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December’s figures on industrial production and trade offered mixed signals on the economy’s attempts at rebalancing. And this so-so picture is unlikely to change anytime soon. … Industrial Production & Trade …
7th February 2014
The MPC’s decision to leave policy on hold today was almost certainly the last to be taken under the unemployment-focused forward guidance adopted just six months ago. But whatever replaces it, interest rates are likely to remain at very low levels for a …
6th February 2014
The economic recovery appears to have remained strong at the start of 2014. Although the composite CIPS/Markit activity index weakened again in January, it still points on the basis of past form to robust GDP growth. In addition, confidence amongst firms …
5th February 2014
The further deterioration of the CIPS/Markit services survey in January after the slight slowdown in GDP growth in Q4 may raise concerns that the recovery is starting to lose momentum. But there are many reasons to remain optimistic. … CIPS/Markit …
With the unemployment rate likely to fall below 7% soon, February’s MPC meeting will set the scene for the demise of forward guidance, at least in its current form. Comments by MPC members suggest that the next ‘phase’ of guidance will not involve …
3rd February 2014
Although the CIPS/Markit manufacturing survey weakened further in January, it continues to suggest that the industrial sector is enjoying a robust recovery and making a punchy contribution to overall GDP growth. … CIPS/Markit Report on Manufacturing …
Against a positive economic backdrop in recent quarters, one blot on the UK economy’s copybook has been the continuing dismal performance of productivity. Indeed, both output per worker and output per hour are likely to have fallen in Q4. But rising …
January’s GfK/NOP confidence survey suggested that consumers started the year in high spirits. And with real earnings likely to rise this year for the first time since 2007, there is scope for confidence and spending growth to strengthen further. … …
31st January 2014
The broad money supply continues to grow at a rate which should reassure those fearing that the economic recovery might be building up steam too rapidly. Indeed, with bank lending remaining subdued, the financial sector seems more likely to slow the …
30th January 2014
Household borrowing reached its highest level since July 2008 in December. But while credit conditions appear to be easing, rising borrowing costs and possible intervention by the Bank of England could limit borrowing growth further ahead. … Household …
The ongoing decline in real average earnings is often presented as a threat to the recovery. But the flip side of falling real pay has been rising employment. This has supported growth in total real earnings, albeit to the benefit of some retailers more …
29th January 2014
The main political parties have recently been fighting amongst themselves for the mantle of fiscal responsibility. But ambitions on both sides for a budget surplus exaggerate the influence politicians have over the public finances. And this goal could …
The preliminary estimate of Q4 GDP confirmed that the UK economy’s recovery is becoming increasingly entrenched. While risks remain, 2014 looks set for a further acceleration in growth. … Preliminary GDP …
28th January 2014
The fall in unemployment has not been out of line with the wider evidence on the labour market or the economy. But the uncertainty over the implications for inflation suggests that the Monetary Policy Committee should still adapt its forward guidance to …
27th January 2014
The UK's image as a 'nation of homeowners' overlooks the fact that homeownership has dropped significantly in recent years. And, to the extent that soaring property prices push down owner occupation further, the reviving housing market may not be as …
The combination of November’s further sharp fall in unemployment and hints from the Governor of the Bank of England suggest that the Monetary Policy Committee’s policy of formal, state-contingent, forward guidance might be about to expire just six months …
The gilt market has largely shrugged off the recent strong news on the UK economy, including the sharp fall in unemployment to within a whisker of the 7% threshold used for the MPC’s forward guidance. Indeed, while yields at the short-end have risen, …
23rd January 2014
Following mixed reports on Christmas sales, January’s CBI Distributive Trades Survey suggests that retailers have seen only a slow start to the new year. But retail prospects should brighten as 2014 proceeds. … CBI Distributive Trades Survey …
Although the unemployment rate is falling rapidly, there is plenty of evidence that it is still well above a level that would generate inflation and require official interest rates to rise soon. … Unemployment still well above an "equilibrium" …
Today’s figures show that conditions are continuing to improve rapidly in the labour market. But the further fall in the unemployment rate is unlikely to trigger an imminent interest rate hike by the MPC. … Labour Data, MPC Mins (Jan.) & Pub. Fin. …
22nd January 2014
The CBI’s Industrial Trends Survey for January and the first quarter of 2014 provided grounds for optimism on the pace and balance of the economic recovery. … CBI Industrial Trends Survey (Jan. & …
21st January 2014
A continuation of the UK’s recent combination of increasing growth and falling inflation would seem too good to be true. But several factors, including a return to health in the banking sector and the slope of firms’ cost curves, suggest that rising …
While Wednesday’s labour market figures are likely to show that the unemployment rate fell again in November, a swift fall to the 7% threshold used for the MPC’s forward guidance is not assured. A revival in productivity and strong workforce growth may …
20th January 2014
Having finally fallen to the 2% target in December, there are increasingly clear signs that CPI inflation is on course to fall well below it this year. In particular, administered, food and consumer goods prices all look set to make a smaller contribution …
2013 ended with a mixed picture for the consumer sector, with surprisingly strong official data set against some softness in the surveys and in the anecdotal evidence from the high street. Nonetheless, real spending probably saw another rise in the fourth …
17th January 2014
With December’s hefty monthly growth in retail sales, the consumer recovery seems to be at full steam. That said, the official data is at odds with other evidence and suggests that the retail sector provided only a modest boost to GDP growth in Q4. … …
The fall in CPI inflation in December to the 2% target for the first time in four years shows that the economic recovery is not prompting price pressures to build. Indeed, CPI inflation looks likely to spend more time below 2% than above it during 2014. …
14th January 2014
With employment, real incomes and consumer confidence all likely to rise this year, the economic environment appears to be conducive to further growth in car sales in 2014. That said, some of the important drivers of sales growth last year are set to fade …
13th January 2014
November’s industrial production and construction figures signal that Q4 GDP growth is unlikely to have been quite as strong as the activity surveys have indicated. Nonetheless, GDP still seems likely to have grown at a respectable rate. … Industrial …
10th January 2014
December’s BRC sales figures supported anecdotal evidence that retailers had a somewhat mixed Christmas period and added to evidence that sales growth slowed in Q4. But 2014 looks set to present a more favourable environment for spending. … BRC Retail …
While today’s Monetary Policy Committee (MPC) meeting passed without event, the Committee may soon adjust its forward guidance. Since there are no signs that falling unemployment is stoking inflation, the MPC could do more to support the recovery by …
9th January 2014
The trade figures have continued to pour cold water on hopes of an export-led recovery. And with little sign that a noteworthy recovery is emerging in the euro-zone, exports look set to remain subdued in 2014. … Trade …
While unemployment is falling swiftly towards the 7% threshold above which the Monetary Policy Committee (MPC) has pledged to keep official interest rates on hold, it remains unlikely that rates will rise in 2014. … Falling unemployment unlikely to …
7th January 2014
Although the CIPS services survey softened again in December, it still suggests that the recovery was strong at the end of 2013. And with the survey showing confidence rising and new business growing strongly, 2014 is shaping up to be another year of …
6th January 2014
With the unemployment rate falling rapidly, the MPC has continued to stress that the reaching of the 7% threshold will not automatically trigger a rise in interest rates. Indeed, there have been hints that the threshold attached to forward guidance could …
While the strength of the economic recovery surprised in 2013, the economy may have seen a softer end to the year. For some retailers, the Christmas period looks like being a bit of a washout, both literally and figuratively. But this shouldn’t have too …
While further robust growth in the broad money supply supports signs that the economic recovery has remained strong, the continued weakness of bank lending remains one reason to doubt that the pace of the UK economy's recovery will accelerate in 2014. … …
3rd January 2014
The economic recovery is still not being accompanied by any marked pick-up in household borrowing. And with borrowing costs likely to increase in coming months, the chances of a credit boom in 2014 soon seem remote. … Household Borrowing Monitor (Nov …
December's CIPS/Markit manufacturing survey indicated that the industrial recovery has remained strong and so provided another sign that the economic recovery is the product of more than just an unsustainable revival in household spending. … CIPS Report …
2nd January 2014
We expect the broadening out of the recovery from consumer spending to the rest of the economy to be one of next year’s main developments. Other key things to watch out for in 2014 include a modest easing of the near-term fiscal squeeze, stronger …
23rd December 2013
Today's news on the state of households' finances shows that the recent growth of household spending has been driven partly by households saving less. However, 2014 should see a more resilient basis for the consumer recovery. … Consumer recovery …
20th December 2013
While the national accounts showed that the economic recovery has been stronger than previously thought this year, they also provided a few reasons to doubt that it will be able to maintain its recent strong pace for much longer. … Nat. Acc., Bal. of …
December’s GfK/NOP confidence survey suggested that consumers have become slightly less optimistic in the run-up to Christmas. But as the squeeze on real earnings eases, there is scope for confidence and spending growth to pick up. … GfK/NOP Consumer …
Data for the early part of December suggest that consumers are in a reasonably positive mood in the run-up to Christmas. And there is still the potential for retailers to enjoy a further pick-up in sales by the close of the festive period. But it is less …
19th December 2013
While retail sales volumes rose in November, this made up only part of the previous month’s drop. So it is touch-and-go as to whether Q4 will see an expansion in sales volumes. But 2014 should see the foundations of the consumer recovery strengthen. … …
Following a subdued few months, December’s CBI Distributive Trades Survey suggests that retailers are enjoying a decent run-up to the Christmas period. And sales growth may pick up further before the close of the festive season. … CBI Distributive …
18th December 2013
While the latest labour market figures have raised the chances that the jobless rate falls below the MPC’s 7% threshold in 2014, December’s minutes suggested that the benign inflation outlook will enable it to keep rates on hold for a long time yet. … …
The fall in CPI inflation to a four year low in November confirms that the economy is enjoying a favourable mix of strong growth and low inflation. And with inflation on track to dip below 2% in 2014, it seems likely that the Monetary Policy Committee …
17th December 2013
The odds seem in favour of Wednesday’s labour market figures revealing another fall in the jobless rate. While in recent months the MPC has tried to downplay the importance of the unemployment threshold, another fall would probably put renewed upward …
16th December 2013
Recent survey evidence suggests that wage growth may finally be starting to recover. The latest surveys from both the Recruitment and Employment Confederation (REC) and the British Chambers of Commerce (BCC) suggest that wage growth has begun to pick up …
