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September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Trade …
14th October 2011
The latest regional data suggest that the northern regions of the UK have recently managed to grow at a similar, albeit sluggish, pace to those in the South. However, conditions in the northern labour and housing markets are still considerably worse than …
13th October 2011
The latest news on the labour market confirmed that the downturn in the economy is having an increasingly adverse impact on both employment and wages growth. … Labour Market Data …
August’s industrial production figures provided yet more evidence that the recent turmoil in financial markets and slowdown in the global economic recovery have taken their toll on the manufacturing sector. … Ind. Production (Aug.) & BRC Retail Sales …
12th October 2011
Despite the mixed evidence on the effectiveness of the first bout of quantitative easing back in 2009, the MPC is right to give the policy another try. It may nudge the pound lower and could have positive effects on confidence by showing that the …
11th October 2011
September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Producer Prices …
8th October 2011
The MPC’s decision to re-launch its quantitative easing programme today confirms that the Committee finally recognises that the major threat to the UK is renewed recession, not inflation. But previous experience suggests that the positive impact on the …
7th October 2011
The latest fall in the Halifax house price index seems to echo recent downbeat news on the economy. While low interest rates make judging the timing difficult, the gloomy economic outlook suggests that house prices still have some way to fall. … Halifax …
The last month has brought further confirmation that the recovery has ground to a complete halt. Quarterly GDP growth was revised down from 0.2% to 0.1% in Q2. Even that growth was dependent on rises in government spending and inventories that seem …
6th October 2011
Q2’s national accounts and September’s CIPS report on services brought further bleak news on the UK economy. Not only was the recession back in 2008/09 deeper than previously thought, but the economy is on the brink of a renewed contraction. … National …
With the news on the UK and global economies continuing to deteriorate, it is now a question of when, rather than if, the Monetary Policy Committee will restart its quantitative easing (QE) programme. While we would advocate immediate action, the …
4th October 2011
Q2’s national accounts and September’s CIPS report on services brought further bleak news on the UK economy. Not only was the recession back in 2008/09 deeper than previously thought, but the economy is on the brink of a renewed contraction. … …
The release of the quarterly national accounts this week seems likely to receive more attention than usual. Not only will the release contain the first expenditure breakdown of Q2 GDP which would normally have been published earlier, but the older GDP …
The continued weakness of the money supply figures supports the case for thinking that inflation will fall back sharply next year and therefore bolsters the arguments of those on the Monetary Policy Committee (MPC) seeking to restart quantitative easing …
30th September 2011
The unexpectedly strong rise in mortgage approvals, combined with a marginal rise in the Nationwide house price index, might suggest that the risk of further house price falls is receding. But, in our view, the increasingly fragile economic outlook still …
Renewed concerns over the UK’s fiscal position have centred on suggestions that, with less spare capacity in the economy than previously thought, the structural budget deficit is correspondingly bigger. This might suggest that the Government needs to cut …
27th September 2011
The recent weakness of the news on the domestic economy and the deterioration in the overseas outlook – particularly in the euro-zone – has made us concerned that even our bearish forecasts for UK GDP growth will not be met. As a result, we now expect …
22nd September 2011
The minutes of September’s MPC meeting strongly suggested that QE2 will be launched soon, while August’s public finances threw more doubt on the fiscal plans. … MPC Minutes (Sep.) & Public finances …
Attention has focussed in recent days on the wiggle room in the current fiscal plans for greater than currently planned public sector investment. But the Government could also boost investment without spending more public sector money by encouraging …
Last week saw a slew of news on inflation which seemed to suggest that, while it is still on course to rise over the next few months, it will drop sharply next year. Indeed, the softness of medium term indicators suggests that below target inflation will …
20th September 2011
The near-term outlook for consumer spending looks exceptionally weak. Surveys suggest that job cuts in the private sector will gather pace in the coming months. Consumer confidence fell in August from its already very low level and has therefore continued …
16th September 2011
August’s retail sales figures provided further evidence that high inflation is killing off any hope of a recovery on the high street. … Retail Sales …
None of the regions of the UK were immune from the severe economic slowdown in August. Meanwhile, public sector job cuts have hit the South West and North East particularly hard. … Regional Monitor …
15th September 2011
September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Labour Market Data …
August’s consumer prices figures brought further hope that the peak in inflation is close. Lingering inflation worries amongst some MPC members should not stand in the way of more quantitative easing for very long. … Consumer Prices …
14th September 2011
We have long argued that the MPC’s next move would be to loosen monetary policy by restarting quantitative easing (QE). But suggestions that they might do so as soon as last week always looked a bit premature. For a start, while the latest activity …
13th September 2011
August’s producer prices figures provided the strongest indication yet that cost pressures in the industrial sector have peaked. … Producer Prices …
10th September 2011
9th September 2011
We think consumer price inflation probably rebounded a touch last month, but still expect it to drop below 5% by the end of the year. As it does, policymakers are likely to start loosening controls on credit. … Industrial Production …
8th September 2011
With all of the house price data relating to August released so far reporting month-on-month falls, the evidence of renewed weakness in prices is building. Admittedly, it is too early to draw firm conclusions. But with the economic recovery stalling, we …
The economic data have weakened markedly and across the board over the last month. A weighted average of the CIPS surveys is now consistent with GDP falling on a quarterly basis again. Low consumer confidence continues to point to falls in real household …
7th September 2011
Last month’s dovish Inflation Report, the about-turn of previous would-be rate hikers and the generally gloomy tone of recent news on the global and UK economies have pushed any remaining prospect of tighter monetary policy even further into the distant …
6th September 2011
August’s CIPS/Markit report on services suggested that growth in the largest sector of the economy has slowed sharply – and has perhaps even turned negative. We continue to expect virtually no GDP growth in the rest of this year (resulting in annual GDP …
Last week’s bank lending data underlined the likelihood that ongoing constraints on the supply of lending and credit to business and households will continue to act as a major hindrance on the pace of economic recovery over the coming quarters. … Lack of …
August’s CIPS/Markit report on manufacturing brought further evidence that the slowdown in the global economic recovery is starting to hit the UK manufacturing sector hard. … CIPS/Markit Report on Manufacturing …
2nd September 2011
August’s drop in average house prices may be little more than noise in the broadly flat trend seen in recent months. But with the recovery faltering and consumer confidence weakening it could also signal the start of a renewed period of house price falls. …
Monetary indicators continue to suggest that underlying inflationary pressures are pretty weak. Meanwhile, firms have continued to pay down their debts, suggesting that business investment is unlikely to support the economic recovery in the coming months. …
31st August 2011
Hopes were raised last week that the manufacturing recovery, which had been slowing since the spring, might have regained a bit of pace in August. We are not so convinced, however, that the manufacturing sector is over the worst, for three reasons. … Is …
30th August 2011
House prices are likely to end 2011 in line with, or marginally lower than, last year. That will do little to alleviate the extent to which housing is overvalued. Against this backdrop, and with the economic outlook characterised by weak growth and …
27th August 2011
Given that the £75bn of asset purchases announced in October has not been completed yet, today’s decision by the MPC to leave policy unchanged was unsurprising. However, the Committee has sent some strong signals that further quantitative easing (QE) is …
26th August 2011
Creating more favourable conditions for private sector investment is just one of the ways in which the Government could help the economy to survive the fiscal squeeze without actually rowing back on its austerity plans. But with the recovery already …
25th August 2011
One puzzle during the recent recession was the way in which retail sales held up so well relative to overall consumer spending. But we find it hard to justify why retail should continue to prove this resilient and expect retail sales to fall over the next …
23rd August 2011
Last week’s flurry of data releases underlined the mounting pressures on households’ finances. These pressures only look set to intensify in the coming months as inflation rises further and unemployment continues to rise. … Rising inflation and …
20th August 2011
The outlook for consumer spending is perhaps the gloomiest it has been since the darkest days of the recession. Consumer confidence dropped to near rock-bottom levels in July. It probably even fell further in August, driven down by the drop in equity …
19th August 2011
Ireland’s robust rebound in economic output so far this year does not appear to have meaningfully improved the health of Dublin’s commercial property occupier markets. Although rents may now have stabilised, it will be some time before they begin to …
The latest regional indicators suggest that the North-South economic divide has continued to widen, with a pick-up in output growth in the South – particularly in London – failing to broaden out to the northern regions of the UK. That said, recent labour …
18th August 2011
August’s MPC minutes and the latest labour market data strongly supported the markets’ (and our own) assumption that interest rates will remain on hold for at least the next couple of years. … MPC Minutes (Aug.) & Labour market …
July’s consumer prices figures confirmed that June’s surprise drop in CPI inflation was just a blip. But the fact that the rise last month was driven by a pick-up in the core rate does not mean that inflation will be slow to fall next year. … Consumer …
17th August 2011
It is often assumed that the fiscal squeeze is driving the current weakness of consumer spending and that government measures – such as a VAT cut – are all that are needed to get the consumer recovery back on track. But real pay began to fall long before …
16th August 2011
