Construction growing through the roof ...
Great headlines from the Times this week. "The economy is growing at an eye popping rate". "Construction growth is going through the roof". "Manufacturing leads strong performance", "Red hot economy lifts markets, ".
It didn't help when Nationwide reported house prices rising by 10.9% in April. Then the SMMT reported car sales increasing to 157,000 in the month from just 20,000 last year. Amazing what can happen once the showrooms reopen.
Interesting, Diesel car share fell below 10%. Hybrid sales accounted for over 40% of all registrations. Not too difficult to imagine what will happen as greater supply comes on stream. Ford's claim that 40% of total global sales will be electric by 2030 appears a tad conservative.
Back to the headlines. This is the week of the IHS Markit / CIPS UK PMI® data series. Hang on to your hats and cling to your eyeballs. Manufacturing surged to a record high in May, as new work intakes increased at a record rate. In construction, new orders increased at the fastest rate since the survey began in April 1997. In the service sector output growth increased at the fastest rate since May 1997.
The manufacturing index hit 65.6, the construction index hit 64.2, the service sector index hit 62.9. Bear in mind anything over 50 reflects growth in the sector and in the economy more generally, then it is understandable, why eye balls are popping. The economy is roaring back to life.
In the manufacturing sector, export orders increased at a survey record pace. Businesses reported stronger demand from the EU, the US and China. No surprise really, world trade increased by almost 10% in the first quarter of the year. Growth is expected to continue at a similar rate for the rest of the year.
The strong and swift upswing in activity, is leading to capacity limitations, delivery delays, supply shortages and rising prices. The good news business optimism is rising with over 70% of manufacturers forecasting higher levels of production, in twelve months time.
Businesses are recruiting. Difficulties are reported, especially in the hospitality sector. Really? The latest furlough data from HMRC reports numbers down to 3.4 million at the end of April of which almost one million were in accommodation and food. The sooner they, and the 1,700 furloughed in the energy sector, get back to work, the better.
In the US, President Biden is suggesting labour support schemes should be ended in September. Rishi Sunak may well be of the same opinion ...
Money For Nothing ... GiIts for Free.
The next episode of The Saturday Economist Live will be on the 25th June. We are spreading our multi media reach. We now have over 4000 hits on our Podcast channel, over 1000 views in the Saturday Economist Club Library. We regularly get over 1000 views on our weekly LinkedIn Channel. Premium Subscribers numbers are increasing at a "Record Rate" ...
We are working on a special feature "Digital Acceleration and the Smart Enterprise". This is an update on our work on Digital Disruption featuring in our Gazprom Moscow visit in at the end of 2019. We will talking about this at TSEL session later this month. The final drafts will be available to Premium Subscribers and members of the Saturday Economist Club.
In our regular sessions we have talked much about Monetary Policy. QE is dead. "Money For Nothing" Gilts for free. The Bank of England is engaging in monetary financing of the fiscal deficit. Someone had to.
According to the latest data from the Debt Management Office, total government liabilities increased by £450 billion in 2020. Foreign investors picked up less than 20% of the issue. Domestic insurance companies and pension funds bought into just 6% of the Treasury burden.
The Bank of England picked up 70% of the gilts on offer. The "lender of last resort" became the "buyer of last resort". Nobody likes a "Gilt Strike". The Old Lady of Threadneedle Street now has 32% of total government debt in the handbag. The Trillion Pound Bank note handed to the Chancellor may yet not be enough ... now that IS eye popping ...
That's all for this week, we will be back with more next week, stay safe ...
John
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