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There have been positive developments in terms of public sector debt. Public sector net borrowing has gone down by £6.1 billion pounds in the second quarter compared to the same period last year, and stands at 1.4% of GDP. Public sector net debt is also lower compared to June 2014.
The Bank of England made the decision to hold interest rates at 0.5%, to the disappointment of those hoping for a rise. On the plus side, this should help keep the cost of vehicle financing down.
According to figures from the Office of National Statistics (ONS), the number of people without employment rose slightly by 63,000 people between April and June compared to the first quarter of 2015. Overall, the employment rate did not change much and stands at 73.4%, higher than a year earlier, and close to the record high. This rise in unemployment may be a blip, and compared to the same time last year, the number of employed people actually rose by 354,000.
If we look more closely at the figures, the number of people in full time employment increased compared to the same time last year, whilst the numbers in part time work changed little. The employment rate in the second quarter was highest in the South West at 78.3%, and lowest in Northern Ireland at 67.8%. This marks a change from the second quarter of 2014, when the employment rate was highest in the South East. Wales saw the biggest rise in its employment rate, whilst the biggest decrease was in the North East.
There is good news in terms of pay, which has also risen 2.8% compared to the second quarter of last year. The Financial Times points out that this is the best real-terms boost in wages since 2007. A report by Reuters indicates that high wages and low inflation should help bolster domestic demand, which is good news as Britain’s economy is still reliant on consumer spending.
The Financial Times is also cautiously optimistic regarding Britain’s ongoing productivity problem, seeing slight increases in output along with a slight decline in hours worked as an indication that productivity— so long the Chancellor’s bugbear— may finally be on the rise.
ONS figures on the retail sector indicate that, compared to June 2014, quantity bought has increased 4%. This is the longest period of sustained year-on-year growth since May 2008. However, compared to May, June saw a dip of 0.2%. Petrol stations were again at the forefront of falling prices, seeing a double-digit reduction of 10%. Average store prices fell 2.9% in June of this year compared to last year, continuing a trend of falling prices, which again, can help boost disposable incomes.
There are some dark clouds on the horizon: according to the CBI, sales slowed in July. The CBI also predicts worse results in August, despite one survey suggesting that British consumer confidence was above the global average.
The UK’s deficit on trade in goods and services was lower in the second quarter of this year than in the first quarter, helped by a surplus in the export of services. The UK’s growing trade deficit on goods, which is at £9.2 billion, is disappointing, although the rise in the imports of goods in June 2015 was partly due to a 20 pence increase in fuels (ONS).
However, this deficit seems unlikely to change much in July. CBI figures for British Industry’s industrial order book balance in July indicate the worst results since July 2013, although not as bad as the long-run average of -15. Reuters suggests this might be due to weak demand from the Eurozone.
In terms of car sales, all indicators are good. SMMT figures for new car registrations continue to show growth in July, with an increase of 3.2% compared to July of last year. Private and fleet registrations increased, while business registrations were down 12.2%. For the year so far, private registrations have increased 2%, fleet have increased 12.3%, and business registrations have declined by 6.2%.
Turning to Europe, Eurostat, the EU’s statistical office, revealed that GDP in the EU28 rose 0.4% between quarter one and quarter two of 2015. When we compare the first quarter of 2015 with the first quarter of 2014, GDP in the EU28 rose by 1.6%.
Eurostat figures also show that retail trade volume fell by 0.5% in the EU28 between May and June 2015. However, compared to June of 2014, the retail sales index increased 2%, due mostly to a small rise in the volume of non-food products sold. In the UK, retail trade volume fell 0.3% between May and June, but increased 4% when compared to June of last year. This puts the UK in a marginally healthier position than the general EU28 figures, and behind the countries which saw the biggest falls.
Industrial production was down in the EU28 by 0.2% in June 2015 compared to the previous month. The country with the biggest decrease was Croatia, down by 2.9%, while Denmark saw an increase of 4.2%. The UK saw a decrease of 0.4%.
However, compared to June 2014, industrial production in the EU28 was up by 1.7%, after a slight decrease in May. The biggest fall was in the Netherlands (-2.4%), and the highest increase was in Ireland (27.6%). The UK saw an increase of 1.7%.
(Sources: ONS, Reuters, SMMT, Eurostat, the Daily Telegraph, the Financial Times)