This month marks two years since the Brexit vote, and in the intervening period, we have become fixated with the relationship between the UK and the EU. However, in many respects what is going on within the EU itself is potentially even more significant, and the next two years could be defining for the bloc.
Rising oil prices means that, like the eponymous shark Jaws, inflation keeps coming back. Manufacturers report tighter margins and consumers face a summer of squeezed budgets. Just when you thought it was over eh!
Not a lot to write home about in last week’s economic data. In the round, it was fairly soft. But at least the public finances are improving. Perhaps important with a certain ‘national institution’s’ 70th birthday on the way. Continue reading
The squeeze on living standards hasn’t gone away
In recent months an emerging narrative has been that the squeeze on UK living standards has relaxed or even ended. This refers to the pace of annual earnings growth overtaking inflation. However, real earnings growth remains modest at best. Meanwhile the squeeze continues for public sector workers on pay caps (1% p.a.) and households experiencing a multi-year freeze on working-age welfare benefits (until 2020). In light of the fact that the price of necessities including utility bills, motoring costs, rates bills and private sector rents (for Northern Ireland) are all rising at substantial rates and above the headline rate of inflation, it is premature to talk of a meaningful end to the cost of living squeeze. Continue reading
Despite strong investment, record employment and (finally) real pay growth, weak spending slows the economy.
Once again Northern Ireland’s latest round of labour market statistics were littered with record highs and lows of the positive variety. The Labour Force Survey confirmed that the unemployment rate (ILO measure) fell to a new record low of 3.1% (UK = 4.2%) and was the lowest rate across all of the UK regions.
Sense that spring was postponed too long this year? The UK economy and the Bank of England feel the same.
Today sees the release of April data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled a mild acceleration in private sector business activity growth, while new orders continued to increase, albeit only marginally quicker than March’s 17-month low. Nonetheless, despite subdued demand pressures, backlogs of work increased further, prompting firms to hire additional staff. In line with a strong and accelerated rate of input cost inflation, businesses reported a further marked increase selling charges.
Since 2008 the major central banks have been, by and large, pushing in the same direction. No longer. There’s widening clear blue water separating the outlook for interest rates either side of the pond.
New car sales traditionally provide a useful barometer of consumer confidence. In recent months, however, interpreting the figures requires a degree of caution given the significant volatility, in the car sales. Tax changes, the weather and the timing of Easter have all affected the volume of new cars sold and the annual growth rates over the last 12-15 months. This ‘noise’ can misrepresent the genuine underlying trends.