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September’s strong CIPS report on services provided reassurance that the fall in the manufacturing PMI was not symptomatic of a wider malaise and that the recovery will remain fairly strong over the next year, despite some intensifying headwinds. … …
3rd October 2014
With both current and pipeline price pressures easing, the housing market cooling further and the international environment souring over the last month, it seems unlikely that any other MPC members will join the minority of two already voting to raise …
2nd October 2014
September’s CIPS manufacturing survey provided another sign that the sector’srecovery lost some vim in the third quarter. However, we doubt that this summer’ssoftening marks the beginning of a prolonged slowdown. … Markit/CIPS Report on Manufacturing …
1st October 2014
Revisions have left the recovery in household spending since 2009 looking a little less strong thanpreviously thought. Nonetheless, recent spending growth remains robust by past standards and thedrivers of spending look set to become more sustainable. … …
30th September 2014
The significant revisions to the UK’s national accounts have not changed the fundamental picture that the economy’s performance since the recession began in 2008 has been very weak by historical and international standards. … National Accounts & Balance …
August’s household borrowing figures provided further evidence that the recovery isnot being driven by an unsustainable credit binge. And while mortgage lending shouldpick up as the economic backdrop improves, only a gradual revival seems likely. … …
29th September 2014
The continued weakness of growth in broad money and bank lending provides more evidence that the low level of interest rates is not causing the economy to overheat. … Monetary Indicators Monitor …
With the party conference season in full swing, attention has turned from the Scottish referendum to the main parties’ plans for fiscal policy in the next parliament. But while their new pledges may sound prudent, the reality is that they will do little …
26th September 2014
Since the Monetary Policy Committee (MPC) is probably only a few months away from starting to raise interest rates, gilt yields are likely to depart from their three decade long downward trend soon. Even so, there is still scope for gilts to outperform US …
25th September 2014
September’s CBI Distributive Trades Survey provided another encouraging sign that the continued weakness of wages has not prevented the recovery in retail sales from remaining robust. … CBI Distributive Trades Survey …
Some argue that interest rates should be raised swiftly to purge so-called “zombie” firms with low productivity. But in reality, there are few zombies and their productivity will rise as demand picks up. Punishing the rest of the economy with higher rates …
23rd September 2014
Significant methodological changes have not altered the fact that the coalition is still struggling to bring the deficit down as quickly as planned. But there are reasons to think that the borrowing trend will improve in the second half of the fiscal …
With real wages still falling, proposals to raise the national minimum wage (NMW) look set to play a key role in political parties’ general election campaigns. But given the likely adverse effects on inflation, interest rates and employment, large rises …
22nd September 2014
The absence of a major relief rally following Scotland’s rejection of independence confirms that the markets only ever placed a very small probability on a ‘Yes’ vote. Although interest rate expectations and sterling both edged up following the result, …
19th September 2014
The near-term outlook for the economy on both sides of the Scottish border has brightened following Scotland’s decision to remain part of the UK. But despite the ‘No’ vote, the UK economy will continue to be buffeted by uncertainty about its political …
The official data and survey evidence have been unequivocal in suggesting that the recovery in consumer spending has remained robust over the last few months. Admittedly, some of the existing supports to growth in consumer spending may fade soon. …
18th September 2014
August’s retail sales figures showed that the recovery in consumer spending still has momentum despite the continued real pay squeeze and looming interest rate hikes. … Retail Sales …
The minutes of September’s MPC meeting struck a fairly dovish tone, while the continued weakness of average earnings growth has bolstered the case for keeping interest rates on hold over the coming months. … MPC Minutes (Sep.) & Labour Data …
17th September 2014
August’s consumer prices figures confirmed that CPI inflation has remained on a downward trend despite the economic recovery’s strength. Looking ahead, we continue to think that it could fall to as low as 1% by the end of this year and will remain below …
16th September 2014
While the recent fall in the pound against the US dollar has been put down to the heighteneduncertainty over the Scottish referendum result, most of the drop has actually been driven by a shiftin interest rate expectations compared to those in the US. … …
12th September 2014
There is much that the Scots could learn from their Celtic neighbours. Irish independence is a story ofeventual, not immediate success. It took nearly 80 years for Irish per capita income to catch up withthe UK’s. It grew rapidly during the “Celtic Tiger” …
While retailers still face an uphill battle to attract consumers back from online shopping, recent signs suggest that shoppers may be gradually heading back into town. Retailers also seem likely to receive support from government policies and wider …
10th September 2014
July’s industrial production and trade figures provided tentative indications that the UK’s strong and stable economic recovery has continued into the third quarter of the year. … Industrial Production & Trade …
9th September 2014
August’s strong BRC Retail Sales Monitor provided an encouraging sign that the recovery in consumer spending has maintained plenty of momentum. Moreover, the prospects for consumer spending towards the end of this year look bright too. … BRC Retail …
UK markets have pushed back their expectations for the timing of the first interest rate hike to the second quarter of 2015, even though the latest surveys suggest that the recovery has remained strong in Q3 and two members of the MPC are now voting to …
8th September 2014
Last week’s revised GDP estimates were seemingly all things to all men, supporting political parties’ views and every economist’s forecasts for interest rates and fiscal policy. In reality, the new figures have neither transformed the economic landscape …
5th September 2014
The recent weakness of inflation and wages alongside the cooling of the housing market suggests that the number of MPC members voting to keep interest rates on hold at today’s meeting is unlikely to have declined. And with inflation set to ease further, …
4th September 2014
Since early 2013, the UK has enjoyed a remarkable period of steady growth reminiscent of the ‘Great Moderation’ in the 1990s and early 2000s. While we doubt GDP growth will remain quite so stable in the coming years, macroeconomic volatility seems likely …
While the economic recovery has remained strong, there is still little sign that inflationary pressuresare emerging. CPI inflation was just 1.6% in July and the recent decline in import prices, fall in oilprices and continued weakness of both …
3rd September 2014
The strengthening of the CIPS/Markit services survey in August provides reassurancethat the economic recovery is not losing pace. Meanwhile, although revised GDPfigures show that the recession was shallower and the recovery stronger than thoughtbefore, …
The latest CIPS manufacturing survey provided another sign that the sector’s recovery is struggling to maintain its momentum in the third quarter. However, it still looks on track to enjoy a solid recovery over 2014 as a whole and in 2015 too. … …
1st September 2014
July’s household borrowing figures provided further signs that the consumer recoveryhas not been driven by an unsustainable credit binge. Meanwhile, mortgage lendinglooks set to recover gradually as the disruption from new mortgage rules fades. … …
Continued moderate growth in broad money and bank lending indicates that there is still no pressingneed for the Monetary Policy Committee to raise interest rates quickly over the next year or so. … Monetary Indicators Monitor …
With euro-zone activity indicators having softened over recent months, it looks as if the currency bloc’s nascent recovery is already losing steam. Without bolder policy action from the ECB, the risks of a re-intensification of the region’s crisis will …
29th August 2014
The GfK composite index of consumer confidence strengthened to match June’s 9-year high in August. It is encouraging that consumers’ confidence remains strong as they prepare for the first interest rate rise since 2007. … GfK/NOP Consumer Confidence …
We doubt that new dissenters Martin Weale or Ian McCafferty will manage to persuade any of the other seven MPC members to vote to raise interest rates at September’s meeting. The recent weakness of wage growth and inflation, as well as signs that the …
28th August 2014
August and Q3’s CBI Distributive Trades Survey provided an encouraging sign that the recovery in consumer spending retained plenty of momentum in the third quarter. What’s more, the prospects for spending over the second half of this year look bright. … …
Past experience suggests that the emergence of a minority vote to raise interest rates at August’s MPC meeting is unlikely to have brought the first rate hike any closer. For a start, minority votes to change policy have not regularly been a signal that …
22nd August 2014
The prospects look bright for a continued solid recovery in consumer spending. Although we do notknow yet what happened to overall consumer spending in Q2, the available data on retail sales andspending off the high street point to another strong rise. …
21st August 2014
July’s retail sales figures provided reassurance that consumers are still willing tospend more even though an interest rate hike is looming. Meanwhile, July’s publicfinances showed that the fiscal consolidation is gradually getting back on track. … Retail …
The frequently changing tone of the MPC’s communications has continued to buffet UK markets.However, the net effect of the dovish Inflation Report, the Governor’s more hawkish press commentslast weekend and the split interest rate vote revealed by the …
20th August 2014
The minutes of August’s MPC meeting, revealing the first split interest rate vote since July 2011, indicate that a 2014 rate hike cannot be ruled out. But the low inflation outlook suggests the odds are still in favour of a delay until early next year. …
July’s fall in CPI inflation has put it back on a downward trend which we still thinkcould see it ease to as low as 1% by the end of the year. The UK economy remainson track, then, to enjoy a favourable combination of strong growth and low inflation. … …
19th August 2014
Last week’s Inflation Report saw the MPC place more emphasis on earnings at a time whenindicators are giving radically different signals regarding its current – let alone likely future –strength. Indeed, while annual growth in the official measure of …
18th August 2014
The second estimate of GDP confirmed that the economic recovery remainedstrong, but became a little less balanced in the second quarter. … Second estimate of GDP …
15th August 2014
July’s weak BRC Retail Sales Monitor may raise concern that the consumer recoveryis losing steam. However, the underlying picture is probably not as weak as it looks. … BRC Retail Sales Monitor …
12th August 2014
June’s trade and construction data provided further evidence that the economicrecovery became more unbalanced in the second quarter. … Trade & Construction …
8th August 2014
The continued strength of the UK’s recovery suggests that today’s vote to keep Bank Rate at 0.5% maynot have been unanimous and that a rate hike this year cannot be ruled out. Even so, the outlook oflow inflation and sluggish wage growth suggests that …
7th August 2014
June’s industrial production figures confirmed that the onus was even more on theservices sector to keep the recovery chugging along in the second quarter.However, the industrial recovery should build steam in the second half of this year. … Industrial …
6th August 2014
The 0.8% quarterly rise in Q2 GDP and the pick-up in the composite PMI in July suggests that therecovery still has plenty of momentum. Admittedly, growth has become increasingly dependent onthe services sector. But we expect the recovery to broaden out …
5th August 2014
