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Week in review

Felicity Burch May 28, 2010 11:16

↑ Index of services In Q1 annualised inflation for services producer prices rose by 0.8%, compared with a fall of 0.5% in Q4 2009. Upwards impacts were most strongly felt on the prices of advertising placements, freight forwarding and maintenance of motor vehicles. There were some downwards pressures, for example from property rentals and construction plant hire.
↑ Q1 GDP Figures for Q1 GDP were revised upwards to 0.3%, partly due to the strength of business investment over the quarter; and the growth of production output, within which manufacturing grew by 1.2%. Consumer spending remains weak, with household expenditure unchanged on Q4 2009.
↑ OECD Economic Outlook The OECD revised upwards its forecasts for output growth in 2010, to 2.75% across the OECD countries. However, significant downside risks were noted including: strong growth outside the OECD forcing up commodity prices; concerns over the sustainability of public debt leading to rising risk premiums; and inflation expectations rising. Given rising inflation expectations in the UK the OECD recommended a policy of beginning to normalise interest rates by the end of 2010.
↓ CBI Quarterly Distributive Trades Survey The balance of retailers who saw sales volumes rising fell to -18%, compared with last month’s considerably more positive figure of 13. The largest falls were seen amongst chemists and household goods, though clothing sales were also down. Expectations for the next month are also negative, with a balance of -15% expecting another fall. Poor weather and slowing momentum in the housing market were suggested as reasons for the worse-than-expected results.
↓ GfK Consumer Confidence Consumer confidence levels fell for the third month in a row in May to a balance of -18. However, this remains above the pre-recession lows for consumer confidence and may not reflect the results of the General Election given the survey period. Consumers were particularly worried about their financial situation and the “general economy” in the next 12 months.

The week ahead

Tue 1st: PMI Manufacturing

Wed 2nd: PMI Construction; REC Report on Jobs; BoE Lending to Individuals  

Thur 3rd: PMI Services 

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