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While the economic recovery is creating jobs at a rapid pace, there still appears to be plenty of slack in the labour market which is keeping a lid on pay growth. … Labour Market Data (Mar./Apr …
14th May 2014
April’s BRC Retail Sales Monitor indicates that consumers loosened their purse strings over the Easter holidays. And the positive outlook for employment and real pay suggests that the consumer recovery will remain strong over the rest of 2014. … BRC …
13th May 2014
The FPC has a number of policy tools at its disposal should it decide it needs to cool the housing market. Provided it acts with sufficient conviction, there is every chance that the new tools will prove effective. Action to curb loan-to-income ratios …
12th May 2014
The main risks to our view that low inflation will keep interest rates on hold for longer than markets expect stem from the MPC’s increased focus on spare capacity under phase two of its forward guidance and the strength of the housing market. But …
Whilst March’s industrial production data indicated that the manufacturing recovery remains robust, the latest trade data provided tentative signs of some rebalancing towards the external sector. … Industrial Production and Trade …
9th May 2014
While the strength of the housing market may have made for an animated discussion at today’s MPC meeting, the benign inflation outlook suggests that tighter monetary policy is still not a near-term prospect. … Low inflation keeps the MPC on …
8th May 2014
The last month’s data has provided further evidence that the UK economy is enjoying a ‘Goldilocks’ scenario of solid, but not excessive, growth and low inflation. The latest PMI surveys suggest that the economic recovery retained a healthy degree of …
April’s CIPS/Markit Services report provided encouraging evidence that the domestic recovery retained a healthy degree of momentum at the beginning of Q2. … Markit/CIPS Report on Services …
6th May 2014
Last week’s data provided further evidence that the UK economy is currently enjoying a ‘Goldilocks’ recovery. Admittedly, there are concerns that an overheating housing market could bring the bears home and scare Goldilocks away. But we think these …
5th May 2014
The Monetary Policy Committee’s decision on Thursday 8th May will be the first to be taken under the second phase of forward guidance. But we don’t expect that to have much of a bearing on its deliberations. With inflation falling further below target in …
1st May 2014
Whilst March’s money and credit data suggested that the housing market recovery may be coming off the boil, there are signs that the consumer recovery is finally feeding through into stronger household borrowing. … Household Borrowing Monitor …
The latest data on the manufacturing sector and household borrowing have provided some further encouraging evidence of a rebalancing of the UK’s economic recovery away from excessive dependence on housing and consumers towards industry. … Markit/CIPS …
April’s GfK/NOP survey indicates that consumers remained upbeat at the start of the second quarter. And with real wages now on the rise, consumer spending looks set to continue to drive the overall economic recovery. … GfK/NOP Consumer Confidence …
30th April 2014
The provisional Q1 GDP figures confirmed that the economic recovery picked up momentum in the early months of 2014. But the combination of solid - rather than spectacular - growth and low inflation should keep interest rates very low. … Preliminary GDP …
29th April 2014
While this week’s GDP figures for the first quarter look set to confirm that the economic recovery has gained further momentum, one potential threat to the sustainability of the recovery is the strength of the pound. Its trade-weighted value reached its …
28th April 2014
The latest data indicate that the outlook for UK consumers remains bright. Inflationary pressures look set to continue to ease over the course of the year, which should mean that real pay picks up further, following its first rise in almost six years. In …
25th April 2014
March’s retail sales figures supported the message from other recent indicators that consumer spending retains plenty of momentum and that the broader economic recovery probably picked up pace in Q1. … Retail Sales …
The sharp rise in self-employment is one reason among many to think that the unemployment rate understates the amount of slack in the labour market and the broader economy. … Is there slack among the …
24th April 2014
Although the strength of April’s CBI Distributive Trades Survey partly reflects an Easter-related boost, underlying growth in retail sales appears to be strong. … CBI Distributive Trades Survey …
The CBI’s Industrial Trends Survey for April and the second quarter provided further encouraging signs that the manufacturing recovery remains robust. … CBI Industrial Trends Survey (Apr. & …
23rd April 2014
The minutes of April’s MPC meeting suggested that the first rise in official interest rates remains some way off. Meanwhile, March’s public finances brought some fairly positive news on the speed of deficit reduction. … MPC minutes (Apr.) & Public …
Last week’s labour market figures brought the long-awaited news that pay growth has finally begun to exceed inflation. Granted, real earnings are still 10% below their pre-recession peak and signs that productivity has continued to stagnate in the first …
21st April 2014
The latest labour market figures showing that average earnings are finally rising at a faster rate than prices mark another major milestone in the economy’s recovery. … Labour Market Data (Feb./Mar …
16th April 2014
The further fall in CPI inflation in March suggested that the six-year squeeze on real wages is finally over and took it a step closer to the 1% figure we think it could reach by the end of the year. … Consumer Prices & Producer Prices (Mar …
15th April 2014
The weakness of the latest BRC retail sales figures, which reflects seasonal factors, is unlikely to be sustained. With real pay on the cusp of rising, the consumer recovery should continue apace over the course of the year. … BRC Retail Sales Monitor …
In this edition of our UK Quarterly Review , we take a close look at the outlook for earnings. After enduring the biggest decline in real wages since the 1920s, are workers finally set to see the benefits of the economic recovery in their pay packets? Or …
14th April 2014
Last week’s official industrial production figures provided an encouraging sign that the sector’s recovery may have gathered pace in the first quarter. Indeed, even if production only held steady in March, it would have risen by 0.9% over Q1 as a whole, …
While the UK economy may have withstood the fiscal consolidation rather better than the IMF and other critics anticipated, there are reasons why George Osborne may want to think twice before declaring that “Plan A” has been fully vindicated. … Can Mr …
10th April 2014
With inflation falling and plenty of slack still left in the labour market, today’s no-change decision by the MPC is likely to have been unanimous again. And with the UK set for a favourable period of strong growth and low inflation, we still think the …
February’s trade figures showed that the economy is still struggling to rebalance towards exports. And in the coming years, progress is likely to be slow at best while demand in the euro-zone remains weak. … Trade …
9th April 2014
February’s official figures showed that the recovery in the industrial sector still has plenty of momentum. As a result, they provided reassurance that the economic recovery is broad-based and is unlikely to have slowed in the first quarter. … …
8th April 2014
Figures released last week confirmed that the weakness of productivity growth continues to hang like a cloud of Saharan dust over the medium-term outlook for the economy. Not only has productivity barely risen, but much of the rise seen has been due …
7th April 2014
With inflation falling faster and slack in the labour market being used up more slowly than the MPC expected in February’s Inflation Report, the decision to leave Bank Rate on hold at this month’s meeting should be straightforward. This may be fortuitous, …
4th April 2014
The last month has brought more good news on inflation. CPI inflation eased from 1.9% to 1.7% in February, the lowest rate since October 2009. Meanwhile, past falls in commodity and import prices suggest that inflation will continue to descend over the …
3rd April 2014
The further deterioration in the tone of the CIPS/Markit services survey in March shouldn’t ring too many alarm bells about the strength of the economic recovery. … CIPS Report on Services (Mar.) & Credit Con. Survey …
Although March’s CIPS manufacturing report indicated that the sector’s recovery may have lost some steam over the first quarter, this seems unlikely to herald the beginning of a renewed slowdown. … CIPS Report on Manuf. (Mar.) & FPC Record …
1st April 2014
February’s money and lending figures provide further reassurance that the economic recovery has maintained its strong pace this year and is not being powered by a surge in credit. … Monetary Indicators Monitor (Mar …
31st March 2014
Although overall household borrowing rose in February, the sharp fall in mortgage approvals suggests that activity in the housing market may be stabilising. Accordingly, the housing recovery does not appear to be fuelled by a borrowing binge. … …
The further fall in CPI inflation in February is unlikely to be the last this year. Past movements in global commodity prices, recent announcements by energy suppliers and the emergence of a supermarket price war suggest that food and energy inflation …
The latest data on the state of households’ finances confirmed our fears that the recovery in spending over recent quarters has been driven largely by consumers saving less. But the consumer recovery should move to a more sustainable footing soon as real …
28th March 2014
The national accounts for the fourth quarter presented a mixed report card on the economy’s progress towards rebalancing. … National Accounts & Balance of Payments …
March’s GfK/NOP survey showed that consumers remain in buoyant mood and supports our expectation that the recovery in household spending will maintain its recent momentum. … GfK/NOP Consumer Confidence …
The recovery in consumer spending has shown no signs of slowing this year, with indicators suggesting that both retail and consumer services spending have grown strongly. Admittedly, households have partly funded their extra spending by saving less. But …
27th March 2014
February’s surge in retail sales confirmed that consumers are still loosening their purse strings and provided some reassurance that the economic recovery has not lost pace in the first quarter. … Retail Sales (Feb …
Despite the slightly weaker tone of March’s CBI Distributive Trades Survey, retailers enjoyed decent sales growth over Q1 as a whole. And looking ahead, we expect the consumer recovery to maintain its current momentum. … CBI Distributive Trades Survey …
25th March 2014
The further fall in CPI inflation in February took it another step towards the 1% rate which we think it could reach later this year and which would provide additional support to the economic recovery. … Consumer Prices & Producer Prices …
The fact that members of the Monetary Policy Committee (MPC) are advancing personal estimates of the output gap expressed to the nearest 0.1% suggests that policymakers may be putting too much emphasis on what is, after all, an unobservable and highly …
24th March 2014
It has become increasingly clear that the Chancellor’s Budget was not quite as fully-financed as it first appeared. Many of the permanent giveaways were paid for by takeaways which will provide only a temporary source of revenue. Meanwhile, the forecasts …
February’s public finances figures confirmed that the UK’s budget deficit is continuing to make steady but slow downward progress. But the fiscal consolidation still has a very long way to go. … Public Finances …
21st March 2014
The meagre giveaway to consumers in yesterday’s Budget did little to change the reality that fiscal policy will impart a moderate squeeze on households’ incomes over the next few years. Indeed, the squeeze is set to intensify after the general election …
20th March 2014
