Following a strong rebound in economic activity, last week saw a slight pullback across macro indicators. While the public health experts in the UK are warning about future lockdowns, especially during the winter months, and PM Johnson confirmed the delay in full reopening by four weeks, there remains no obvious signs of consumer concerns yet.
Against the backdrop of threats of ‘sausage wars’, the latest economic data is encouraging. This signals not only an economic rebound but also the success of the vaccination roll-out and support policies from the year gone by. Can a delay to full reopening turn the tide? Most think not. But one thing to watch our for is whether some households turn a little more cautious as the rate of infections rises.
Another week of upbeat economic data. UK Businesses have now joined consumers in setting records for high performance. But the ‘brightening outlook comes with some discomfort’, as OECD describes it. With a surge in the spread of the delta variant, UK officials are now drawing up a contingent plan for possible delay in June 21 easing.
Amidst the steady drip of very good news on the recovery, last week came a reminder that we’re not out of the woods yet. Rising cases of the Indian variant (or Delta to use the World Health Organisation’s new labelling) underlines that while the risks posed by the virus have certainly diminished, they have not been eliminated.
What does a combination of households sitting on cash piles and firms on a hiring spree give you? A roaring UK economy. Add to this the low base from last year and growth figures are going through the roof. But a note of caution is due. The end of government support plus (hopefully) transitory inflation could take some of the shine away.
As the report card on opening up improves, so does the growth estimate for 2021. The latest to join the bandwagon is the Bank of England which is now forecasting the UK economy to enjoy the fastest growth since the Second World War. That will pull the Northern Ireland economy up too. The Chancellor also expects the recovery to be ‘turbo-charged’ by the excess savings of households and firms.
The US economy bounced back sharply in Q1 thanks to a successful vaccination drive and in particular generous government support. The latter meant personal income in the US posted its biggest ever increase in March (a series that goes back to the 1940s!). That’s what you call shock therapy for the recovery. And Northern Ireland’s non-essential retail finally reopened its doors which coincided with news that every adult over the age of 18 will receive a £100 High Street voucher later this year.
The pace of recovery continues to build. Bumper readings for retail sales and the PMI surveys are helping firm up confidence in the outlook. And what’s even better, the pace of vaccination is building across Europe. But risks remain. Covid continues to pose a grave challenge to so many countries, particularly India.
Another steady dose of upbeat economic data this past week. Starting with confirmation the UK recovery got underway back in February, despite lockdown restrictions, to increased restaurant reservations, job adverts and even traffic on the roads! Locally, hairdressers, beauty salons and non-essential retail are set to reopen this week with gyms and pubs with beer gardens following on 30th April. But there are clouds elsewhere. The world crossed 140 million COVID cases in the past week.
The onset of Spring is a reminder of renewal and growth. And so the world economy continues to heal. That positivity is reflected in the latest economic data as well as IMF’s latest outlook, which points to higher growth and less long-term damage than previously expected. Similarly, the 12-month outlook amongst Northern Ireland firms is at a 13-month high. But what confidence there is could be dented by the current political situation and negative news headlines.
