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March’s industrial production figures poured more cold water on hopes that the sector will be able to keep up its recent support for the overall economic recovery. … Industrial Production …
12th May 2011
May’s Bank of England Inflation Report left the outlook for interest rates finely balanced. But we remain of the view that the markets are overstating the likely level of rates over the next couple of years. … Bank of England Inflation Report …
11th May 2011
The widening in the UK trade deficit in March was all but inevitable after such a sharp narrowing in the previous two months and the big picture is that the trade position is still looking a lot better than it was a few months ago. … Trade …
After stabilising in the past few months, the main house price indices again appear to be on their way back down. Given the weak activity data and the overvaluation in the market, this should come as little surprise. … Halifax House Prices …
9th May 2011
This will be the fourth Inflation Report in a row that the MPC will be in the uncomfortable position of revising down its GDP growth forecast for 2011 but revising up its inflation forecast. But of course the big question is what happens to the inflation …
April’s producer prices figures showed that cost pressures have continued to build in the manufacturing sector, but more recent developments suggest that these pressures may turn out to be short-lived. … Producer Prices …
6th May 2011
The news that GDP rose by only 0.5% in Q1 means that underlying activity has been broadly flat over the past six months. With the full effect of the fiscal tightening yet to be felt, we expect the recovery to struggle to regain momentum over the rest of …
5th May 2011
Given the dismal state of the recovery, it was hardly a surprise that the Monetary Policy Committee kept interest rates on hold today. Most forecasters have reacted to the recent run of weaker news by simply pushing back their expected timing of the first …
The drop in April’s CIPS/Markit report on services echoed the falls already seen in the sister manufacturing and construction surveys and provided further evidence that the economic recovery is struggling to regain momentum. The MPC therefore still looks …
It is often assumed that the fiscal squeeze is driving the current weakness of consumer spending and that government measures – such as a VAT cut – are all that are needed to get the consumer recovery back on track. But real pay began to fall long before …
Monetary indicators continue to show that broad money growth is exceptionally weak, consistent with inflation eventually falling sharply in the medium term. … Monetary Indicators Monitor …
4th May 2011
Today’s data suggested that the housing market remains in a fragile state, while the construction sector seems to have started the second quarter on a weak footing. … Household Borrowing (Mar.) & CIPS Construction …
March’s fall in inflation and a run of weak news on the economic recovery have left an interest rate rise at this month’s Monetary Policy Committee meeting looking relatively unlikely. With inflation likely to rise further over the coming months, a rate …
3rd May 2011
April’s CIPS manufacturing survey provided further evidence to suggest that the best days of the industrial recovery are behind us. … CIPS/Markit Report on Manufacturing …
Clearly there is a limit to how much weight anyone, the MPC included, should put on the provisional GDP figures. Nonetheless, it would take a pretty substantial upward revision to leave the recovery looking even half decent. … Recovery, what …
2nd May 2011
Q1’s GDP figures suggest that the recovery has completely ground to a halt since last autumn, with underlying activity pretty much stagnant for the past six months. The chances of an interest rate rise next month now look even slimmer. … Preliminary GDP …
27th April 2011
April’s CBI industrial trends survey provided a bit more evidence to suggest that the manufacturing recovery is no longer gaining pace. … CBI Industrial Trends Survey (Apr. and …
26th April 2011
At first glance, the marriage of Prince William to Miss Catherine Middleton on Friday 29th April hardly seems to be an important economic issue that merits close examination. Nonetheless, the Royal Wedding is likely to add to the volatility of the …
25th April 2011
Just as the snow-related distortions have faded, Easter timing effects have come along to muddle the picture instead. But as far as we can tell, the underlying trend in consumer spending is flat at best. … Easter muddles the …
21st April 2011
March’s retail sales figures were slightly more upbeat than the other recent news on consumer spending. The public finance figures were a bit better than expected too. But it is hard to be optimistic when consumers’ real incomes are being squeezed so …
The dovish tone of the minutes of April’s MPC meeting has further reduced the chances of a rise in interest rates at next month’s meeting. If the recent weaker tone of the economic data is sustained, we still think that a rate hike this year can just …
20th April 2011
Rising commodity prices have been boosting import values, meaning that the underlying trade deficit is not quite as bad as the headline figures suggest. Nonetheless, this goes only some of the way to explaining the UK’s disappointing trade performance …
19th April 2011
March’s fall in CPI inflation has given the doves on the MPC some welcome relief in the run-up to the Committee’s crucial May meeting. Granted, it is far too early to proclaim that the inflation threat has now passed. Indeed, inflation still looks set to …
18th April 2011
Weaker data on the strength of the UK’s economic recovery, combined with an unanticipated fall in CPI inflation from 4.4% to 4% in March, has made markets much less confident that the Monetary Policy Committee (MPC) will raise interest rates over the next …
13th April 2011
The labour market recovery is looking a bit healthier, with the private sector apparently managing to offset job cuts in the public sector. But the continued falls in real pay do not bode well for consumer spending. … Labour Market Data …
March’s drop in both inflation and consumer spending clearly relieves some of the pressure on the Monetary Policy Committee (MPC) to raise interest rates soon. Although inflation is probably set to resume its upward trend later this year, we still expect …
12th April 2011
In theory, GDP has the scope to rise pretty sharply in Q1, by over 1%. But the latest data suggests that the rebound might have been rather more modest than this. … Will Q1 …
11th April 2011
March’s producer prices figures show that cost pressures in the manufacturing sector are continuing to build. But data on the construction sector suggest that the underlying strength of the recovery is still pretty weak. … Producer Prices …
8th April 2011
There had been little to suggest that the Committee had altered its view since the last meeting, so the no-change decision today was of little surprise. However, the next meeting – coinciding with May’s Inflation Report – is the key crunch time. We still …
7th April 2011
The UK economy is still making little progress on rebalancing away from consumers to other parts of the economy. Until net trade starts to improve, a strong and sustainable recovery seems unlikely. … Still few signs of …
February’s drop in industrial production is not quite as bad as it first looks. Nonetheless, taken with the drop in March’s CIPS manufacturing survey, it may be that the industrial recovery is past its peak. … UK Industrial Production …
6th April 2011
Last month’s marginal increase in house prices is unlikely to set a trend for the rest of this year. With lenders further restricting the availability of credit and the fiscal squeeze intensifying today, there are convincing reasons why house prices …
The latest news on the services sector suggested that the underlying recovery in the biggest part of the economy has picked up steam. But we would be surprised if the sharp improvement is sustained and, on balance, still expect the MPC to hold fire at …
5th April 2011
There is little to suggest that the Monetary Policy Committee has shifted its position at all since its last meeting. A rate rise therefore does not look very likely. A May hike, coinciding with the next Inflation Report, is a bigger risk. But we think …
4th April 2011
The next wave of the fiscal consolidation will hit households this week on so-called “worse off Wednesday”, the first day of the new financial year. We expect the net impact of the main measures introduced this week to knock £2.3bn or 0.25% off …
Last week’s news suggested that the UK economy is still making little progress on the rebalancing that is needed to pave the way for a strong and sustainable recovery. … Slow progress on …
March’s CIPS/Markit report on manufacturing was not disastrous but perhaps poured some cold water on hopes that the industrial sector will entirely avoid the emerging slowdown in the domestic and global recoveries. … CIPS/Markit Report on Manufacturing …
1st April 2011
The Bank of England’s latest survey suggested that credit conditions remain pretty tight, suggesting that a significant pick-up in bank lending still looks unlikely any time soon. Meanwhile, there was nothing too concerning from an inflationary point of …
31st March 2011
The latest set of monetary indicators add to the reasons to think that medium-term price pressures in the economy are still very weak and that inflation will therefore fall back next year. … Monetary Indicators Monitor …
29th March 2011
Today’s UK data suggested that there is still little evidence of a significant rebalancing in the economy. Indeed, we remain sceptical that the economy is now firmly back on the path to strong health. … Nat. Accounts, Bal. of Pay. (Q4) & H'hold borr. …
We think that the Chancellor was probably right to stick pretty rigidly in last week’s Budget to his austerity plans. Nonetheless, we have said it before and we will say it again – the Government needs a Plan B should the economy turn out to be weaker …
28th March 2011
The weather-related volatility of the past few months has made reading the underlying trend of consumer spending difficult. However, it is increasingly looking like consumers have become much more cautious since the initial post-snow bounce in spending at …
24th March 2011
February’s official retail sales figures added to the increasing amount of evidence suggesting that consumer spending growth has slowed sharply since the initial bounce in spending at the start of the year. … UK Retail Sales (Feb …
The minutes of March’s MPC meeting show that most Committee members are still reluctant to start tightening monetary policy when there is so much uncertainty about the growth and inflation outlook. A near-term rate rise is still a significant risk, but is …
23rd March 2011
This checklist is intended to help clients keep track of the important measures and numbers announced during the Chancellor’s Budget speech at 12.30pm and to provide some instant context. … UK Budget Checklist …
February’s public finances and consumer prices numbers presented a distinctly unfavourable backdrop to tomorrow’s Budget. … Consumer Prices & Public Finances …
22nd March 2011
The catastrophic events in Japan have contributed to a reassessment of the likely path of UK interest rates that was already underway before the tragedy struck. Nonetheless, a strong signal from the Government in Wednesday’s Budget that it intends to …
21st March 2011
The recent falls in UK equity prices, interest rate expectations and gilt yields have not simply been a response to the Japanese earthquake. Indeed, all had started to fall prior to the 11th March as higher oil prices caused investors to question the …
17th March 2011
The latest labour market figures gave slightly mixed messages. But the fundamental picture is that both activity and price pressures in the labour market remain weak. … UK Labour Market Data …
16th March 2011
News on consumer spending has been trickling in over the last couple of weeks. While each piece of news has not been significant on its own, put it all together and a pretty convincing picture of a sharp slowdown in consumer spending growth emerges. … …
14th March 2011
