Archive

March 13, 2024
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UK Recession Ends Before It Begins

  • UK GDP rebounded by 0.2% m-o-m in January 2024, as expected. The retail sector’s seasonal adjustment issue from December was already known to have unwound.
  • We currently see GDP growth of 0.3% q-o-q in Q1, restoring the level broadly held since 4Q22. January’s rebound means the recession ended before its February declaration.
  • This was never a recessionary regime that could crush inflationary pressures. Its likely end stops that risk from developing, negating that potential need for an early rate cut.

By Philip Rush

March 12, 2024
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UK: Less Excess in the Labour Market

  • UK unemployment increased in January 2024, contrary to the consensus, but tracking the rise we forecast for Q1. However, this looks like more than just residual seasonality.
  • The underlying changes signal slightly higher unemployment. Meanwhile, vacancies are falling after their seasonal rebound, and redundancies are off their lows.
  • Wage growth was also slightly softer than expected. Resilient pay settlements should limit how much further these data slow, postponing rate cuts relative to market pricing.

By Philip Rush

February 29, 2024
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UK Housing Shock Has Blown Over Again

  • Interest rate spikes in 2022 and 2023 rattled the housing market, but prompt reversals in market rates dissipated the shocks before they were adequately felt.
  • UK mortgage rates are back to their lows from last spring, and approvals for new loans are higher than then. Lending values are set to turn positive again soon.
  • The risk to economic activity and RPI inflation increasingly appears to have blown over, with housing depreciation troughing and MIPs unlikely to turn negative soon.

By Philip Rush

February 28, 2024
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EA Still Stuck in Stagnation

  • The flash services PMI’s bounce raised a risk that the Euro area’s stagnation might be ending. However, we still believe that is residual seasonality rather than substance.
  • ESI survey data corroborate this sceptical assessment as they were broadly unchanged at levels below the historical average for most sectors and countries.
  • Ongoing labour market resilience in the EEI and unemployment data sustains cyclical support for wage costs. Services and retail price expectations remain historically high.

By Philip Rush

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