Are we nearly there yet? | EEF

Are we nearly there yet?

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Sunshine, a win at Wimbledon, and more positive economic news last week. Is everything suddenly going well for the UK?

It may be that we have turned a corner. As City AM reported today, some forecasters are starting to make upward revisions to their outlook for the economy. And in manufacturing the recent PMIs are pointing to a gradual, but broad-based improvement in activity.

More broadly, last week's uniformly positive PMIs are consistent with growth of around 0.5% in the second quarter of this year. Following on from growth of 0.3% in the first quarter it looks like the economic recovery might finally be gaining some momentum.

However, there are still important risks facing the UK, reflected in the Monetary Policy Committee's view that recent economic news wasn't enough to merit tighter policy any time soon.

But even if a recovery does materialise, do we have the kind of balanced growth we're looking for? As we blogged on Friday – and this week's issue of The Economist reports – business investment is a stark one third below its pre-recession peak.

Similarly, exports have so far failed to make the contribution to growth that many had hoped for, with trade dragging on growth in 2012. But there is reason for optimism here, as the export component of the manufacturing PMI rose to a two-year high last week.

What to look out for:

  • Tomorrow's releases of UK trade and industrial production data for May will give us some more detail on the shape of growth in the second quarter.
  • Also tomorrow the IMF's World Outlook will include their outlook for the UK economy, and their view on broader risks
  • 16th July: CPI data - we may base effects and regulated prices push inflation over 3%, prompting Mark Carney to write a letter to the Chancellor. This may include more detail on his view of the economic situation. If not the MPC minutes on the 17th of July are sure to be of interest
  • 25th July: first estimate of UK GDP for the second quarter of 2013


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