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The latest labour market figures highlighted that wage growth remains weak, despite the continued decline in labour market slack. … Labour Market …
17th May 2017
If implemented, the Labour manifesto could boost GDP growth – by increasing investment spending – at the cost of higher debt which would potentially result in higher interest rates. … Labour would ease the fiscal squeeze …
16th May 2017
The sharp rise in CPI inflation in April mainly reflected a number of factors that won’t be repeated and we think that this brought inflation close to its eventual peak. … Consumer Prices & Producer Prices …
Growth in consumer spending has begun to lose pace in response to the pick-up in inflation that is underway. This has been seen most acutely on the high street, with survey measures of spending on consumer services having held up rather better. … Consumer …
15th May 2017
In the minutes of its latest meeting, the MPC commented that if the economy evolves in line with its forecast, rate hikes would be justified before markets currently expect. But judging by the market reaction following the meeting, others are clearly more …
12th May 2017
This week’s news brought further signs that the housing market is cooling and could suggest that we are on the cusp of a house price slump. But we doubt that the various indications of softness suggest that a sizeable and sustained downturn is now …
May’s Bank of England Inflation Report confirmed that the Monetary Policy Committee is in no hurry to raise interest rates. But it also lent some support to our view that it will begin to tighten monetary policy somewhat sooner than markets expect. … UK …
11th May 2017
Today’s activity data re-affirmed that the economy lost some momentum in Q1 but showed some signs that GDP growth is becoming slightly better balanced. … Industrial Production, Construction & Trade …
Emmanual Macron’s victory in Sunday’s French presidential election is potentially good news for the UK economy and might also provide the best background for the Brexit negotiations. … What does Macron’s victory mean for the …
10th May 2017
The evidence that consumers are gloomier about the economic outlook but upbeat about their own finances doesn’t sit comfortably together. So which picture of the consumer – unconcerned enough to continue spending strongly, or becoming more worried about …
9th May 2017
April’s BRC Retail Sales Monitor suggests that consumers loosened their purse strings over the Easter holidays and helps to allay concerns that real consumer spending growth is slowing sharply in the face of higher inflation. … BRC Retail Sales Monitor …
Press reports of growing animosity between the UK and EU have this week given a sense that the prospects for a successful and orderly Brexit have deteriorated. But formal negotiations are not yet underway, and there is little to suggest that the …
5th May 2017
Recent news on the economy might suggest that the effects of the pound’s post-referendum depreciation will be closer to those seen after the pound’s fall in 2008 – which raised inflation and squeezed real incomes – than those seen after its 1992 ERM exit, …
Weaker economic data and a rise in the pound is likely to silence some of the tentatively hawkish members of the MPC and mean that May’s Inflation Report strikes a relatively dovish tone. Nonetheless, we still think that the first hike in Bank Rate will …
We doubt that the sharper-than-expected slowdown in quarterly GDP growth from 0.7% in Q4 to 0.3% is a sign of things to come. Indeed, output surveys point to an acceleration in growth at the start of Q2. All three sector PMIs posted increases in April to …
4th May 2017
March’s household borrowing figures provide another reason to think that the consumer slowdown shouldn’t be too severe. Moreover, continued strong credit growth shouldn’t panic policymakers into tightening either monetary or macroprudential policy …
April’s Markit/CIPS Services PMI implies that quarterly GDP growth will bounce back from the sharp slowdown experienced in Q1. And March’s household borrowing figures suggest that consumer spending growth won’t slow too sharply. … Markit/CIPS Services PMI …
Q1’s GDP figures – which revealed a sharp slowdown in economic growth – have unsurprisingly raised concern that the economy is finally experiencing a major Brexit-related slowdown. However, there are a number of reasons why it is too soon to hit the panic …
2nd May 2017
April’s Markit/CIPS manufacturing PMI suggests that the sector made a strong start to the second quarter and provides hope that this strength should be maintained in the coming months. … Markit/CIPS Report on Manuf. …
Leaders of the EU27 are set to convene in Brussels tomorrow to formally agree Brexit negotiating guidelines. By insisting that sufficient progress is made on a withdrawal agreement before future trade arrangements can be discussed, the EU will give itself …
28th April 2017
The large fall in public borrowing in the 2016-17 fiscal year could suggest that the process of deficit reduction is almost complete and that the Conservatives can keep their pledge not to raise the rates of the main tax types. However, progress on …
With consumers feeling the adverse effects of sterling’s post-referendum fall, the economy has started to cool. But we doubt this is the start of a sustained slowdown. … Preliminary estimate of GDP …
Consumer confidence edged down this month, but the big picture remains that consumers are weathering the squeeze on their spending power from higher inflation well. … GfK/NOP Consumer Confidence …
After a dismal quarter for the high street in Q1, the strength of April’s CBI Distributive Trades Survey is welcome news and helps to allay fears that real consumer spending growth is slowing sharply in the face of higher inflation. … CBI Distributive …
27th April 2017
The fall in retail sales volumes in Q1 2017 suggests that the slowdown in consumer spending growth is gathering pace. But the recent strength of nominal spending offers some comfort. Retail sales volumes registered their largest quarterly fall in seven …
March’s public sector finances figures confirmed the large fall in borrowing that the OBR expected for the 2016-17 fiscal year. However, with much of the drop due to temporary factors, borrowing will probably rise slightly in 2017-18. … Public Finances …
25th April 2017
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 …
