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The rise in oil prices has brought the recent downward trend in CPI inflation to a halt. But we doubt it will be too long before inflation starts to drift down again. … Consumer Prices & Producer Prices …
13th June 2018
Another strong set of employment figures in April suggests that firms remain positive about the outlook for demand despite the economy going through a soft patch at the start of the year. … Labour Market …
12th June 2018
The early hard data for Q2 will have done little to reassure the Monetary Policy Committee (MPC) that the slowdown in Q1 will prove temporary. But the surveys suggest that some rebound is in store. … Industrial Production, Construction & Trade …
11th June 2018
The EU has shunned the Government’s backstop proposal for the whole of the UK to remain in the EU’s customs territory at the end of the transition period. It seems to us that this forces the Government into a straight choice between accepting the need for …
8th June 2018
Economic growth of 0.4% or so in Q2 – as suggested by the latest business surveys – would normally be pretty respectable. But coming after Q1’s snow-related slowdown, it looks a little soft. What’s more, if growth has been boosted by some “catch-up” after …
The news on the economy has improved considerably over the past few weeks. Indeed, May’s PMI surveys suggest that GDP growth could accelerate to 0.4% or so this quarter, up from 0.1% in Q1. Meanwhile, the retail sales, consumer credit and consumer …
5th June 2018
May’s Markit/CIPS report on services provides us with further reassurance that the weakness in GDP growth in Q1 will prove temporary and increases the chances of the MPC pressing ahead with an interest rate hike in August. … Markit/CIPS Services PMI …
May’s BRC Retail Sales Monitor reported the strongest year-on-year increase in sales in over a year, suggesting that consumers are embracing the end of the real pay squeeze. … BRC Retail Sales Monitor …
While the fall in gilt yields over the past fortnight partly reflects an increase in safe haven demand, expectations for future interest rates have also slipped back. It seems unlikely, though, that an increase in euro-zone tensions will alter the …
1st June 2018
May’s Markit/CIPS manufacturing survey suggests that the sector is putting in a strong performance in Q2, after the poor start to the year. … UK Markit/CIPS Manufacturing PMI …
Unsecured lending to households rebounded in April, providing some reassurance after the unusually small rise in March. That chimes with other evidence that a consumer revival is in the pipeline. … Household Borrowing Monitor …
31st May 2018
May’s GfK/NOP survey showed that consumers are still in pretty good spirits, providing some reassurance that the economy got back on track again in Q2 after the weak start to the year. … GfK/NOP Consumer Confidence …
Fears that the recent rise in oil prices will severely dampen consumer spending are probably somewhat overdone. Indeed, even if oil prices remain at current levels, higher inflation would eat into real wage growth only marginally and the direct impact on …
29th May 2018
Annual consumer spending growth ground to its slowest pace in six years in Q1. Alongside a string of weak early indicators of spending in Q2, that called into question our forecast of a rebound in spending growth over the course of the year. Indeed, there …
25th May 2018
While today’s figures confirmed that the economy slowed sharply in Q1, we doubt that this will prevent the MPC from raising rates again in August. … GDP Second Estimate …
The strong rebound in retail sales in April provides encouragement that consumer spending growth has regained some pace after the weather-related weakness in Q1. … Retail Sales …
24th May 2018
The pick-up in the CBI Distributive Trades Survey in May suggests that the recent weakness in retail sales is abating. And with real wages rising again, we are upbeat about the prospects for consumer spending growth over the rest of the year. … CBI …
23rd May 2018
The recent rise in oil prices did not stop CPI inflation from taking another step down in April. But we doubt that inflation’s fall significantly reduces the chance of an interest rate hike in the near future. … Consumer Prices & Producer Prices …
While the beneficial effects on exports of the pound’s depreciation may now be fading somewhat, it is too early to conclude that the sterling boost to growth is over. … Is the sterling boost …
22nd May 2018
The CBI Industrial Trends Survey suggests that the manufacturing sector has failed to regain momentum so far in Q2 after the poor start to the year. But with firms’ expectations for output ahead picking up strongly, the recovery in manufacturing has some …
April’s public finances figures have got the new fiscal year off to a good start and might give the Chancellor a bit more wiggle room to loosen the purse strings in the Autumn Budget. … Public Finances …
This week’s figures suggested that the labour market is in rude health. Admittedly, some of the timelier measures of employment growth have started to weaken. And with the labour market now exceptionally tight, some slowdown in employment growth looks …
18th May 2018
The bout of softer-than-expected inflation and activity data which caused the MPC to step back from hiking Bank Rate in May is certainly reason for caution. But like the MPC, we think that temporary factors were behind the slowdown, and suspect that …
17th May 2018
The Monetary Policy Committee’s latest inflation forecasts imply that UK interest rates will remain substantially below US rates for the foreseeable future. But there are reasons why the gap may not be as wide as the projections suggest. … Why the MPC …
March’s labour market figures provide us with optimism that sustained rises in real pay are in prospect and will place more pressure on the MPC to hike interest rates soon. … Labour Market …
15th May 2018
After the sea of downbeat economic news in recent weeks, the Monetary Policy Committee (MPC)’s decision to keep rates unchanged at its meeting in May came as little surprise. Of course, the MPC’s decision to hold fire largely reflected a desire to confirm …
11th May 2018
While the MPC thinks that the economy’s slow start to the year should prove temporary, it sees the costs of waiting a few more months to be sure as being relatively low. As a result, we still expect the next hike in interest rates to come in August. And …
10th May 2018
March’s activity figures did little to support suspicions that the overall economy grew a bit more quickly in the first quarter than the preliminary GDP figures suggest. … Industrial Production, Construction & Trade …
While Easter timing effects dragged down sales growth in April, the underlying trend does not look particularly strong. Nonetheless, with employment growth still solid and real wages now on the rise, the outlook for consumer spending over the rest of this …
9th May 2018
The slowdown in quarterly GDP growth in Q1 begs the question whether the economy is too fragile to withstand a tightening in monetary policy anytime soon. But the slowdown was almost entirely due to weakness in the construction sector, which was buffeted …
4th May 2018
After a disappointingly-weak Q1, the economy looks to have made a pretty slow start to Q2. Admittedly, the measly 0.1% expansion in GDP in Q1 was partly due to weather effects. However, there are signs that the economy has lost some underlying momentum. …
3rd May 2018
A string of weak economic data, as well as comments by Governor Carney, have all but ruled out another interest rate hike on 10th May. Indeed, the MPC is likely to err on the side of caution until it is confident that the recent softening in the data is …
The slight pick-up in the services PMI in April will do a little to assuage fears that the economy has suffered a loss of underlying momentum and makes the chance of an interest rate hike next week extremely slim. Nonetheless, with wage pressures …
Local elections tend not to be a big deal, at least from an economic perspective. Turnout is typically low, and many voters are swayed by local issues. Nonetheless, given the fragile political situation and the possibility of a general election occurring …
2nd May 2018
Unsecured lending to households ground to a halt in March, raising concerns of a sharp pull-back in consumer spending growth. But other indicators suggest that the slowdown in lending will prove temporary. Meanwhile, mortgage approvals fell back, and …
1st May 2018
The latest Markit/CIPS Manufacturing Survey suggested that the sector struggled to re-gain much momentum at the start of Q2. Meanwhile, the Bank of England’s Money and Credit figures revealed a worrying slowdown in consumer credit. This further reduces …
This week’s public finances figures showed that borrowing for the full 2017/18 financial year came in at £42.6bn, a whopping £16bn lower than that predicted by the Office for Budget Responsibility (OBR) this time last year. And this is despite the fact …
27th April 2018
While weaker-than-expected GDP growth in Q1 largely reflects the severe weather, and so should be transitory, it is probably the final nail in the coffin for an interest rate hike in May. However, a recovery in real pay should put the economy on a firmer …
April’s GfK/NOP survey suggested that consumers have become a little less optimistic at the start of Q2. But with real wages set to rise again in the coming quarters, there is scope for confidence and spending growth to regain some momentum. … GfK/NOP …
The pick-up in the CBI Distributive Trades Survey in April suggests that March’s weakness was largely a reflection of the severe weather conditions. And with real wages now on the rise, the outlook for consumer spending growth over the rest of the year is …
26th April 2018
Governor Carney’s comment that the MPC will decide whether or not to increase Bank Rate in May "conscious that there are other meetings over the course of this year" suggests that he wants to hold off tightening policy until it is clear the recent patch …
25th April 2018
Despite coming in a touch below expectations, the headline total orders balance of the CBI Industrial Trends Survey points to the manufacturing sector sustaining its recent expansion. However, a rebound to quarterly growth rates of over 1% isn’t on the …
24th April 2018
March’s public finances figures will come as welcome news to the Chancellor and further increases the scope for the Chancellor to ease back on austerity in the Autumn. … Public Finances …
On the face of it, the fall-back in inflation in March has reduced the chances of a hike in interest rates in May. And Governor Carney’s comments appear to add weight to this view. However, an argument could be made that falling inflation might actually …
20th April 2018
Abstracting from the effects of the snow, the big picture remains one of pretty feeble high-street activity. But we doubt consumer spending growth will weaken further. CPI inflation now appears to be on a firm downward trajectory. And there have been …
19th April 2018
March’s retail sales figures were always likely to be weak after the unusually bad weather at the start of the month. And with the bulk of the lost spending likely to be made up, the bad news shouldn’t last long. … Retail Sales …
While the bigger-than-expected fall in inflation in March means that another hike in interest rates in May is now less clear cut, we nonetheless think that it remains more likely than not. … Consumer Prices & Producer Prices …
18th April 2018
February’s labour market figures provide us with optimism that sustained rises in real wages are now in prospect and should seal the deal on another interest rate hike in May. … Labour Market …
17th April 2018
The recent run of weak data suggests that a hike in Bank Rate, to 0.75% in May, is far from a done deal. But we don’t think that a May hike is now off the table. Some of the unexpected weakening in this week’s activity data reflects temporary factors. And …
13th April 2018
February’s activity data added to the evidence that the economy lost a little pace in Q1. But we don’t think that this will prevent the Monetary Policy Committee from raising interest rates again in May. … Industrial Production, Construction & Trade …
11th April 2018
