There is something special about Sunday morning, the Sunday Times, hot croissants with honey and butter, excellent. Headlines, Whitehall plans a euro evacuation in the event of a collapse of the banking system. Yeah – The ATMs are going out …
The claimant count gives cause for greater alarm. The unemployment measure provides a valuable signal as a coincident indicator to trends in GDP. As the chart demonstrates, inverting the claimant count and lagging by one quarter provides a high correlation and signal of trend. If the claimant count increases at a similar rate over the third quarter, the message is clear, growth is off track, the recovery is slipping away and the UK is heading back into recession.
According to the ONS in Q4 there was too much snow, in January not enough snow, April was too warm and the bank holidays and the Royal Wedding hit the growth figures in the second quarter. Heaven knows what would have happened to GDP if it had snowed on the day of the Royal Wedding.
Household goods store volumes were down by 3.7% but non store retail sales particularly on line internet sales were up by 24%. Retail is facing a “disruptive” challenge from the swing to more “clicks than bricks” in consumer buying patterns. Internet retail sales volumes accounted 9.9% of all transactions compared to 6.8% in June last year.
The message from the latest unemployment data is very worrying, growth year on year could be at best flat or even negative in the second quarter. The latest NIESR estimate suggests growth on the second quarter is just 0.8% year on year. This looks to be too optimistic. The preliminary estimate of GDP is released later this month. It could look horrible. Our forecast for growth in the year will be downgraded yet again in the Q3 review. There may be no rush to put up interest rates this year. Real incomes are under severe pressure. Is government policy grinding growth out.
The manufacturing figures for March were released this week. After growth of 6.6% in January and 5.0% in February manufacturing growth was just 2.7% in March. In the month capital goods and engineering were up 7%, metal bashers were up by 4% but consumer durables were down by 3%. So is the manufacturing miracle over? What will happen to growth this year? Let’s face it, the growth in manufacturing is not evidence or a “rebalancing” of the economy, it is more like evidence of a hit and run victim regaining consciousness. It’s a recovery not a manufacturing miracle.
The seasonally adjusted value of retail sales in January 2011 rose by 8.2 per cent compared with January 2010 and the seasonally adjusted volume of retail sales in January 2011 rose by 5.3 compared with January 2010. It’s a retail boom or is it? What is happening to food? Britain isn’t eating according to the official figures. Consumers having emptied the freezer in December must have started eating each other in January as sales fell by a further 2.7%. I love data and I love the ONS but something is happening to the numbers. Can it be that more and more food sales are going on line.
The ONS estimates for GDP growth came as something of a surprise for the final quarter of 2010 with q on q growth down by 0.5%. Even more disturbing was the sight of the Chancellor of the Exchequer explaining how snow had derailed the economic recovery in the final month of the year.
Retailers suffer worst December on record according to the Daily Telegraph as the retail sales figures for December were released by the Office of National Statistics. “British retail sales suffered their worst December on record as retailers battled with Arctic weather conditions and shoppers shunned higher prices.”
But food, what happened to food. Let them eat flake, or snowflakes presumably as food sales fell by 3.4% compared to December last year. That is the equivalent of one days destocking from the freezer as supplies came under pressure from families housebound. It is going to be a tough year ahead for retail, especially in household goods, retail sales were flat in December but the food figures should be taken with a pinch of salt.
According to latest data from the Office of National Statistics, the UK economy grew by 0.3% in the first quarter, up from an initial estimate of 0.2 per cent, slightly slower than the 0.4pc in the fourth quarter of 2009. What does this actually mean? The figures are in line with a recovery pattern suggesting the UK will emerge from recession in the second quarter of 2010 based on a technical year on year quarter growth definition.