Archive

February 13, 2024
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UK: Labour Market In Rude Health

  • UK unemployment confounded market expectations by falling to 3.8% from the lowered profile in the reintroduced LFS data. It is 0.5pp less than the BoE forecast for Q4.
  • Residual seasonality may unwind some of this strength in the Spring, and labour demand appears to have softened slightly despite rebounding weekly vacancies data.
  • Wage growth also exceeded expectations. Underpinned by high settlements, it may persist near 6%. Strength in pay and jobs suggests the labour market is in rude health.

By Philip Rush

January 30, 2024
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EA Stagnation Skirts Recession

  • The Euro area appears to have skirted a technical recession with a flat GDP in Q4. Even if revised down, the activity trend has been broadly stagnant for five quarters.
  • Only Ireland is in a proper recession, but Germany’s size means it subtracted more from the EA in Q4. Surveys have been recovering and remain robust for employment.
  • Resilient demand relative to supply suggests policy is not overly tight, which should discourage rate cuts from matching the deep mean reversion that markets price.

By Philip Rush

January 24, 2024
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Global Policy Isn't Squeezing That Tight

  • Surprising strength was broadly experienced across the flash PMIs for January. Demand growth is rebounding rather than slowing, prolonging inflationary excess demand.
  • Unemployment rates should rise with below-potential growth, but they broadly remain below their pre-pandemic levels and have mostly stopped falling rather than risen.
  • The failure of tight labour markets to loosen suggests global policy isn’t set far above a neutral level. That should postpone cuts and limit their future extent.

By Philip Rush

January 19, 2024
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UK: False Retail Trend Break in Dec-23

  • UK retail sales crashed by 3.2% m-o-m in the official estimates for Dec-23, appearing to break the well-established trends of rising values and flat volumes.
  • Expenditure for Christmas should be read across November and December, recognising that the sales events are challenging for the ONS to adjust for seasonally.
  • Non-seasonally adjusted sales were consistent with the performance in recent years, suggesting the trend break is a temporary statistical issue, not a fundamental one.

By Philip Rush

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