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Fears that the recent rise in oil prices will severely dampen consumer spending are probably somewhat overdone. Indeed, even if oil prices remain at current levels, higher inflation would eat into real wage growth only marginally and the direct impact on …
29th May 2018
Annual consumer spending growth ground to its slowest pace in six years in Q1. Alongside a string of weak early indicators of spending in Q2, that called into question our forecast of a rebound in spending growth over the course of the year. Indeed, there …
25th May 2018
While today’s figures confirmed that the economy slowed sharply in Q1, we doubt that this will prevent the MPC from raising rates again in August. … GDP Second Estimate …
The strong rebound in retail sales in April provides encouragement that consumer spending growth has regained some pace after the weather-related weakness in Q1. … Retail Sales …
24th May 2018
The pick-up in the CBI Distributive Trades Survey in May suggests that the recent weakness in retail sales is abating. And with real wages rising again, we are upbeat about the prospects for consumer spending growth over the rest of the year. … CBI …
23rd May 2018
The recent rise in oil prices did not stop CPI inflation from taking another step down in April. But we doubt that inflation’s fall significantly reduces the chance of an interest rate hike in the near future. … Consumer Prices & Producer Prices …
While the beneficial effects on exports of the pound’s depreciation may now be fading somewhat, it is too early to conclude that the sterling boost to growth is over. … Is the sterling boost …
22nd May 2018
The CBI Industrial Trends Survey suggests that the manufacturing sector has failed to regain momentum so far in Q2 after the poor start to the year. But with firms’ expectations for output ahead picking up strongly, the recovery in manufacturing has some …
April’s public finances figures have got the new fiscal year off to a good start and might give the Chancellor a bit more wiggle room to loosen the purse strings in the Autumn Budget. … Public Finances …
This week’s figures suggested that the labour market is in rude health. Admittedly, some of the timelier measures of employment growth have started to weaken. And with the labour market now exceptionally tight, some slowdown in employment growth looks …
18th May 2018
The Monetary Policy Committee’s latest inflation forecasts imply that UK interest rates will remain substantially below US rates for the foreseeable future. But there are reasons why the gap may not be as wide as the projections suggest. … Why the MPC …
17th May 2018
March’s labour market figures provide us with optimism that sustained rises in real pay are in prospect and will place more pressure on the MPC to hike interest rates soon. … Labour Market …
15th May 2018
After the sea of downbeat economic news in recent weeks, the Monetary Policy Committee (MPC)’s decision to keep rates unchanged at its meeting in May came as little surprise. Of course, the MPC’s decision to hold fire largely reflected a desire to confirm …
11th May 2018
While the MPC thinks that the economy’s slow start to the year should prove temporary, it sees the costs of waiting a few more months to be sure as being relatively low. As a result, we still expect the next hike in interest rates to come in August. And …
10th May 2018
March’s activity figures did little to support suspicions that the overall economy grew a bit more quickly in the first quarter than the preliminary GDP figures suggest. … Industrial Production, Construction & Trade …
While Easter timing effects dragged down sales growth in April, the underlying trend does not look particularly strong. Nonetheless, with employment growth still solid and real wages now on the rise, the outlook for consumer spending over the rest of this …
9th May 2018
The slowdown in quarterly GDP growth in Q1 begs the question whether the economy is too fragile to withstand a tightening in monetary policy anytime soon. But the slowdown was almost entirely due to weakness in the construction sector, which was buffeted …
4th May 2018
After a disappointingly-weak Q1, the economy looks to have made a pretty slow start to Q2. Admittedly, the measly 0.1% expansion in GDP in Q1 was partly due to weather effects. However, there are signs that the economy has lost some underlying momentum. …
3rd May 2018
A string of weak economic data, as well as comments by Governor Carney, have all but ruled out another interest rate hike on 10th May. Indeed, the MPC is likely to err on the side of caution until it is confident that the recent softening in the data is …
The slight pick-up in the services PMI in April will do a little to assuage fears that the economy has suffered a loss of underlying momentum and makes the chance of an interest rate hike next week extremely slim. Nonetheless, with wage pressures …
Local elections tend not to be a big deal, at least from an economic perspective. Turnout is typically low, and many voters are swayed by local issues. Nonetheless, given the fragile political situation and the possibility of a general election occurring …
2nd May 2018
Unsecured lending to households ground to a halt in March, raising concerns of a sharp pull-back in consumer spending growth. But other indicators suggest that the slowdown in lending will prove temporary. Meanwhile, mortgage approvals fell back, and …
1st May 2018
The latest Markit/CIPS Manufacturing Survey suggested that the sector struggled to re-gain much momentum at the start of Q2. Meanwhile, the Bank of England’s Money and Credit figures revealed a worrying slowdown in consumer credit. This further reduces …
With the deadline for finalising the withdrawal agreement and a framework for the UK’s future relationship with the EU fast approaching, many issues are still unresolved – not least the Irish border issue. As a result, the Government’s negotiating red …
27th April 2018
This week’s public finances figures showed that borrowing for the full 2017/18 financial year came in at £42.6bn, a whopping £16bn lower than that predicted by the Office for Budget Responsibility (OBR) this time last year. And this is despite the fact …
While weaker-than-expected GDP growth in Q1 largely reflects the severe weather, and so should be transitory, it is probably the final nail in the coffin for an interest rate hike in May. However, a recovery in real pay should put the economy on a firmer …
April’s GfK/NOP survey suggested that consumers have become a little less optimistic at the start of Q2. But with real wages set to rise again in the coming quarters, there is scope for confidence and spending growth to regain some momentum. … GfK/NOP …
The pick-up in the CBI Distributive Trades Survey in April suggests that March’s weakness was largely a reflection of the severe weather conditions. And with real wages now on the rise, the outlook for consumer spending growth over the rest of the year is …
26th April 2018
Despite coming in a touch below expectations, the headline total orders balance of the CBI Industrial Trends Survey points to the manufacturing sector sustaining its recent expansion. However, a rebound to quarterly growth rates of over 1% isn’t on the …
24th April 2018
March’s public finances figures will come as welcome news to the Chancellor and further increases the scope for the Chancellor to ease back on austerity in the Autumn. … Public Finances …
On the face of it, the fall-back in inflation in March has reduced the chances of a hike in interest rates in May. And Governor Carney’s comments appear to add weight to this view. However, an argument could be made that falling inflation might actually …
20th April 2018
We maintain our relatively optimistic view about the prospects for UK economic growth over the next few years. In particular, a recovery in real earnings should help household spending growth to regain some momentum, while we think investment will …
19th April 2018
Abstracting from the effects of the snow, the big picture remains one of pretty feeble high-street activity. But we doubt consumer spending growth will weaken further. CPI inflation now appears to be on a firm downward trajectory. And there have been …
March’s retail sales figures were always likely to be weak after the unusually bad weather at the start of the month. And with the bulk of the lost spending likely to be made up, the bad news shouldn’t last long. … Retail Sales …
Forget Brexit – the biggest thing to happen to the UK economy over the next couple of years could be the advent of a Labour government, and a particularly left-wing one at that. On the plus side, this could bring a small fiscal boost and a softer Brexit. …
18th April 2018
While the bigger-than-expected fall in inflation in March means that another hike in interest rates in May is now less clear cut, we nonetheless think that it remains more likely than not. … Consumer Prices & Producer Prices …
February’s labour market figures provide us with optimism that sustained rises in real wages are now in prospect and should seal the deal on another interest rate hike in May. … Labour Market …
17th April 2018
The recent run of weak data suggests that a hike in Bank Rate, to 0.75% in May, is far from a done deal. But we don’t think that a May hike is now off the table. Some of the unexpected weakening in this week’s activity data reflects temporary factors. And …
13th April 2018
February’s activity data added to the evidence that the economy lost a little pace in Q1. But we don’t think that this will prevent the Monetary Policy Committee from raising interest rates again in May. … Industrial Production, Construction & Trade …
11th April 2018
March’s BRC Retail Sales Monitor provided evidence that sales have recovered from the weak period at the start of the month, when snow deterred consumers from visiting the shops. Admittedly, some of the recovery can probably be attributed to the early …
10th April 2018
About a month ago, we warned that the severe weather around the start of March would make the economy look a bit fragile in Q1. Indeed, the weaker-than-expected services PMI survey, released this week, has raised concern that the economy has suffered a …
6th April 2018
The National Accounts showed that the economy barely slowed at all in 2017. Annual growth, revised up from 1.7% to 1.8%, was only marginally lower than 2016’s 1.9% outturn. Since then, however, the heavy snowfall at the start of March appears to have …
5th April 2018
The latest Markit/CIPS services survey suggests that the severe weather conditions in March held back the sector at the end of Q1. However, we don’t think that this will prevent the Monetary Policy Committee from raising interest rates again next month. … …
March’s Markit/CIPS report on manufacturing suggests that the recovery in the industrial sector lost a bit of steam in Q1. But it should still go some way to offsetting the weakness in high-street spending in early 2018. … Markit/CIPS manufacturing PMI …
3rd April 2018
The news on the state of households’ finances shows that recent spending growth has been partly driven by households saving less. But it should not be long before consumer spending is on a firmer footing. … Consumers relying on saving …
29th March 2018
February’s household borrowing figures showed that, following a small decline over the course of 2017, unsecured credit growth has stabilised. This suggests that consumers are continuing to take advantage of historically low interest rates in order to …
The recently announced US tariffs should have a limited direct effect on the UK economy. Admittedly, falls in equity prices – on the back of concerns over a full-blown trade war – could clearly have bigger knock-on effects on consumer spending and GDP …
Q4’s Quarterly National Accounts confirmed that growth in 2017 was broadly unchanged from 2016, and painted a more balanced growth picture for the final quarter. Meanwhile, the latest money and credit figures provide another reason to think that the …
March’s Gfk/NOP survey indicates that consumers were in good spirits at the end of the first quarter. And with real wages set to rise again in the coming quarters, there is scope for confidence and spending growth to strengthen further. … GfK/NOP Consumer …
The severe weather at the start of March saw the CBI Distributive Trades Survey balances take a turn for the worse. But with the economic drivers of consumer spending finally showing signs of improvement, the weakness should prove temporary. … CBI …
28th March 2018
