Week ahead 13th July

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Here’s a Monday morning look ahead at the data and events relating to UK manufacturing.

Inflation

Inflation data released tomorrow is likely to show that price rises in the UK economy remain close to zero. Although we saw CPI inflation increase to 0.1% in the year to May, it’s possible that tomorrow’s CPI data will show another negative reading as base effects from postponing clothing discounts to July from June last year – unlikely to be replicated this year – will act as a drag. We expect inflation to hover around the 0% mark for the rest of the year.

Labour market statistics

Recent labour market statistics have showed continued improvement on the jobs front – with employment growing and unemployment falling – though the pace of this improvement has now slowed. This trend is likely to continue as the labour market tightens.
Worth keeping an eye out for in this week’s data is what’s happening on earnings. Last month’s data showed that average weekly earnings grew 2.7% in the three months to April, the fastest pace of growth in earnings since August 2011. Although inflation is currently low, continued strength in economic growth and wages may point to higher inflation in the medium term, something the MPC will be watching closely.

EEF Pay Bulletin

Our own pay data will also be published on Thursday this week. The picture for manufacturing pay has been somewhat divergent from the economy as a whole. In official data, manufacturing pay growth had been outpacing other sectors in the past few years, but it has come in at a weaker clip over the last six months or so. Our data has also showed a slower picture of late, with the three-month average pay settlement unchanged at 2% in May, the lowest increase in pay across the sector since October 2010. Keep an eye out for our Pay Bulletin to see if this trend has continued.

Blogs later this week:

- A deal’s been reached in Greece: what does it mean?
- A closer look at productivity
- Next steps after the Airports Commission’s recommendation

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