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After a slightly softer run of official and survey data, the improvement in the CIPSservices survey in July provided reassurance that the recovery is not losing pace andraises the chances that the MPC’s interest rate vote later this week will be split. … …
5th August 2014
In its latest assessment of the UK economy, the IMF last week concluded that sterling was“moderately” overvalued and that its strength may be holding back the economy’s rebalancing.But we doubt that a renewed fall in sterling would be the panacea that …
4th August 2014
While the key activity balances of the CIPS manufacturing survey softened in July,they still point to strong growth in the third quarter and so suggest that the sector isstill thriving is spite of sterling’s recent appreciation. … CIPS/Markit Report on …
1st August 2014
While a vote to raise interest rates does not seemimminent, the Inflation Report following the MPC’s meeting will give the clearestsignal yet as to whether a hike is likely before theend of 2014. In particular, the MPC’s conclusionregarding whether wages …
The latest money and credit figures show that bank lending is finally staging a gradual recovery. Butwith broad money growth still fairly subdued and bank lending recovering from a low level, the casefor the MPC to raise official interest rates only …
29th July 2014
June’s household borrowing figures supported the view that the recent slowdown inhousing market activity is largely due to temporary disruptions caused by theintroduction of the Mortgage Market Review regulations. Activity should pick up overthe rest of …
The pound’s depreciation and the UK’s recession which caused many Brits to forgo overseas tripssupported the UK tourism industry during the downturn. But now, sterling’s rise and the strongerrecovery in the UK than overseas suggest that the sector could …
28th July 2014
On the face of it, last week’s fiscal figures suggested that the public finances are still not benefitingfrom the recovery’s strength. Indeed, if the trend in the first three months of this fiscal year relative tolast was maintained, then the deficit …
The recovery in consumer spending has shown few signs of flagging. Retail sales volumes were 1.6% higher in Q2 than in Q1, while growth in spending off the high street seems to have remained strong. Admittedly, the continued fall in real wages, recent …
24th July 2014
The meagre growth in the official measure of retail sales volumes in June probablyunderstates the underlying strength of the consumer recovery. … Retail Sales …
July’s CBI Distributive Trades Survey provided an encouraging sign that retail sales got off to a strong start to the third quarter. What’s more, the outlook remains bright for a continued robust recovery in retail spending over the second half of this …
23rd July 2014
The minutes of July’s MPC meeting contained further signs that the Committee is edging closer to raising interest rates. While we think that the MPC will be cautious and wait until early 2015 to tighten, the chances of a 2014 hike are building. … MPC …
The CBI Industrial Trends Survey for July and the third quarter provided anencouraging sign that May’s surprisingly weak industrial production figures arelikely to prove short-lived. … CBI Industrial Trends Survey (Jul. & …
22nd July 2014
June’s fiscal numbers contained further signs that the coalition is struggling tobring the deficit down in line with the plans. Nonetheless, there are reasons toexpect the trend in public borrowing to improve later this year. … Public Finances …
Last week’s labour market data was something of a curate’s egg. Although a further fall in theunemployment rate indicated that the jobs recovery has continued at a rapid pace, the earningsfigures confirmed that workers’ real pay has continued to fall. …
21st July 2014
UK equities have continued to underperform relative to overseas indices despite the comparativestrength of the UK’s economic recovery. This seems to have partly reflected concerns that the UK’srecovery is still not feeding through to a pick-up in …
16th July 2014
Although employment has continued to grow rapidly, there still appears to beenough slack in the jobs market to prevent pay from picking up. … Labour Market Data …
The sharp rise in core inflation in June reported by today’s official consumer prices figures contrastswith timelier survey evidence suggesting that discounting on the high street has been particularlyintense over the traditional summer sales period. …
15th July 2014
While consumer price inflation rose quite sharply in June, there remain compellingreasons to expect it to ease further over the second half of 2014. … Consumer Prices & Producer Prices …
Whilst retailers appear to have fared well over the second quarter as a whole,June’s BRC Retail Sales Monitor provided further evidence that the ongoing pricewar between supermarkets is depressing the value of food sales. … BRC Retail Sales Monitor …
Sterling’s further appreciation has increased the chances that CPI inflation drops even further below the MPC’s 2% target over the next year or so. Not only will sterling’s rise have a direct impact on inflation by reducing import prices, it will also …
14th July 2014
The public finances, particularly tax receipts, have made a disappointing start to this fiscal year. However, recent fiscal data have been distorted by several temporary factors, suggesting that they are not a sign the economy is actually weaker than the …
10th July 2014
Although the economic recovery appears to be heading into the second half of this year with plenty of momentum, the continued weakening of inflationary pressures suggests that today’s decision by the Monetary Policy Committee to leave interest rates on …
May’s trade figures provided more disappointing news that manufacturers may be struggling to cope with sterling’s strength. And with exporters still facing a number of headwinds, we expect export growth to remain sluggish for a while yet. … Trade …
May’s industrial production figures suggested that the stronger pound might bestarting to slow the revival of the manufacturing sector. Nonetheless, there is still agood chance that the overall recovery gathered pace in the second quarter. … Industrial …
8th July 2014
Given its small weight in overall output, the construction sector is often overlooked. But last week’s survey data provided encouraging evidence that the sector is helping to build a more balanced recovery. What’s more, the outlook remains bright. … Will …
7th July 2014
The acceleration of the jobs market recovery and more hawkish comments from the Governor over the last month suggest that an interest rate rise before the end of the year cannot be ruled out. But provided inflation continues to ease, we think the Monetary …
3rd July 2014
While the economic recovery appears to have accelerated in Q2, workers are still failing to see the benefits in their pay packets. Annual growth in average weekly earnings fell from 2.2% to -1.7% in April. And while this partly reflected average pay in …
June’s CIPS/Markit services survey suggests that the sector’s robust recovery continued in the second quarter, and provides further signs that the wider economic recovery has gathered pace. … Markit/CIPS Report on Services …
June’s CIPS report on manufacturing suggested that the recovery in UK industry is going from strength to strength. For now at least, even the stronger pound appears to be doing little to slow the sector’s momentum. … CIPS/Markit Report on Manufacturing …
1st July 2014
Although the UK’s economic recovery has gone from strength to strength, markets have remained optimistic that monetary policy will remain highly accommodative for a while longer yet. Indeed, on the basis of its past relationship with measures of labour …
30th June 2014
May’s money and credit figures provided some more signs that the housing market recovery has lost some steam. Meanwhile, although the consumer recovery has continued apace, it has not lead to an unsustainable pick-up in credit. … Household Borrowing …
None of the measures announced by the Financial Policy Committee (FPC) last week seem likely to sap the recovery in house prices of its current momentum or prevent the overall level of household debt from rising markedly. Admittedly, there are still a …
The latest data on the state of households’ finances revealed another disappointing fall in disposable income. But households’ balance sheets remain fairly healthy overall, and we continue to expect incomes to rise in the second half of this year. … …
27th June 2014
The first quarter’s national accounts brought some positive news on the pace and balance of the UK’s recovery. And while the current account deficit has remained extremely large, there are reasons to think this will prove to be temporary. … National …
Despite Mark Carney’s warming that interest rates could rise before the end of the year, consumer confidence has continued to improve, suggesting that the recovery in household spending may gather pace over the coming quarters. … GfK/NOP Consumer …
Although June’s CBI Distributive Trades Survey was much weaker than expected, it indicated that growth in the retail sector remained strong in Q2 as a whole. What’s more, the outlook for spending in the second half of the year remains bright. … CBI …
25th June 2014
The MPC’s recent hawkish comments have helped to push near-term interest rate expectations higher and have fuelled a further rally in sterling to its strongest trade-weighted level since October 2008. Ironically, sterling’s rise has perhaps given the MPC …
23rd June 2014
The trickle of warnings of a not-too-distant policy tightening from the Monetary Policy Committee (MPC) turned into something more closely resembling a flood last week. Ultimately, however, it is the data – and not the MPC’s expectations or signals – that …
The recovery in consumer spending seems to be gathering pace thanks to rising confidence and strong employment growth. Admittedly, there are still signs of fragility – real earnings are still not rising and the housing market has shown signs of cooling …
20th June 2014
May’s public borrowing figures contained tentative signs that the coalition is struggling to bring down the deficit in line with the fiscal plans this year. … Public Finances …
May’s retail sales figures showed that a combination of rapid jobs growth and falling prices is continuing to fuel a strong recovery in consumer spending. … Retail Sales …
19th June 2014
While the minutes of June’s MPC meeting provided some relief that no members have voted to raise rates just yet, they also sounded a hawkish note in reiterating the Governor’s warning that there is a bigger risk of a 2014 hike than markets expect. … MPC …
18th June 2014
May’s drop in UK consumer price inflation demonstrated that strong growth in economic activity is not causing underlying price pressures to build. … Consumer Prices & Producer Prices …
17th June 2014
Mark Carney’s statement in his Mansion House speech on Thursday evening that “the first rise in interest rates …could happen sooner than markets currently expect” looked like a pretty plain signal that tighter monetary policy is not very far away. Even …
16th June 2014
Although employment is continuing to grow very rapidly, there still appears to be enough slack in the jobs market to prevent pay growth from picking up. … Labour Market Data …
11th June 2014
With replica shirts, curved televisions and crates of beer all heavily advertised, the World Cup is clearly an important event for many retailers. But while this summer’s football extravaganza is likely to affect the timing of consumer spending in the UK, …
10th June 2014
April’s industrial production figures added to the growing body of evidence suggesting that the economic recovery might have gathered even more pace in the second quarter. … Industrial Production …
Although May’s BRC Retail Sales Monitor showed that an escalating price war between supermarkets is depressing the value of food sales, the recovery in retail spending as a whole looks to have maintained a healthy pace in Q2. … BRC Retail Sales Monitor …
On the face of it, the new policy measures unveiled by the European Central Bank (ECB) last week should have positive effects on the UK’s principal trading partner and hence on the UK’s own growth prospects. But aside from doubts over the effectiveness of …
9th June 2014
