Detailed below is the Weekly News for 12th June. I have managed to avoid, I think, multiple references to the General Election. I did give a short quote to British Baker on Friday. ‘It has to be the case that given economic uncertainty and Brexit negotiations looming, we need our government, of whatever complexion, to bring stability and a sense of direction as soon as possible. Like all industries the bakery sector is looking for a government that is in a position to address the challenges the country faces.’
It will be interesting to see how Michael Gove approaches his job at DEFRA.
Have good week.
Gordon Polson – FOB Director
CBI Economic Update: In its second estimate of Q1 GDP, the ONS unexpectedly revised down quarterly economic growth to 0.2% (from 0.3%), a sharp easing from the expansion of 0.7% observed in Q4. Revisions to service sector output made the largest contribution to the downgrade to Q1 growth. Meanwhile, the release of the expenditure breakdown of GDP showed that consumer spending growth had slowed compared with the previous quarter, while business investment partially recovered after contracting in the previous quarter.
The CBI’s Growth Indicator indicates that private sector growth eased in the three months to May, as volumes eased to flat from growing among business & professional services firms reported by the CBI’s Service Sector Survey. Manufacturing output continued to record a robust expansion, as indicated by the CBI’s Industrial Trends Survey, whereas the CBI’s Distributive Trades Survey suggests that retail sales are gaining a little momentum following a lacklustre start to the year, but are close to flat on the year. Looking ahead, firms anticipate that the pace of growth in the private sector to pick up a little over the next three months, with healthy activity in manufacturing and business & professional services offsetting a slowdown in retail and falling volumes in consumer services.
CPI inflation jumped from 2.3% in March to 2.7% in April – the highest since 2013. Predominantly driving this was rising air fares, as the fall seen over March unwound. This was due to the later timing of Easter this year (which fell in April), which pushed up air fares relative to 2016 (when Easter fell in March). Rising clothing prices also delivered a boost to the CPI rate, but this was largely down to base effects.
Results of the Labour Force Survey showed that employment rose by 122k over Q1, pushing the employment rate to a record high of 74.8%. Meanwhile a 53k drop in unemployment nudged the jobless rate down to 4.6% – the lowest since 1975. Rising inflation pulled real average earnings growth (pay adjusted for inflation, excl. bonuses) down 0.2% on a year earlier, marking the first fall in real pay since Q3 2014.
Retail sales volumes (incl. automotive fuel) rose by 2.3% month-on-month in April, following a 1.5% decline in March. All the main sub-sectors reported a rise in sales, with the largest upward contribution coming from non-food stores. This was largely driven by a 7.6% rise in “other non-food” stores (which includes chemists, jewellers, sports shops, among others). Annual growth picked up in April, with sales volumes (incl. automotive fuel) rising by 4.0%, up from 2.0% in March. Non-store retailing contributed the largest chunk of annual growth, rising 22.1% in April.
Business Confidence: A poll by the Institute of Directors Business reveals business confidence has plunged since the election, with company bosses blaming uncertainty over the make-up of the government. The institute’s poll suggested a negative swing in confidence of 34 points from the previous month, with 57% of the 700 people polled either quite or very pessimistic about the economy over the next 12 months. Meanwhile, a report by BDO finds that growth in the services sector has slowed to a halt and is on the brink of shrinking. Companies in the sector, which make up 80% of the economy, are reporting their lowest levels of output in four years, according to BDO.
SACN Meeting 19th June: It is worth looking at these papers https://www.gov.uk/government/groups/scientific-advisory-committee-on-nutrition including the minutes of the last meeting which include the discussion on folic acid held in closed session and potassium replacers on which an announcement could be made some time soon. Folic acid will be discussed again at the forthcoming meeting on 19th June.
White bread is just as good for you study finds: This study by Weizmann Institute of Science in Israel revealing that there is no difference between wholemeal and white bread in terms of health effects, were widely reported in the media last week. Full details of the study are available here.
Five A Day: According to new research by Diabetes UK two thirds of Britons eat three of fewer portions of fruit and vegetables a day and almost half have at least three fruit free days a week. PHE advise people to eat at least five portions of fruit and vegetables a day.
COOL and British Produce: According to a YouGov poll of 2246 adults, two thirds of consumers would like the option of viewing only British products when shopping on line. The survey was commissioned by the NFU.
Acrylamide: The latest draft acrylamide measures are available for public consultation. They are attached and are available at link: http://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-2895100_en FoB will comment direct and via AIBI as necessary.The deadline for comments is 7 July.