2021-06-06-牛津经济研究院-UK_The_recovery_rolls_on_6页_239kb

UK Weekly Economic Briefing Summary

Core Content

The UK economy is showing signs of a strong recovery, supported by record or near-record high Purchasing Managers' Index (PMI) readings in May. While some high-frequency retail data suggested a slowdown, this is likely due to weather-related factors rather than a genuine decline in consumer activity. The services and manufacturing sectors performed exceptionally well, with the services PMI reaching a 24-year high of 62.9 and manufacturing PMI hitting 65.6, the second-highest since the survey began in 1992. The composite PMI for May also reached a record high of 62.9, the highest since the series began in 1998.

The construction sector also showed resilience, with a PMI of 64.2, a near-seven-year high. These figures indicate that the economy is rebounding strongly, although there may be some overstatement of the recovery due to positive media coverage and the reopening of the economy. The PMI data may not fully reflect the actual pace of economic growth.

Main Points and Key Insights

• PMI Performance:

  • May's services PMI reached 62.9, the highest in nearly 25 years.
  • Manufacturing PMI hit 65.6, the second-highest since 1992.
  • Construction PMI was at a near-seven-year high of 64.2.
  • Composite PMI for May was the highest since 1998.

• Consumer Behavior:

  • April saw a net repayment of £0.4bn in credit card debt and personal loans, which is lower than the average of £1.7bn in previous years.
  • This suggests a reduced willingness to borrow, but not a significant risk to overall consumer spending.
  • Retail sales in April rose by 9.2% month-on-month, indicating strong consumer demand.
  • Footfall data showed retail visitor numbers were still 27% below 2019 levels, but this may be attributed to cold and wet weather.

• Housing Market:

  • Mortgage approvals in April rose to 86,921, above the 2010-2019 average.
  • Nationwide reported a near-seven-year high in annual house price inflation at 10.9%.
  • The extension of the stamp duty holiday is helping maintain property demand.

• Labour Market:

  • The proportion of businesses trading increased to 87% in the last week of May.
  • The share of workers on furlough fell to 8.1%, the lowest since the Job Retention Scheme began.
  • The KPMG/REC jobs survey showed a sharp rise in permanent job openings, the fastest since 1998.

Economic Outlook

• GDP Growth:

  • The economy is expected to grow by 2.3% month-on-month in April, narrowing the gap with pre-pandemic levels.
  • The recovery is seen as robust, though some caution is advised due to potential overstatement by PMI surveys.

• Forecast Data:

  • Domestic demand is forecast to grow by 9.0% in 2021, with private consumption and government consumption also showing positive trends.
  • GDP growth is projected to slow in 2022 and 2023, with annual growth rates of 5.9%, 3.9%, and 3.1% respectively.
  • CPI inflation is expected to rise to 2.1% in 2022, with a slight decline in 2023.
  • The current account balance is forecast to remain negative, though the deficit is expected to narrow over time.

Key Risks and Considerations

• Consumer Debt Repayment:

  • While April's consumer credit repayment was lower than the average, it does not necessarily signal a slowdown in consumer spending.
  • Households are returning to normal savings behavior, and excess savings accumulated during the pandemic could still fuel future consumption.

• PMI Accuracy:

  • There may be a bias in the PMI data due to positive media coverage and the reopening of the economy, which could overstate the recovery.
  • The PMIs should be interpreted with caution, as they may not fully reflect real-time economic performance.

• Weather Impact:

  • Unseasonably cold and wet weather in May likely affected retail footfall and consumer behavior.

Week Ahead Highlights

• Halifax House Prices:

  • Expected to be released on Monday, 7 June.
  • Forecast: m/m growth of -1.9% and 3m-on-3m growth of 1.5%.

• GDP Data:

  • April GDP is expected to rise by 2.3% m/m, narrowing the gap with February 2020 levels.
  • The 3m-on-3m growth is forecast to be 1.5%.

• Services and Manufacturing PMIs:

  • Services PMI is expected to rise to 3.1% m/m and 1.3% 3m-on-3m.
  • Manufacturing PMI is expected to decline slightly to 0.2% m/m, but remain strong on a year-on-year basis.

Conclusion

The UK economy is on a solid recovery path, with strong PMI readings and positive indicators in services, manufacturing, and construction. While some data points like consumer credit repayment and retail footfall suggest caution, these are likely temporary or influenced by external factors. The overall outlook remains optimistic, with GDP growth expected to continue, albeit at a slower pace in the coming months. The housing market and labour market also show resilience, reinforcing the notion of a sustainable economic rebound.