Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

mohsinqureshii

UK Economy Keeps Momentum at 2014 Start: NIESR

Recommended Posts

  • NIESR estimates the UK economy grew 0.8% in the quarter to January, up from a slight slowdown of 0.7% growth in December, and holding on to momentum gained in the third quarter of 2013. Still, the institute suggests the output gap will remain negative for longer with the BoE keeping rates on hold until Q2 2015.

 

Britain's gross domestic product (GDP) appears to have regained momentum at the start of the year after slightly losing steam towards the end of 2013.

 

GDP is now estimated to have grown at a slightly faster rate of 0.8% in the three months ending in January, up from 0.7% over the quarter to December, according to the monthly GDP survey published on Friday by the National Institute of Economic and Social Research (NIESR), Britain's longest established independent economic research institute.

 

In its release, NIESR also said it expects output to regain its pre-recession peak, recorded in January 2008, in less than nine months time. Even so, the institute also points to the fact that “a large negative output gap will remain” and therefore expects the Bank of England (BoE) to keep interest rates on hold until the second quarter of 2015.

 

The official statistics showed the UK economy grew 0.7% in the fourth quarter of 2013, down from 0.8% in the third quarter. The Office for National Statistics (ONS) said in its first estimate that the economy had still remained 1.3% below the peak in the first quarter of 2008.

 

NIESR publishes its quarterly GDP updates on a monthly basis and analyzes floating quarters as opposed to the official data provided by the ONS in London, which gathers figures on the basis of calendar quarters.

 

NIESR ups UK growth forecast driven by spending

 

NIESR also published its latest quarterly GDP forecast for the UK economy, in which it said the economy should rise at the rate of 2.5% this year, up from an estimate of 2% published in November. The economy is then expected to slow down in 2015 to an annual GDP rate of 2.1%.

 

In its forecast release, NIESR said the primary driver behind the GDP growth has been consumer spending despite real consumer wages falling. This may probably be offset by Consumer Price Index inflation falling sharply to the 2% target in December, easing households' budget squeeze slightly.

 

Looking ahead in more detail, NIESR expects “consumer spending to remain the key driver of recovery in 2014 and 2015, supported by continued buoyancy in the housing market.”

 

“House prices have seen a dramatic rise throughout the year, concentrated in London and the South East. There is considerable uncertainty over the magnitude of the impact of the second Help to Buy Scheme: stronger house price inflation would lead to even stronger consumer spending growth in 2014,” read the study.

 

Business investment to pick up, productivity to remain weak in 2014

 

NIESR also expects lower levels of uncertainty to support robust revival in business investment, while net trade is estimated to remain weak reflecting fragile markets in Europe.

 

However, the official data published today showed the negative trade balance improved at the end of 2013, although it may be viewed as non sustainable. An ONS analyst said on Friday that even though it is premature to numerically quantify the impact of a narrower deficit, it may positively contribute to the second revision of GDP in Q4.

 

The forecast also praised the strength of the UK labor market, but pointed to “stagnant productivity” which is expected to remain weak throughout 2014.

 

“In the short term, increased employment is welcome, but over the medium-term the absence of productivity growth would limit real consumer wage growth. Our forecast remains one of a gradual improvement in productivity, but continued stagnation poses a downside risk to the UK’s medium-term prospects,” reads the report on productivity.

 

On the BoE's (BoE) policies in light of a strengthened labor market, NIESR said “the surprisingly rapid fall in unemployment raises questions over the credibility of the BoE's forward guidance.”

 

“It remains unclear how this will be resolved. We have brought forward the point at which we expect interest rates to rise in the second quarter of 2015, although this is still more than a year after a breach of the unemployment threshold is expected,” NIESR added

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • $BAC Bank of America stock finally got the breakout , see https://stockconsultant.com/?BAC
    • $AYI Acuity Brands stock good day with a breakout above 104.85 , see https://stockconsultant.com/?AYI
    • $AXP American Express stock with a solid breakout above 97.46 , see https://stockconsultant.com/?AXP
    • $ACGL Arch Capital Group stock with a nice narrow range breakout above 31.43, from Stocks To Watch , see https://stockconsultant.com/?ACGL
    • Date : 7th August 2020.FX Update – Ahead of NFP, USD finds a bid.The narrow trade-weighted USDIndex (DXY) posted a two-day high at 93.16, extending the rebound from the 27-month low seen yesterday at 92.53. EURUSD concurrently retreated to a 1.1819 low, which is a pip shy of yesterday’s low and 2 pips shy of making it a big figure correction from yesterday’s 27-month peak. Cable posted a two-day low at 1.3098, drawing back from the 1.3187 five-month peak seen Thursday following the warily upbeat BoE outlook. USDJPY continued to ply a narrow range (less than 15 pips) around the 105.50 mark. Both the Aussie and Kiwi Dollars corrected moderately as the US currency firmed. AUDUSD, after first edging out a high at 0.7243, which matches Wednesday’s 18-month peak, ebbed to a low at 0.7196. USDCAD lifted to a three-day high at 1.3372.Front-month USOil futures were soft for a second day, maintaining sub-$42.00 levels after posting a five-month high earlier in the week at $42.52. Gold prices corrected below $2,050.00 after printing a fresh nominal record high at $2,077.85. The ascent of gold has been a reflection of investor concerns over the risk of there being an eventual pop in inflation as a consequence of massive global fiscal stimulus efforts and massive global monetary uber-accommodation, although there has been scant sign of this happening thus far, with disinflation remaining in force and with much of the US yield curve and other sovereign benchmark yields either at or near record lows. In the mix is speculation that the Fed, and possibly other major central banks, may be amid a strategic shift to allow higher inflation.The US Department of Labor’s weekly initial jobless claims will be THE key data release from the US later today, while labor market reports from Canada and the United States will be closely watched by market participants. The median forecast of economists polled by Reuters is for the Non-Farm Payroll to rise by 1,600,000, following the big miss in ADP number of 167,000 on Wednesday and the better than expected Weekly Claims yesterday of 1,186,000 compared to expectations of 1,400,000. The range in the Reuters poll estimates varies from -280,000 to 3,500,000. On the other hand, Canada is expected to add 400,000 jobs with the Unemployment Rate slumping lower to 11% from 12.3%.Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.