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The upbeat tone of August’s CBI Distributive Trades Survey provided an encouragingsign that the consumer recovery has continued apace in Q3. And looking ahead, therecent fall in commodity prices should provide a further boost to spending. … CBI …
26th August 2015
Although the UK has clearly been caught up in the recent meltdown in global financial markets, we doubt that it will knock the economic recovery off course. That said, it provides the more cautious members of the MPC with another reason to hold fire on …
25th August 2015
The FTSE 100’s sharp decline last week, leaving it 10% below its peak in April, certainly won’t lift consumers’ spirits but it is unlikely to be large enough to dissuade them from continuing to spend more either. The relationship between equity prices and …
21st August 2015
July’s public borrowing figures showed that the public finances are now benefitingfully from the economic recovery’s strength. But at this early stage of the fiscal year,it is too soon to conclude that the second phase of the fiscal squeeze is going to …
July’s retail sales figures showed that the pace of spending growth on the high street moderated at the beginning of Q3. But we doubt that this signals a more widespread slowdown in the consumer recovery. … Retail Sales …
20th August 2015
The decline and underperformance of the FTSE 100 has not reflected building concerns about the UK’s economic outlook but rather the impact of recent events in China. The FTSE 100 is comprised to a greater extent than most other advanced economy benchmarks …
19th August 2015
The small rise in CPI inflation from 0% to 0.1% in July merely reflected the slightly earlier conclusion of summer discounting of clothing this year compared to last and so has little bearing on the likely timing of the first interest rate rise. …
18th August 2015
Headlines have recently been captured by last week’s shock move by the People’s Bank of China to lower the daily reference rate for the renminbi . However, we doubt that this will have much bearing on either the economic recovery, or the outlook for …
14th August 2015
CPI inflation probably held steady at zero in July, but the recent fall in oil prices suggests that the UK is likely to experience another bout of negative inflation before the end of the year. Meanwhile, domestic price pressures are still weak, …
The latest labour market figures supported the current consensus view on the Monetary Policy Committee that interest rates do not need to rise before the end of the year. … Labour market data …
12th August 2015
This report is only available as a PDF. Click to download. … BRC Retail Sales Monitor (Jul.) …
11th August 2015
Once again, the Monetary Policy Committee (MPC) surprised many by the extent of its downward revision to the inflation forecast in its latest Inflation Report and the Governor poured cold water on speculation that interest rates would rise before the end …
7th August 2015
The widening of the trade deficit in June is likely to be the start of a further deterioration in coming months, thanks to the stronger pound and the weakness of demand in the euro-zone. … Trade …
The ‘Super Thursday’ releases from the MPC suggested that an interest rate rise is still not imminent. The Committee wants to be cautious and wait for price pressures to emerge before pressing the lift-off button. So with a renewed period of deflation …
6th August 2015
June’s industrial production figures highlighted that the strong pound and weak overseas demand held back the manufacturing sector’s recovery in the second quarter. And the prospects for the rest of this year remain quite bleak. … Industrial Production …
The UK is heading for a renewed period of deflation. The fall back in oil prices to below $50 per barrel will bear down on petrol prices soon. In addition, sterling has continued to appreciate and on a trade-weighted basis it is now 18% higher than it was …
5th August 2015
The slight deterioration in July’s Markit/CIPS services survey is unlikely to dissuade two or three members of the Monetary Policy Committee (MPC) from voting to raise interest rates at this week’s meeting. … Markit/CIPS Report on Services (Jul.) & GDP …
July’s Markit/CIPS manufacturing survey suggested that the sector has struggled to regain traction at the start of Q3, after a poor showing in Q2. And the prospects for the industrial recovery over the rest of this year remain fairly bleak too. … …
3rd August 2015
Last week’s GDP figures indicated that the economic recovery has passed another milestone, namely that GDP per capita is now back to its pre-crisis levels. Admittedly, it has taken an extremely long time by past standards to reach this point. But …
31st July 2015
The GfK consumer confidence survey softened in July, but remained high by historical standards. This suggests that the consumer recovery still has plenty of momentum and that household spending should continue to grow solidly in the near term. … GfK/NOP …
This month’s MPC vote will probably be split for the first time this year. While only a minority will vote for a rate rise, the risk of a hike this year has risen. Indeed, Mark Carney will probably use the Inflation Report to continue to prepare …
30th July 2015
Despite softening a little, July’s CBI Distributive Trades Survey nonetheless remained robust and the big picture is that retail sales volumes still seem to be growing at a fairly healthy rate. … CBI Distributive Trades Survey …
29th July 2015
June’s money and credit figures showed a further pick-up in lending to households and the housing market recovery regaining some momentum. But there is little to suggest that consumers are embarking on a borrowing “binge”. As such, the Monetary Policy …
The first estimate of GDP in Q2 confirmed that the economic recovery got back on track after its slowdown at the start of the year. On the face of it, this could bring an interest rate rise closer, but we think that there is plenty of scope for the …
28th July 2015
July’s CBI Industrial Trends Survey provided more evidence that the strongerpound has snuffed out the recovery in the manufacturing sector. … CBI Industrial Trends Survey (Jul. & …
27th July 2015
The preliminary estimate of Q2 GDP on Tuesday looks set to show that the economic recovery has re-gained some momentum. However, the recent strength of the survey data has not been borne out fully in the official data that has already been released. …
24th July 2015
Households are continuing to see substantial increases in their purchasing power. Annual growth in average weekly earnings (excluding bonuses) picked up from 2.7% in April to 2.8% in May, well above the near zero rate of CPI inflation. What’s more, survey …
23rd July 2015
The weaker tone of June’s retail sales figures does not alter the big picture that the consumer recovery remains in full swing. And with the UK set to experience another period of “good” deflation, the prospects for the second half of this year are …
The minutes of July’s MPC meeting gave strong hints that at least a couple of members are on the brink of voting to raise Bank Rate. Undeniably, the probability of a 2015 rate rise has grown over the last month. But on balance, we still think that …
22nd July 2015
While June’s public finances brought less encouraging news on the pace of deficit reduction, there is no need for the Chancellor to panic yet. Indeed, robust growth in tax receipts suggests that the public finances are starting to feel the full benefits …
21st July 2015
Interest rate expectations and the pound have both risen over the last month as stronger pay figures and signs that the US Fed is just a couple of months away from raising interest rates have bolstered expectations that the MPC could follow suit about the …
17th July 2015
The surprise rise in unemployment revealed by last week’s labour market figures might be just a blip. However, the fact that both main measures of unemployment rose makes it harder to dismiss this as just volatility in the data. And the pace of claimant …
The soft tone of the labour market figures should temper expectations of a near-term interest rate rise following yesterday’s relatively hawkish comments by some MPC members. Although the fall in unemployment may be a one-off, slower jobs growth would be …
15th July 2015
June’s consumer prices figures showed that the UK is continuing to benefit from a period of very low inflation brought on by lower energy and import prices. There are still no signs that low inflation reflects a more general economic malaise. … Consumer …
14th July 2015
June’s BRC retail sales figures suggest that consumer spending made another chunky contribution to GDP growth in the second quarter. What’s more, rising real incomes and strong confidence should continue to buoy the consumer recovery. … BRC Retail Sales …
Despite being unshackled from the constraints of the coalition, the Chancellor chose pragmatism over ideological fervour in last week’s Budget. As well as easing the pace at which borrowing is set to fall over the coming years, he pushed through net tax …
10th July 2015
Good news on the trade deficit in May was tempered by signs the construction sector’s recovery is struggling to get back on track. But since both sets of statistics are erratic, we would caution against concluding that net trade will be a sustained source …
The Summer Budget confirmed that consumers face an imminent ramping-up of the fiscal squeeze. But there are still reasons to remain optimistic that the recovery in spending won’t be derailed. … Can the consumer recovery survive a renewed fiscal …
9th July 2015
Despite the Chancellor’s decision to smooth the fiscal squeeze in yesterday’s Budget, the Monetary Policy Committee (MPC) is likely to continue to keep interest rates on hold until next year. Austerity will still be a big drag on the economy over the next …
May’s industrial production figures provided further reassurance that the economic recovery managed to gather pace in the second quarter despite the stronger pound and euro-zone debt crisis. … Industrial Production …
7th July 2015
As far as the UK is concerned, the main point to take from last week’s Greek developments wasthat there are still limited signs of contagion to the rest of the euro-zone. So far, so not-too-badthen, although we will wait to see how this week’s instalment …
3rd July 2015
The latest labour market data provided further evidence that the recovery in wages now has momentum. Indeed, the headline (three-month average of the annual) growth rate in average weekly earnings picked up to 2.7% in April, the strongest since August …
June’s Markit/CIPS report on services provided further reassurance that the slowdown in GDP growth in Q1 was just temporary and that the Greek crisis has so far had little bearing on the recovery’s overall pace. … Markit/CIPS Report on Services …
There is probably a greater chance of Angela Merkel becoming Prime Minister of Greece than the MPC raising interest rates this month. And while a couple of MPC members look set to respond to the recent pick-up in earnings growth by voting to hike rates …
2nd July 2015
June’s disappointing Markit/CIPS report on manufacturing suggested that the industrial side of the economy is playing no role in the economic recovery at themoment – indeed, it may even have dragged on overall GDP growth in the second quarter. But this …
1st July 2015
The household spending recovery is doing even better than was previously estimated. Admittedly, spending has recently been driven by falling saving. But it should not be long until the spending recovery is built on firmer foundations. … Consumer …
30th June 2015
The national accounts showed that the recovery has more momentum than previously thought. And while the fall in household saving and huge current account deficit suggested that recent growth has relied on some temporary props, we remain confident that the …
The upbeat tone of June’s GfK consumer confidence survey suggests that household spending should continue to grow robustly in the near term and is another reason to think that the overall economic recovery got back on track in Q2. … GfK/NOP Consumer …
May’s fairly weak household borrowing figures provided further reassurance that therecovery in household spending is not founded upon an unsustainable pick-up incredit growth and is another reason to think that the Monetary Policy Committee canwait until …
29th June 2015
Given the air of uncertainty hanging over Europe, it is perhaps surprising that markets haverecently brought forwards their expectations for the timing of the first hike in official interest ratesin the UK. This is partly in response to MPC member Martin …
26th June 2015
