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The unexpected slide in oil prices last week, to a six-year low of about $40pb, has left most forecasters once again pulling down their CPI inflation projections and has led some to speculate that this could delay the first rate hike. The fall in oil …
11th December 2015
November’s consumer prices figures look likely to show that the UK’s brief period of negative inflation has now come to an end. What’s more, although oil prices have fallen further in December, we think that inflation will continue to drift up over the …
The MPC’s decision to leave interest rates on hold again today highlights how the UK is set to tread the middle path between a loosening ECB and a tightening US Fed. A further fall in oil prices and a flattening in wage growth – which should keep …
10th December 2015
October’s dismal trade figures provided further signs that the economic recovery has remained worryingly unbalanced in the fourth quarter. And the prospects for exports further ahead remain pretty dim too. … Trade …
The Autumn Statement took the Conservatives’ planned path for departmental spending another stepcloser to Labour’s manifesto plans. Admittedly, the overall fiscal consolidation this parliament is set tobe bigger than the Conservatives planned before the …
9th December 2015
It now looks odds on that the US Federal Reserve presses ahead and raises interest rates next week, while on the other side of the English Channel, the ECB has already loosened policy further. The UK lies somewhere in between, with the next move in …
After a torrid year so far, October’s industrial production figures suggest that theUK manufacturing sector should end the year in better shape. … Industrial Production …
8th December 2015
The growing prevalence of Black Friday failed to provide much of a boost to retail sales in November. It appears sales were just shifted from the start to the end of November to take advantage of discounts. That said, looking though some of the …
There was much talk about the emerging “transatlantic divergence” last week. It now looks odds on that the US Fed will press ahead and raise interest rates later this month. Meanwhile, on the other side of the English Channel, the European Central Bank …
4th December 2015
The UK economy appears to be regaining a little momentum, but the nature of the recovery is looking quite unbalanced. The breakdown of Q3’s 0.5% quarterly rise in real GDP showed solid growth in domestic demand, but a 1.5 percentage point drag from net …
3rd December 2015
And so another year of rock bottom interest rates is set to pass us by. It is getting on for seven years since interest rates reached 0.5% and it is over eight years since we saw an interest rate rise. So will 2016 be the year in which rates finally rise? …
The improvement in the Markit/CIPS services survey in November reinforces our view that the economy will reverse its temporary slowdown seen in Q3 and offsets the slowing in the manufacturing and construction sectors. … Markit/CIPS Report on Services …
While monetary policy looks set to start moving in opposite directions in the US and euro-zone very soon, no change looks likely in the UK in the near future. Sterling is therefore likely to be caught in the crossfire, keeping the trade-weighted index …
2nd December 2015
Although the Chancellor is probably still running high from last week’s surprise windfall from the Office for Budget Responsibility (OBR) at the Autumn Statement, he should be wary. There are various ways which the new forecasts could prove too …
We got close to finally seeing some action from the Bank of England today. But in the event, the latest Financial Stability Report only prepped the ground for action from the Financial Policy Committee (FPC) further ahead. What’s more, it’s clear that the …
1st December 2015
The fall-back in the Markit/CIPS manufacturing survey in November shows that while there may be signs of improvement in the manufacturing sector, it still faces significant challenges. … Markit/CIPS Report on Manuf. …
Household borrowing figures for October demonstrated that households continue to drive the UK recovery. While the figures probably don’t have any implications for the interest rate outlook, they may add to the evidence on the need for macro-prudential …
30th November 2015
The Chancellor’s surprise windfall from the Office for Budget Responsibility (OBR) allowed him to do everything he wanted in last week’s Spending Review and Autumn Statement – and more. Indeed, it is rather peculiar how fiscal policy is being driven by …
27th November 2015
The second estimate of Q3 GDP confirmed that growth in the UK slowed and was relatively unbalanced. That said, we believe that this slowdown will be temporary but that these imbalanced may persist. … GDP: Second Estimate & Expenditure Breakdown …
We doubt that the fall in confidence in November is a sign that the pace of the consumer recovery is unwinding. The headline balance remains strong on a historical basis, and other elements of the GfK survey provided reassuring signs too. … UK Consumer …
We could finally see some policy action from the Bank of England next week – but not in the form of a tightening in monetary policy. The Financial Policy Committee (FPC) may flex its muscle by using some of its macroprudential tools to keep a check on the …
The measures announced in the Autumn Statement should provide a small boost to consumers’ incomes next year relative to the July Budget. But at just 0.2% of nominal income, it is unlikely to be transformative. And the big picture is still that the fiscal …
26th November 2015
This checklist is intended to help clients keep track of the important measures and numbers announced during the Autumn Statement and Spending Review at 12.30pm and to provide some instant context. For a more detailed look at our expectations, please see …
25th November 2015
Heavy discounting on the high street and online on Black Friday is likely to provide a bigger boost to spending this year than last. What’s more, the rise in real earnings, confidence and employment over the past twelve months should mean that spending …
24th November 2015
November’s CBI Distributive Trades Survey makes for somewhat disappointing reading. But mild weather and distortions related to Black Friday may have dragged on the headline figure, suggesting a bounce-back next month may be on the cards. … CBI …
The release of the UK and US inflation figures last week provided a reminder of why the MPC is likely to raise interest rates later than the US Fed. Inflation rates in both economies will pick up fairly notably over the next few months as previous sharp …
20th November 2015
October’s public finance figures suggest that borrowing has not fallen as quickly as the OBR predicted, leaving the Chancellor with less room for manoeuvre in his Autumn Statement on 25th November. … Public Finances …
The underlying picture for household spending remains positive. Real household spending in Q3 looks likely to have grown by around 0.8% q/q, the rate seen in Q1 and Q2. And while retail sales volumes fell in October and private new car registrations were …
19th November 2015
UK retail spending fell slightly in October. But, more importantly, sales held onto most of the strong gain seen in September. … Retail Sales …
Financial markets still do not expect interest rates to rise until the end of 2016. While we agree that interest rates will rise very slowly, we expect the first rise to come sooner, probably in the middle of next year. After all, the MPC’s Inflation …
17th November 2015
October’s -0.1% rate of CPI inflation could be the last we see of deflation for now, although we don’t think inflation will reach the 2% target until 2018. … Consumer Prices & Producer Prices …
We have known for some time the Government’s broad objectives for its negotiations with the EU and David Cameron’s letter last week to the European Council President Donald Tusk contained little further detail. Perhaps the most notable development for the …
13th November 2015
After returning to negative territory in September, CPI inflation looks set to slip further below zero in October. While inflation looks odds on to post its lowest rate since March 1960, we do not think this decline will worry the MPC too much, with weak …
Labour market activity is still looking quite healthy. But the slowdown in wage growth in the latest figures confirmed that an interest rate rise is still some way off. … Labour market data …
11th November 2015
The significant fall in the BRC Retail Sales Monitor in October reflected temporary factors in both the current and previous months. The underlying picture is more positive, with support from solid real earnings growth, ultra-low interest rates and …
10th November 2015
Downgrades to the Bank of England’s inflation projections in its Inflation Report last week were widely anticipated. Nonetheless, sterling’s tumble against the dollar and the euro after its release suggests that the “Super Thursday” announcements from the …
6th November 2015
September’s trade and industrial production figures provide further signs that the UK’s economic recovery remained unbalanced in the third quarter. … Industrial Production & Trade …
The “Super Thursday” announcements from the MPC were on the whole quite dovish, with the Committee signaling that it is still in no hurry to raise interest rates. We remain comfortable with our view that rates will not rise until Q2 of next year. … MPC …
5th November 2015
Spending on cars has been cruising along nicely. But we doubt it will provide as much of a boost to consumer spending in coming years, particularly as temporary sources of support, such as pent-up demand and payment protection insurance (PPI) repayments …
The latest business surveys support our view that the slowdown in the economy in Q3 was just temporary. Gains in both the Markit/CIPS manufacturing and service sector PMIs in October left the economy-wide composite PMI looking consistent with quarterly …
4th November 2015
The slight bounce-back in the Markit/CIPS services survey in October brought moree vidence of what we expect will be a rebound in growth in Q4, after the slowdown in Q3. … Markit/CIPS Report on Services …
The improvement in the Markit/CIPS manufacturing survey in October suggests that output in the manufacturing sector has regained some vigour going into the final quarter of 2015. … Markit/CIPS Report on Manuf. …
2nd November 2015
Mr Osborne has various options to soften the impact of his cuts in tax credits, but all of them will cost him some money. Admittedly, this might “only” be a couple of billion for a couple of years. But it does not come at a helpful time, given that …
30th October 2015
On the face of it, the dip in October’s GfK consumer confidence survey suggests that the consumer recovery may be running out of steam. But with the headline balance high by past standards and consumer fundamentals still strong, we remain optimistic that …
Although the October CBI Distributive Trades Survey indicated a substantial slowdown in retail spending growth compared to September, we do not take it as a sign that the consumer recovery is headed for a slowdown in Q4 and beyond. In fact, the …
29th October 2015
Growth in household borrowing strengthened in September, supporting the ongoing recovery. And although mortgage approvals fell back, we believe this is a temporary blip with fundamentals still supportive of growth going forward. … Household Borrowing …
We expect mixed messages from this month’s Inflation Report. On the one hand, a lower profile for inflation over the next few months is likely to confirm that interest rates will not rise until well into next year. But on the other hand, the MPC will …
The preliminary estimate of GDP confirmed that the economic recovery cooled in the third quarter. We think that this will be only temporary. Nonetheless, the news clearly further reduces the chances of an interest rate rise in the near future. … …
27th October 2015
The CBI Industrial Trends Survey for October and Q4 highlighted the woes of the manufacturing sector. And the near-term prospects remain dim. … CBI Industrial Trends Survey (Oct. & …
26th October 2015
Although he said that it would be “a bit of a yawner”, Bank of England Governor Mark Carney’s speech on the UK’s membership of the EU contained something for both the pro- and anti-Europe camps to seize upon (with arguably more for the pros). Mr Carney’s …
23rd October 2015
