sentiment Indicator (ESI) in August suggests that the economic recovery might already be starting to fizzle out. What’s more, rising unemployment is likely to further …
28th August 2020
Further signs recovery continued at a strong pace in August The sharp rise in the composite IHS Markit/CIPS Flash PMI in August provided further evidence that the recovery continued at a strong pace in Q3. Even so, we expect rising unemployment to put a …
21st August 2020
Rise in debt ratio beyond 100% unlikely to panic the Chancellor July saw the fourth biggest monthly deficit in history behind only the first three months of this fiscal year. A massive increase in debt to over £2 trillion for the first time ever and above …
Retail spending rises above pre-pandemic levels Retail sales rose above their pre-pandemic levels in July as non-essential shops were allowed to open for the whole month. But the sector has benefited disproportionately from online spending and a switch …
Inflation still set to fall close to zero, despite July jump The sharp rise in CPI inflation from +0.6% to +1.0% came as a bit of a surprise, but it is unlikely to mark the start of an upward trend. CPI inflation still looks on track to fall to within a …
19th August 2020
GDP recovering, but it will feel like a recession for a long time The rises in GDP in May and June mean that in some ways the largest recession on record is already over. But as the full scale of the fallout in unemployment has yet to be felt and as GDP …
12th August 2020
The lull before the storm The cracks evident in the latest batch of labour market data are likely to soon turn into a chasm with the unemployment rate rising from 3.9% to around 7.0% by mid-2021. The 220,000 q/q (0.7%) fall in employment in Q2 (consensus …
11th August 2020
Further signs the recovery continued in July The jump in the UK Economic Sentiment Indicator (ESI) in July is an encouraging sign that the recovery continued at a decent pace at the start of Q3. Even so, rising unemployment is likely to put a brake on the …
30th July 2020
Easing in the rush for cash The signs that firms did not rush quite as fast to take on more debt in June and that households started to borrow again rather than pay down debt suggest that the economy is moving back towards normal. But as the road to …
29th July 2020
Encouraging, but economy still well below pre-crisis levels The surge in the composite PMI to 57.1 in July is an encouraging sign of further recovery, but it is not an indication that GDP has recovered to its pre-virus level. We don’t expect that to …
24th July 2020
Retail spending back to pre-pandemic levels Retail sales rose back to pre-pandemic levels in June. But since the sector has benefitted disproportionately from online spending and a switch away from other types of spending, this overstates the extent of …
Cash outflow starts to ease The smaller rise in public sector borrowing in June compared to May suggests that government support is starting to wind down as the economy reopens. However, government borrowing is still exceptionally high and we suspect that …
21st July 2020
Reassuring despite largest fall in employment since 2011 The smaller-than-expected fall in employment in May and evidence that the first wave of joblessness in the coronavirus crisis ended in June shows that the furlough scheme has been effective in …
16th July 2020
A dip into deflation lies ahead The small rise in CPI inflation from +0.5% in May to +0.6% in June probably won’t be sustained for long as the effects of the Chancellor’s VAT cut for the hospitality/tourism sectors and the “Eat Out to Help Out” restaurant …
15th July 2020
Not so “V” after all The 1.8% m/m rise in GDP in May is a disappointing first step on the road to recovery and suggests that hopes of a rapid rebound from the lockdown are wide of the mark. Indeed, the path to full economic recovery will probably be much …
14th July 2020
Economy rebounding but worse to come for the labour market While the PMIs are tricky to interpret at the moment, the recovery in the all-sector PMI from a trough of 13.4 in April to just shy of 50 in June is another sign that there has been a strong …
6th July 2020
Drop in Q1 GDP a taste of things to come The 2.2% q/q drop in GDP in Q1 2020 was the joint largest fall since 1979 and sets the stage for an unprecedented 15-20% fall in Q2, despite evidence that the economy rebounded in May and June. The National …
30th June 2020
SMEs don’t hesitate to take advantage of bounce back loans The Bounce Back Loan Scheme (BBLS) restored access to credit for small and medium-sized enterprises (SMEs) in May. That increases the chances of a swift recovery but will also raise the fiscal …
29th June 2020
Output recovering but employment intentions wavering The rise in the UK Economic Sentiment Indicator (ESI) in June suggests that the economy is continuing to recover after its nadir in April. But firms and households are becoming more downbeat on the …
Activity on the climb but still well below normal The nature of the PMIs makes them tricky to interpret at the moment, but the rise in the composite PMI from 30.0 in May to 47.6 in June (consensus 41.0) suggests that the additional easing in the lockdown …
23rd June 2020
Online sales and DIY stores drive the recovery The bigger-than-expected rebound in retail sales in May, was driven by another big step up in online sales and the reopening of DIY stores, and is a sign that the economy started to get back to its feet. But …
19th June 2020
Borrowing peaked but will remain high for years The double whammy of the precipitous fall in economic activity and the government’s measures to combat the crisis has already pushed the debt to GDP ratio above 100% for the first time in over 50 years. …
Persistently weak inflation to prompt regular QE expansions May’s further fall in inflation is probably only the beginnings of a prolonged period of very soft price pressure that we think will prompt the Bank of England to announce a total of £350bn more …
17th June 2020
Headline ILO unemployment figures not capturing full force of downturn The labour market figures for April suggest that the unemployment rate may not increase quite as far as we had anticipated. Even so, bigger rises are almost certainly on the way as the …
16th June 2020
Lockdown reduced economic output by 25% At its peak in April the lockdown reduced economic output by 25%, making the coronavirus crisis by far the deepest recession on record. The peak-to-trough fall in GDP was 7% in both the Global Financial Crisis and …
12th June 2020
PMIs confirm activity is returning only gradually The rebound in May’s all-sector PMI suggests the economy is now on the long road to normality. But the PMI echoes the message from the high frequency data that the recovery will be protracted. At 40.7 and …
4th June 2020
Households deleveraging but businesses continue to load up on debt The record fall in net loans to households and another surge in borrowing by businesses in April is an indication of how the lockdown has affected consumer spending and business revenues. …
2nd June 2020
Weak animal spirits may hold back the recovery While the slight easing in social distancing rules in May helped industrial confidence to recover a little, the headline UK Economic Sentiment Indicator (ESI) fell further in May as services and retail firms …
28th May 2020
April marks the low point for sales The 18.1% m/m fall (consensus forecast -16.0%) in retail sales volumes in April was easily the largest on record. The good news is that April should be the low point. But the bad news is that May is unlikely to be a …
22nd May 2020
Government borrowing skyrockets The double whammy of the precipitous fall in economic activity and the government’s measures to combat the crisis has already pushed borrowing to alarmingly high levels. While the small easing of the lockdown on 13 th May …
Activity still well below normal The nature of the PMIs makes them tricky to interpret, but the rise in the composite PMI from 13.8 in April to 28.9 in May probably shows that April was the low point for activity, and that the slight easing in the …
21st May 2020
Easing price pressures suggest the Bank has more work to do The energy-driven slump in inflation in April is unlikely to concern the Bank of England much, but it might find the easing in underlying price pressures a little harder to ignore. And with the …
20th May 2020
Sanguine headline figures belie hundreds of thousands of layoffs The headline labour market figures have not yet caught up with the fall in employment of between 500,000 and 1 million revealed in the timelier data for April. And we suspect that …
19th May 2020
Record collapse in economic activity and worse to come March’s GDP figures showed that the UK economy was in freefall as soon as the coronavirus lockdown began. And with all the restrictions in place until mid-May, and then only lifted very slightly, …
13th May 2020
Survey at a record low, but still not capturing collapse in GDP The collapse in the construction PMI in April confirms that no sector of the economy has been spared from the slump in activity. We already knew that the composite activity PMI, which covers …
6th May 2020
The calm before the storm The drop in both the number of corporate and individual insolvencies in Q1 is unlikely to be maintained over the next few months as the collapse in revenues and employment caused by the coronavirus pushes many more firms and …
30th April 2020
Sharp drop in sales in March to be followed by a plunge in April The 5.1% m/m fall (consensus forecast -4.0%) in retail sales volumes in March was the largest on record and suggests that household consumption declined by at least 4% q/q in Q1. However, as …
24th April 2020
Survey points to unprecedented monthly contraction in GDP in April The eye-watering declines in April’s flash PMIs confirm the coronavirus lockdown has pushed the economy into a recession of unprecedented speed and depth. Particularly worrying was the …
23rd April 2020
First signs of higher borrowing emerge, but much worse to come Despite the slight deterioration in March, the budget deficit was still only £48.7bn (2.1% of GDP) in 2019/20, but it will soon surge next year. The government measures to combat the economic …
CPI inflation starts to slide In March CPI inflation took the first leg of what we suspect will be a sustained journey down to around 0.5% by the summer, easing from 1.7% in February to 1.5% (consensus forecast 1.5%). The fall in CPI inflation in March …
22nd April 2020
Small crack may soon turn into chasm The small crack that appeared to be opening up in the labour market in March may soon turn into a chasm with the unemployment rate rising from 4% to almost 9%. February’s Labour Force Survey (LFS) data weren’t very …
21st April 2020
The 0.1% m/m fall in GDP in February will be the last figure that looks anything like “normal” for a while as the coronavirus lockdown will mean that in March and April GDP will fall at a speed and magnitude that the UK economy has never endured before. …
9th April 2020
More confirmation that social distancing is obliterating economic activity The incoming data continue to confirm that the UK is destined for the sharpest fall in economic output for over a century in Q2. And the collapse in consumer confidence to its …
6th April 2020
Downward revisions confirm lockdown has led to a huge loss of activity The downward revisions to March’s PMIs confirm that the measures taken to slow the spread of the coronavirus have pushed the economy into a recession of unprecedented scale and depth. …
3rd April 2020