Inteligencia y Seguridad Frente Externo En Profundidad Economia y Finanzas Transparencia
  En Parrilla Medio Ambiente Sociedad High Tech Contacto
Economia y Finanzas  
 
15/03/2009 | Further Sharp Rise in Unemployment Likely to Dominate U.K. Economic Indicators in Week Beginning 16 March

Howard Archer

The coming week is likely to see further very gloomy news on the labour market, manufacturing, and public finances fronts.

 

The headline-grabbing figure next week is likely to occur on Wednesday, with unemployment on the International Labour Organization (ILO) measure surging through the two-million level. Specifically, we expect unemployment on the ILO measure to have risen by around 176,000 in the three months to January, taking it up to 2.040 million. As a result, we expect the ILO unemployment rate to jump to 6.6% in the three months to January. Meanwhile, we forecast claimant count unemployment to have climbed at an increased rate of 90,000 in February, following a rise of 73,800 in January. This would be the largest monthly increase since March 1991 and take claimant count unemployment up to 1.323 million. The claimant count unemployment rate is forecast to rise to 4.1% in February, from 3.8% in January.

Reports of companies laying off workers are prevalent, while an increasing number of companies are folding. With the economy seemingly set to contract through 2009 and very possibly beyond before starting to recover gradually, we expect unemployment to rise to a peak of 3.3 million on the ILO measure around late 2010/early 2011. This would give an unemployment rate of around 10.5%.

Meanwhile, average earnings growth is likely to have moderated in January in the face of sharply rising unemployment and heightened job insecurity, as well as retreating inflation and markedly reduced inflation expectations. We expect underlying average earnings growth (excluding bonus payments) to have slowed to 3.4% in the three months to November. Headline average annual earnings growth is seen at an even lower 3.0% in the three months to January. These levels would be substantially below the 4.5% level that the Bank of England considers broadly consistent with its 2.0% consumer price inflation target.

Wednesday also sees the release of the minutes of the March meeting of the Bank of England's Monetary Policy Committee (MPC). At the meeting, the MPC cut interest rates by a further 50 basis points, from 1.00% to a record low of 0.50%, and the Bank of England also announced it is to engage in quantitative easing. Specifically, the Bank of England revealed that it is to purchase £75 billion in assets through the issuance of central bank reserves, and expects it to take up to three months to carry out this program. The central bank has already started to buy government bonds, and it will also buy some high-quality corporate debt.

We expect the March minutes to reveal that all nine MPC members were in favour of the interest-rate cut and the commencement of quantitative easing. It is possible that David Blanchflower favoured an even bigger interest-rate reduction than the 50-basis-point cut that was enacted, but the overwhelming view within the MPC is likely to have been that 0.50% should probably mark the floor in interest rates. There are clearly major concerns within the Bank of England about the negative repercussions that even lower interest rates might have for the banking sector, and also some serious doubts within the MPC about how much benefit another reduction would have, especially as savers are being hit so hard. It will be interesting to see if the MPC discussed the likely need for additional quantitative easing further out, both in terms of further expansion of the money supply and the potential widening of the asset types being bought.

Recent manufacturing and survey evidence have been truly dire. The industrial sector is suffering a major hammering globally as demand collapses, and U.K. manufacturers are taking their fair share of the hits. Unfortunately, the Confederation of British Industry (CBI) industrial trends survey for March (out Thursday) seems unlikely to offer any relief. Indeed, we expect the CBI's survey to show a balance of -60% of manufacturers reporting that their overall orders were at normal levels in March. This would be down from -56% in February and would be the lowest balance since January 1992. Both domestic and foreign orders are expected to have been exceptionally weak. Production expectations could well have deteriorated even further from February, when a 28-year-low balance of -44% of manufacturers anticipated that their output volumes would rise over the next three months. Meanwhile, the balance of manufacturers expecting to raise their prices over the next three months could have moved deeper into negative territory in March, from -13% in February, which was the weakest reading since November 2003. Sharply contracting demand and activity seems highly likely to cut further into manufacturers' pricing power.

The public finances (out Thursday for February) are likely to make particularly dismal reading. Tax receipts are being decimated by sharply contracting economic activity, declining corporate profitability, rising unemployment, reduced bonus payments, December's value-added tax cut, and substantially weakened housing market activity and prices. Meanwhile, sharply rising unemployment is also resulting in higher benefit claims, thereby pushing up government expenditure. Consequently, we expect there to have been a Public Sector Net Borrowing Requirement (PSNBR) of £9.0 billion in February, which would be more than 10 times the shortfall of £811 million in January 2008. In last November's Pre-Budget Report, Chancellor Alistair Darling forecast the PSNBR to reach £77.6 billion in fiscal 2008/09, but it now looks likely to reach at least £90 billion. As for 2009/10….

 

18 Mar - Bank of England Monetary Policy Committee Vote Split, March (Hike-Unchanged-Cut): 0-0-9
18 Mar - Claimant Count Unemployment Rate, February (%): 4.1%
18 Mar - Claimant Count Unemployment Change, February (000s): +90K
18 Mar - International Labour Organization Unemployment Rate, January (%): 6.6%
18 Mar - Average Earnings including bonus, January (3-Month/Year): +3.0%
18 Mar - Average Earnings excluding bonus, January (3-Month/Year): +3.4%
19 Mar - Public Sector Net Borrowing Requirement, February (GBP/Bln): 9.0
19 Mar - CBI Monthly Industrial Trends Total Orders, March (balance): -60%

Global Insight (Reino Unido)

 


Otras Notas Relacionadas... ( Records 1 to 10 of 120 )
fecha titulo
06/03/2013 Why Europe?
08/09/2012 Europa - Grecia prohíbe a sus ministros contratar a familiares como asesores
07/08/2012 Europe - Poland To Acquire 1,000 New Tanks
02/08/2012 Europa - La solución de Alemania para acabar con el paro: salarios de 400 euros
02/08/2012 Europa - La solución de Alemania para acabar con el paro: salarios de 400 euros
09/07/2012 Europa - Crisis ahoga a municipios de España
01/07/2012 Unión Europea - Consejo Europeo: Una disputa política en Rumanía puso en riesgo la validez del último Consejo Europeo
30/06/2012 Europe - Opinion: Germany the Euro Winner? Hardly
30/06/2012 Europe - Black Market for Body Parts Spreads Among the Poor in Europe
23/06/2012 Europa - UE acuerda paquete por 163 mil mdd para el crecimiento


Otras Notas del Autor
fecha
Título
24/11/2012|
09/09/2012|
29/07/2012|
29/07/2012|
29/07/2012|
29/07/2012|
22/07/2012|
14/07/2012|
08/07/2012|
01/07/2012|
24/06/2012|
10/06/2012|
27/05/2012|
20/05/2012|
13/05/2012|
06/05/2012|
29/04/2012|
21/04/2012|
24/03/2012|
18/03/2012|
18/03/2012|
11/03/2012|
11/03/2012|
04/03/2012|
04/03/2012|
26/02/2012|
26/02/2012|
26/02/2012|
23/10/2011|
15/10/2011|
02/10/2011|
25/09/2011|
31/07/2011|
17/07/2011|
17/07/2011|
10/07/2011|
10/07/2011|
03/07/2011|
03/07/2011|
19/06/2011|
19/06/2011|
05/06/2011|
05/06/2011|
29/05/2011|
29/05/2011|
22/05/2011|
22/05/2011|
15/05/2011|
15/05/2011|
08/05/2011|
08/05/2011|
11/04/2011|
26/03/2011|
20/03/2011|
26/02/2011|
19/02/2011|
12/02/2011|
29/01/2011|
22/01/2011|
15/01/2011|
01/01/2011|
25/12/2010|
18/12/2010|
11/12/2010|
20/11/2010|
14/11/2010|
05/11/2010|
31/10/2010|
23/10/2010|
09/10/2010|
03/10/2010|
18/09/2010|
11/09/2010|
11/09/2010|
11/09/2010|
04/09/2010|
04/09/2010|
06/08/2010|
30/07/2010|
24/07/2010|
17/07/2010|
10/07/2010|
03/07/2010|
20/06/2010|
19/06/2010|
13/06/2010|
05/06/2010|
29/05/2010|
22/05/2010|
16/05/2010|
01/05/2010|
25/04/2010|
10/04/2010|
03/04/2010|
28/03/2010|
12/02/2010|
05/02/2010|
23/01/2010|
15/01/2010|
08/01/2010|
19/12/2009|
11/12/2009|
11/12/2009|
05/12/2009|
05/12/2009|
28/11/2009|
28/11/2009|
21/11/2009|
21/11/2009|
13/11/2009|
13/11/2009|
07/11/2009|
31/10/2009|
17/10/2009|
09/10/2009|
03/10/2009|
19/09/2009|
12/09/2009|
05/09/2009|
07/08/2009|
07/08/2009|
01/08/2009|
01/08/2009|
19/07/2009|
19/07/2009|
28/03/2009|
28/02/2009|
28/02/2009|
18/01/2009|
02/01/2009|
24/09/2008|
24/09/2008|
06/04/2008|
06/04/2006|

ver + notas
 
Center for the Study of the Presidency
Freedom House