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June’s small rise in retail sales volumes suggested that the Jubilee provided only a negligible fillip. Indeed, abstracting from the temporary factors that have influenced spending recently, the underlying trend in sales still seems to be flat. … Retail …
19th July 2012
The latest regional figures show that the economic recovery in the Midlands has lost considerable pace. Meanwhile, although the official figures show that employment has continued to grow in most of the regions, surveys suggest that this recovery will run …
18th July 2012
The Government’s new scheme to use its balance sheet to boost private sector infrastructure spending is a step in the right direction. However, there are a number of reasons why the eventual boost to investment will probably be smaller than the Government …
The vote to do more quantitative easing (QE) this month was not unanimous, but the tone of the minutes was nonetheless pretty dovish. We still expect more asset purchases to be announced before the end of the year. … MPC Minutes (Jul.) & Labour market …
UK inflation fell by more than expected for the second month in a row in June. Inflation is finally within sight of the 2% target and we still expect it to be well below the target by the end of the year. … Consumer Prices …
17th July 2012
The effects of early June’s Jubilee celebrations are now starting to come through in the economic data. Last week’s releases provided evidence of the positive effects of the extended holiday, but unfortunately it won’t be long until we see the negative …
16th July 2012
There are some reasons to hope that households should soon find it a bit easier and cheaper to borrow. But whether households will want to borrow more is another matter. … Is lending to households set to …
13th July 2012
The further rise in the pound against the euro appears to reflect safe-haven demand for UK assets and the weakening outlook for the euro-zone economy. These factors could yet push sterling higher. … Rising pound dents UK export hopes …
UK government bond yields and equity prices have diverged over the last month. The Monetary Policy Committee’s (MPC’s) decision to resume quantitative easing (QE) appears to explain their decoupling. Previous tranches of QE have helped simultaneously to …
A further fall in inflation this year is largely “baked in the cake”. Here we outline the main factors set to influence inflation over the rest of 2012. By the end of the year, it could be below 1%. … What to expect from inflation for the rest of this …
11th July 2012
May’s industrial and trade figures were not quite as strong as they first appeared. Abstracting from the one-off factors affecting the official figures, it still seems as if an underlying slowdown is taking place in both sectors. … Industrial Production & …
10th July 2012
June’s BRC Retail Sales Monitor supports other evidence suggesting that the extended Jubilee holiday boosted demand on the high street in the early part of the month. But that boost seems to have been short-lived. … BRC Retail Sales Monitor …
Any chances of the economy escaping a third quarterly contraction have receded in light of the latest surveys and official data. Admittedly, June’s CIPS surveys point to output being flat over the quarter, but they may well have understated the …
9th July 2012
The 1%m/m rise in the Halifax index in June does little to alter the underlying trend which shows that house prices are grinding lower, albeit only slowly. … Halifax House Prices …
5th July 2012
The near-term inflation outlook has improved significantly in recent weeks. Inflation has fallen below 3% for the first time since the end of 2009. It will come under further downward pressure from the recent drop in oil and petrol prices. And we still …
4th July 2012
June’s CIPS/Markit report on services showed that activity in the biggest part of the economy is weakening, implying that the MPC is almost certain to decide on more quantitative easing (QE) at its meeting tomorrow. … CIPS/Markit Report on Services …
The low level of housing equity withdrawal is an indication of how the subdued housing market may be limiting households’ ability and willingness to spend. … Housing Equity Withdrawal …
Unsecured consumer credit growth has picked up, although we think that this could be an indication of consumer weakness rather than strength. There are still few signs of a more widespread recovery in household borrowing. … Household Borrowing Monitor …
3rd July 2012
The weakness of money and lending growth is one factor likely to prompt the Monetary Policy Committee (MPC) to announce more quantitative easing (QE) this week. … Monetary Indicators Monitor …
May’s decline in mortgage approvals was surely related to the fact that lenders are once again reducing the availability of mortgage credit. Against a backdrop of renewed recession in the UK and the escalating crisis in the euro-zone, mortgage approvals …
The improvement in the CIPS report on manufacturing in June mainly reflected a bounce-back following May’s unexpectedly sharp fall, rather than any fundamental improvement. The big picture is that the manufacturing sector is still in decline. … …
2nd July 2012
There have been plenty of signals over the past few weeks that more quantitative easing (QE) is on its way. Although the Committee could wait until August’s Inflation Report, there seems to be little point in doing so when the case for more stimulus is so …
If core inflation falls as we expect, it now looks like inflation could get as low as 0.5% or so in the early part of next year. … Inflation outlook improves …
With the GfK/NOP measure of consumer confidence unchanged in June, the anticipated boost to consumer spirits from the Jubilee celebrations does not seem to have materialised. … GfK/NOP Consumer Confidence …
29th June 2012
Today’s news on the state of households’ finances revealed that the continued drop in real income is taking its toll on consumer spending, as well as preventing households from taking the steps required to repair their balance sheets. … Households hit by …
28th June 2012
The economy is still estimated to have contracted at the start of the year and it is probably still in recession now. We continue to expect GDP to shrink by 0.5% this year and expand only modestly next year. … National Accounts (Q1) & Credit Conditions …
June’s CBI Distributive Trades Survey suggested that demand on the high street picked up very strongly in June, probably reflecting the impact of the extended Jubilee holiday. However, we do not expect this pick-up to last. … CBI Distributive Trades …
27th June 2012
A referendum on the UK’s membership of the EU seems to be becoming a more realistic prospect. We think that concerns about the economic disruption if the UK were to leave are overdone. In fact, the economy could end up better off. … Would leaving the EU …
May’s public finance figures suggested that the double-dip recession is weighing on the public finances. … Public finances (May) …
26th June 2012
May’s inflation figures should help to strengthen the case for the minority pushing for more QE. Although core inflation rose from 2.1% to 2.2%, this primarily reflected base effects. Our seasonally-adjusted measure of the monthly change in core prices …
25th June 2012
The changeable weather, petrol panic-buying and the Jubilee celebrations have all made consumer spending quite volatile recently. However, the underlying picture remains one of a lacklustre recovery. … Spending remains …
22nd June 2012
May’s strong rise in the official measure of retail sales largely reflected the fading of the temporary factors that depressed spending in April and so should not be interpreted as a sign that consumers have materially loosened their purse strings. … …
21st June 2012
The latest regional figures show that the northern and devolved regions of the UK have begun to bear more of the brunt of the economic slowdown. It seems likely to be only a matter of time before this weakness is reflected in the regional employment …
20th June 2012
June’s MPC minutes left an extension of quantitative easing (QE) within the next month or two looking even more likely. We are sticking with our forecast for another £50bn of gilt purchases at the upcoming July meeting. … MPC Minutes (Jun.) & Labour …
The further fall in inflation in May was a nice surprise given that we and the consensus had expected it to hold broadly steady. We continue to expect inflation to be back below its target before the end of the year. … Consumer Prices …
19th June 2012
The measures announced at Thursday’s Mansion House dinner are a bold attempt to get credit flowing through the economy again. Most crucially, by linking the provision of cheap funds to new lending, they reduce the chances that banks will just sit on any …
18th June 2012
Most households should be benefiting from the fall in inflation, but lower income households should gain the most as food and energy price inflation ease further. … Who is benefiting most from falling …
15th June 2012
April’s trade figures are likely to dampen any positive mood following last night’s policy announcements, with an unexpectedly large widening in the deficit compared to March. … Trade …
UK policymakers last night announced that they are significantly stepping up their efforts to try to cushion the UK economy from the effects of the euro-zone crisis. The measures should help to ease strains in the banking sector, but there are question …
The further rally in UK government bonds over the last month – resulting in yields reaching new record lows – has mainly reflected an increase in global demand for safe-havens in the wake of the further intensification of the euro-zone debt crisis. But …
14th June 2012
The recent swings in weather conditions and retail sales have brought to the fore the issue of the impact of the weather on consumer spending. There are occasions when the weather can have an impact on overall purchases. But in general, weather effects …
12th June 2012
April’s industrial production figures suggested that the sector is on course to make yet another negative contribution to GDP growth in the second quarter. … Industrial Production …
The UK’s return to recession in the past two quarters has been driven by a fall in stockbuilding. Stockbuilding is an erratic component of GDP and so this weakness might just be temporary. However, if the fall is a sign of firms’ lack of confidence in the …
11th June 2012
In the midst of a generally gloomy economic situation, the last week has seen a string of fairly positive domestic news. But we doubt that May’s resilient picture will last. … One swallow does not a summer …
May’s producer prices figures confirmed that price pressures at the start of the inflation pipeline have begun to fade again, strengthening the case for thinking that CPI inflation is on course to fall eventually to a very low rate. … Producer Prices …
8th June 2012
Lingering upside risks to inflation prompted the Monetary Policy Committee (MPC) to keep its asset purchase programme on hold at today’s meeting, despite the increasing turmoil in the euro-zone. However, we continue to think that more quantitative easing …
7th June 2012
May’s CIPS/Markit report on services suggested that activity in the biggest part of the economy is holding up better than in the industrial sector, making the MPC decision at midday today even more finely balanced. We still think that the Committee could …
The small rise in the Halifax house price index for May seems to be in keeping with other evidence that house prices are stuck in a rut, at least at the national level. … Halifax House Prices …
May’s BRC Retail Sales Monitor supported other evidence suggesting that demand on the high street has recovered following April’s washout. However, there are reasons to think that May’s resilience is unlikely to last. … BRC Retail Sales Monitor …
The debate around fiscal policy has tended to become polarised between advocates of austerity, who argue that any relaxation of deficit reduction would bring down the wrath of markets, and opponents, who see consolidation acting as a significant drag on …
6th June 2012
