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The combination of November’s further sharp fall in unemployment and hints from the Governor of the Bank of England suggest that the Monetary Policy Committee’s policy of formal, state-contingent, forward guidance might be about to expire just six months …
27th January 2014
Following mixed reports on Christmas sales, January’s CBI Distributive Trades Survey suggests that retailers have seen only a slow start to the new year. But retail prospects should brighten as 2014 proceeds. … CBI Distributive Trades Survey …
23rd January 2014
Although the unemployment rate is falling rapidly, there is plenty of evidence that it is still well above a level that would generate inflation and require official interest rates to rise soon. … Unemployment still well above an "equilibrium" …
A shift in the driver of growth from consumers to investment and exports continues to be the great white whale of economic policy. While there are good reasons to aspire to a more balanced recovery, hefty obstacles lie in the way. But the recovery should …
Today’s figures show that conditions are continuing to improve rapidly in the labour market. But the further fall in the unemployment rate is unlikely to trigger an imminent interest rate hike by the MPC. … Labour Data, MPC Mins (Jan.) & Pub. Fin. …
22nd January 2014
The CBI’s Industrial Trends Survey for January and the first quarter of 2014 provided grounds for optimism on the pace and balance of the economic recovery. … CBI Industrial Trends Survey (Jan. & …
21st January 2014
A continuation of the UK’s recent combination of increasing growth and falling inflation would seem too good to be true. But several factors, including a return to health in the banking sector and the slope of firms’ cost curves, suggest that rising …
While Wednesday’s labour market figures are likely to show that the unemployment rate fell again in November, a swift fall to the 7% threshold used for the MPC’s forward guidance is not assured. A revival in productivity and strong workforce growth may …
20th January 2014
Having finally fallen to the 2% target in December, there are increasingly clear signs that CPI inflation is on course to fall well below it this year. In particular, administered, food and consumer goods prices all look set to make a smaller contribution …
2013 ended with a mixed picture for the consumer sector, with surprisingly strong official data set against some softness in the surveys and in the anecdotal evidence from the high street. Nonetheless, real spending probably saw another rise in the fourth …
17th January 2014
With December’s hefty monthly growth in retail sales, the consumer recovery seems to be at full steam. That said, the official data is at odds with other evidence and suggests that the retail sector provided only a modest boost to GDP growth in Q4. … …
The fall in CPI inflation in December to the 2% target for the first time in four years shows that the economic recovery is not prompting price pressures to build. Indeed, CPI inflation looks likely to spend more time below 2% than above it during 2014. …
14th January 2014
With employment, real incomes and consumer confidence all likely to rise this year, the economic environment appears to be conducive to further growth in car sales in 2014. That said, some of the important drivers of sales growth last year are set to fade …
13th January 2014
November’s industrial production and construction figures signal that Q4 GDP growth is unlikely to have been quite as strong as the activity surveys have indicated. Nonetheless, GDP still seems likely to have grown at a respectable rate. … Industrial …
10th January 2014
December’s BRC sales figures supported anecdotal evidence that retailers had a somewhat mixed Christmas period and added to evidence that sales growth slowed in Q4. But 2014 looks set to present a more favourable environment for spending. … BRC Retail …
While today’s Monetary Policy Committee (MPC) meeting passed without event, the Committee may soon adjust its forward guidance. Since there are no signs that falling unemployment is stoking inflation, the MPC could do more to support the recovery by …
9th January 2014
The trade figures have continued to pour cold water on hopes of an export-led recovery. And with little sign that a noteworthy recovery is emerging in the euro-zone, exports look set to remain subdued in 2014. … Trade …
The UK economy has leapt towards the top of the international growth table and there are good reasons to think it can stay there. We now expect the economy to grow by 3% this year and next. … The leader of the …
8th January 2014
While unemployment is falling swiftly towards the 7% threshold above which the Monetary Policy Committee (MPC) has pledged to keep official interest rates on hold, it remains unlikely that rates will rise in 2014. … Falling unemployment unlikely to …
7th January 2014
Although the CIPS services survey softened again in December, it still suggests that the recovery was strong at the end of 2013. And with the survey showing confidence rising and new business growing strongly, 2014 is shaping up to be another year of …
6th January 2014
With the unemployment rate falling rapidly, the MPC has continued to stress that the reaching of the 7% threshold will not automatically trigger a rise in interest rates. Indeed, there have been hints that the threshold attached to forward guidance could …
While the strength of the economic recovery surprised in 2013, the economy may have seen a softer end to the year. For some retailers, the Christmas period looks like being a bit of a washout, both literally and figuratively. But this shouldn’t have too …
While further robust growth in the broad money supply supports signs that the economic recovery has remained strong, the continued weakness of bank lending remains one reason to doubt that the pace of the UK economy's recovery will accelerate in 2014. … …
3rd January 2014
The economic recovery is still not being accompanied by any marked pick-up in household borrowing. And with borrowing costs likely to increase in coming months, the chances of a credit boom in 2014 soon seem remote. … Household Borrowing Monitor (Nov …
December's CIPS/Markit manufacturing survey indicated that the industrial recovery has remained strong and so provided another sign that the economic recovery is the product of more than just an unsustainable revival in household spending. … CIPS Report …
2nd January 2014
We expect the broadening out of the recovery from consumer spending to the rest of the economy to be one of next year’s main developments. Other key things to watch out for in 2014 include a modest easing of the near-term fiscal squeeze, stronger …
23rd December 2013
Today's news on the state of households' finances shows that the recent growth of household spending has been driven partly by households saving less. However, 2014 should see a more resilient basis for the consumer recovery. … Consumer recovery …
20th December 2013
While the national accounts showed that the economic recovery has been stronger than previously thought this year, they also provided a few reasons to doubt that it will be able to maintain its recent strong pace for much longer. … Nat. Acc., Bal. of …
December’s GfK/NOP confidence survey suggested that consumers have become slightly less optimistic in the run-up to Christmas. But as the squeeze on real earnings eases, there is scope for confidence and spending growth to pick up. … GfK/NOP Consumer …
Data for the early part of December suggest that consumers are in a reasonably positive mood in the run-up to Christmas. And there is still the potential for retailers to enjoy a further pick-up in sales by the close of the festive period. But it is less …
19th December 2013
While retail sales volumes rose in November, this made up only part of the previous month’s drop. So it is touch-and-go as to whether Q4 will see an expansion in sales volumes. But 2014 should see the foundations of the consumer recovery strengthen. … …
Following a subdued few months, December’s CBI Distributive Trades Survey suggests that retailers are enjoying a decent run-up to the Christmas period. And sales growth may pick up further before the close of the festive season. … CBI Distributive …
18th December 2013
While the latest labour market figures have raised the chances that the jobless rate falls below the MPC’s 7% threshold in 2014, December’s minutes suggested that the benign inflation outlook will enable it to keep rates on hold for a long time yet. … …
The fall in CPI inflation to a four year low in November confirms that the economy is enjoying a favourable mix of strong growth and low inflation. And with inflation on track to dip below 2% in 2014, it seems likely that the Monetary Policy Committee …
17th December 2013
The odds seem in favour of Wednesday’s labour market figures revealing another fall in the jobless rate. While in recent months the MPC has tried to downplay the importance of the unemployment threshold, another fall would probably put renewed upward …
16th December 2013
Recent survey evidence suggests that wage growth may finally be starting to recover. The latest surveys from both the Recruitment and Employment Confederation (REC) and the British Chambers of Commerce (BCC) suggest that wage growth has begun to pick up …
The MPC’s forward guidance has continued to be relatively unsuccessful in decoupling markets in the UK from those in the US. However, investors seem to have largely priced in the prospect of tapering, suggesting that gilt yields are unlikely to jump …
12th December 2013
October’s figures on industrial production and trade offered some good news for the Government’s oft-proclaimed ambition for an economy more biased towards manufacturing. But, on the external side, the picture remains weak. … Industrial Production & …
10th December 2013
Some have argued that strong job creation will rapidly push down unemployment to the MPC’s 7% threshold. But this overlooks developments in another determinant of the unemployment rate – growth in the workforce. This should continue at a decent pace, …
9th December 2013
While the Office for Budget Responsibility unveiled much stronger forecasts for the economy in last week’s Autumn Statement, with correspondingly more favourable projections for the public finances, there are some reasons to think that it might be being …
Recent rises in inflation and interest rate expectations might contradict claims by Mark Carney that households understand the MPC’s forward guidance. But we are not too concerned about the former at the moment, and consumers’ interest rate expectations …
6th December 2013
With sizeable improvements in the economic and fiscal forecasts, December’s Autumn Statement gave the Chancellor leeway to announce measures which will provide some modest support to consumers’ budgets. But this will only go some way to offsetting the …
This is a responsible package which is broadly fiscally neutral. The key message is that the UK’s fiscal consolidation still has a long way to go. … Autumn Statement 2013: Mr Osborne sticks to the …
5th December 2013
While the MPC’s communications have arguably become a little less clear over the last month or two, Committee members seem united in the fundamental belief that inflation pressures will remain subdued as the economy recovers. As such, interest rates …
CPI inflation fell sharply from 2.7% to 2.2% in October and it looks likely to fall below the 2% target soon. Past falls in global agricultural commodity prices suggest that food price inflation will ease significantly in the coming months. The …
4th December 2013
While the CIPS services survey softened slightly in November, the strength of the manufacturing and construction surveys suggests that the economic recovery is maintaining its momentum. Quarterly GDP growth in the final three months of the year could well …
New data on UK business births and deaths show that both are on the rise. With productivity growth driven largely by the impact of firms entering and exiting industries, evidence of more ‘creative destruction’ should support a revival in productivity and …
3rd December 2013
November’s BRC retail sales figures brought more evidence of a slight slowdown in the recovery in consumer spending. But retail sales should grow at a faster pace soon as the drags on consumer spending subside. … BRC Retail Sales Monitor …
With November’s Inflation Report indicating favourable prospects for growth and inflation, there is little reason for the MPC to change course on policy. And while unemployment may be falling more rapidly towards the 7% way station than the MPC expected, …
2nd December 2013
November’s CIPS manufacturing survey signals that the sector’s revival is continuing to gather pace and so should help to ease concerns that the economic recovery is entirely dependent on an unsustainable housing market boom. … CIPS Report on …
