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The fast rollout of boosters has reduced U.K. hospital admissions, whereas they are surging across Europe.
Economic contagion for the U.K. in the event of fresh restrictions in the rest of Europe should be modest.
Manufacturing output would be unaffected, while the weaker euro will help to lower U.K. CPI inflation in 2022.
Samuel Tombs (UK Economist)U.K.
- The 0.6% m/m rise in payroll employee numbers in October implies unemployment didn't rise post-furlough...
- ...But the drop in median pay in October suggests many furloughed staff have returned only part-time.
- Year-over-year growth in wages continued to slow in September; no sign of a wage-price spiral forming.
Samuel Tombs (UK Economist)U.K.
- Nearly 4% of all staff still were furloughed in September, yet redundancies appear to have remained low.
- Involuntarily part-time working, however, likely became much more widespread in Q4.
- October's labour market data will be partial and might not offset concerns about the recovery's strength.
Samuel Tombs (UK Economist)U.K.
- Budget announcements, including the jump in National Living Wage, will support earnings growth next year...
- ...but higher taxes and inflation suggest real take home pay will fall by 1.5%, the most since 2011.
- This is one key reason we expect the MPC will hike Bank Rate by less than markets currently expect.
Samuel Tombs (UK Economist)U.K.
- The labour market continued to tighten in Q3, but employment and hours still were below their potential.
- Labour supply likely has increased much more than labour demand in Q4, now that the CJRS has ended.
- Unit wage costs were kept in check by a productivity rebound; rising labour supply will cool wage growth in Q4.
Samuel Tombs (UK Economist)U.K.
- Payroll employee numbers returned in August to their pre-Covid peak, but will dip in Q4, after furlough ends.
- We expect the unemployment rate to rise to 5.0% in Q4, from 4.5% in Q3; slack within firms will build too.
- Three-month-on-three-month annualised growth in wages fell to 3.2% in July; slack will keep it in check.
Samuel Tombs (UK Economist)U.K.
- The number of workers on furlough decreased again in July, as government contributions were tapered...
- ...But usage remains high in sectors that already have fully recovered, and among financially-weak SMEs.
- We expect the unemployment rate to rise to 5.0% in Q4, from 4.5% in Q3; hidden slack will rise much more.
Samuel Tombs (UK Economist)U.K.
- Markets still expect the MPC to hike rates in Q2 2022, despite surprise plans to lift national insurance in April.
- The tax hike will defer a full recovery in households' spending to the second half of next year.
- The plans imply the Treasury does not expect the OBR to turn upbeat on the medium-term economic outlook.
Samuel Tombs (UK Economist)U.K.
- 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.
Samuel Tombs (UK Economist)U.K.
Covid-19 cases likely will pick up in September, as schools return and building ventilation declines.
Business closures in Q4 aren't likely, but households will remain cautious, delaying a full recovery.
In the event of a new variant and lockdown, we think the MPC would cut rates to -0.25%, despite 4% inflation.
Samuel Tombs (UK Economist)U.K.
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.
Samuel Tombs (UK Economist)U.K.
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
Samuel Tombs (UK Economist)U.K.
Many indicators suggest that the economic recovery is stalling in the face of the third wave of Covid-19.
Samuel Tombs (UK Economist)U.K.
We now expect the MPC to end its gilt purchases immediately at next month's meeting, following last week's consumer prices data.
Samuel Tombs (UK Economist)U.K.
Next week's labour market report—released during our summer break—likely will show that employment is growing respectably, rather than spectacularly.
Samuel Tombs (UK Economist)U.K.
Government support for businesses during the pandemic has kept the number of corporate insolvencies extremely low by past standards.
Samuel Tombs (UK Economist)U.K.
The hawkish surprise last week from the U.S. Fed has left many investors questioning whether the MPC will follow suit this Thursday.
Samuel Tombs (UK Economist)U.K.
It remains our view that employment and wages will not rise rapidly enough over the 18 months to prompt the MPC to hike Bank Rate.
Samuel Tombs (UK Economist)U.K.
Tuesday's labour market report looks set to show that the unemployment rate fell further in April, though not quite as rapidly as implied by recent business surveys.
Samuel Tombs (UK Economist)U.K.
We expect April’s GDP report, released on Friday, to show that the economy continued to recover at a rapid rate in April.
Samuel Tombs (UK Economist)U.K.
