Filtered by Subscriptions: UK Markets Use setting UK Markets
The MPC’s forward guidance has continued to be relatively unsuccessful in decoupling markets in the UK from those in the US. However, investors seem to have largely priced in the prospect of tapering, suggesting that gilt yields are unlikely to jump …
12th December 2013
UK markets continue to think that official interest rates will rise in mid-2015 despite some dovish signals from the Monetary Policy Committee (MPC) over the last month. In particular, MPC members have emphasised that there is likely to be a case for …
11th December 2013
October’s figures on industrial production and trade offered some good news for the Government’s oft-proclaimed ambition for an economy more biased towards manufacturing. But, on the external side, the picture remains weak. … Industrial Production & …
10th December 2013
While the Office for Budget Responsibility unveiled much stronger forecasts for the economy in last week’s Autumn Statement, with correspondingly more favourable projections for the public finances, there are some reasons to think that it might be being …
9th December 2013
Recent rises in inflation and interest rate expectations might contradict claims by Mark Carney that households understand the MPC’s forward guidance. But we are not too concerned about the former at the moment, and consumers’ interest rate expectations …
6th December 2013
With sizeable improvements in the economic and fiscal forecasts, December’s Autumn Statement gave the Chancellor leeway to announce measures which will provide some modest support to consumers’ budgets. But this will only go some way to offsetting the …
While the MPC’s communications have arguably become a little less clear over the last month or two, Committee members seem united in the fundamental belief that inflation pressures will remain subdued as the economy recovers. As such, interest rates …
5th December 2013
CPI inflation fell sharply from 2.7% to 2.2% in October and it looks likely to fall below the 2% target soon. Past falls in global agricultural commodity prices suggest that food price inflation will ease significantly in the coming months. The …
4th December 2013
While the CIPS services survey softened slightly in November, the strength of the manufacturing and construction surveys suggests that the economic recovery is maintaining its momentum. Quarterly GDP growth in the final three months of the year could well …
New data on UK business births and deaths show that both are on the rise. With productivity growth driven largely by the impact of firms entering and exiting industries, evidence of more ‘creative destruction’ should support a revival in productivity and …
3rd December 2013
November’s BRC retail sales figures brought more evidence of a slight slowdown in the recovery in consumer spending. But retail sales should grow at a faster pace soon as the drags on consumer spending subside. … BRC Retail Sales Monitor …
With November’s Inflation Report indicating favourable prospects for growth and inflation, there is little reason for the MPC to change course on policy. And while unemployment may be falling more rapidly towards the 7% way station than the MPC expected, …
2nd December 2013
November’s CIPS manufacturing survey signals that the sector’s revival is continuing to gather pace and so should help to ease concerns that the economic recovery is entirely dependent on an unsustainable housing market boom. … CIPS Report on …
One of the key questions faced by the Office for Budget Responsibility in producing its economic forecasts for this week’s Autumn Statement is whether the recent outperformance of the UK economy compared to the rest of the G7 can be sustained. While the …
The latest broad money supply figures support signs that the economic recovery has remained strong in the fourth quarter. Meanwhile, bank lending has begun to show some tentative signs of improvement, increasing the chances that the recovery is sustained. …
29th November 2013
Talk of a recovery fuelled by lending growth continues to be overdone. Accordingly, while the willingness of the Bank of England to curb lending may hold back any strong revival in credit, this need not undermine the economic recovery. … Household …
November’s fall in consumer confidence suggests that households are still not feeling the full benefit of the economic recovery. Nonetheless, some solid props to consumer spending are on the horizon. … GfK/NOP Consumer Confidence …
Alongside the release of its Financial Stability Report, the Bank of England has unveiled new measures to blunt the incentives for banks to make new mortgage loans. While these initiatives may do little directly to cool the housing market, the Financial …
28th November 2013
November’s CBI Distributive Trades Survey suggests that the recovery in retail sales has lost some pace recently. But there are a few signs that retailers are anticipating a healthier Christmas period. … CBI Distributive Trades Survey …
27th November 2013
The second estimate of Q3 GDP confirmed that the UK economy is experiencing a period of strong growth. And while the expenditure breakdown showed that household spending has remained the main driver of overall growth, the pick-up in investment provides …
Growth in household spending continues to drive the economic recovery. In the near-term, rising house prices and consumer credit should support further expansion. But a solid foundation of rising real earnings will be needed before a return to the rates …
Although small retailers suffered much more than large ones during the economy’s post-2008 weakness, more recently, small retailers have started to outperform their larger competitors. But we doubt that large retailers are at risk of losing much market …
26th November 2013
This week’s second estimate of GDP looks set to confirm that the UK economy was the fastest growing G7 economy in the third quarter. But the Government’s shortfall in the opinion polls suggests that it is still struggling to take much of the credit for …
25th November 2013
Although October’s public finance figures were a little disappointing, borrowing this year still looks set to come in substantially below the OBR’s March forecast. While the Chancellor is likely to exercise restraint, he has some scope to fund for a …
21st November 2013
UK markets are being supported by a favourable combination of accelerating economic growth, weakening inflation and very low interest rates. Granted, the MPC has brought forward to the third quarter of 2015 the point at which it expects the jobless rate …
20th November 2013
November’s MPC minutes echoed the message of the Bank of England’s November Inflation Report that UK monetary policy is on hold for the foreseeable future. … MPC minutes …
The recovery in the housing market has so far had little impact on total sales of household goods. But digging a little deeper, spending on items linked more closely with house purchases has risen quite strongly. As the housing market continues to revive …
18th November 2013
The changes to the MPC's unemployment forecasts revealed in its November Inflation Report last week forced the Committee to play down the strict interpretation of its own forward guidance that interest rates could be on the rise as soon as the end of next …
Attention on what has been termed the “cost of living crisis” has fuelled speculation that December’s Autumn Statement will include measures to cut energy bills. And even if funding of the ‘green’ measures currently pushing up bills was shifted to …
15th November 2013
Data for the early part of Q4 suggests that the consumer recovery may be stumbling slightly. But the picture should improve in the run-up to Christmas. October’s sharp drop in inflation, combined with recent strong labour market data, may herald a …
14th November 2013
October’s surprise fall in retail sales volumes highlights that, despite the hype over the economic recovery, the revival in the consumer sector remains a fragile one. That said, October’s disappointing outturn is hopefully only a temporary setback. … …
November’s Inflation Report provided some superficial support for expectations that interest rates will rise sooner than the MPC suggested back in August. But we still think that the disinflationary effects of the spare capacity in the economy will keep …
13th November 2013
October’s inflation figures suggest that the UK economy is hitting a sweet spot of accelerating GDP growth and declining price pressures. And inflation is likely to fall further in the near future. … Consumer Prices & Producer Prices …
12th November 2013
Underemployment, where people are in employment but want to work more hours, reached a record high in the first half of 2013. This means that there is more slack in the labour market than the unemployment rate suggests and implies that wages will recover …
This week’s Bank of England Inflation Report looks likely to include a downward revision to the MPC’s forecast for the unemployment rate, bringing forward the date at which it is expected to hit the 7% level at which the Committee will re-assess policy …
11th November 2013
September’s trade figures show that the UK economy continues to see an imbalance between domestic and overseas demand. And while export surveys have been positive, consumer demand may mean the trade deficit is slow to narrow in the near-term. … Trade …
8th November 2013
The ONS’ latest population projections suggest that the UK’s population will age even more rapidly than previously expected. But we doubt this will feed into a one-for-one fall in workforce growth and hence the future unemployment rate. … Ageing …
The MPC should think twice before concluding that the fall in interest rate expectations and gilt yields in recent months is a sign that markets are coming around to its views on the economic outlook. The belief that US interest rates will be left looser …
7th November 2013
Despite the acceleration of the UK’s economic recovery, gilt yields and interest rate expectations have fallen back over the last month. It would be tempting to conclude that the markets are starting to place more faith in the MPC’s forward guidance and …
With the economic recovery proceeding more quickly than the MPC expected, but little pressure on forward guidance’s knockouts, today’s decision to leave policy unchanged was probably a unanimous one. But next week’s Inflation Report could have a material …
September’s industrial production figures showed that the sector is continuing to recover, albeit more slowly than indicated by the recent surveys. As things stand, production looks on course to rise at a faster pace in the fourth quarter than in Q3. … …
6th November 2013
The economic recovery still seems to be gathering speed. The 0.8% quarterly rise in GDP in the third quarter was the strongest expansion seen since Q2 2010. And whereas a year or so ago, the recovery was dependent on growth in a handful of sectors, output …
5th November 2013
The CIPS business surveys suggest that the UK economy got off to a very strong start in Q4. An improvement on Q3’s 0.8% expansion would seem eminently possible. … CIPS/Markit Report on Services …
The BRC’s measure of retail sales pointed to fairly subdued growth in spending in October. But we still think the outlook for the retail sector remains fairly favourable. Improving levels of consumer confidence should support spending in the near term …
With GDP growth in Q3 coming in slightly above the MPC's forecast and unemployment falling more rapidly than expected, when the Committee might reconsider the stance of monetary policy has continued to excite commentators. But with members currently …
4th November 2013
One part of the economy which has not shown much of a pick-up in recent months has been lending to households and firms. However, we are not too concerned about what, at present, is a pretty creditless recovery. Households and firms have plenty of liquid …
October’s CIPS/Markit report on manufacturing suggested that output in the sector has continued to expand at a robust pace despite recent unhelpful developments such as sterling’s appreciation and the US debt ceiling crisis. … CIPS Report on …
1st November 2013
Although it fell slightly, UK consumer confidence remained high in October and should continue to buttress growth in household spending, in spite of the headwinds presented by falling real pay and the high level of household debt. … GfK/NOP Consumer …
31st October 2013
Some of the recent recovery in spending by UK households has been accounted for by spending abroad. So while the official household spending figures show growth, data for domestic spending are less encouraging. And as the economy recovers, UK consumers’ …
30th October 2013
Recent strong growth in certain measures of broad money suggests that the economic recovery has plenty of momentum at present. But the continued weakness of bank lending remains a reason to be cautious about the growth outlook. … Monetary Indicators …
29th October 2013
