Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

Tel: 020 8346 3482
Mobile: 07800 608 674
Email: ruthlea@arbuthnot.co.uk

 

From the desk of Ruth Lea

Economic insight and financial comment related to the ever-changing financial landscape and the economic world at large.

Economic Perspectives

18th November 2019

Economic Insight - 18 November 2019

The UK’s slowing economy: facing headwinds
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest reports on UK data:
Press Release

The UK’s slowing economy: facing headwinds

Date: 18th November 2019

The UK’s slowing economy: facing headwinds
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest reports on UK data:
    • In the context of a weakening global economy and continuing Brexit uncertainty, UK GDP rose by a slightly weaker than expected 0.3% (QOQ) in 2019Q3, to be just 1.0% higher YOY.
    • NIESR is projecting 0.2% (QOQ) GDP growth for 2019Q4. If GDP does rise by 0.2% in 2019Q4, then GDP will grow by 1.3% in the year 2019, compared with 1.4% in 2018 and 1.9% in 2016 and 2017.
    • The data so far available for 2019Q4 have been disappointing. Retail sales slipped 0.1% (MOM) in October, whilst the Markit surveys for the month were subdued.
    • There is some softening in the labour market, though it is still fairly robust. Employment fell in 2019Q3 and vacancies, though still very high, are easing. Given the modest contraction in the labour force, unemployment also fell in 2019Q3 and the unemployment rate fell to 3.8%; it has not been lower since early 1975.
    • The annual increase in average earnings slipped to 3.6% in 2019Q3 for both total and regular pay. But, given the modest inflationary pressures, real earnings continue to grow quite well.
    • CPI inflation fell to 1.5%, below the Bank of England’s 2% target, in October reflecting lower energy prices. Producer prices inflation also eased in October, reflecting lower oil prices, and remains well-contained.
    • House price inflation was unchanged at 1.3% (YOY) in September, with prices falling in East England by 0.2% (YOY) and in London by 0.4% (YOY).
    Concerning other economic news:
    • The Bank’s MPC left monetary policy unchanged at it November meeting but, whilst seven members of the MPC vote for no change, two members voted to cut rates to 0.5%.
    • Eurostat confirmed that Eurozone GDP had grown by 0.2% (QOQ) in 2019Q3, to be 1.2% higher YOY. Germany narrowly avoided recession, growing by 0.1% (QOQ) in 2019Q3 after a fall of 0.2% in 2019Q2 (revised). Its growth is effectively stagnant, as is Italy’s. French GDP rose by 0.3%, supported by fiscal expansion.
    Concerning political developments:
    • Parliament was dissolved on 6 November 2019, 25 working days before the General Election of 12 December 2019, and the political parties have launched their campaigns.
    • The Chancellor announced changes to his fiscal rules, which could see an extra £100bn of net investment over the next five years.
    • The Shadow Chancellor announced a proposed £150bn Social Transformation Fund over five years (averaging £30bn a year). In addition, the previously announced £250bn Green Transformation Fund over ten years averages at £25bn a year. Taken together they could add £55bn a year of extra investment spending.

    Ruth Lea said, “…the slowdown in the UK economy should be seen within the context of the weaker global economy, especially the Eurozone. In addition, the economy continues to face the headwind of continued Brexit uncertainty, which is almost certainly depressing investment and could well be undermining the consumer as well. But the economy is still growing. Moreover, despite the assertions that the economy has been significantly damaged by the direct impact of the June 2016 Brexit vote, which should be considered separately from the uncertainties generated by this year’s delays, the UK economy has performed quite creditably since the referendum. Between 2016Q2 and 2019Q3 it grew by 4.95%, the same as Germany and faster than Italy. Granted France and Spain have grown quicker but, given their higher margins of spare capacity as measured by unemployment rates, this is not altogether surprising,”

For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon

Maitland:
Sam Cartwright
020 7379 4415
Jais Mehaji
020 7379 5151
arbuthnot@maitland.co.uk
Download full article

4th November 2019

Economic Insight - 04 November 2019

The UK as a place to do business: still very highly regarded internationally
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest reports on the UK’s international ranking on three key metrics:
Press Release

The UK as a place to do business: still very highly regarded internationally

Date: 4th November 2019

The UK as a place to do business: still very highly regarded internationally
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest reports on the UK’s international ranking on three key metrics:
    • The UK rose a notch from 9th to 8th (out of 190 economies) in the World Bank’s ease of doing business report. The top three economies were New Zealand, Singapore and Hong Kong.
    • However, the UK slipped a place from 8th to 9th (out of 141 countries) in the WEF’s global competitiveness rankings. The top three economies were Singapore, the USA and Hong Kong.
    • According to the latest Global Financial Centres Index (GGCI), London remains the second highest ranking global financial centre (out of 104 major centres) after New York, and ahead of Hong Kong, Singapore and Shanghai.
    Concerning central banks:
    • The Fed cut the target range for the federal funds rate by 0.25% to 1.50%-1.75% in October, the third cut since July. Fed Chair Jerome Powell implied that the Fed would hold off further cuts. US GDP growth in 2019Q3 was a better-than-expected 1.9% (QOQ, annualised).
    • The ECB left monetary policy unchanged at its October meeting, after the stimulatory package in September. ECB President Mario Draghi was replaced by Christine Lagarde on 1 November. Eurozone GDP growth was a better-than-expected 0.2% (QOQ) in 2019Q3, with France’s GDP rising 0.3% (QOQ). German data have not yet been released but are expected to be weak.
    • The Bank’s MPC meets next week, no changes in policy are expected.
    Concerning UK data releases:
    • The public finances continue to disappoint. Public sector net borrowing (PSNB) in the first six months of FY2019 (April-September 2019) was £39.0bn, compared with £33.2bn in the same period last year (April-September 2018).
    • Bank data showed that consumer credit growth and net mortgage borrowing were little changed in September.
    Concerning political developments:
    • A General Election has been called for 12 December. The Early Parliamentary General Election Act 2019 received Royal Assent on 31 October, following agreement by both Houses. The Commons approved the legislation on 29 October (438/20, a majority of 418). Parliament will be dissolved on 6 November 2019.
    • Given the impending General Election and the dissolution of Parliament, the Government’s attempts to get the revised “deal” (as of 17 October) through Parliament have been put on ice.
    • The Treasury announced the Budget, planned for 6 November, had been cancelled.
    • The EU27 agreed on 28 October to extend the deadline to 31 January 2020. The Prime Minister agreed to the extension, also on 28 October. The Brexit deadline of 31 October was, therefore, missed.

    Ruth Lea said, “…despite all the ongoing uncertainties over Brexit, the UK is still very highly regarded internationally as a place to do business, as well as being highly internationally competitive according to the latest reports. There was modest promotion in the World Bank’s “doing business” rating, a modest demotion in the WEF’s competitiveness ranking and London remains the second ranked international financial centre after New York. Whilst this is no cause for complacency, it does serve to put the UK economy into some overall international perspective.”

For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon

Maitland:
Sam Cartwright
020 7379 4415
Jais Mehaji
020 7379 5151
arbuthnot@maitland.co.uk
Download full article

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Comment, at a glance

Retail sales rose 0.2% in three months to October
14 November 2019

Retail sales rose a weak 0.2% (QOQ) in the three months to October to be 2.9% higher (YOY) (table 1). The ONS commented that the quarterly increase was the lowest since April 2018. Food stores were the only main sector to see growth (0.8%) on the QOQ comparison. On a trend basis, the growth in retail sales appears to be flattening off.

Retail sales fell 0.1% (MOM) in the month of October, with only fuel and department stores reporting growth. Sales were 3.1% higher YOY “…with growth across all sectors except household goods stores”.

Online retailing increased to 19.2% of total retailing in October 2019, compared with 19.0% (revised) reported in September 2019.  

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House price inflation unchanged at 1.3% in September
13 November 2019

According to official data, UK average house prices inflation in September was 1.3% (YOY), unchanged from August (Figure 1). The ONS commented “…over the past three years, there has been a general slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England. The lowest annual growth was in London, where prices fell by 0.4% (YOY) in September, followed by the East of England where prices fell by 0.2% (YOY).

Prices fell 0.2% (MOM) on a non-seasonally adjusted basis in September, but they rose 0.2% (MOM) on a seasonally adjusted basis.

The UK’s four countries continued to show different inflation rates in September: England (1.0% YOY), Wales (2.6% YOY), Scotland (2.4% YOY) and Northern Ireland (4.0% (2019Q3, YOY)).

In England, there was, as always, a significant range across the regions (figure 4). The complete list of annual price changes is: North West (2.8%), Yorkshire & Humberside (2.2%), North East (2.0%), West Midlands (1.6%), South East (0.7%) South West (0.5%), East Midlands (0.1%), East (-0.2%), and London (-0.4%).

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CPIH, CPI inflation rates fall to 1.5% in October
13 November 2019
The CPIH inflation rate fell to 1.5% in October, compared with September’s 1.7%. (CPIH is the Consumer Prices Index including owner-occupiers’ housing costs and is the ONS’s preferred measure of consumer prices inflation.) The ONS said “…the largest downward contributions to change in the CPIH 12-month inflation rate, between September and October 2019, came from electricity, gas and other fuels as a result of changes to the energy price cap. Further downward contributions from furniture, household equipment and maintenance; and recreation and culture, were partially offset by rises in clothing and footwear prices”. The CPIH inflation rate of 1.5% was the lowest since November 2016, when it was also 1.5%.

The inflation rates for goods and services in October were 0.4% (0.9% in September) and 2.2% (unchanged) respectively. The core rate inflation (excluding energy, food, alcoholic beverages & tobacco) increased a tad to 1.7% (1.6% in September). The Consumer Prices Index (CPI) 12-month rate was also 1.5% in October, down on September’s 1.7%t.

Turning to the producer price index (PPI), the inflation rate for the output PPI (goods leaving the factory gate) was 0.8% (YOY) in October (down from September’s 1.2%, table 1). The ONS reported that petroleum made the largest downward contribution to the change in the annual rate of output inflation.

The inflation rate for the input PPI (materials and fuels used in the manufacturing process) fell to minus 5.1% (YOY) in October, compared with minus 3.0% in September (table 3). The ONS commented that crude oil provided the largest downward contribution to the annual rate of input inflation. Crude oil prices fell 5.3% (MOM) in October, and were 22.9% lower YOY (table 5). 

The annual rate of inflation for imported materials and fuels fell to minus 2.8% (YOY) in October (down on September’s minus 1.1%, table 4). Imported materials and fuels represent roughly two-thirds of overall materials and fuels (input prices) in terms of index weight. The sterling effective exchange rate index (ERI) appreciated 2.2% (MOM) in October, but was 0.4% lower YOY (table 4).

All in all, these reports suggest that prices inflation is very well contained.

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Labour productivity (output per hour) grew 0.3% (QOQ) in 2019Q3
12 November 2019

The ONS reported that the flash estimate of output per hour (their main measure of labour productivity, “productivity hours”) grew 0.3% (QOQ) in 2019Q3, but was unchanged (YOY). The YOY calculation reflected both total weekly hours worked and gross value added (GVA) growing equally by 1% (YOY). GVA is a measure of the production of goods and services in the economy and is closely aligned to gross domestic product (GDP). The increase in total weekly hours worked was driven by a 1.0% increase in total employment as average actual weekly hours remained unchanged.

Output per worker rose 0.5% (QOQ) in 2019Q3, but was also unchanged (YOY). Both total employment and GVA grew equally by 1% (YOY) in 2019Q3. The growth in employment was driven by a strong increase in the number of people who were self-employed, along with moderate growth in the number of employees, which increased by 4.1% and 0.4% respectively.

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Unemployment rate 3.8% in 2019Q3; annual earnings growth was 3.6%
12 November 2019

Employment fell by 58,000 (QOQ) in 2019Q3 to 32.75mn, but was 323,000 higher (YOY) (table 1 of the ONS’s labour market overview bulletin). The annual increase was mainly driven by women (up 226,000 on the year) and full-time workers (up 286,000 on the year), with the latter reaching a record high of 24.21mn. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 76.0%, higher than a year earlier (75.5%), but 0.1 percentage points lower than the previous quarter. The employment rates for men and women were 80.3% and 71.8% respectively. The recent trend increase in the employment rate for women is partly due to ongoing changes to the State Pension age for women resulting in fewer women retiring between the ages of 60 and 65.

Unemployment was 1.31mn in 2019Q3, 23,000 lower than the previous quarter and 72,000 down YOY (table 1). The unemployment rate (the proportion of the labour force that were unemployed) was 3.8%, compared with 3.9% in the previous quarter and 4.0% a year earlier. It has not been lower since November-January 1975. The inactivity rate (the proportion of people aged 16-64 who were economically inactive) was 20.8%; 0.3 percentage points lower than a year earlier but 0.1 percentage points higher than last quarter.

Job vacancies remain strong, though they have eased since the beginning of 2019. There were 800,000 job vacancies in the three months to October 2019 (sic), still at near-record levels since comparable records began in 2001. The number was, however, down 18,000 (QOQ) and 53,000 lower (YOY).

The rate of pay growth (annual growth in average weekly earnings for employees in Great Britain) has tended to trend upwards since March-May 2017, reaching 3.9% in May-July 2019, the highest nominal pay growth rate since 2008. However, in 2019Q3, growth dropped to 3.6% for both total pay (including bonuses) and regular pay (excluding bonuses). In real terms, annual pay growth has been positive since December 2017-February 2018 and was 1.8% for total pay and 1.7% for regular pay in 2019Q3.

All in all, this report suggests the labour market still remains robust, though employment and vacancies now seem to be falling and annual earnings growth seems to be easing a tad.

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Trade (goods & services) deficit narrowed in 2019Q3
11 November 2019

The total trade (goods & services) deficit was £6.4bn in 2019Q3, compared with a deficit of £11.4bn in 2019Q2, a narrowing of £5.0bn, largely due to rising exports (table 1). Excluding unspecified goods (including non-monetary gold (NMG)), the total trade deficit (goods and services) narrowed by £3.3bn to £6.5bn in 2019Q3.  

Concerning goods (visible) trade:
·       The deficit was £33.2bn in 2019Q3, compared with £34.1bn in 2019Q2, an improvement of just £1.0bn (rounded). Exports were 5.0% (QOQ) higher, whilst imports were 2.8% higher.
·       The deficit with EU countries widened by £1.3bn to £23.3bn (table 2).
·       The deficit with non-EU countries narrowed by £2.3bn (rounded) to £9.9bn (table 2).

The services surplus was £26.8bn in 2019Q3, comfortably higher (£4.0bn, rounded) than the surplus of £22.7bn in 2019Q2. Exports were up 6.3% (QOQ), whilst imports were just 1.0% higher.    

Removing the effect of inflation, the total trade deficit narrowed to £4.3bn in 2019Q3 compared with £10.5bn in 2019Q2, acting as a boost to constant price GDP growth (expenditure terms), other things being equal.

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GDP slipped 0.1% in September
11 November 2019
GDP slipped 0.1% (MOM) in September, after a fall of 0.2% in August, and a rise of 0.3% in July. It was 0.9% (YOY) higher (table GVA3). Within GDP with all main sectors showing either zero or negative growth:

·       Services output was flat (MOM) in September. Growth of 1.4% in information and communication was offset by weakness elsewhere.  

·       Production contracted by 0.3% (MOM) in September 2019, following a fall of 0.7% (MOM) in August. Within production, manufacturing contracted by 0.4% (MOM) in September, following a fall of 0.7% in August.

·       Construction output contracted by 0.2% (MOM), after August’s 0.1% increase.

 

The monthly growth rates for gross domestic product (GDP) are volatile and therefore should be used with caution and alongside other measures such as the three-month growth rate when looking for indicators of the longer-term trend of the economy. However, they are useful in highlighting one-off changes that can be masked by three-month growth rates.

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GDP rose 0.3% in 2019Q3
11 November 2019

GDP rose by a less-than-expected 0.3% (QOQ) in 2019Q3, to be 1.0% higher (YOY), having slipped by 0.2% in 2019Q2 and grown by 0.6% in 2019Q1. The ONS said that the 0.3% increase in 2019Q3 “…followed a period of increased volatility in the first half of the year relating to the UK’s original planned exit date from the European Union, likely reflecting the effects of bringing forward activity in the first quarter of the year and the decline in car production owing to partial car plant shutdowns in April”. They also noted that “…the underlying momentum in the UK economy shows some signs of slowing”. The YOY increase of 1.0% “…is the weakest figure since 2010Q1”.

Within the total, the service and construction sectors provided positive contributions to GDP growth, while output in the production sector was flat:

·       Following a loss of momentum in 2018H2 and 2019H1, services output increased by 0.4% in 2019Q3. The most notable contribution to growth came from “other services” sectors, with growth of 0.7% in “human health and social work activities” alongside growth of 0.7% in “financial and insurance activities”. There was also continued strength in the information and communication industry, which “partially reflected an increase in UK-based film and TV production”.

·       Production output was flat, following a 1.8% (QOQ) drop in 2019Q2, as was manufacturing output, following a 2.1% fall in 2019Q2. The ONS noted that “…the volatility throughout the first half of 2019 has been particularly pronounced in the production industry” reflecting the impact of the delay to Brexit.

·       Construction output increased by 0.6% in 2019Q3, following a 1.2% decline in 2019Q2. The quarterly increase reflected strength in new construction work, particularly in private new housing work and private commercial new work.  

 

Turning to the expenditure components, private consumption, government consumption and net trade contributed positively to GDP growth, while gross capital formation (GCF) contributed negatively to growth, mainly reflecting destocking:

·       Household consumption increased 0.4% (QOQ) in 2019Q3, following a similar increase in 2019Q2.

·       Government consumption increased by 0.3% in 2019Q3, driven by higher spending in “healthcare and public administration”, following a sharp 1.1% increase in 2019Q2.

·       Gross capital formation (GCF) comprises gross fixed capital formation, changes in inventories and net acquisition of valuables.

·       Within GCF, gross fixed capital formation (GFCF) slipped 0.2% in 2019Q3, after falling 0.9% in 2019Q2. Within GFCF, business investment was flat after a 0.4% fall in 2019Q2, which followed four consecutive quarters of decline throughout 2018.

·       There was a significant decrease in inventories in 2019Q3 (£4.6bn after alignment). They fell for the second consecutive quarter, as “…businesses appear to be continuing to run down stock levels. This follows the large increase in 2019Q1, reflecting to a large extent the pronounced building up of stocks in the run-up to the UK’s original exit date from the European Union at the end of March”. The destocking acted as a significant drag on GDP growth.

·       There was a narrowing of the trade deficit, largely reflecting exports growth of 5.2% in 2019Q3. Goods exports, reflecting increases in machinery and transport equipment and chemicals, were 5.0% higher whilst services exports were 5.3% higher. Meanwhile, import volumes grew just 0.8% in 2019Q3, following volatility seen earlier in the year. Goods imports rose just 0.2%, whilst services imports grew 2.3%.

·       The trade deficit (goods and services) was estimated to be £4.3bn (volume terms) compared with £10.5bn in 2019Q2 and £23.3bn in 2019Q1. The narrowing of the deficit contributes to GDP growth.

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Bank of England, no policy change, downgrade to inflation forecasts
7 November 2019

The MPC, as expected, voted at its November meeting to maintain the Bank Rate at 0.75%. The vote was 7 in favour of no change, but 2 members favoured a cut to 0.5%. There was a unanimous vote to maintain the stock of sterling non-financial investment-grade corporate bond purchases at £10bn, and the stock of UK government bond purchases at £435bn.

The minutes of the MPC meeting stated:
·       “Looking through Brexit-related volatility, underlying UK GDP growth has slowed materially this year and a small margin of excess supply has opened up. That slowdown reflects weaker global growth, driven by trade protectionism, and the domestic impact of Brexit-related uncertainties.
·       Inflationary pressures are projected to lessen in the near term. Conditioned on current market yields, CPI inflation is projected to rise to slightly above 2% towards the end of the forecast period.

On interest rates, the minutes stated:
·       “Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2% target. The Committee will…monitor closely the responses of companies and households to Brexit developments as well as the prospects for a recovery in global growth.”
·       “If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation.”
·       “Further ahead, provided these risks do not materialise and the economy recovers broadly in line with the MPC’s latest projections, some modest tightening of policy, at a gradual pace and to a limited extent, may be needed to maintain inflation sustainably at the target.”

The Bank modestly revised its forecasts in the November Monetary Policy Report from August. (The Monetary Policy Report has replaced the Inflation Report.) GDP growth forecasts were little changed for 2019 and 2020, but revised down to 1¾% for 2021 (2.3% in August). GDP growth was then expected to firm to 2% in 2022. But the CPI inflation forecast was revised softer to 1.5% for 2020Q4 (compared with August’s 1.9% for 2020Q3) and lowered too for 2021Q4 and 2022Q4. The unemployment rate was revised modestly upwards over the forecast.

Finally, market expectations for the Bank Rate, which underpinned the forecasts, were similar to August, but with a modest downgrade for 2022. They implied a cut of 0.25% in 2020, with no increases after that cut for the rest of the forecast period.

Table 1 Bank of England’s economic forecast summary: November 2019 (August 2019 in brackets, Q3 for quarterly data)

 

2019

2020

2021

2022

Table 1C:

 

 

 

 

GDP (YOY, %)

1¼ (1.3)

1¼ (1.3)

1¾ (2.3)

2 (na)

CPI inflation rate (YOY, %)

1½ (na)

1½ (na)

2 (na)

2¼ (na)  

Unemployment rate (LFS, %)

4 (na)

4 (na)

3¾ (na)

3½ (na)

 

 

 

 

 

Table 1A:

2019Q4

2020Q4

2021Q4

2022Q4

GDP (YOY, %)

1.0 (1.0)

1.6 (1.4)

1.8 (2.4)

2.1 (2.5)

CPI inflation rate (YOY, %)

1.4 (1.7)

1.5 (1.9)

2.0 (2.2)

2.2 (2.4)

Unemployment rate (LFS, %)

3.9 (3.7)

4.0 (4.0)

3.8 (3.7)

3.5 (3.3)

Bank Rate (market expectations)

0.7 (0.7)

0.5 (0.5)

0.5 (0.5)

0.5 (0.6)

 

 

 

 

 

Sources: (i) Bank of England, Monetary Policy Report, November 2019; (ii) Bank of England, Inflation Report, August 2019.

 

 

 

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Markit Surveys for October weak
5 November 2019

The Markit surveys were all weak in October, but a little better than in September.

·       The Markit/CIPS manufacturing PMI rose to 49.6 in October, up for the second successive month, but remaining below the neutral 50.0 mark separating contraction from expansion. (September’s figure was reported at 48.3 in September.) Firms reported that weaker inflows of new business had led to a further scaling back of output, but this was partly offset by manufacturers who raised production to build-up stocks in advance of the October Brexit “deadline”. (Data released on 1 November 2019.)

·       The Markit/CIPS construction PMI rose to 44.2 in October, compared with 43.3 in September, but still below the neutral 50.0 mark. Companies noted client demand remained subdued in response to political uncertainty and the economic “backdrop”. October’s unusually wet weather may also have depressed activity. (Data released on 4 November 2019.)

·       The Markit/CIPS services PMI rose to 50.00 in October, compared with 49.5 in September, signalling stagnation in service sector output. Business levels were supported by existing contracts as the volume of new work declined further. Uncertainty around Brexit undermined domestic and international demand. (Data released on 5 November 2019.)

·       The Markit/CIPS all sector PMI rose to 49.5 in October, from 48.8 in September, but still below 50.00. Markit commented that “…the October reading is historically consistent with GDP declining at a quarterly rate of 0.1%, similar to the pace of contraction in GDP signalled by the surveys in 2019Q3”.

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