- GDP likely held steady in July, falling short of the consensus and the level implied by the BoE's Q3 forecast.
- Surging Covid cases depressed output in the distribution, food services and education sectors.
- A decline in new Covid-19 vaccinations probably led to a reduction in output in the health sector too.
- Shortages of workers and, to a lesser extent, materials, should ease in Q4, enabling output to rise.
- Businesses plan to invest more over the coming quarters, and can continue to adapt to Covid-19.
- Public sector output will rise too; school attendance will pick up and waiting lists will keep hospitals busy.
- Businesses are reporting low inventory in relation to demand, but shops remain well-stocked for now.
- Labour shortages should fade now that self-isolation rules have eased and the holiday season is nearly over.
- The workforce, however, is 2.2% below its pre-Covid trend; migration and participation won't fully recover.
- The Delta variant is to blame for July's fall in retail sales, not the rain, zeal for dining out, or alleged shortages.
- Surveys show households were less willing to visit both shops and services providers last month.
- Retailers are unlikely to benefit from any future recovery in consumers' confidence.
- House price growth surged to 13.2% in June—the highest rate since late-2004—from 9.8% in May.
- As government support fades and inflation rises, squeezing real incomes, price growth will slow...
- ...But lower mortgage rates will prevent a marked slowdown; we have revised up our 2022 forecasts.
- In one line: A hefty jump, but expect price growth to slow over the remainder of the year.
- Employee numbers have rebounded since the spring, but total employment is lagging behind.
- Vacancies are high, but are concentrated in different sectors to those which will see post-furlough layoffs.
- High inflation and 4-to-5% unemployment didn't lift wage growth in 2017, and probably won't this time.
- In one line: Recent employment gains likely will be reversed when the furlough scheme ends.
- CPI inflation probably declined to 2.1% in July from 2.5% in June, below the consensus, 2.3%.
- Clothing prices appear to have fallen sharply, as usual; they dropped only marginally a year ago.
- Surveys suggest the pace of increases in catering services prices has slowed down.
The U.K. economy was the G7's straggler for a fifth consecutive quarter, despite the rebound in Q2.
GDP will barely rise in July; June's surges in output in the health and advertising sector will reverse...
...while data from OpenTable and the BRC point to a step down in consumers' spending last month.
In one line: Still the straggler in the G7, despite Q2’s rebound.
The MPC's forecasts imply markets' expectations for future rate hikes are about right...
...But the risks to the MPC's economic forecasts now are skewed firmly to the downside.
We now expect the first rate hike in Q2 2023, slightly earlier than before, with QE wind-down coming later.
Now that negative rates are in the toolkit, the MPC might divulge its new estimate for the lower bound.
The MPC also might lower the threshold that Bank Rate must reach before it starts to wind down QE.
We expect Ofgem to announce on Friday that the default tariff cap will rise by a painful 13.5% in Q4.
The proportion of staff furloughed fell to 5.7% at the end of June, from 7.5% a month earlier...
...But surveys point to only a marginal fall in early July, and still high usage in fully recovered sectors.
Firms likely won't fully relinquish recent productivity gains; the employment rate will drop back in Q4.
The ONS' Business Impact of Covid-19 survey suggests business turnover has flatlined since late May.
The disruption caused by the "pingdemic" wors- ened in late July, but likely is now starting to fade.
Unemployment still looks set to jump in Q4, despite another hefty drop in furlough scheme usage in June
The slowdown in consumer credit gross lending in June suggests monthly GDP growth slowed.
Households remained cautious; last month liquid assets increased at a faster rate than pre-Covid.
Businesses increased their net external finance for the first time since February; a positive sign for capex.
In one line: Households remain slightly cautious.
Q2 CPI inflation exceeded the MPC's one-quarter ahead forecast by the most for 13 years...
...But only two members have implied they will vote to end QE; pushback from the doves has been strong.
Inflation expectations have remained well-anchored;Team Transitory probably is right.
On the face of it, May's trade data suggest Brexit's adverse impact has faded considerably...
...But the U.K. is not benefiting from the global upswing in trade to the same extent as its peers.
Brexit is one reason why we expect the recovery in GDP to slow as it approaches its pre-Covid level.
The larger-than-consensus fall in the composite PMI adds to evidence that the recovery is slowing.
The disruption caused by Covid-19 cases is only part of the story; a weaker underlying picture is emerging.
Prices still are rising sharply, but there are some early signs that the upward pressure is easing.