CBI Economic Update: Q1 GDP growth slows more than expected but survey data point to a pick-up in momentum in April. UK GDP growth slowed to 0.3% in Q1 2017, disappointing consensus expectations. This marks a softening in momentum: growth was down considerably on Q4 2017 (0.7%), and was below the average rate seen over the last few years (0.6% since 2013). The easing was driven by consumer-facing sectors, though most of the economy saw slower growth relative to the previous quarter.
However looking ahead, the CBI’s growth indicator showed a pick-up in growth in the three months to April, the fastest pace of growth since December 2015. This was largely down to stronger growth in the business & professional services and non-retail distribution sectors. Manufacturing continued to see a firm rise in output but growth in the retail and consumer services sector remained lacklustre over the last three months.
The CBI’s growth indicator chimes with the April Markit/CIPS composite PMI, which picked up to 56.2 from 54.8 in March (readings above 50 signal growth in activity, below 50 indicates contraction and a result of 50 designates no change). All sectors saw an uptick in activity in April however, manufacturing saw the strongest pick up, with growth rising to a three year high.
The CBI’s Distributive Trades Survey reported that growth in retail sales volumes accelerated in the year to April, exceeding expectations. The main drivers of growth were the grocery and clothing sectors. Warm weather and the later timing of Easter this year likely played a role in boosting growth – indeed, other indicators of consumer activity have been softer. In the year to May, retail sales growth is expected to ease.
Barclays UK economic overview 2017: The UK economy has shown signs of a slowdown with q1’17 GDP growth at 0.3% (q⁄q), with weakness particularly in the services sector, but also present in industry and construction. March’17 retail sales volumes contracted by more than forecast, resulting in negative quarterly growth and detracting from private consumption for the first time since q4’13. April’17 business surveys, however, showed some positivity from firm-to-firm sales on the back of improved euro area sentiment and increased competitiveness from GDP depreciation, although firms don’t expect this to be long-lived given Brexit uncertainty. Imported inflationary pressures remain present while domestic pressures appear bleak. although the peak in imported input prices appears behind us, firms continue trying to pass on recent highs to clients, resulting in further rises in prices charged, posing upside risks to the headline CPI forecast of 2.7% for 2017. Nominal core wage growth, meanwhile, continues to decelerate, consistent with surveys which suggest further weakness lies ahead. this resulted in real core wage growth decelerating by 0.6pp to 0.3% (3m⁄y) in Feb’17, it’s lowest since Oct’14, despite an unemployment rate of 4.7%, only 0.2pp above the medium-term equilibrium. It is believed that economic momentum will slow further in 2017 as CPI continues its ascent and real core wage growth turns negative, forcing households to hold back on their spending.
Bank of England Inflation report is available here: http://www.bankofengland.co.uk/publications/Pages/inflationreport/2017/may.aspx
Folic Acid Update: SACN is in the process of finalising their evidence report, to provide advice to Food Standards Scotland (FSS). The report was discussed alongside the FSS draft dietary modelling report in closed session on 16th March. The draft minutes of that SACN meeting are available here https://app.box.com/s/8e59ig7zy2kem8d9hk9otz60o78qh68j The final SACN report should be on the SACN agenda at the next meeting on 19th June. SACN’s advice will be considered by the FSS Board, before it provides advice to the Scottish Ministers. The FSS Board is due to consider this advice in August. We, with nabim and Scottish Bakers, may have a meeting with FSS in July when they should have received all the relevant information.
Air Quality Plan: The government has published a draft plan to improve air quality by reducing nitrogen dioxide levels in the UK. The options now open for consultation on reducing nitrogen dioxide in towns and cities are designed to reduce the impact of diesel vehicles and accelerate the move to cleaner transport. Local authorities are already responsible for improving air quality in their area, but will now be expected to develop new and creative solutions to reduce emissions as quickly as possible, while avoiding undue impact on the motorist. the government is consulting on a range of measures that could be taken to mitigate the impact of action to improve air quality. In line with the timetable directed by the Courts the government is seeking views on these proposals in advance of preparing its final plan for publication by 31 jul’17. All final decisions will be taken by the incoming government. This consultation will run until 15 jun’17.
BEIS Industrial Heat Survey: Please have a look at the link and complete the survey if you wish. Link for the survey: https://goo.gl/forms/O9K3ipIEfJ2l7K5W2 (Don’t worry about the date on the survey, just complete asap) The purpose of the survey is to provide valuable information to the department for Business, Energy and Industrial Strategy, who plan to decarbonise the industrial sector by 2050.