We are very fortunate that Dorset based economist Nigel Jump will be contributing regularly to Dorset Eye. Under the heading of ‘The Economics Story’ Nigel will keep local people updated on regional and national economics and how it affects us.
The middle of the month brings a raft of new data on the UK economy. This time, the economic news was generally better than expected – but not exciting.
On Tuesday, inflation came out lower than expected for the year to September: 2.2% on the CPI. Largely, it was a timing issue related to energy price hikes in September 2011 dropping out of the index before the punitive price hikes come back in for October. Inflation is likely to be higher again soon.
On Wednesday, the labour market data for June-August (unemployment rate down to 7.9%) and the claimant count for September (basically flat year-on-year) showed again that this is not a typical downturn of high job losses but one of low productivity (see previous blog on the productivity conundrum).
On Thursday, retail sales volumes showed a better (2.6%) year-on-year rise in September and the positive sequence since April suggests some improvement through the summer: perhaps a sign of stabilising demand at long last.
Next week (Wednesday), we’ll have the first guesstimate of the real GDP rate for the third quarter. It will attract a lot of hype, especially as many commentators are expecting a slightly positive figure and envisaging headlines calling an ‘end to recession’.
Actually, it could go either way. The construction and production numbers we have for July and August were not good. Some of the surveys have talked of lower activity. The net trade figures have been awful. But, the housing market has improved a little, government spending has been held up by recession and monetary policy remains loose.
In the end, whether the new quarterly growth rate is +0.2% or -0.2%, the doldrums continue. We’ll have to have a sequence of “better .. but not exciting” months this winter before the uncertainty really starts to lift.
Nigel F Jump
Chief Executive & Chief Economist, Strategic Economics Ltd
Visiting Professor in Economics, University of Bath
Visiting Professor in Regional Economic Development, University of Plymouth