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 info@pantheonmacro.com, or contact your account rep

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21 Jan 2022 House Price Growth to Slow in 2022 as Mortgage Rates Rise

  • House price growth remained strong in Q4, despite the return of the SDLT threshold to £125K at the end of Q3.
  • Timely indicators, however, suggest Omicron weighed on buyer demand at the end of the year, and in January.
  • Higher mortgage rates and falling real incomes will cause house price growth to decelerate this year.

Samuel Tombs (UK Economist)U.K.

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.

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.

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.

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.

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.

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.

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.

UK Datanote: U.K. Nationwide House Prices, November 2021

  • In one line: Prices still rising quickly, but higher mortgage rates will cool the market soon.

Samuel Tombs (UK Economist)U.K.

29 Nov 2021 Forecast Review: MPC Caught Between Higher Inflation and Omicron

  • Recent activity data have surprised to the upside, but the Omicron variant casts a shadow over Q1.
  • The near-term path for inflation looks much higher than a month ago, after October's above-consensus data.
  • The MPC likely will hike Bank Rate in December, but markets' expected 2022 rate path looks far too steep.

Samuel Tombs (UK Economist)U.K.

25 Nov 2021 Business Investment Held Back by Supply Side Constraints

  • Capex failed to pick up at all in Q3, as firms struggled to get their hands on transport equipment.
  • Firms, however, appear keen to invest and have the financial resources, so a rebound remains likely.
  • We expect capex to rise by about 10% in 2022 and 4% in 2023, eventually returning to 2019's level.

Samuel Tombs (UK Economist)U.K.

19 Nov 2021 Near-Real-Time Indicators Signal a Further Slowdown in Q4

  • The ONS' BIC survey suggests the recovery stalled in both October and November
  • OpenTable figures show that the boom in dining out has faded in November.
  • We expect quarter-over-quarter GDP growth to slow to 1.0% in Q4, from 1.5%, and below the consensus, 1.1%

Gabriella DickensU.K.

17 Nov 2021 Relief on Unemployment, but Still No Clarity on Wider Labour Market Slack

  • 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.

15 Nov 2021 October's CPI Inflation Print Likely Will Exceeded the Consensus

  • Energy prices likely were the key driver of higher CPI inflation in October, but the core rate probably rose too.
  • Used car prices rocketed again, while data from the BRC point to a chunky rise in clothing prices.
  • Hospitality firms probably raised prices in response to the VAT hike; the boost is uncertain but likely large.

Samuel Tombs (UK Economist)U.K.

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

  • In one line: Demand remaining strong, despite the stamp duty changes.

Samuel Tombs (UK Economist)U.K.

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