A flurry of positive economic data for the UK
“Britain’s economic plan is working”, said Chancellor George Osborne in today’s Autumn Statement. He was quick to stress, however, that “the job is not done” and that there are still hard choices to be made to secure the economy for the long term.
According to the Office for Budget Responsibility (OBR), the UK’s growth forecast for 2013 has been revised from 0.6 to 1.4 per cent, and for 2014 from 1.8 to 2.4 per cent. The unemployment rate, which currently stands at 7.6 per cent, is predicted to drop to 7 per cent in 2015 and to 5.6 per cent in 2018.
The OBR data was the latest in a series of upbeat figures for the UK economy this week, following the publication of the Markit/CIPS PMI manufacturing (Monday), construction (Tuesday), and services (Wednesday) reports. Growth in manufacturing, for example, reached a two-and-a-half year peak in November, while employment in the sector rose at its fastest pace since May 2011.
Today, we also heard from the Bank of England and the European Central Bank that they are keeping their interest rates unchanged. Across the Atlantic, the US revised up its third-quarter GDP growth to 3.6 per cent, a day after payroll processing company ADP said 215,000 new positions were created last month, making November the strongest month for job growth in 2013.
But all eyes will be on the US non-farm payrolls report tomorrow, which might provide more concrete clues as to when the Federal Reserve will start tapering its stimulus programme.
Bid-yields for 10-year government bonds had a bit of a bumpy ride today. From 09:00 to 17:00 (GMT), the UK 10-year government bond bid-yield rose by 2.5 basis points, while the 10-year German Bund bid-yield increased by 5.5 basis points.