Wednesday 18 July 2018
The good weather during the second quarter has ushered in widespread optimism touching all corners of the economy. Unemployment is down and wages are up, as is growth. Confidence is beaming from both business and consumers.
So far, the deluge of doomsday warnings over Brexit have succeeded in dampening optimism in spite of surging exports. Finally, well-deserved confidence is drying out the negativity with London-based businesses now tied between net optimism and pessimism…
…Indeed, according to Lloyds Bank’s “outlook” index, optimism has risen above the long-term average with 25% (31% in London) positive about the future in the second quarter of this year. Amid Remainer-stoked fears investment has been stifled Lloyds also found more than one in ten are looking to invest over the next six months…
…Confidence has spread from the sellers to the buyers with Deloitte’s consumer index registering its highest level since it began in 2011. Lower unemployment has had the knock-on effect of reassuring employees of their economic stability leading to greater buying power. Joblessness is down to 4.2%, the lowest since Britain joined the EU (or EEC, as it was back in 1973) falling by 12,000 to 1.41m according to the ONS. Job vacancies have also risen, up 7,000 to 824,000. The Sun reports wages are up 2.7% on the past year, a 0.4% increase accounting for inflation.
“Consumer confidence has rallied against a backdrop of favourable economic fundamentals. UK consumers are increasingly confident about opportunities in the jobs market and the security of work. With the unemployment rate at a 43-year low and skills shortages on the rise the stage looks set for gains in real wages,” said Deloitte’s chief economist Ian Stewart.
…All of which means the economy is expected to grow 0.5% in the third quarter of this years, up from 0.2% in the first three months. Quarter two stands at 0.4%, a doubling in output. Services, manufacturing construction (see below) have all rebounded. Activity in the almighty services sector improved markedly in June, jumping to 55.1 on the PMI scale compared to 54.0.
Following a slow start to the year, the construction sector has enjoyed its third straight month of growth beating the average forecast in a Reuters survey of economists. In June, the sector recorded its fastest growth in seven months. In that time new orders rose at their fastest pace since May 2017. Job creation also performed well, the quickest growth in a year. According to industry analysts Markit, construction growth was driven by increasing demand for both residential and commercial properties. Construction accounts for 10% of the UK economy, only slightly less than financial services.
British retail giant Tesco is partnering with its opposite number across the Channel, French supermarket chain Carrefour. Wasn’t Brexit supposed to destroy retail and cross-border supply chains? Tesco does not seem to think so. It’s push for bigger business abroad will be fuelled by efficiency savings with Carrefour. “By working together and making the most of our collective product expertise and sourcing capability, we will be able to serve our customers even better, further improving choice, quality, and value,” said chief executive Dave Lewis.