Chief Economist’s Weekly Briefing – Gently does it

pound-414418_1280 (3).jpgDebt looms large not just in the UK but across major economies. So rate hikes have to proceed very gently.

The producers. A decent August for UK production as output rose by 0.2% on the month. If it manages the same in September then production should rise by 0.9% in Q3, about treble its recent pace. Manufacturing is enjoying a mini-renaissance. Output rose 0.4% on the month and turnover is up 6% on the year. It’s an equal opportunity buoyancy too, benefiting common-or garden manufacturers as well as the high-end techie stuff. What’s not to like? Continue reading

Chief Economist’s Weekly Briefing – On the horizon

retail-1424043_1280.jpgYou can’t keep the UK shopper down. The retail sales figures for August are testament to that. Is a hike in interest rates on the way to cool things off?

Boom! UK shoppers hit the shops with gusto in August. The amount spent grew by 1.0%m/m and 5.6%y/y. The volume purchased, which adjusts the amount spent for inflation, rose 1.0%m/m and 2.4%y/y. Rising employment means more people are earning but that can’t account for retail sales growth. Either we dipped into our savings or we borrowed more. The Monetary Policy Committee will have noticed the rise in inflation to 3.2%. That will strengthen the hand of members who believe that the time for a rise in Bank Rate is coming closer. Continue reading

Chief Economist’s Weekly Briefing – All work and no pay

people-2568530_1920.jpgWith unemployment at a 40-year low, wages should be rising at roughly twice their current pace. That they are not reflects rising supply, a shift to self-employment, less job switching than usual and, above all, stagnant productivity. It can also stump central banks used to the conventional relationship between work and pay. Continue reading

Chief Economist’s Weekly Briefing – Lone star

The UK economy is hardly firing when growth accelerates by half, only to reach 0.3%q/q. Yet many would settle for that given the predictions made last year. For that thank a surprisingly strong service sector that’s supporting generalised weakness elsewhere. Until the other parts of the economy start moving, growth will remain sluggish.menu-coffee-outside-cafe.jpg Continue reading

Chief Economist’s Weekly Briefing – Light relief

Does June’s unexpected fall in the rate of inflation herald the start of a retreat? It seems unlikely. The fall in sterling that has helped push inflation higher is still filtering through into consumer prices. And even at the lower rate inflation remains uncomfortably above wage growth. That’s a considerable headwind for the economy.


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