Archive

January 29, 2025
2025-01-28 AI_head.png

AI: Attack Of The Clones

  • AI investors were shocked by China’s DeepSeek successfully matching the performance of OpenAI’s GP4-o1 at a fraction of the build cost and despite export restrictions.
  • Innovating a more productive use of capital does not negate the potential gains from increasing processing power. Either way benefits the economy with faster AI progress.
  • Foundation model IP needs better protection against the attack of cloning distillation techniques to reap a return on investment while pushing the performance frontier.

By Philip Rush

January 21, 2025
2025-01-21 UK_head.png

UK Pay And Participation Are Rising

  • A renewed rise in the UK unemployment rate took it to 4.4% despite employment hitting record highs. Participation among older people has reversed much of its pandemic fall.
  • The underlying UR trend also increased, making this change look genuine. Nonetheless, the past two similar occasions proved extremes, with the UR falling a few months later.
  • Rapid pay growth might have encouraged labour force participation. The direct inflation effect should dominate the second-order slack story, but the BoE will probably cut.

By Philip Rush

January 16, 2025
2025-01-16 UK_head.png

UK: GDP Scrapes Statistical Bottom

  • UK GDP disappointed the consensus again by only rebounding 0.1% m-o-m in November, continuing the stagnation since the election was called and risking a Q4 contraction.
  • The services PMI’s December upturn suggests the recovery could extend. That would also be consistent with residual seasonality, which has been closely followed in 2024.
  • Recent weakness will help the BoE cut again in February. Reversing this dynamic could make it the last, but we expect another in May before hikes return in 2026.

By Philip Rush

December 17, 2024
2024-12-17 UK_head.png

UK Wages Torch Dovish Feathers

  • UK unemployment stopped rising in October, with the 4.3% rate close to the average of the past 18 months. The underlying trend is only for a slight weakening after strength.
  • Employment and hours worked are booming, partly owing to recent revisions. The poor productivity performance raises the hawkish pressure from these activity data.
  • Resurgent wages compound the hawkish news as private pay jumps on not-yet-captured public sector settlements. These data torch the dovish case for cutting rates this week.

By Philip Rush

By country