The saturday economist 9th june 2012

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The Saturday Economist 9th June. Economics news and updates on the UK economy.

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The saturday economist 9th june 2012

  1. 1. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | In this issue : Page No. Saturday June 9th 2012 The week in review 2 Manufacturing Prices 3 Service Sector Survey 4 Construction Sector Survey 5 Oil Price Watch 6 Discussion Papers - the 2012 series 7 John Ashcroft is Chief Executive Latest Economic Indicators 8 of pro.manchester, a director of Marketing Manchester, a member of the Greater Manchester Chamber of Commerce, the AGMA Business Leadership Council and a visiting professor at Don’t miss MMU Business School the weekly specialising in Macro Economics and Corporate Strategy. e-mail London School of Economics London Business School with a Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ PhD in macro economics from MMU.Saturday, 9 June 12
  2. 2. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | The Week in Review - rates on hold, car sales rise, inflation falls Saturday June 9th 2012 and service sector data supports growth hopes . Base rates were on hold along with QE on Thursday as the MPC voted for no change in current policy stance. With base rates at 50 basis points and 10 year gilt yields falling to 1.7%, there is little capacity for further manoeuvre in monetary policy. Good news on inflation as manufacturing output prices fell to 2.8% from 3.2% in April. Input price inflation slowed to just 0.1%. World trade is slowing impacting on raw materials, manufacture prices and oil. Input costs will be negative in the months ahead pushing output prices and CPI inflation towards the 2% target. The consumer is alive and well - car registrations were up 8% in May and private demand grew by 14%. The PMI Markit survey for services recorded a solid 53.3 in May unchanged from April. New business flows prompted a rise in employment in the Das Boot is on the other foot sector. In construction, output slowed in May but to a level of 54.4 from 55.8 in the prior month - levels consistent with growth and expansion. The manufacturing figures from last week present something of an anomaly. In Europe the Spanish banks remain the centre of attention. Recapitalization is inevitable, the quantum varying from €40 billion to €100 billion. The FANGS, Finland Austria, Norway and Germany will have to bite the bullet and back FROB the Spanish Fund for Orderly Bank Restructuring which has already spent up. The money will flow from the EFSF or the ESM or some other twist of the central bank Scrabble board. JKA As the MPC keeps rates on hold. Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 2Saturday, 9 June 12
  3. 3. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Manufacturing Prices Saturday June 9th 2012 Manufacturing output price inflation fell to 2.8% in May compared to 3.2% in April. This is the lowest level since November 2009. Input price increases slowed to 0.1% compared to 1% prior month. This the lowest since September 2009. Import prices of metals and raw materials pushed cost prices lower. The slow down in world trade is impacting on world manufacture prices. Metals and raw material prices are falling. Oil is will have fallen by 7% in the second quarter compared to 2011 Q2. Input prices are likely to enter negative territory in the months ahead, pushing output prices lower towards the 2.3% long term rate. Output prices fell to 2.8% in May In turn this will push CPI inflation to within the 2% target rate by the end of Q3. The slow down in world output and the problems in Europe are making the MPC task much easier than expected. By the end of the year, the short flip from oil prices will be over and world output is expected to rally. Holding the 2% CPI target will be more difficult than attainment. Input prices slowed to 0.1%. Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 3Saturday, 9 June 12
  4. 4. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Saturday June 9th 2012 Markit / CIPS Service Sector Survey Headline Business Activity Index recorded a level of 53.3 for second successive month with new business rising significantly. Employment levels increased despite fall in confidence to five-month low. Growth of the UK service sector was unchanged during May at a solid rate, supported by a further marked gain in incoming new business. Companies kept on top of workloads through the recruitment of new staff, although worries over the Eurozone debt crisis and a tough operating environment led to a fall in business confidence to the lowest of 2012 so far. Despite the fears over growth generated by last weeks manufacturing survey, the service sector, as a key component of output growth suggests the economy is not facing a significant double dip slow down. Service Sector output is firm As new business fuels growth. Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 4Saturday, 9 June 12
  5. 5. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Saturday June 9th 2012 Markit / CIPS Construction Sector Survey Construction output slowed in May according to the PMI Markit survey. The Markit/CIPS Construction Purchasing Managers’ Index® (PMI®) slowed from 55.8 in April to 54.4 in May. The latest reading signalled a solid overall increase in construction activity but the pace of expansion was the slowest for three months. The survey showed that new business growth and confidence were both much less positive than in April. New business growth eased markedly in May to its weakest for four months. World trade growth is slowing Commenting on the report, David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, said: “Reports of the UK’s return to recession appear to have delivered a blow to general confidence in construction, with this month’s PMI posing some big questions for the sector in the coming months” Manufactures pricing slowing Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 5Saturday, 9 June 12
  6. 6. The Saturday Economist johnashcroft.co.uk 150 Saturday June 9th 2012 Oil brent crude rallied to $99.47 last week 120 90 Oil Price Brent Crude $ Qtr Data $ I II III IV 60 2010 76.35 78.37 77.49 87.28 2011 104.79 116.57 113.57 109.16 30 2012 118.83 109.00 110.00 115.00 Forecasts 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 8Saturday, 9 June 12
  7. 7. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Discussion Papers 2012 Saturday June 9th 2012 Depreciation and the UK trade in goods 2008 - 2011 April 2012 Forty years of UK trade - 1970 - 2012 April 2012 A comparison of UK recession and recoveries 1930 - 2012 May 2012 What’s wrong with Quantitative Easing? May 2012 Don’t worry about the Euro May 2012 The IMF, QE, Credit Easing and SME bonds May 2012 Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 7Saturday, 9 June 12
  8. 8. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Latest Economic Indicators Saturday June 9th 2012 Indicator Period Latest Notes, next release Source Inflation CPI April 3.0% ONS Inflation RPI April 3.5% .. ONS Inflation RPIX April 3.5% .. ONS Earnings March 1.6% ONS Retail Sales volume January 2.0% ONS Retail Sales value January 4.4% ONS Unemployment March 2.62 LFS Million trailing 3 months ONS Unemployment % March 8.2% LFS trailing 3 month ONS Claimant count April 1.59m Million ONS PPIs output May 2.8% Manufacturing prices (output) ONS PPIs input May 0.1% Manufacturing prices ( input) ONS GDP growth Q1 2012 -0.3% ONS Manufacturing March -0.9% year on year growth ONS ONS : Office for National Statistics, LFS : Labour Force Survey Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 8Saturday, 9 June 12
  9. 9. The Saturday Economist johnashcroft.co.uk The Saturday Economist The Saturday Economist is a round up of the week’s economics news for the UK published on the web site johnashcroft.co.uk. The information is also available as a PDF download. The information was originally published in short form in the Sunday Times and Croissants weekly blog post and has been expanded following requests for more information. To receive the weekly STAC e-mail join me on LinkedIn. Details of our current annual The material in the Saturday Economist is based upon information which we forecasts : The UK in Black and consider to be reliable but we do not represent that it is accurate or complete and White Forecasts for the UK it should not be relied upon as such. We accept no liability for errors, or omissions Economy 2012 - 2015 can be of opinion or fact. found on this web site and on slideshare - jkaonline In particular, no reliance should be placed on the comments or trends in financial markets. The publication of this document should not be construed as the giving All views expressed in the Saturday Economist of investment advice. are my own. Information is intended to provide a general outline of the subjects covered. It should neither be regarded as comprehensive Forecasting is fun and subject to frequent revision. nor sufficient for making decisions, nor should it be used in place of professional advice. Neither the Saturday Economist or any representative JKA accept any responsibility for any loss arising Data is adapted from the Office for National Statistics licensed under the Open Government Licence v.1.0. from any action taken or not taken by anyone using this material. Check out www.johnashcroft.co.uk, Join me on LinkedIn, Twitter or Google+ Page 12Saturday, 9 June 12

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