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While the activity balances of August’s CIPS/Markit report on manufacturing recovered from July’s extremely weak levels, they remained consistent with ongoing recession in the industrial sector. … CIPS/Markit Report on Manufacturing …
3rd September 2012
Recent evidence suggests that households are finding it a bit easier to cope with their high levels of debt. However, this is unlikely to last if unemployment rises as we expect. … Respite in bad debts unlikely to …
Hopes that a summer packed full of sporting and cultural events would boost consumer spending have been dampened by the weaker run of data over the past week or so. What’s more, the recent rise in commodity prices has darkened the outlook for real pay, …
Consumer sentiment continues to be very depressed. If the Olympic Games did give confidence a boost in August, this appears to have been drowned out by the gloomy economic news, particularly confirmation that the UK remained in recession in Q2. … GfK/NOP …
31st August 2012
Household borrowing recovered in July after it was depressed by temporary factors in June. Nonetheless, the big picture is that borrowing growth remains very weak. … Monetary Indicators Monitor …
Household borrowing recovered in July after it was depressed by temporary factors in June. Nonetheless, the big picture is that borrowing growth remains very weak. … Household Borrowing Monitor …
30th August 2012
Last week brought more bad news for the Chancellor. The public sector ran a deficit in July, a month when a surplus is typically the norm. Admittedly, some temporary factors contributed to July’s poor borrowing numbers. But the public finances face more …
27th August 2012
UK GDP was revised up in the second quarter as expected, but the revision was pretty small in the big picture. The UK’s economic performance still looks dismal. … GDP: Second Estimate & Expenditure Breakdown …
24th August 2012
While UK equity and gilt prices have both increased over the last few months, we doubt that further significant price rises are likely over the coming quarters. Equities seem destined to struggle as economic growth disappoints and profit margins are …
23rd August 2012
August’s CBI Distributive Trades Survey suggested that the Olympics did little to boost retail sales. Recent bad news on petrol and energy prices, as well as rising borrowing costs, will dampen the chances of a pick-up in sales growth later this year. … …
The recent reversal of the 25% or so fall in oil prices earlier this year and the prospect of another round of utility price rises might now mean that CPI inflation struggles to fall below the 2% target over the next year. Nonetheless, we doubt that this …
As expected, June’s unexpectedly large drop in mortgage approvals was partially reversed in July. But the rise was small, and these figures continue to highlight that tight credit conditions are compounding the effects of low buyer confidence on housing …
The Government is reportedly considering making permanent the temporary extension to Sunday trading hours for large retailers. We doubt that this would give much of a boost to overall retail spending, although it could produce some shifts in the pattern …
22nd August 2012
The return to recession and the deterioration in the public finances have put the Chancellor in a tricky position, to put it mildly. His dilemma is made even worse by the fact that, on his current plans, the pace of fiscal consolidation is supposed to …
July’s public finance figures brought no end to the underlying deterioration in the fiscal position evident since the beginning of the financial year. … Public finances …
21st August 2012
Last week brought yet more evidence that the economy did not do quite as badly in the second quarter as the preliminary GDP figures showed. That said, we have said before that only a massive revision would alter the big picture of a very weak recovery and …
20th August 2012
After a slow start, it looks like the Olympic Games have provided a reasonable boost to high street spending. … Olympics to help sales maintain …
17th August 2012
Not only did retail sales post a reasonable rise in July, but an upward revision to June’s figures added to other evidence suggesting that the preliminary estimate of GDP will be revised up next week. … Retail Sales …
16th August 2012
The minutes of August’s MPC meeting supported our view that more policy stimulus is likely before long. Meanwhile, the labour market remains puzzlingly resilient, but we doubt that this can last with the economy back in recession. … MPC Minutes (Aug. …
15th August 2012
The ONS data confirm reports from other sources that back in June, the London housing market remained strong. However we are less confident about some of the apparent strength reported for some other regions, and it is more than likely that most regional …
14th August 2012
UK inflation rose for the first time in four months in July, but the increase was driven by temporary factors. We still expect inflation to be back below its 2% target within two or three months. … Consumer Prices …
The Olympic mood was abruptly punctured by Mervyn King as he presented the Bank of England’s Inflation Report last week. Although the lower near-term profile for inflation was good news, this was overshadowed by the big downgrades to the MPC’s forecasts …
13th August 2012
Although July’s producer prices figures disclosed the first rise in input price inflation since February, we doubt that this is a sign of an emerging consumer price inflation threat. Indeed, the further fall in output price inflation suggests that …
10th August 2012
After a slow start, there are tentative signs that the Olympic Games have given a small boost to overall consumer spending, in line with our expectations. Nonetheless, we suspect that this boost will be temporary and will be simply at the expense of lower …
The latest UK trade data were pretty dreadful and we doubt that the extra bank holiday in June can take all of the blame. … Trade …
9th August 2012
The Bank of England’s latest Inflation Report contained substantial downward revisions to the growth and inflation forecasts, supporting our view that more policy stimulus is likely once the current asset purchases are completed in November. … Bank of …
8th August 2012
Further safe-haven flows and growing expectations of a further cut in official interest rates and more QE have caused gilt yields at the short end of the curve to fall to within a whisker of zero. Yields on government debt are already negative in six …
7th August 2012
June’s industrial figures suggested that the drop in GDP in Q2 is likely to be revised to a slightly smaller fall. But the figures did not change the overall picture of a sector struggling to grow in response to rapidly weakening overseas demand. … …
July’s BRC Retail Sales Monitor provided more evidence that sales growth returned to lacklustre rates following the Jubilee celebrations. We might yet see an Olympics boost to spending, but this is likely to be as short-lived as the Jubilee uplift. … BRC …
Some people had pointed to the more upbeat surveys as evidence that the Q2 GDP figures were understating the strength of the economy. But the fall in July’s CIPS/Markit surveys diminished this argument. If the news continues in this vein, the MPC is …
6th August 2012
The fall in personal insolvencies in Q2 echoes other evidence suggesting that households are finding it easier to cope with their debts. The easing squeeze on real incomes should help them further. But if unemployment starts to rise again as we expect, …
3rd August 2012
July’s CIPS/Markit report on services was thankfully not as bad as the manufacturing survey released earlier this week. But it was not that good either. Even leaving aside temporary factors, the big picture is that the economy is still struggling to grow. …
Gilt yields at the short end of the curve reached a new record low today and currently stand only a whisker above zero. If concerns about UK banks build, or if official interest rates fall further than markets expect, then we see no reason why the UK …
2nd August 2012
It is only a month since the Monetary Policy Committee (MPC) resumed its quantitative easing (QE) programme, so no action was likely at today’s meeting. Nonetheless, we expect both an interest rate cut and a further extension of the asset purchase …
July’s CIPS/Markit report on manufacturing demonstrated that the drag from the euro-zone’s debt crisis on the UK’s industrial sector is building. … CIPS/Markit Report on Manufacturing …
1st August 2012
The third consecutive quarterly contraction in Q2 left the UK economy lagging even further behind its main competitors. … Double-dip …
Broad money and lending growth plumbed new lows in June, supporting our subdued forecasts for both inflation and economic growth. … Monetary Indicators Monitor (Jul. …
31st July 2012
Despite the recent falls in inflation and unemployment, consumer sentiment remains very depressed. The Olympic Games might give confidence a near-term boost, but any uplift will probably be short-lived. … GfK/NOP Consumer Confidence …
June’s household borrowing figures seem to have been depressed by a series of temporary factors. Nonetheless, there are also signs that both the underlying supply of and demand for credit is fading. … Household Borrowing Monitor …
30th July 2012
July’s CBI Distributive Trades Survey indicated that retail sales growth slowed by more than retailers expected. Although real incomes may be rising modestly soon, we doubt that this will prevent sales growth from slowing further later this year. … CBI …
Having extended its asset purchases at July’s meeting, the Monetary Policy Committee (MPC) is unlikely to make any changes to its quantitative easing QE) programme this week. We expect more QE and a 25bps cut in rates in November. … Inflation Report to …
Last week’s surprisingly poor GDP figures once again called into question the reliability of the data. But the weakness is consistent with the low level of construction orders and the slowdown in the growth of tax receipts. And output would have to be …
A look at the so-called misery index, a simple sum of the unemployment and inflation rates, suggests that households should be starting to feel a bit happier. But we think that the recent improvement could be short-lived. … Improvement in misery index may …
27th July 2012
The news that the economy contracted for a third successive quarter has led to renewed warnings that the UK will lose its AAA credit rating. We have long been of the view that the weakness of the economy and the resulting impact on the fiscal position …
26th July 2012
The UK fell deeper into recession in the second quarter. Although some temporary factors pulled down output, it looks like there was some underlying contraction too. Even allowing for a decent bounce-back in Q3, our forecast for a 0.5% fall in GDP in 2012 …
25th July 2012
A further interest rate cut is looking increasing likely. We have pencilled in a 25bps reduction in November, taking official rates to 0.25%. And it is possible that the Monetary Policy Committee (MPC) takes rates even closer to zero, following the …
24th July 2012
The 30% increase in global agricultural commodity prices over the last month has prompted fears of a renewed squeeze on households’ incomes. However, food prices would have to rise much further to prevent a recovery in real pay. … Will global food prices …
23rd July 2012
A close look at last week’s figures suggests that some of the apparent divergence between the strong employment and weak GDP figures may be explained by the Olympics. Come Games time, more than 100,000 workers will be employed, and it seems that many of …
June’s public finance figures continued the underlying deterioration in the fiscal position evident since the beginning of the financial year. … Public finances (Jun. …
20th July 2012
Although consumer spending appears to have boosted at the start of June by the extended bank holiday, the fillip did not last for long and the underlying trend in spending still looks pretty mediocre. At least consumers seem willing to spend when an …
19th July 2012
