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Sterling’s further appreciation has increased the chances that CPI inflation drops even further below the MPC’s 2% target over the next year or so. Not only will sterling’s rise have a direct impact on inflation by reducing import prices, it will also …
14th July 2014
The public finances, particularly tax receipts, have made a disappointing start to this fiscal year. However, recent fiscal data have been distorted by several temporary factors, suggesting that they are not a sign the economy is actually weaker than the …
10th July 2014
Although the economic recovery appears to be heading into the second half of this year with plenty of momentum, the continued weakening of inflationary pressures suggests that today’s decision by the Monetary Policy Committee to leave interest rates on …
May’s trade figures provided more disappointing news that manufacturers may be struggling to cope with sterling’s strength. And with exporters still facing a number of headwinds, we expect export growth to remain sluggish for a while yet. … Trade …
May’s industrial production figures suggested that the stronger pound might bestarting to slow the revival of the manufacturing sector. Nonetheless, there is still agood chance that the overall recovery gathered pace in the second quarter. … Industrial …
8th July 2014
Given its small weight in overall output, the construction sector is often overlooked. But last week’s survey data provided encouraging evidence that the sector is helping to build a more balanced recovery. What’s more, the outlook remains bright. … Will …
7th July 2014
The acceleration of the jobs market recovery and more hawkish comments from the Governor over the last month suggest that an interest rate rise before the end of the year cannot be ruled out. But provided inflation continues to ease, we think the Monetary …
3rd July 2014
While the economic recovery appears to have accelerated in Q2, workers are still failing to see the benefits in their pay packets. Annual growth in average weekly earnings fell from 2.2% to -1.7% in April. And while this partly reflected average pay in …
June’s CIPS/Markit services survey suggests that the sector’s robust recovery continued in the second quarter, and provides further signs that the wider economic recovery has gathered pace. … Markit/CIPS Report on Services …
June’s CIPS report on manufacturing suggested that the recovery in UK industry is going from strength to strength. For now at least, even the stronger pound appears to be doing little to slow the sector’s momentum. … CIPS/Markit Report on Manufacturing …
1st July 2014
May’s money and credit figures provided some more signs that the housing market recovery has lost some steam. Meanwhile, although the consumer recovery has continued apace, it has not lead to an unsustainable pick-up in credit. … Household Borrowing …
30th June 2014
None of the measures announced by the Financial Policy Committee (FPC) last week seem likely to sap the recovery in house prices of its current momentum or prevent the overall level of household debt from rising markedly. Admittedly, there are still a …
The latest data on the state of households’ finances revealed another disappointing fall in disposable income. But households’ balance sheets remain fairly healthy overall, and we continue to expect incomes to rise in the second half of this year. … …
27th June 2014
The first quarter’s national accounts brought some positive news on the pace and balance of the UK’s recovery. And while the current account deficit has remained extremely large, there are reasons to think this will prove to be temporary. … National …
Despite Mark Carney’s warming that interest rates could rise before the end of the year, consumer confidence has continued to improve, suggesting that the recovery in household spending may gather pace over the coming quarters. … GfK/NOP Consumer …
Although June’s CBI Distributive Trades Survey was much weaker than expected, it indicated that growth in the retail sector remained strong in Q2 as a whole. What’s more, the outlook for spending in the second half of the year remains bright. … CBI …
25th June 2014
Provided that interest rates rise only gradually over the years ahead, the UK economy looks set for a prolonged period of strong growth which mends rather than exacerbates its existing imbalances. … Is the recovery …
The trickle of warnings of a not-too-distant policy tightening from the Monetary Policy Committee (MPC) turned into something more closely resembling a flood last week. Ultimately, however, it is the data – and not the MPC’s expectations or signals – that …
23rd June 2014
The recovery in consumer spending seems to be gathering pace thanks to rising confidence and strong employment growth. Admittedly, there are still signs of fragility – real earnings are still not rising and the housing market has shown signs of cooling …
20th June 2014
May’s public borrowing figures contained tentative signs that the coalition is struggling to bring down the deficit in line with the fiscal plans this year. … Public Finances …
May’s retail sales figures showed that a combination of rapid jobs growth and falling prices is continuing to fuel a strong recovery in consumer spending. … Retail Sales …
19th June 2014
The recent drop in mortgage approvals does not negate the need for the FPC to test its new macro-prudential powers . For one thing, we expect the drop in lending to be temporary. In addition, the re-emergence of higher risk mortgage lending in recent …
18th June 2014
While the minutes of June’s MPC meeting provided some relief that no members have voted to raise rates just yet, they also sounded a hawkish note in reiterating the Governor’s warning that there is a bigger risk of a 2014 hike than markets expect. … MPC …
Low inflation will not stop interest rates from rising, perhaps quite soon. But it should limit the size and speed of any increase and help the economic recovery to continue largely unconstrained. … Will low inflation keep the MPC at …
17th June 2014
May’s drop in UK consumer price inflation demonstrated that strong growth in economic activity is not causing underlying price pressures to build. … Consumer Prices & Producer Prices …
Mark Carney’s statement in his Mansion House speech on Thursday evening that “the first rise in interest rates …could happen sooner than markets currently expect” looked like a pretty plain signal that tighter monetary policy is not very far away. Even …
16th June 2014
Although employment is continuing to grow very rapidly, there still appears to be enough slack in the jobs market to prevent pay growth from picking up. … Labour Market Data …
11th June 2014
With replica shirts, curved televisions and crates of beer all heavily advertised, the World Cup is clearly an important event for many retailers. But while this summer’s football extravaganza is likely to affect the timing of consumer spending in the UK, …
10th June 2014
April’s industrial production figures added to the growing body of evidence suggesting that the economic recovery might have gathered even more pace in the second quarter. … Industrial Production …
Although May’s BRC Retail Sales Monitor showed that an escalating price war between supermarkets is depressing the value of food sales, the recovery in retail spending as a whole looks to have maintained a healthy pace in Q2. … BRC Retail Sales Monitor …
On the face of it, the new policy measures unveiled by the European Central Bank (ECB) last week should have positive effects on the UK’s principal trading partner and hence on the UK’s own growth prospects. But aside from doubts over the effectiveness of …
9th June 2014
April’s trade figures suggested that the economy is still struggling to rebalance towards exports. And since the impact of sterling’s rise on exports has probably not been felt yet, the recovery is unlikely to receive support from net trade soon. … …
6th June 2014
While the strength of the economic recovery may have pushed one or two MPC members closer to voting to raise interest rates at today’s meeting, we still think that the benign inflation outlook and a cooling of the housing market will persuade most members …
5th June 2014
While the latest activity surveys suggest that the recovery might have gathered pace in the second quarter, a revival in productivity has remained elusive. Indeed, firms are hiring workers in record numbers – Q1’s 283,000 quarterly rise in employment was …
4th June 2014
May’s CIPS/Markit services survey echoed the upbeat message of the previous month’s report in suggesting that the economic recovery may still be gathering pace. … CIPS Report on Services …
Although the latest figures showed further signs of subdued growth in broad money and particularly bank lending, we doubt that this is a sign the economic recovery will lose steam soon. Indeed, it remains encouraging that economic activity is growing …
2nd June 2014
April’s money and credit figures suggest that new mortgage rules have stifled the recovery in housing market activity. But with real incomes rising and confidence strengthening, a gradual recovery in household borrowing still looks likely this year. … …
The latest data on the manufacturing sector and household borrowing has provided more encouraging evidence that the economic recovery is shifting away from its excessive dependence on housing and consumers towards industry. … Markit/CIPS Report on …
On the face of it, the steady fall in gilt yields this year suggests that markets might be expecting the economic recovery to lose some momentum soon or that safe-haven demand from overseas might have pushed them lower. However, the fall in yields seems …
The further improvement in GfK’s consumer confidence report in May suggests that the recovery in household spending could gather even more pace soon. … GfK/NOP Consumer Confidence …
30th May 2014
Although the revival in housing market activity may lose some pace as a result of new regulations and rising mortgage rates, we doubt that this will derail the recovery in consumer spending. … Recovery built on solid …
29th May 2014
While the Monetary Policy Committee (MPC) will leave policy on hold again at its meeting on 4th and 5th of June (announcement noon on the 5th), it is clear that some members are getting closer to voting for higher interest rates. But provided that …
Although May’s CBI Distributive Trades Survey suggested that growth in retail spending may slow from recent stellar rates, it still indicated that the consumer recovery has remained robust in the second quarter. … CBI Distributive Trades Survey (May & …
28th May 2014
Last week’s release of the expenditure breakdown of Q1 GDP confirmed that an upturn in business investment has turbocharged the UK’s economic recovery. And looking ahead, there’s every reason to expect it to continue to make a significant contribution to …
26th May 2014
While real household spending is continuing to pick up strongly, retailers have remained under pressure to offer generous discounts. Indeed, the retail sales deflator fell into negative territory in April for the first time since July 2006. And anecdotal …
22nd May 2014
The second estimate of Q1 GDP provided more evidence that the recovery is based on solid foundations. But April’s public finances made for less encouraging reading. … GDP Second Estimate (Q1) & Public finances …
While the minutes of May’s MPC meeting suggested that one or two members may vote to raise interest rates soon, most seem content to leave policy on hold for a good deal longer. Meanwhile, April’s retail sales figures were particularly strong. … MPC …
21st May 2014
While CPI inflation rose in April, this largely reflected a temporary boost from the later timing of Easter this year. Underlying price pressures have remained subdued and we continue to think that CPI inflation will fall to about 1% later this year. … …
20th May 2014
May’s Bank of England Inflation Report proved to be a blow for those predicting that the Monetary Policy Committee (MPC) would signal its intention to raise interest rates soon. The MPC stood by its assessment made in February that there remains ample …
19th May 2014
May’s fairly dovish Inflation Report might go some way to cool expectations that the Monetary Policy Committee will raise interest rates as soon as the first quarter of next year. … Bank of England Inflation Report …
14th May 2014
