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September’s industrial production figures were weaker than the estimates contained in the preliminary estimate of Q3 GDP. The industrial sector seems to be teetering on the brink of recession. … Ind. Production (Sep.) & BRC Retail Sales Monitor …
8th November 2011
After voting to expand its quantitative easing (QE) programme last month, the Monetary Policy Committee (MPC) looks likely to pause for breath at this week’s policy meeting. Nonetheless, with the external environment deteriorating rapidly and inflation …
7th November 2011
The latest rise in house prices in October adds to the evidence that a lack of properties for sale is supporting prices. However, if the recent signs of a fresh downturn in the labour market are extended, that support is likely to weaken over the next few …
At first glance, last week’s activity data painted a mixed picture on the recent health of the UK’s economic recovery. However, a closer inspection suggests that the economy is heading back into recession. … From stagnation to …
An across-the-board deterioration in the economic data over the last month has left the UK economy on course to contract in the fourth quarter. While the first estimate of GDP revealed that output grew by 0.5% q/q in Q3, this largely reflected one-off …
3rd November 2011
October’s CIPS/Markit report on services suggested that the overall economy is likely to contract in the fourth quarter and lent further support to our view that inflation will plummet next year. … CIPS/Markit Report on Services …
The slightly better than expected GDP figures for the third quarter have not altered our view that the UK economy is likely to stagnate at best over the next year or so, with growing risks of another major recession. … GDP Preliminary Est. (Q3) & CIPS …
1st November 2011
The latest rise in the Nationwide measure of house prices is further confirmation that, for now, subdued demand for housing is being offset by a lack of properties for sale. But we suspect that house prices will start to fall again next year. … …
The pronounced weakness of the latest broad money and lending data suggests that the Monetary Policy Committee (MPC) was right to restart QE in October. However, the MPC seems to be getting less ‘bang for its buck’ from QE2 than it did from the first …
31st October 2011
On the face of it, hopes that the UK economy is finally ‘rebalancing’ were given a shot in the arm last week with the release of the Economic Accounts and Balance of Payments figures. However, a closer look suggests that progress has been piecemeal …
The Balance of Payments and Economic Accounts releases for the second quarter suggested that the economy is a bit better balanced than previously thought. Nonetheless, we doubt that these improvements will be sustained. … Balance of Payments & Economic …
26th October 2011
Last week’s consumer prices data for September may have caused some members of the Monetary Policy Committee to swallow hard after their decision to extend the quantitative easing (QE) programme earlier in the month. But before too long, the combination …
25th October 2011
On the face of it, September’s public finance figures suggested that the chance that the Government will bring borrowing down in line with its fiscal plans has increased. But we doubt that the figures have fully reflected the recent economic slowdown and …
22nd October 2011
September’s rise in retail sales volumes was a rare bright spot in an otherwise terrible set of consumer data released over the last month. Consumer confidence has remained at a very low level, inflation has surged and job losses have gathered pace – all …
21st October 2011
The Monetary Policy Committee’s (MPC’s) decision at the start of October to undertake £75bn of asset purchases by February has not yet provided much of a boost to UK markets. In 2009/10, QE reduced the spread of gilt yields over risk-free interest rates …
September’s retail sales figures were a bit stronger than we and the consensus had expected, but hardly suggested that a recovery on the high street is now underway. … Retail Sales …
The MPC’s unanimous vote for more QE in October and its growing concerns over the outlook for the economy suggest that further extensions of its bond purchase programme are likely next year. … MPC Minutes …
20th October 2011
September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Consumer Prices …
19th October 2011
The euro-zone debt crisis is likely to have severe adverse effects on the UK economy at a time when domestic contractionary forces are building. We now expect UK GDP growth to slow from about 0.8% this year to around zero in 2012, with a high chance of a …
18th October 2011
Last week’s data suggested that conditions in the labour market are now deteriorating again at a rapid pace. Rather than being just a blip, we fear that this will mark the beginning of another prolonged rise in unemployment. … Is the labour market now …
September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Trade …
14th October 2011
The latest regional data suggest that the northern regions of the UK have recently managed to grow at a similar, albeit sluggish, pace to those in the South. However, conditions in the northern labour and housing markets are still considerably worse than …
13th October 2011
The latest news on the labour market confirmed that the downturn in the economy is having an increasingly adverse impact on both employment and wages growth. … Labour Market Data …
August’s industrial production figures provided yet more evidence that the recent turmoil in financial markets and slowdown in the global economic recovery have taken their toll on the manufacturing sector. … Ind. Production (Aug.) & BRC Retail Sales …
12th October 2011
Despite the mixed evidence on the effectiveness of the first bout of quantitative easing back in 2009, the MPC is right to give the policy another try. It may nudge the pound lower and could have positive effects on confidence by showing that the …
11th October 2011
September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Producer Prices …
8th October 2011
The MPC’s decision to re-launch its quantitative easing programme today confirms that the Committee finally recognises that the major threat to the UK is renewed recession, not inflation. But previous experience suggests that the positive impact on the …
7th October 2011
The latest fall in the Halifax house price index seems to echo recent downbeat news on the economy. While low interest rates make judging the timing difficult, the gloomy economic outlook suggests that house prices still have some way to fall. … Halifax …
The last month has brought further confirmation that the recovery has ground to a complete halt. Quarterly GDP growth was revised down from 0.2% to 0.1% in Q2. Even that growth was dependent on rises in government spending and inventories that seem …
6th October 2011
Q2’s national accounts and September’s CIPS report on services brought further bleak news on the UK economy. Not only was the recession back in 2008/09 deeper than previously thought, but the economy is on the brink of a renewed contraction. … National …
With the news on the UK and global economies continuing to deteriorate, it is now a question of when, rather than if, the Monetary Policy Committee will restart its quantitative easing (QE) programme. While we would advocate immediate action, the …
4th October 2011
Q2’s national accounts and September’s CIPS report on services brought further bleak news on the UK economy. Not only was the recession back in 2008/09 deeper than previously thought, but the economy is on the brink of a renewed contraction. … …
The release of the quarterly national accounts this week seems likely to receive more attention than usual. Not only will the release contain the first expenditure breakdown of Q2 GDP which would normally have been published earlier, but the older GDP …
The continued weakness of the money supply figures supports the case for thinking that inflation will fall back sharply next year and therefore bolsters the arguments of those on the Monetary Policy Committee (MPC) seeking to restart quantitative easing …
30th September 2011
The unexpectedly strong rise in mortgage approvals, combined with a marginal rise in the Nationwide house price index, might suggest that the risk of further house price falls is receding. But, in our view, the increasingly fragile economic outlook still …
Renewed concerns over the UK’s fiscal position have centred on suggestions that, with less spare capacity in the economy than previously thought, the structural budget deficit is correspondingly bigger. This might suggest that the Government needs to cut …
27th September 2011
Signals from the Monetary Policy Committee that it is likely to recommence quantitative easing in the very near future have provided only a muted boost to UK asset prices. While gilt yields have continued to fall, equity prices have remained very soft …
24th September 2011
The recent weakness of the news on the domestic economy and the deterioration in the overseas outlook – particularly in the euro-zone – has made us concerned that even our bearish forecasts for UK GDP growth will not be met. As a result, we now expect …
22nd September 2011
The minutes of September’s MPC meeting strongly suggested that QE2 will be launched soon, while August’s public finances threw more doubt on the fiscal plans. … MPC Minutes (Sep.) & Public finances …
Attention has focussed in recent days on the wiggle room in the current fiscal plans for greater than currently planned public sector investment. But the Government could also boost investment without spending more public sector money by encouraging …
Last week saw a slew of news on inflation which seemed to suggest that, while it is still on course to rise over the next few months, it will drop sharply next year. Indeed, the softness of medium term indicators suggests that below target inflation will …
20th September 2011
The near-term outlook for consumer spending looks exceptionally weak. Surveys suggest that job cuts in the private sector will gather pace in the coming months. Consumer confidence fell in August from its already very low level and has therefore continued …
16th September 2011
August’s retail sales figures provided further evidence that high inflation is killing off any hope of a recovery on the high street. … Retail Sales …
None of the regions of the UK were immune from the severe economic slowdown in August. Meanwhile, public sector job cuts have hit the South West and North East particularly hard. … Regional Monitor …
15th September 2011
September’s unexpectedly sharp rise in headline CPI inflation from 4.5% to 5.2% came as a bit of a nasty surprise. But the key point is that inflation is very close to a peak and should soon start to fall back quite sharply. … Labour Market Data …
August’s consumer prices figures brought further hope that the peak in inflation is close. Lingering inflation worries amongst some MPC members should not stand in the way of more quantitative easing for very long. … Consumer Prices …
14th September 2011
We have long argued that the MPC’s next move would be to loosen monetary policy by restarting quantitative easing (QE). But suggestions that they might do so as soon as last week always looked a bit premature. For a start, while the latest activity …
13th September 2011
August’s producer prices figures provided the strongest indication yet that cost pressures in the industrial sector have peaked. … Producer Prices …
10th September 2011
9th September 2011
We think consumer price inflation probably rebounded a touch last month, but still expect it to drop below 5% by the end of the year. As it does, policymakers are likely to start loosening controls on credit. … Industrial Production …
8th September 2011
