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April’s trade figures suggested that the economy is still struggling to rebalance towards exports. And since the impact of sterling’s rise on exports has probably not been felt yet, the recovery is unlikely to receive support from net trade soon. … …
6th June 2014
While the strength of the economic recovery may have pushed one or two MPC members closer to voting to raise interest rates at today’s meeting, we still think that the benign inflation outlook and a cooling of the housing market will persuade most members …
5th June 2014
While the latest activity surveys suggest that the recovery might have gathered pace in the second quarter, a revival in productivity has remained elusive. Indeed, firms are hiring workers in record numbers – Q1’s 283,000 quarterly rise in employment was …
4th June 2014
May’s CIPS/Markit services survey echoed the upbeat message of the previous month’s report in suggesting that the economic recovery may still be gathering pace. … CIPS Report on Services …
Although the latest figures showed further signs of subdued growth in broad money and particularly bank lending, we doubt that this is a sign the economic recovery will lose steam soon. Indeed, it remains encouraging that economic activity is growing …
2nd June 2014
April’s money and credit figures suggest that new mortgage rules have stifled the recovery in housing market activity. But with real incomes rising and confidence strengthening, a gradual recovery in household borrowing still looks likely this year. … …
The latest data on the manufacturing sector and household borrowing has provided more encouraging evidence that the economic recovery is shifting away from its excessive dependence on housing and consumers towards industry. … Markit/CIPS Report on …
On the face of it, the steady fall in gilt yields this year suggests that markets might be expecting the economic recovery to lose some momentum soon or that safe-haven demand from overseas might have pushed them lower. However, the fall in yields seems …
The further improvement in GfK’s consumer confidence report in May suggests that the recovery in household spending could gather even more pace soon. … GfK/NOP Consumer Confidence …
30th May 2014
While the Monetary Policy Committee (MPC) will leave policy on hold again at its meeting on 4th and 5th of June (announcement noon on the 5th), it is clear that some members are getting closer to voting for higher interest rates. But provided that …
29th May 2014
Although May’s CBI Distributive Trades Survey suggested that growth in retail spending may slow from recent stellar rates, it still indicated that the consumer recovery has remained robust in the second quarter. … CBI Distributive Trades Survey (May & …
28th May 2014
Last week’s release of the expenditure breakdown of Q1 GDP confirmed that an upturn in business investment has turbocharged the UK’s economic recovery. And looking ahead, there’s every reason to expect it to continue to make a significant contribution to …
26th May 2014
While real household spending is continuing to pick up strongly, retailers have remained under pressure to offer generous discounts. Indeed, the retail sales deflator fell into negative territory in April for the first time since July 2006. And anecdotal …
22nd May 2014
The second estimate of Q1 GDP provided more evidence that the recovery is based on solid foundations. But April’s public finances made for less encouraging reading. … GDP Second Estimate (Q1) & Public finances …
While the minutes of May’s MPC meeting suggested that one or two members may vote to raise interest rates soon, most seem content to leave policy on hold for a good deal longer. Meanwhile, April’s retail sales figures were particularly strong. … MPC …
21st May 2014
While CPI inflation rose in April, this largely reflected a temporary boost from the later timing of Easter this year. Underlying price pressures have remained subdued and we continue to think that CPI inflation will fall to about 1% later this year. … …
20th May 2014
May’s Bank of England Inflation Report proved to be a blow for those predicting that the Monetary Policy Committee (MPC) would signal its intention to raise interest rates soon. The MPC stood by its assessment made in February that there remains ample …
19th May 2014
Speculation that the Bank of England’s May Inflation Report would show that the Monetary Policy Committee is preparing to raise interest rates proved to be unfounded, prompting a significant fall back in UK market interest rates and sterling following the …
15th May 2014
May’s fairly dovish Inflation Report might go some way to cool expectations that the Monetary Policy Committee will raise interest rates as soon as the first quarter of next year. … Bank of England Inflation Report …
14th May 2014
While the economic recovery is creating jobs at a rapid pace, there still appears to be plenty of slack in the labour market which is keeping a lid on pay growth. … Labour Market Data (Mar./Apr …
April’s BRC Retail Sales Monitor indicates that consumers loosened their purse strings over the Easter holidays. And the positive outlook for employment and real pay suggests that the consumer recovery will remain strong over the rest of 2014. … BRC …
13th May 2014
The main risks to our view that low inflation will keep interest rates on hold for longer than markets expect stem from the MPC’s increased focus on spare capacity under phase two of its forward guidance and the strength of the housing market. But …
12th May 2014
Whilst March’s industrial production data indicated that the manufacturing recovery remains robust, the latest trade data provided tentative signs of some rebalancing towards the external sector. … Industrial Production and Trade …
9th May 2014
While the strength of the housing market may have made for an animated discussion at today’s MPC meeting, the benign inflation outlook suggests that tighter monetary policy is still not a near-term prospect. … Low inflation keeps the MPC on …
8th May 2014
The last month’s data has provided further evidence that the UK economy is enjoying a ‘Goldilocks’ scenario of solid, but not excessive, growth and low inflation. The latest PMI surveys suggest that the economic recovery retained a healthy degree of …
April’s CIPS/Markit Services report provided encouraging evidence that the domestic recovery retained a healthy degree of momentum at the beginning of Q2. … Markit/CIPS Report on Services …
6th May 2014
Last week’s data provided further evidence that the UK economy is currently enjoying a ‘Goldilocks’ recovery. Admittedly, there are concerns that an overheating housing market could bring the bears home and scare Goldilocks away. But we think these …
5th May 2014
The Monetary Policy Committee’s decision on Thursday 8th May will be the first to be taken under the second phase of forward guidance. But we don’t expect that to have much of a bearing on its deliberations. With inflation falling further below target in …
1st May 2014
Whilst March’s money and credit data suggested that the housing market recovery may be coming off the boil, there are signs that the consumer recovery is finally feeding through into stronger household borrowing. … Household Borrowing Monitor …
The latest data on the manufacturing sector and household borrowing have provided some further encouraging evidence of a rebalancing of the UK’s economic recovery away from excessive dependence on housing and consumers towards industry. … Markit/CIPS …
April’s GfK/NOP survey indicates that consumers remained upbeat at the start of the second quarter. And with real wages now on the rise, consumer spending looks set to continue to drive the overall economic recovery. … GfK/NOP Consumer Confidence …
30th April 2014
The provisional Q1 GDP figures confirmed that the economic recovery picked up momentum in the early months of 2014. But the combination of solid - rather than spectacular - growth and low inflation should keep interest rates very low. … Preliminary GDP …
29th April 2014
While this week’s GDP figures for the first quarter look set to confirm that the economic recovery has gained further momentum, one potential threat to the sustainability of the recovery is the strength of the pound. Its trade-weighted value reached its …
28th April 2014
The latest data indicate that the outlook for UK consumers remains bright. Inflationary pressures look set to continue to ease over the course of the year, which should mean that real pay picks up further, following its first rise in almost six years. In …
25th April 2014
March’s retail sales figures supported the message from other recent indicators that consumer spending retains plenty of momentum and that the broader economic recovery probably picked up pace in Q1. … Retail Sales …
The sharp rise in self-employment is one reason among many to think that the unemployment rate understates the amount of slack in the labour market and the broader economy. … Is there slack among the …
24th April 2014
Although the strength of April’s CBI Distributive Trades Survey partly reflects an Easter-related boost, underlying growth in retail sales appears to be strong. … CBI Distributive Trades Survey …
The CBI’s Industrial Trends Survey for April and the second quarter provided further encouraging signs that the manufacturing recovery remains robust. … CBI Industrial Trends Survey (Apr. & …
23rd April 2014
The minutes of April’s MPC meeting suggested that the first rise in official interest rates remains some way off. Meanwhile, March’s public finances brought some fairly positive news on the speed of deficit reduction. … MPC minutes (Apr.) & Public …
Last week’s labour market figures brought the long-awaited news that pay growth has finally begun to exceed inflation. Granted, real earnings are still 10% below their pre-recession peak and signs that productivity has continued to stagnate in the first …
21st April 2014
Despite further signs that the UK’s economic recovery has remained strong, gilt yields have continued to fall over the last month. Indeed, the 10-year gilt yield recently touched a six-month low. Their fall seems to have been partly linked to the decline …
16th April 2014
The latest labour market figures showing that average earnings are finally rising at a faster rate than prices mark another major milestone in the economy’s recovery. … Labour Market Data (Feb./Mar …
The further fall in CPI inflation in March suggested that the six-year squeeze on real wages is finally over and took it a step closer to the 1% figure we think it could reach by the end of the year. … Consumer Prices & Producer Prices (Mar …
15th April 2014
The weakness of the latest BRC retail sales figures, which reflects seasonal factors, is unlikely to be sustained. With real pay on the cusp of rising, the consumer recovery should continue apace over the course of the year. … BRC Retail Sales Monitor …
Last week’s official industrial production figures provided an encouraging sign that the sector’s recovery may have gathered pace in the first quarter. Indeed, even if production only held steady in March, it would have risen by 0.9% over Q1 as a whole, …
14th April 2014
While the UK economy may have withstood the fiscal consolidation rather better than the IMF and other critics anticipated, there are reasons why George Osborne may want to think twice before declaring that “Plan A” has been fully vindicated. … Can Mr …
10th April 2014
With inflation falling and plenty of slack still left in the labour market, today’s no-change decision by the MPC is likely to have been unanimous again. And with the UK set for a favourable period of strong growth and low inflation, we still think the …
February’s trade figures showed that the economy is still struggling to rebalance towards exports. And in the coming years, progress is likely to be slow at best while demand in the euro-zone remains weak. … Trade …
9th April 2014
February’s official figures showed that the recovery in the industrial sector still has plenty of momentum. As a result, they provided reassurance that the economic recovery is broad-based and is unlikely to have slowed in the first quarter. … …
8th April 2014
Figures released last week confirmed that the weakness of productivity growth continues to hang like a cloud of Saharan dust over the medium-term outlook for the economy. Not only has productivity barely risen, but much of the rise seen has been due …
7th April 2014
