Today is apparently known as Super Thursday. This is because a slew of economic data was released. Unfortunately, most of it was bad. Manufacturing output fell by -0.5%, the third month in a row that it has fallen, the trade gap in goods and services widened in March to £4.9 billion. The Bank of England's lowered it's forecast for growth this year and raised it's expected figure for inflation to 2.7% (see the BBC summary HERE).
Are we finally seeing the beginning of the slowdown that all the economists predicted? I don't know but it's possible. I was particularly interested in the fall in manufacturing output since it was this we were told that would benefit from the 14% drop in the value of the pound after the referendum.
Roger Bootle, at Capital Economics, a leading Brexiteer said last year the fall in sterling should be celebrated because an over valued pound led to a shrinking manufacturing sector (HERE). Well the pound dropped and the manufacturing sector didn't expand, it shrank! Bang goes that theory.
Another economist, Matthew Lynn (HERE) said in October last year that a falling pound would make our exports more competitive - well they may be cheaper but it has done nothing for the amount we sell overseas. We shouldn't take too much notice of Mr Lynn last August he wrote that the Bank of England was taking a big risk and could stoke a "Brexit boom" (HERE). This is what he said:
"Here’s a prediction. Within a year[i.e. in August 2017], growth in the UK will be far ahead of the rest of Europe, and even our exports to the rest of the continent will be up. In fact, the real danger now is that the Bank has just taken us back to the old British vice of over-stimulating the economy with a demand-led blow-out. Very soon we will have forgotten about the Brexit bust – and be worrying that the Brexit boom has gotten out of control and will have to be reined in".
The Euro zone is growing fast and will probably overtake us by August, our exports have fallen or at least not increased as much as our imports, and far from "forgetting" about the Brexit bust - we are just starting to see it. Separately, the housing market is slowing down with the supply of houses coming on to the market at the lowest since records started in 2002 (HERE). Both Halifax and Nationwide reported a fall in house prices in the last quarter.
Update: Friday 12th May, Figures show Germany grew at 0.6% in the first quarter of the year while unemployment in France fell again, marking seven quarters of net job creation. Overall in Europe, industrial production was down -0.1% but this was all due to lower energy production (down 3.2%). Output of goods all rose, meaning they are producing more with less energy so actually all good news.
