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The activity surveys and the official data we have so far suggest that quarterly GDP growth in Q2 was just 0.2% or 0.3%. Part of this weakness just reflects a number of temporary adverse factors affecting growth in Q2, most obviously the extra bank …
12th July 2011
June’s producer prices figures showed that cost pressures in the industrial sector are still intensifying, but at a slower pace than before. … Producer Prices …
9th July 2011
With the economic recovery still showing few signs of regaining momentum, the case for raising interest rates is looking weak. Indeed, we think that over the next couple of years renewed quantitative easing is more likely than an increase in interest …
8th July 2011
May’s rise in manufacturing output only just offset April’s bank holiday-related drop, adding to other evidence suggesting that the industrial recovery is weakening. … Industrial Production …
The bounce in house prices in June is unlikely to signal that the downwards pressure on house prices has abated. With the squeeze on real pay likely to intensify until well into next year, house prices still have further to fall. … Halifax House Prices …
7th July 2011
A raft of negative news from the high street suggests that falling real incomes are taking their toll on the consumer sector. … Consumers bowing under the …
6th July 2011
June’s UK CIPS/Markit report on services suggested that the recovery in the biggest part of the economy has regained a little momentum. But growth in the sector, and indeed the economy as a whole, remains very sluggish. … CIPS/Markit Report on Services …
Inflation fell sharply in most countries in the region last month, due in large part to a surprise drop in food prices. This appears to have been driven by one-off factors relating to the outbreak of e.coli in Germany. As such, we may see a bounce in food …
5th July 2011
Last week brought news of a string of collapses among well-known retailers. Meanwhile, even the relative winners on the high street are having to work harder to gain sales, with discounting reportedly particularly intense in the past couple of weeks. … …
June’s CIPS/Markit report on manufacturing appeared to confirm that the previously robust recovery in the industrial sector is rapidly losing steam. … CIPS/Markit Report on Manuf. …
2nd July 2011
There was little in the Bank of England’s latest Credit Conditions Survey to suggest that bank lending is set to pick up any time soon. … Credit Conditions (Q2), Cons. Conf. (Jun.) & Pay settlements …
1st July 2011
The Nationwide house price index was unchanged in June. But the regional indices show that the resilience of the national index over the past year or so is largely down to London where, in contrast to the rest of the country, house prices continue to …
There are still no signs of any pick-up in broad money or lending growth, suggesting that the medium-term outlook for both economic growth and inflation remains pretty weak. … Monetary Indicators Monitor …
30th June 2011
The latest mortgage lending figures confirm that housing market activity remains very weak. That’s unlikely to change while the squeeze on real pay continues. … Mortgage Lending …
There were no major changes to the overall growth picture in Q1’s National Accounts. But the economy does not appear to have been making as much progress towards rebalancing as previously appeared to be the case. … National Accounts & Balance of Payments …
29th June 2011
Last week’s public finances figures for May brought the clearest signs yet that the weakness of the economy is starting to hinder the Government’s fiscal consolidation efforts. … Sagging tax receipts put cracks in Plan …
28th June 2011
The minutes of June’s MPC meeting suggested that the Committee is moving even further away from a near-term interest rate rise – with more members starting to contemplate giving the economy extra support. … MPC Minutes …
23rd June 2011
May’s public finances figures brought the clearest signs yet that the weakness of the economy is having an adverse effect on the public finances. … Public Finances (May) & CBI Ind. Trends …
22nd June 2011
The Greek debt crisis escalated last week, but the UK has remained immune from the contagion fears that have spread to other debt-ridden countries in Europe. … UK escapes Greek contagion …
21st June 2011
Consumer spending has fallen for two quarters in a row, meaning that the household sector is now technically back in recession. Although high street spending picked up in April, that appears to have been only a temporary improvement in response to the …
17th June 2011
UK interest rate expectations and government bond yields have continued to fall over the last month, predominantly reflecting the continued flow of weak data on the UK’s economic recovery. Rate expectations and bond yields have also fallen in the US and …
June’s UK CIPS/Markit report on services suggested that the recovery in the biggest part of the economy has regained a little momentum. But growth in the sector, and indeed the economy as a whole, remains very sluggish. … Retail Sales …
The labour market figures are still giving a bit of a mixed picture about how well the jobs recovery is faring. But the squeeze on real pay is very clear – reinforcing our concerns about the outlook for consumer spending. … Labour Market Data …
16th June 2011
May’s unchanged CPI inflation rate represents just a temporary pause in an upward trend which could take inflation to 5.5% or above. But medium-term influences still point to sharp falls in inflation next year and beyond. … Consumer Prices …
15th June 2011
The Chancellor is stuck between the proverbial rock and hard place. Yes, the fiscal squeeze is stifling the recovery. But abandoning the consolidation would not guarantee that growth prospects would be any better. … Between a rock and a hard …
14th June 2011
April’s industrial production figures were heavily distorted by one-off factors and were therefore not nearly as bad as they look. Still, with the trend in activity slowing and cost pressures still very strong, the outlook for industry is far from rosy. … …
11th June 2011
9th June 2011
April’s UK trade figures suggested that the big boost to GDP growth in the first quarter from the external sector is unlikely to be repeated this quarter. … Trade …
The ongoing concerns over the lack of a “Plan B”, should the economy be weaker than the Government’s fiscal plans assume, underline the need for interest rates to stay low for a long time yet. … Plan B worries underline low interest rate …
7th June 2011
The latest small rise in the Halifax house price index does little to change the bigger picture that prices on this measure are trending lower. Given the struggling economic recovery and the fact that the fiscal contraction will only get more severe from …
There is little chance of an interest rate rise this month. Last month’s Inflation Report did not suggest that an imminent rate hike was required. And the economic data have retained a fairly soft tone. There is still a danger of a rise later this year. …
6th June 2011
On the face of it, the sharp drop in last week’s manufacturing PMI suggested that output in the sector has actually started to fall again. It is clearly disappointing that even the previously bright spot of the recovery is now starting to crumble. … Even …
May’s CIPS/Markit report on services was thankfully not as bad as the manufacturing survey released earlier this week. Nonetheless, the slight deterioration provided further evidence that the economic recovery is still struggling. … CIPS/Markit Report on …
3rd June 2011
The relative performance of the regions of the UK over the next few years depends in part on their different exposure to the public sector and the fiscal squeeze. The fringes of the UK – and Northern Ireland in particular – stand to be worst affected, but …
2nd June 2011
The long-awaited re-balancing of the economy seems to be underway, with net trade making a huge positive contribution to quarterly GDP growth in Q1. However, the 1.3% contraction in domestic demand was not pretty, driven by falls in both consumer spending …
The latest monetary indicators show that broad money growth remains exceptionally weak, suggesting that the recent slowdown in the pace of economic recovery may be more than just a temporary soft patch. … Monetary Indicators Monitor …
1st June 2011
Today’s manufacturing and household borrowing data provided further evidence that the UK’s economic recovery is now struggling across the board. … CIPS/Markit Report on Manuf. (May) & H'hold Borrowing …
A re-balancing of the economy has been needed for some time – but this wasn’t quite what we had in mind! The danger now is that domestic demand continues to weaken, while net trade is unable to keep up this degree of support. … Re-balancing in the …
30th May 2011
December’s producer prices figures revealed that cost pressures in the manufacturing sector are continuing to intensify. But this should not prevent consumer price inflation from falling back in the medium term. … Nationwide House Prices …
27th May 2011
Signs that the UK’s economic recovery has lost steam have taken their toll on UK markets. Interest rate expectations have fallen back sharply, even though CPI inflation looks on track to rise to near 5% later this year. Meanwhile, UK bonds have …
26th May 2011
The lack of any upward revision to UK GDP in Q1 leaves the economic recovery still looking disappointingly weak. Of course, we are now over halfway through the second quarter. But while high street spending has done well over the last couple of months, …
25th May 2011
April’s public finance figures have got the new fiscal year off to a bad start. We continue to doubt that the Government will be able to get borrowing down to meet the fiscal projections this year or next. … Public Finances …
24th May 2011
The breakdown of the strong 1.1% monthly rise in sales volumes in April suggested that this strength primarily reflected a temporary boost from better weather and the Royal Wedding. What’s more, last week’s data underlined the pressures still bearing down …
23rd May 2011
Consumer spending received a boost in April from the favourable combination of the good weather, the later fall of Easter and the Royal Wedding. However, this support is only temporary and we suspect that consumer spending has subsequently reverted to the …
19th May 2011
April’s official measure of retail sales supported other evidence showing that the high street enjoyed a bit of a bounce last month. However, it looks like this strength primarily reflected the temporary boost from better weather and the Royal Wedding and …
The good news on inflation did not last for long, with April’s sharp rise more than reversing March’s drop. However, the increase was driven by temporary factors and we still expect inflation to fall back next year. … Consumer Prices …
17th May 2011
The industrial recovery appears to have come off the boil. However, although the manufacturing sector now looks unlikely to return to the impressive 5% plus annual growth rates seen towards the end of last year, we think that the recovery still has some …
16th May 2011
On the face of it, last week’s Inflation Report – showing inflation projected to be on target in two years’ time – endorsed market expectations of a modest rise in interest rates over the next couple of years. But there are a number of reasons why …
The continued weak news on the UK’s economic recovery and recent falls in commodity prices have led markets to revise down further their expectations for official interest rates. Overnight index swap (OIS) markets now expect official interest rates to …
12th May 2011
The recent slowdown in the pace of recovery is probably due in part to the fiscal tightening measures that have already been put in place. But with the bulk of the government spending cuts yet to come, the downward pressure from the fiscal squeeze is set …
