- Business and consumer surveys suggest hiring paused before the October Budget.
- We assume unchanged payrolls month-to-month in November, and the October jobless rate held at 4.3%.
- A strong DMP survey points to 0.3% month-to-month private-sector ex-bonus AWE growth in October.
Rob Wood (Chief UK Economist)UK
- In one line: The REC weakens in November as the Budget tax hikes bite.
Rob Wood (Chief UK Economist)UK
- We expect GDP to rise 0.2% month-to-month in October, despite a fall in retail sales.
- Professional services should rebound, and a jump in GP appointments signals strong healthcare growth.
- We still expect GDP to grow 0.3% quarter-to-quarter in Q4, but risks lie to the downside.
Rob Wood (Chief UK Economist)UK
- In one line: The PMI falls, but it will rebound after the Budget.
Rob Wood (Chief UK Economist)UK
- In one line: The Budget hit sentiment, but we take some encouragement from the large upward revision to the PMI.
Rob Wood (Chief UK Economist)UK
- In one line: S Payroll tax hikes boost inflation more than they cut wages.
Rob Wood (Chief UK Economist)UK
- In one line: The Budget keeps construction growth solid for now, but boosts inflation pressure and cuts optimism.
Rob Wood (Chief UK Economist)UK
- In one line: Signs that private demand is turning.
Rob Wood (Chief UK Economist)UK
- At least 17 government-set or inflation-indexed prices in the CPI will change between November and April.
- To help clients keep track of these ‘known knowns’ we will regularly update a table of estimated impacts.
- We expect the known knowns to prevent services inflation slowing between October and April.
Rob Wood (Chief UK Economist)UK
- The PMI fell to a 13-month low in November as businesses worried about taxes and trade wars.
- But take the implications for GDP growth with a pinch of salt; the PMI overreacts to political events.
- The MPC will look through the November PMI and stick to its ‘gradual rate cut’ message.
Rob Wood (Chief UK Economist)UK
Stronger population growth boosts official LFS employment estimates by 402K in Q2…
…Cutting productivity, as well as raising unit wage costs and therefore estimated inflation pressure.
Ignore the drop in November BRC retail sales as the data are distorted by the timing of Black Friday.
Rob Wood (Chief UK Economist)UK
- In one line: Late Black Friday cuts retail sales growth.
Rob Wood (Chief UK Economist)UK
- Tobacco duties and base effects will push up CPI inflation to 2.6% in November, from 2.3% in October.
- We expect energy and food to add 14bp to inflation, and core goods another 15bp, compared to October.
- CPI inflation 0.2pp higher than the MPC’s forecastwould rule out a December rate cut.
Rob Wood (Chief UK Economist)UK
- In one line: Budget and geopolitics hit manufacturing sentiment in November.
Rob Wood (Chief UK Economist)UK
- In one line: House prices bounce back after pre-Budget pause.
Rob Wood (Chief UK Economist)UK
- In one line: Tax hike fears lead households to dispose of assets and rush to complete house purchases.
Rob Wood (Chief UK Economist)UK
MARKET REPRICES FOR FEWER RATE CUTS...
- ...AND WE NOW SEE HOUSE PRICES RISING BY 4% IN DECEMBER
Rob Wood (Chief UK Economist)UK
- We trim our Q4 growth forecast to 0.3% quarter-to-quarter, after weak GDP and the fall in the PMI.
- Unemployment is likely trending up gradually and wage growth is slowing.
- But services inflation and wage growth remain too strong, so the MPC will cut only gradually.
Rob Wood (Chief UK Economist)UK
REBOUNDING GROWTH AND SLOWLY EASING WAGES
- ...THE MPC WILL CUT IN NOVEMBER AND THREE TIMES IN 2025
Rob Wood (Chief UK Economist)UK
