Positive signs for UK economy in Q4 look to have proved short-lived
That movements in consumer credit and households’ savings in November
returned to levels more akin to pre-Covid norms offered further indication that activity was growing at a decent pace in Q4 before Omicron struck.
However, a sharp drop in December’s services PMI and a deterioration in some high-frequency indicators illustrated the consequence of surging Covid cases.
What you will learn:
- More evidence that consumer behaviour had been normalising before Omicron struck was provided by a slowdown in households’ accumulation of savings.
- Unfortunately, evidence of stronger activity in November looks to have been usurped by the consequences of the rapid spread of the Omicron Covid variant, a rise in the number of people isolating and increased consumer hesitancy.
- Moreover, the latest high-frequency indicators added to the evidence that the services sector has been hard hit by Omicron. CHAPS data on credit and debit card spending showed social spending in December averaged just under 90% of the February 2020 level.
Firms must brace for higher ‘new normal’ construction material prices
New research by Oxford Economics suggests that construction materials prices have shifted permanently higher due to the shocks of the past couple of years. Project managers and investors should anticipate costs being at least 15-20% higher in 2024 and onwards than in 2021.Find Out More
New Activity Trackers suggest momentum is waning
After a choppy first quarter of GDP data, our novel Activity Trackers (which incorporate proprietary daily sentiment data from Penta) suggest that economic momentum in EM Asia is on a softer trend in Q2 (at least outside of China) supporting our view of easing underlying inflationary pressures and diminishing appetite for further rate hikes.Find Out More