EEF Economics Blog | All posts tagged 'retail sales'

2012 Q1 GDP: where are we now?

Felicity Burch April 24, 2012 09:30

Ahead of tomorrow's GDP release for the first quarter of 2012, what do the most recent economic indicators suggest about the state of the UK Economy?

↑ Manufacturing PMI	At the end of 2011 the Markit/CIPS Manufacturing PMI had moved firmly below 50, signalling a contraction in the sector. However, since the turn of the year, the indicator has been in positive territory, recording its highest reading for ten months in March.

↔ Manufacturing output	Manufacturing output has had a weaker start to 2012 than some of the business surveys might have suggested, and ONS data showed that it contracted in February this year. However, on a three-monthly basis output rose by a modest 0.2%.

↑ Service sector	Markit/CIPS Services PMI has been firmly positive since the start of 2012, with the most recent survey suggesting growth in the sector was the strongest since the second quarter of 2010.

↓ Construction sector	ONS reported two large monthly falls in construction output in December and January pointing to a sharp fall in output in the first quarter, despite relatively positive survey responses.

↑ UK Trade	Although ONS trade data weakened slightly in February, there was an improvement in the 3-monthly data, following record-high exports to non-EU economies at the end of 2011.

↔ Consumer confidence	Consumer confidence has had a shaky start to the year. GfK NOP’s Consumer Confidence Index ended 2011 at -31 and, after improving slightly, has returned back to -31. This is a level generally associated with recession and suggests there is some way to go before household spending returns to form.

↑ Retail sales	After a weak February, ONS data showed that sales bounced back in March. Although the increase was partly a result of people buying fuel stores ahead of the threatened petrol strikes, it was in line with the latest BRC-KPMG Retail Sales Monitor which also suggested that retail sales strengthened in March.

↓ Credit conditions	The Bank of England’s Agents found that a sizeable minority of firms had seen a rise in the cost of finance. In the more recent Trends in Lending release, the Bank reported that net lending to businesses contracted £4bn in February, while consumer credit remained subdued. In addition, the Bank’s latest Credit Conditions Survey showed that availability of credit to households was expected to tighten.

↔ Forecasts	Forecasts for growth in 2012 have remained relatively down-beat. The Treasury’s Comparison of Independent Forecasts in April showed a range between a contraction of 0.5% and growth of 1.5% over the year. The median forecast currently stands at 0.6%. Although forecasts have improved modestly since January when they fell within a range of -1.3% and 1.7%, with a median forecast of 0.4%, in either case the median forecast would not rule out a contraction in the first quarter of this year.

So what does all this mean for tomorrow’s GDP release

Tomorrow’s release – be it positive or negative – is likely to confirm one thing: this recovery is patchy and unsteady. The Bank of England’s recent minutes note that the arithmetic affects of a sharp contraction in construction at the beginning of the year will knock the GDP figure down. This may well mean that UK output fell in the first quarter of 2012, pushing the economy back into technical recession. But as recent data reveal, the overall picture is much more mixed.

Tags: gdp, economy, economic data, manufacturing pmi, manufacturing output, services, construction, uk trade, consumer confidence, retail sales, credit conditions, forecasts, growth

Week in Review - 17th February, 2012

Felicity Burch February 17, 2012 09:48

↓ Consumer prices	CPI inflation fell to 3.6% in January, from 4.2% in December. This is partly resulting from the fact that last January’s VAT rise – which pushed up inflation in 2011 – has now been fully accounted for in the statistics.

↓ Labour market statistics	The number of people in employment increased by 60,000 in the three months to December, mainly due to an increase in the number of part-time employees. The ILO measure of unemployment rose by 48,000, though this was the smallest quarterly increase since June 2011. The ILO unemployment rate was stable at 8.4%. The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose for the eleventh consecutive month, though the claimant count rate was unchanged at 5.0%.

↔ EEF Pay Settlements	The three-month average pay settlement was 2.4% in January, down slightly from the month earlier. This is in line with the broadly stable settlements seen throughout 2011, and – given that January is one of the key months for settlements – it may suggest that last year’s elevated inflation has not had an undue influence on pay deals. Official statistics showed that across the whole economy, pay rose by 2.0% in the three months to December and by 1.4% for manufacturing. Excluding bonuses, pay was up 2.0% across the economy and by 1.8% in manufacturing.

↑ Retail sales	The value of retail sales in increased by 4.4% between January 2011 and January 2012. Sales volumes increased by 2.0% over the same period.

The week ahead

Tue 21^st: Public sector finances
Wed 22^nd: MPC minutes
Fri 24^th: GDP (2^nd estimate for 2011q4); Business Investment

Tags: cpi, labour market statistics, eef pay settlements, retail sales, week in review

Week in Review - 20th January, 2012

Felicity Burch January 20, 2012 11:21

↓ Consumer prices	CPI inflation fell to 4.2% in December, and is already some way down from its peak of 5.2% seen in September. RPI has also fallen back, and now stands at 4.8%. Downward pressure on inflation came from petrol, gas and clothing. There was some upward pressure from landline and mobile phone charges.

↓ Labour market statistics	The number of people in employment increased by 18,000 in the three months to November, which was driven by increased self-employment. The ILO measure of unemployment rose by 118,000, remaining at its highest level since 1994. The ILO unemployment rate rose to 8.4%. The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose for the tenth consecutive month, though the claimant count rate was unchanged at 5.0%.

↔ EEF Pay Settlements	The three-month average pay settlement was 2.4% in December, this was down slightly from 2.5% the month before, but was based on only a small number of settlements, Average settlement levels remained stable throughout 2011, between 2.4% and 2.6%. Official statistics showed that across the whole economy, pay rose by 1.9% in the three months to November and by 1.5% for manufacturing. Excluding bonuses, pay was up 1.9% across the economy and by 1.6% in manufacturing.

↑ Retail sales	The volume of retail sales was 2.6% higher in December 2011 than in December 2010. The value of retail sales increased by 6.2% over the same period, reflecting a 2.4% increase in prices.

The week ahead

Tue 24^th: Producer Prices Indices
Wed 25^th: GDP (2011 Q4 Preliminary estimate)
Thu 26^th: GfK NOP Consumer Confidence

Tags: cpi, labour market statistics, eef pay settlements, retail sales, week in review

Week in Review - 16th December, 2011

Felicity Burch December 16, 2011 12:19

↓ Consumer prices	After hitting 5.2% in September CPI has begun to fall back, and was 4.8% in November. RPI also fell, to 5.2%. The largest downward pressures to the change in CPI annual inflation between October and November came from food, petrol, clothing and furniture, household equipment & maintenance. Upward pressure came from increases in the cost of domestic heating and sales of alcohol.

↓Labour market statistics	The number of people in employment fell by 63,000 in the three months to October, while the ILO measure of unemployment rose by 128,000, remaining at its highest level since 1994. The ILO unemployment rate stayed at 8.3%. The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose for the ninth consecutive month, though the claimant count rate was unchanged at 5.0%.

↔ EEF Pay Settlements	The three-month average pay settlement was 2.5% in November, up slightly from 2.4% in October. There has been little change in the level of settlements throughout 2011: they have remained between 2.4% and 2.6% all year.

↓ Retail sales	Compared with October 2011, retail sales volumes decreased by 0.4% and sales values decreased by 0.1% in November. However, retail sales volumes increased by 0.7% and sales values increased by 4.6% over the year.

The week ahead

Wed 21^st: Public Sector Finances; MPC minutes
Thu 22^nd: Q3 GDP final cut; balance of payments; business investment
Fri 23^rd: Index of services; productivity

Tags: week in review, consumer prices, labour market statistics, pay settlements, retail sales

Week in Review - 15th September, 2011

Felicity Burch September 16, 2011 09:31


↑ Consumer prices	CPI inflation was up again in August, to 4.5%, and has now been above target for 21 months. RPI inflation was also up, to 5.2%. Upward pressures on inflation came from clothing and footwear; housing and household services; and furniture, household equipment and maintenance. There was some downwards pressure, from recreation and culture; and transport.

↓ EEF Pay Settlements	The three-month average pay settlement was 2.5% in August, edging down a little from a revised figure of 2.6% in July. Since the beginning of the year average settlements have been broadly stable, at a level a little below the long-term average.

↓ Labour Market Statistics	The number of people in employment fell by 69,000 in the three months to July, while the ILO measure of unemployment rose by 80,000, the largest quarterly increase in unemployment since August 2009. The ILO unemployment rate stands at 7.9%. The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose for the sixth consecutive month, to 1.58 million in August, up 20,300 since July. The claimant count rate remained at 4.9%.

↔ Retail Sales	Between August 2010 and August 2011 retail sales volumes remained flat, though the value of sales increased by 4.7%.

The week ahead

Wed 21^st: Public Sector Finances; MPC minutes

Tags: week in review, cpi, pay settlements, labour market statistics, retail sales

Is credit insurance becoming an issue again?

Jeegar Kakkad August 30, 2011 09:45

Well, I'm not too surprised.

In June we saw big high-street names like HMV, Habitat, CarpetRight, Thorntons and Jane Norton closing down shops or going to administration. And the news since then has, if anything, only made consumers more cautious about spending, especially on big-ticket items. In turn, this has retailers planning earlier and deeper Christmas sales to bring the punters in. So it is inevitable that with retailers nervous about sales, their banks and credit insururs get nervous about their exposure to the retail industry.

Cue today's story in the Financial Times on credit insururers keeping an eye on the retail industry:

If a retailer’s finances are considered too risky, trade credit insurers can withdraw or restrict levels of cover being offered to their suppliers with potentially disastrous consequences. As seen with HMV and Woolworths this can disrupt the supply chain and cause a squeeze on working capital, which a retailer may not survive.

In the depths of the last downturn (take a look at our coverage here, here and here), much was made of the unsophisticated, blanket approach credit insurers took to withdrawing coverage from manufacturers. It didn't matter what the companies sales, markets or financials looked like, if it was exposed in anyway to the auto industry or to construction, then coverage was withdrawn.

The FT's article picks up on a key point of advice: keep close to your credit insurer so they have greater knowledge - and hence confidence - in your business.

Yet this approach didn't help some manufacturers last time round, and many have stopped using the product altogether. And others may be wary of sharing financial data with insurers because they've been burned by a similar approach with their banks.

We'll be watching to see if and how this credit insurance develops. The linke between retail sales, auto sales and manufacturing is how the credit insurance problem spilled over from the high street to industry. Hopefully it won't happen again.

Tags: credit insurance, retail sales, high street, manufacturing

Growth

Week in Review - August 19th, 2011

Felicity Burch August 19, 2011 10:18


↑ Consumer prices	CPI inflation edged back up in July, to 4.4%, remaining well above the Bank of England’s 2% target. This prompted the Governor’s seventh consecutive letter to the Chancellor of the Exchequer. The main upward pressure inflation was from financial services such as fees for arranging mortgages. Other upward pressure came from clothing and footwear; furniture, household equipment and maintenance; housing and household services. There was some downwards pressure, however, from food and drink prices.

↓ Labour market statistics	The number of people in employment rose by 25,000 in the three months to June, but the ILO measure of unemployment rose by 38,000, meaning the unemployment rate went up to 7.9%. This was partially offset by a fall of 23,000 in the number of economically inactive people (those neither in work nor looking for work). The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose again to 1.56 million in July, up 37,100 since June. This pushed the claimant count rate up to 4.9%.

↓ MPC minutes	Although the MPC once again voted to maintain interest rates and quantitative easing at current levels, the two members of the committee who had previously voted to increase the base rate joined the majority in voting to keep it at 0.5%.

↔ Retail sales	Between July 2010 and July 2011 the volume of retail sales was unchanged though, by value, retails sales rose 4.3% over the same period.

↑ Public sector finances	Public sector net borrowing (excluding financial interventions) was £40.1bn in the year to date for 2011/12, down from £43.1bn in the same period last year. However, public sector net debt in July was equivalent to 62.4% of GDP compared with 55.4% of GDP in July 2010.

The week ahead

Fri 26^th: Q2 GDP (second estimate); Index of Services; Q2 Business investment

Tags: cpi, labour market, mpc, retail sales, public sector finances, week in review

Week in Review - 22nd July, 2011

Felicity Burch July 22, 2011 09:45


↔ MPC minutes	The MPC once again kept rates on hold with the voting pattern on the MPC unchanged from last month. Spencer Dale and Martin Weale called for a 25 basis point rate rise; and Adam Posen called for an increase in the asset purchase programme of £50bn.

↓ Public Sector Finances	Public sector net borrowing (excluding financial interventions) was £14.0bn June, compared with £13.6bn in June last year. This was some way above the consensus expectation of £12.5bn. Public sector net debt (excluding financial interventions) was £944.3bn (equivalent to 61.9% of GDP) at the end of June 2011 compared with £803.7bn (55.3% GDP) at the end of June 2010.

↑ Retail Sales	Between May and June the volume of retail sales rose by 0.7% while the value rose by 0.3%. Growth in the volume of sales was driven by discounting on the part of retailers.

The week ahead

Tue 26^th: GDP Q2; Index of Services

Fri 29^th: Lending to individuals;

Tags: mpc minutes, public sector finances, retail sales

Week in Review - 20th May, 2011

Felicity Burch May 20, 2011 11:27

↑ CPI	After falling last month, CPI annual inflation jumped, by 0.5 percentage points, to 4.5% in April. RPI inflation edged down to 5.2%, from 5.3% in March. The difference between the two measures is partly accounted for by the recent fall in house prices, which only affects RPI. The jump in CPI inflation was partly caused by this year’s later timing of Easter. It was also driven by the cost of transport, particularly air transport, and alcohol and tobacco, caused by increased duties.
↑ Labour Market Statistics	The numbers of people employed rose by 118,000 in the three months to March and the ILO measure of unemployment fell by 55,000 over the quarter to 2.46 million. The three-month unemployment rate fell to 7.7%. The claimant count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose to 1.47 million, its highest level since September last year. There are, however, 43,400 fewer claimants than at this point last year.
↑ Retail sales	Compared with April 2010, retail sales volumes were 2.8% higher in April 2011. All sectors except for household goods stores showed growth in the volume of sales over the last year. Possible reasons for this growth include the later timing of Easter, the royal wedding and the warmer weather.
The week ahead

Tue 24^th: Public Sector Finances
Wed 25^th: GDP 2011q1 (2^nd estimate); index of services
Fri 27^th: GfK NOP Consumer Confidence

Tags: cpi, labour market, retail sales, week in review

Week in Review - 25th March, 2011

Felicity Burch March 25, 2011 09:30

↑ CPI	CPI annual inflation moved up again, by 0.4 percentage points, to 4.4% in February. RPI inflation was 5.5%, up from 5.1% in January. The most significant upward contributions to the change in both the CPI and RPI between January and February were from: housing and household services, as a result of higher gas bills; clothing and footwear; and miscellaneous goods and services, most notably financial services.

↓ Public Sector Finances	Public sector net debt (excluding financial interventions) was £875.8bn (equivalent to 58.0% of GDP) at the end of February 2011 compared with £729.9bn (50.8 per cent of GDP) as at the end of February 2010.

↔ EEF Pay Settlements	In the three months to February, pay freezes accounted for 13.5% of settlements, this represents a fifth consecutive monthly fall. Pay freezes as a proportion of settlements are now at their lowest level since September 2008, and well below their peak of 79.3% in September 2009. Deferrals as a percentage of settlements were largely unchanged at 7.1%.

↓ Retail Sales	Between January and February, total retails sales volumes decreased by 0.8%. Sales fell in food and non-food stores. However compared with February 2010 the volume of retail sales in February 2011 was 1.3% higher.

The week ahead

Tue 29^th: GDP, 2010q4, final revision; Balance of Payments; Business Investment; Lending to individuals
Wed 30^th: Index of Services
Thu 31^st: GfK/NOP Consumer Confidence

Tags: inflation, public sector finances, pay settlements, retail sales

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