Good News Shock!

25/04/2011

At a time when we are use to receiving a continual assault of bad UK economic news, it’s encouraging to learn that some of the underlying trends are quite positive.  

Take the trade deficit, for example. In December, it stood at £5.7 billion, prompting gloom as to whether we would ever see an export-led recovery.  In January it narrowed to £3.9 billion and in February it came down to £2.4 billion. If that trend continues, the outlook could be very good indeed.

There’s good news on the employment front too, with the latest labour market statistics showing a strong rise in employment and falling unemployment. Despite the winter snows, employment grew by 143,000 in the December-February period compared with the previous three months.  Unemployment fell 17,000, with the rate now down to 7.8%. Hefty public sector job losses of 132,000 were more than offset by private sector job gains of 428,000.  This trend seems set to continue.  A further interesting trend is the ‘greying’ of the job market – in the past two years, employment in the 65-plus age group has increased by 183,000.

The most remarkable bit of news was last month’s drop in consumer price inflation from 4.4% to 4%, which effectively ruled out a May rise in bank rate.  This indicates that weak consumer demand is now bearing down on prices and is likely to set back a rate hike until at least October, which will come as a relief to many.