Transcript of "The saturday economist 18th august"
The Saturday Economist johnashcroft.co.ukRetail sales, inflation, employment rise Saturday, 18 August 2012Economic news this week OTHER NEWSsuggests the economy is Retail Salesnot in recession but may be Retail sales were up by 2.8%growing by around 1% this in July.year. -------------------------------- InflationRising inflation, falling CPI basis 2.6% in Julyunemployment, retail sales compared to 2.4% in June.up and car manufacturing up, ------------------------------this is not consistent with an Unemploymenteconomy in recession or flat Claimant count fell by 5,900 inlining for that matter. July - a rate of 4.9%.. ------------------------------Our model based on output Car Manufacturingand employment, suggests the Increased by 22% in July In the minutes of the MPC for August, the nine memberseconomy grew by around 1% no tsunamis assist output. voted unanimously to maintain base rates at 0.5% and toin the second quarter and will maintain the level of QE at £375 billion. “For some members -----------------------------grow by around 1.2% for the the decision was nevertheless more finely balanced, since MPC Minutes Augustyear as a whole. The economy a good case could be made at this meeting for more asset More QE on the way? Minutesis not in a double dip or flat. purchases.” The MPC are placing great hopes on the FLS. suggest more gilt purchases?Closing : FTSE : 5,847; 10 Year Gilts 1.67%, Oil Brent Crude $113.16; Gold $1,614; $ 1.569; € 1.2739
The Saturday Economist johnashcroft.co.ukCar manufacturing up 22% in July Saturday 18 August 2012Car manufacturing surgedby 22% in July and at arate of 15% for the year asa whole.Car output rose for the13th consecutive month, up22.2% in July and 15.1% for “Car manufacturingthe year-to-date. continued to perform well”, said Paul Everitt,Commercial Vehicle output SMMT Chief Executive.stabilised down 1.3% in the “While uncertaintymonth after a 7.7% fall for in Europe remains athe first seven months. challenge, the £6 billion investment committedUK engine production was to the UK in the last two Output is likely to hit 1.45 million units this yearup 0.3% over the year, with years delivers long-term compared to sales of 2.0 million and peak output ofa narrow 1.9% downturn in growth opportunities. 1.6 million pre recession.the month. Our products have enormous global appeal.”
The Saturday Economist johnashcroft.co.ukSurprise rise in inflation in July Saturday 18 August 2012Inflation is on the rise Communication costsaccording to latest data (4.4%), education (5%)for July. Restaurants and hotels (3.2%) were all on the rise.CPI inflation increased to2.6% from 2.4% in June Respite to inflation wasand RPI and RPIX inflation afforded in clothing andincreased to 3.2% from footwear 0.1% Transport2.8%. 1.3% and recreation 0.4%.Food and non-alcoholic Overall goods inflationbeverages increased by increased by 1.9% as2.1%. Alcohol and tobacco service sector inflationprices increased by 5.0% increased by 3.4%. “Oil prices are on the rise Inflation CPI basisHousing and household again and service sector increased to 2.6% in Julyservices were up by 6.1%. Energy costs appear inflation is 3.4%. compared to 2.4% in June.Furniture and household subdued in July but thegoods increased by 3.5% critical oil price was down The 2% target may be RPI and RPIX inflationHealth costs were up by 12% compared to July last elusive this year.” increased to 3.2% from3.% year. 2.8%
The Saturday Economist johnashcroft.co.ukUnemployment falls in latest data Saturday 18 August 2012Unemployment fell as the Total pay rose by 1.6 perclaimant rate fell by just cent on a year earlier, upunder 6,000 in July to 0.1 on the three months to1.59 million and a rate of May 2012.4.9%. Regular pay (excludingThe wider LFS survey bonuses) rose by 1.8 perconfirmed a fall of 46,000 cent on a year earlier.in the three months to Juneto a level of 2.564 million The number of full-timeand a rate of 8%. workers increased by 130,000 to reach 21.41The employment rate for million and the number ofthose aged from 16 to 64 part-time workers increasedwas 71.0 per cent, up 0.4 on by 71,000 to reach 8.07 increased by 39,000 on the The number of peoplethe quarter. million. quarter to 4.20 million. employed in the private Public sector jobs were sector in March 2012 wasThere were 29.48 million The number of employees 5.90 million in March 23.43 million, up 222,000people in employment aged increased by 128,000 to 2012, down 39,000 from from December 2011.16 and over, up 201,000 on 25.02 million as the number December 2011.the quarter. of self-employed people Page 4
The Saturday Economist johnashcroft.co.ukRetail Sales up 2.8% in July Saturday 18 August 2012Retail sales in July were This compares with £6.6up by 2.8% in volume billion in June 2012 andterms and up by 3.1% £6.5 billion in July 2011.in value according to thelatest data from the Office The average spend via thefor National Statistics. internet was estimated to be £505 million in July 2012The June volumes were approximately 9% of totalalso revised up to 2.6%, so retail sales values.over the last three monthsretail sales have averaged Strongest retail sectors2.5%. were elusive to define!Still below the long run Food sales were up by justaverage of 3.4% but this is 1% and clothing sales fellnot recession territory. slightly.The average weekly spend Household goods salesfor all retailing in July 2012 were up by just 2%. Onlinewas £6.7 billion. sales are driving retail growth up 14%. Page 5
The Saturday Economist johnashcroft.co.ukWhat happened in the world this week Saturday 18 August 2012 The Finns are in ... were external factors Finland is totally committed contributing to the decline to the euro, its European said ministry spokesman affairs minister said Shen Danyang. following comments from its foreign minister that the country was preparing for a break up of the singleSalute to the Euro Foreign direct investment currency.Investors welcomed the in China fell 8.7pc in July,statement by Angela the government said, as the Earlier in the week ...Merkel - the Chancellor economy continues to feel Finland’s foreign ministerexplained the pledge by the pinch of slowing global had warned the country is So much for onshoringthe European Central Bank growth and the European preparing for a full-blown The Sensata plant into do whatever it takes to debt crisis. currency crisis as tensions Freeport is profitable andsupport the euro project in the eurozone mount. competitive, but owner,was “completely in line” The slowdown in world Bain Capital, has decidedwith the views of the Euro Finland will not tolerate economic growth, to ship jobs to China – andleaders even the Finns are further bail-out creep, fine increasing uncertainties and forced workers to train theirin. words indeed. a lack of proper solution to overseas replacements. the European debt crisis Page 6
The Saturday Economist johnashcroft.co.ukProfessor Milton Keynes column Saturday 18 August 2012GDP and Claimant Count ComparisonsI have been puzzled In this chart the blue line GDP ONS PMKby the strength of the represents the change in Q4 0.6 0.6employment data and the GDP year on year and the Q1 -0.2 1.2apparent weakness of the red chart represents the Q2 -0.7 1.7GDP figures as published quarter on quarter change Q3 na 1.8by the Office for National in the claimant count.Statistics writes our residenthead of research Professor It is inverted so that as theMilton Keynes this week. claimaint count increases, the inverted chart falls inMost people still think of line with the GDP change.employment as a laggingindicator of economic The most recent twogrowth but as my chart quarters suggest theexplains, the claimaint estimates for GDP declinecount provides an extremely are at odds with thereliable coincident indicator employment data. Far fromof trends in the economy. falling, the economy may well be growing. Page 7
The Saturday Economist johnashcroft.co.ukMarkets : FTSE 5,874 : DOW 13,275 : Nasdaq 3,076 : DAX 6,945 Saturday 18 August 2012 FTSE 5,852 + 5 £:$ 1.569 DJIA 13,275 + 67 £:€ 1.274 NASDAQ 3,076 + 152 $:€ 1.227 DAX 7,041 + 95 $:¥ 79.37 CAC 3,488 + 52 Base Rate 0.50% Nikkei 9,162 + 271 10 yr UK 1.67% Hang Seng 20,116 - 20 10 yr US 1.81% 10 yr Euro 1.51% Brent Crude $ 113.71 Copper 342.00 WTI Crude $ 96.21 Corn 799.00 - 4 Gold $ 1.614.0 Wheat 874.00 - 13 Silver 5000 $ 2,803.0 Cotton 72.95 +.05 Platinum $ 1,472.7 Page 8
The Saturday Economist johnashcroft.co.ukGrowth Inflation Unemployment Government BorrowingGDP in the second quarter Inflation CPI basis was 2.6% Claimant count in July fell In the first three months tofell by 0.8% year on year as in July. Inflation RPI and by 5,900 to a level of just June, Government was upthe recovery of 2010 petered RPIX increased to 3..2% from under 1.6 million and a rate by £4.5 billion. Borrowingout in 2011. 2.8%. of 4.9%. is likely to exceed the levels achieved in 2011/12.Growth in Q1 fell by 02%. In Manufacturing price inflation The LFS count fell slightly2011 UK growth was up by fell to 1.7% in July, latest (three months to June) to a0.8% and 1.8% in 2010 . earnings up by 1.8% in May. level of 2.56 million. 8.0%
The Saturday Economist johnashcroft.co.ukThe Saturday Economist is a round up of the The publication of this document should not beweek’s economics news for the UK published construed as the giving of investment advice.on the web site johnashcroft.co.uk. Forecasting is subject to frequent revisionThe information is also available as a PDF Please remember we are forecasting the outputdownload. of the Office for National Statistics which may, of itself, be subject to revision.The information was originally published inshort form in the Sunday Times and Croissants All views expressed in the Saturday Economistweekly blog post and has been expanded are my own. Information is intended to providefollowing requests for more information. a general outline of the subjects covered. It should neither be regarded as comprehensiveThe material in the Saturday Economist is nor sufficient for making decisions, nor shouldbased upon information which we consider to it be used in place of professional advice.be reliable but we do not represent that it isaccurate or complete and it should not be relied Neither the Saturday Economist or anyupon as such. We accept no liability for errors, representative accept any responsibility for anyor omissions of opinion or fact. loss arising from any action taken or not taken by anyone using this material.In particular, no reliance should be placed on Data adapted from the Office forthe comments or trends in financial markets. John K Ashcroft National Statistics licensed under Open Government Licence .v.1.0.