Pantheon Macroeconomics

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U.K. Publications

Below is a list of our U.K. Publications for the last 6 months. If you are looking for reports older than 6 months please email, or contact your account rep

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U.K. RICS Residential Market Survey

UK Datanote: U.K. RICS Residential Market Survey, December 2021

  • In one line: The start of a gradual slowdown for house price growth. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Labour Market Data, November/December 2021

  • In one line: Employment still rising, despite the end of furlough and the Omicron hit. 

Samuel Tombs (UK Economist)U.K.

19 Jan 2022 How Much Longer Will the Employment Miracle Last?

  • Employment has continued to rise, despite the withdrawal of the furlough scheme and the Omicron hit...
  • ...But growth will slow soon; few people who want a job don't have one, while employment taxes will rise in April.
  • Wage growth has cooled, despite the tight job market; real wages look set to fall sharply this year.

Samuel Tombs (UK Economist)U.K.

13 Jan 2022 Job Moves to Revert to Normal Levels this Year, Dampening Wage Growth

  • The proportion of workers changing jobs surged in 2021 to reach its highest level in the past 20 years...
  • ...But lower confidence and a sluggish housing market will drive job moves back to pre-Covid norms this year.
  • Job-to-job moves also will trend down in the 2020s as the population ages, bearing down on wage growth.

Gabriella DickensU.K.

10 Jan 2022 Above-Consensus November GDP Data Unlikely to Spur on the MPC

  • We think that GDP increased by about 0.6% month-to-month in November, above the 0.4% consensus.
  • Easing supply-chain blockages seem to have facilitat- ed pick-ups in manufacturing and construction output.
  • Growth in services output was supported by increas- es in retail sales, transport usage and vaccinations.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Construction Survey, December 2021

  • In one line: Supply shortages are continuing to ease, bearing down on input price inflation. 

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Services Survey, December 2021

  • In one line: Omicron weighed heavily on consumer services in December.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Manufacturing Survey, December 2021

  • In one line: Supply chains improved modestly, but Brexit and Omicron will undo recent progress in Q1.

Samuel Tombs (UK Economist)U.K.

24 Dec 2021 House Prices will Stagnate in H1 2022, but are Unlikely to Fall Outright

  • House price growth dipped in October following the return of Stamp Duty Land Tax threshold to £125K...
  • ...But that most likely is a blip; timelier indicators of house price growth have remained strong in Q4.
  • We expect house price growth to stagnate in H1 2022, as mortgage rates rise and real incomes fall.

Gabriella DickensU.K.

22 Dec 2021 A Falling Participation Rate Looks Set to Limit Trend Growth this Decade

  • The supply of labour has dropped over the past two years, in part due to a lower participation rate.
  • Over-50s have been a key driver, due to early retire- ment or long-term sickness following Covid-19.
  • We think the participation rate now is on a perma- nently lower path, limiting trend growth this decade.

Gabriella DickensU.K.

PM Datanote: U.K. CBI Distributive Trades Survey, December

PM Datanote: U.K. CBI Distributive Trades Survey, December

In one line: Omicron and earlier-than-usual Christmas shopping are weighing on sales. 

The CBI’s reported sales balance plunged to +8 in December, from +39 in November, well below the consensus, +25. 

The sharp drop in the net balance of retailers reporting that sales were higher than a year ago suggests that annual growth in retail sales has slowed to a crawl. The reported sales balance was at its lowest level since March. And the sales-for-the-time-of-year balance—which has a better relationship with the official data—fell to -2 in December, from +35 in November.  Admittedly, other measures of consumers’ spending have been more upbeat in December. The Bank of England’s CHAPS data, for instance, rose by 12% in the first nine days of the month, compared to November’s average level. Note, however, that the series is not seasonally adjusted. Given that retail sales usually are 15% higher in December than in November, total spending might not be rising at all. 

Nonetheless, we think that retail sales should be relatively immune to the impact of the Omicron variant, particularly if consumers shift spending away from services venues. After all, employment growth has remained strong in the wake of the withdrawal of the furlough scheme. And households have amassed excess savings equal to nearly 9% of GDP, which they can draw on to finance expenditure over the next year, if they become more confident again. We doubt, however, that households will go on a spending spree, either. GfK’s measure of consumer confidence edged down to -15 in December, from -14 in November, well below its long-run average, -9.  And as well as the emergence of the Omicron variant, households are facing mounting pressure on their real incomes from high CPI inflation. Real incomes will be hit by the increase in National Insurance contributions in April and by soaring CPI inflation, which looks set to increase to around 6% on the back of a huge increase in energy prices. Growth in employment also will slow as businesses too are hit by higher NICs and struggle to utilise the staff they took back from furlough in October.  On balance, we expect retail sales in H1 next year merely to match Q4’s level. 

The chart shows that annual growth in retail sales probably slowed to a crawl in December as consumers already had done a lot of their Christmas shopping in October and November, and the Omicron variant persuaded people to retreat to their homes. 

Samuel Tombs (UK Economist)U.K.

17 Dec 2021 The MPC will Give the Economy Breathing Space Before Hiking Again

Markets now expect the MPC to hike Bank Rate to 0.50% in February, following today's surprise hike.

Most members, however, thought the decision was "finely balanced" and see a "modest" tightening ahead.

Omicron won't just have short-term effects if the MPC hikes again and pushes firms over the edge.

Samuel Tombs and Gabriella DickensU.K.

16 Dec 2021 Subdued Services Inflation Gives the MPC Time to Wait for Omicron

November's 5.1% CPI inflation rate was 0.6pp above the forecast made by the MPC only last month...

...But high inflation is due to surging energy and goods prices; underlying services inflation remains subdued.

We expect the headline rate to peak at 6.0% in April, but then to fall sharply, slipping below-target in 2023.

Samuel Tombs and Gabriella DickensU.K.

15 Dec 2021 Labour Market to Warrant Gradual Rate Hikes, Once Omicron Wanes

The unemployment rate continued to fall in October, despite the end of the furlough scheme.
Some full-time workers have become part-timers post-furlough, but they don't seem to want more hours.
Wage growth, however, slowed to a below-inflation rate in October; the real wage squeeze will get worse.

Samuel Tombs and Gabriella DickensU.K.

14 Dec 2021 Sterling to Continue to Slide in 2022, Hurt by the U.K.'s Covid Sensitivity

Trade-weighted sterling has fallen by about 2% since late October; bets on a further drop have intensified.
The U.K. economy is more Covid sensitive than most; the downside risk to rate expectations is greater.
Investors next year increasingly will price-in the risks of a messy outcome to the next general election.

Samuel Tombs and Gabriella DickensU.K.

UK Datanote: U.K. RICS Residential Market Survey, November 2021

  • In one line: Higher mortgage rates will cool house purchase demand soon.

Samuel Tombs (UK Economist)U.K.

10 Dec 2021 Omicron Damage Likely to Delay the First MPC Rate Hike Until March

  • The MPC likely will hold back from raising Bank Rate next week, despite several upside data surprises.
  • We are cutting our forecast for quarter-on-quarter GDP growth in Q1 to 0.3%, from 0.8%, due to Omicron.
  • The Covid situation won't be better in early February; the March meeting is a better bet for the first rate hike.

Samuel Tombs (UK Economist)U.K.

9 Dec 2021 CPI Inflation Likely Exceeded the MPC's Forecast, Again, in November

  • CPI inflation likely rose to 4.8% in November—0.3pp above the MPC's forecast—from 4.2% in October.
  • Used car prices still are rising rapidly, while supermar- kets are passing on higher food prices to shoppers.
  • Tobacco prices were lifted by a duty hike, while cloth- ing CPI inflation likely was boosted by a base effect.

Samuel Tombs (UK Economist)U.K.

UK Datanote: U.K. Markit/CIPS Manufacturing Survey, November 2021

  • In one line: Gathering some momentum, as shortages ease modestly.

Samuel Tombs (UK Economist)U.K.

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U.K. Document Vault, Pantheon Macro, Pantheon Macroeconomics, independent macro research independent research, ian shepherdson, economic intelligence