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The saturday economist 14th july 2012

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The Saturday Economist 14th July : UK Economics news and updates

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The saturday economist 14th july 2012

  1. 1. “Gotcha” “Cesspit”Saturday, 14 July 12
  2. 2. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | In this issue : Page No. Saturday July 14th 2012 The week in review 2 Manufacturing Output - May 3 Trade in Goods and Services - May 4 Construction Output - May 5 Oil Price Watch this week - Brent Crude rallies 6 Latest Economic Indicators 8 John Ashcroft The Saturday Economist is Chief Executive of pro.manchester, a director of Marketing Manchester, a member of the Greater Manchester Chamber of Commerce, the AGMA Business Leadership miss Council and a visiting professor at ’t MMU Business School Don specialising in Economics, Corporate Strategy and Business Modelling. Education : London School of Economics London Business John Ashcroft.co.uk School with a PhD in economics from MMU.Saturday, 14 July 12
  3. 3. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Saturday July 14th 2012 The Week in Review - manufacturing output construction and trade figures are released for May, The Bank of England announced a further twist in the Finance for Lending programme and the word trembles as growth in China falls to 7.6%. Analysts became excited as manufacturing growth increased by 1.2% compared to prior month but compared to May last year, output fell by 1.7%. Capital goods output increased by 2.3% but this was the only bright spot in the gloomy figures as output of consumer durables and non durables both fell. Trade figures at first glance offered good news, the deficit on trade in goods fell from £9.7 billion to £8.4 billion in May. Not so good really, April was slightly ahead of trend Manufacturing output falls 1.7% year on year with a deficit averaging £8.5 billion in the first three months of the year. Our forecast for the second quarter is a deficit of £26.5 billion, no trade miracle here or in the trend data. In other news the Bank of England announced a further twist in the finance for lending programme. Up to £80 billion may be available to the banking sector, at discount rates over four years to encourage lending. The data released this week does not change our central forecasts for output or for the trade deficit for the year. No real relief in the trade deficit figures John Ashcroft.co.uk Page 2Saturday, 14 July 12
  4. 4. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Saturday July 14th 2012 Manufacturing Output May Analysts became excited as manufacturing growth increased by 1.2% compared to prior month but compared to May last year, output fell by 1.7%. Capital goods, (for overseas investment presumably) increased by 2.3% but this was the only bright spot in the gloomy figures as output of consumer durables and non durables both fell. Manufacturing output remains some 8% below the peak of the first quarter 2008 despite a rally from the low of 2009. Where does this leave our forecasts for the year? Over the first five months, output compared to prior year was down 1.5% year on year. Assuming output remains level for the rest of the year, the overall rate of decline for 2012 will be around Manufacturing output remains pretty flat -0.5%. This is our central forecast for manufacturing. The change year on year in May down 1.7% John Ashcroft.co.uk Page 3Saturday, 14 July 12
  5. 5. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Saturday July 14th 2012 UK Trade figures for May Trade figures at first glance offered good news, the deficit on trade in goods fell from £9.7 billion to £8.4 billion in May. Not so good really, April was slightly ahead of trend with a deficit averaging £8.5 billion in the first three months of the year. Our forecast for the second quarter is a deficit of £26.5 billion, no trade miracle here or in the trend data. The deficit in trade in goods with EU countries narrowed by £0.1 billion to £4.5 billion in May, compared with a deficit of £4.6 billion in April. Exports increased by 4.7% to £12.5 billion and imports increased by £0.5 billion (2.9 per cent) to £17.0 billion. So much for the negative Euroland impact on UK exports and growth. The problems for the UK economy are domestic demand not overseas developments. Forecast trade in goods deficit £106 billion 2012 Where does this leave our forecasts for the year? We still anticipate a trade in goods deficit of £106 billion for the year almost 7% of GDP. The trade in services surplus is expected to be around £68 - £70 billion. The overall trade in goods and services deficit will be £38 billion around 2.4% of GDP manageable and fundable. Depreciation of Sterling is a bad thing for the UK economy. With a service sector surplus of £68 billion John Ashcroft.co.uk Page 4Saturday, 14 July 12
  6. 6. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Saturday July 14th 2012 Construction Output In constant (2005) prices, non-seasonally adjusted, the total volume of construction output in May 2012 is estimated to have been 6.3 per cent lower than in May 2011 according to the latest data from the ONS. Repair and maintenance work remained steady but the volume of new work fell by 9%. On current trends we estimate that output for the quarter (Q2) will be £24.6 billion down 8% year on year. For the year as a whole the volume of output (total volume) will be down by 6% compared to 2011. Values of total output £24.6 billion. Output forecast to be down 6% for 2012 John Ashcroft.co.uk Page 5Saturday, 14 July 12
  7. 7. The Saturday Economist johnashcroft.co.uk Oil Price Watch ...... $150 Saturday July 14th 2012 Oil brent crude closed at $102.4 last week (FT source), as the market bounces from the floor. $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 118.83 107.57 110.00 115.00 Data Set Forecasts $0 Our forecasts more bullish 2004 2005 2006 2007 2008 2009 2010 2011 2012 than the World Bank $107 this year. John Ashcroft.co.uk Page 6Saturday, 14 July 12
  8. 8. The Saturday Economist johnashcroft.co.uk Log In | Register | My Account | iPad App | Latest Economic Indicators Saturday June 14th 2012 Indicator Period Latest Notes, next release Source Inflation CPI May 2.8% ONS Inflation RPI May 3.1% .. ONS Inflation RPIX May 3.1% .. ONS Earnings April 1.8% ONS Retail Sales volume May 2.0% ONS Retail Sales value May 3.3% ONS Unemployment April 2.62 LFS Million trailing 3 months ONS Unemployment % April 8.2% LFS trailing 3 month ONS Claimant count May 1.59m Million ONS PPIs output June 2.3% Manufacturing prices (output) ONS PPIs input May -2.3% Manufacturing prices ( input) ONS GDP growth Q1 2012 -0.3% ONS Manufacturing May -1.7% year on year growth ONS ONS : Office for National Statistics, LFS : Labour Force Survey John Ashcroft.co.uk Page 7Saturday, 14 July 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 June 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 John Ashcroft 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. John Ashcroft.co.uk Page 8Saturday, 14 July 12
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