November 23, 2022
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PMI Consolidation Behind Contractions

  • Differential surprises in the Nov-22 PMI surveys still reinforced the global trend towards falling activity. The US drop crystallised the convergence risk we flagged last month.
  • Levels are consistent with broad Q4 activity declines, which would confirm a technical recession in the UK. Unemployment lags but is showing some signs of deterioration.
  • Although there is arguably enough recessionary evidence for tightening to slow slightly in December, unemployment will need to have definitively turned for hikes to end.

By Philip Rush

November 23, 2022

Pill - Monetary policy and central bank asset purchases: Substitutes and complements −

Beesley Lecture given at the Institute of Directors, London

November 22, 2022
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UK Costs Pushing More Inflation

  • Inflation surprises continue to skew higher as prices remain far below where firms would like them. Additional cost shocks have prevented the gap from closing at all yet.
  • Government policy encourages second-round effects that raise the equilibrium price and cost-push inflation towards it over the next 18 months.
  • This macro story raises inflationary trends in our forecast to be almost 2pp above the consensus. That is less than the 4pp gap in March but could still rise again.

By Philip Rush