{"id":3364,"date":"2021-12-08T11:11:18","date_gmt":"2021-12-08T11:11:18","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/tomd\/?p=3364"},"modified":"2022-01-07T09:52:01","modified_gmt":"2022-01-07T09:52:01","slug":"economic-review-november-2021","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/tomd\/2021\/12\/08\/economic-review-november-2021\/","title":{"rendered":"Economic Review – November 2021"},"content":{"rendered":"
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Inflationary\npressures mount<\/strong><\/p>\n<\/div>\n\n

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Official statistics\nshow the UK headline rate of inflation now stands at a 10-year high, with\nsurveys pointing to further upward pressure as firms continue to report rapidly-rising\ncost burdens.  <\/strong><\/p>\n<\/div>\n\n

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Data\nreleased last month by the Office for National Statistics (ONS) revealed that\nthe Consumer Prices Index (CPI) 12-month rate \u2013 which compares prices in the\ncurrent month with the same period a year earlier \u2013 rose to 4.2% in October.\nThis was above all predictions in a Reuters poll of economists and represents a\nconsiderable jump from September\u2019s rate of 3.1%.<\/p>\n<\/div>\n\n

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The\nrise was largely driven by higher household energy bills following the lifting\nof the regulatory price cap on 1 October, with gas prices paid by consumers up\n28.1% and electricity up 18.8% in the year to October. ONS said price rises\nwere evident across the board with the cost of petrol, second-hand cars,\nfurniture and household goods, hotel stays and eating out all increasing\nnoticeably.<\/p>\n<\/div>\n\n

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Some\nof the current increase in the rate of inflation is inevitably due to weak\nprice levels witnessed in October last year when the pandemic was dragging down\neconomic activity. Analysts do expect to see inflation ease somewhat next year\nas these factors begin to drop out of the data.<\/p>\n<\/div>\n\n

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Survey\nevidence, though, suggests there are further inflationary pressures in the\npipeline. Preliminary data from November\u2019s IHS Markit\/CIPS Composite Purchasing\nManagers\u2019 Index, for instance, revealed record cost pressures, with input price\ninflation \u2018rising at the fastest rate since the index began in 1998\u2019<\/em>,\nfuelled by \u2018higher wages and a spike in prices paid for fuel, energy and raw\nmaterials<\/em>.\u2019<\/p>\n<\/div>\n\n

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November\u2019s\nMonthly Industrial Trends Survey published by the Confederation of British\nIndustry (CBI) also highlighted the current inflationary pressures; output\nprice expectations among manufacturers climbed to the highest level since May\n1977.<\/p>\n<\/div>\n\n

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Rate rise speculation\nintensifies<\/strong><\/p>\n<\/div>\n\n

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The Chief Economist\nat the Bank of England (BoE) has given a clear hint that interest rates are set\nto rise soon, although the emergence of the Omicron variant has cast some doubt\nover the exact timing.<\/strong><\/p>\n<\/div>\n\n

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At\na meeting ending on 4 November, the BoE\u2019s Monetary Policy Committee (MPC) voted\nto leave the Bank Rate unchanged at its historic low level of 0.1%.\nPolicymakers, however, were split on the decision, with two of the nine-member\ncommittee voting for an immediate hike to 0.25%.<\/p>\n<\/div>\n\n

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Bank\nGovernor Andrew Bailey described the decision as a “very close call<\/em>.\u201d\nMr Bailey went on to say that the MPC had “spent many hours”<\/em>\npondering its decision and did not rule out a rate increase when the committee\nnext convenes in mid-December. The Governor was, though, at pains to stress\nthat rates were unlikely to rise sharply, adding “for the foreseeable\nfuture, we’re in a world of low interest rates<\/em>.\u201d <\/p>\n<\/div>\n\n

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Since\nthe last meeting, a number of policymakers have indicated a growing willingness\nto act in order to counter above-target inflation, with the clearest hint to\ndate coming from BoE Chief Economist Huw Pill. Speaking at a CBI conference on\n26 November, Mr Pill suggested the conditions now existed for him to vote for\nhigher rates and indicated that he was minded to do so soon.<\/p>\n<\/div>\n\n

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Mr\nPill said, \u201cThe ground has now been prepared for policy action. Given where\nwe stand in terms of data and analysis, I view the likely direction of travel\nfor monetary policy from here as pretty clear<\/em>.\u201d The Chief Economist,\nhowever, also noted that the Omicron strain could throw a potential spanner in\nthe works and stressed there was no guarantee the MPC would sanction a rate\nhike when its next meeting concludes on 16 December.<\/p>\n<\/div>\n\n

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Markets\n<\/strong>(Data compiled by TOMD)<\/strong><\/strong><\/p>\n<\/div>\n\n

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Discovery\nof the Omicron variant impacted markets as investors considered the\nrisk to the global economic recovery. After initial market falls, stocks\nlargely regained their composure on Monday 29 November, as<\/strong> indices recovered\nsome of the losses seen during the previous trading session.<\/strong><\/p>\n<\/div>\n\n

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On\nthe last day of the month however, concerns intensified over the efficacy of\ncurrent vaccines against the new strain; markets felt the impact of this\nuncertainty. In the UK, buoyed by miners, the FTSE 100 managed to pull back\nfrom steep losses, when it pushed below the 7,000-point mark for the first time\nin nearly two months. The index closed the month down 2.46%, to end November on\n7,059.45. The mid cap FTSE 250 index closed on 22,519.72, a monthly loss of\n2.54% and the Junior AIM index closed on 1,187.56, a loss of 2.91% in the\nmonth. The Euro Stoxx 50 fell 4.41% in\nthe month to close on 4,063.06. In\nJapan, the Nikkei 225 recorded a\nloss of 3.71% in the month, to close on 27,821.76. <\/p>\n<\/div>\n\n

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US\nstocks fell at month end after Federal Reserve Chairman Jerome Powell remarked\nthat inflation can no longer be considered transitory. He also signalled an\nearlier-than-expected end to monthly bond purchases, potentially opening the\ndoor to interest rate increases. The Dow closed the month down 3.73%, the\nNASDAQ gained 0.25%.<\/p>\n<\/div>\n\n

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Concerns\nthat the new variant could slow global economic growth sent oil prices lower.\nThe Organisation of the Petroleum Exporting Countries and its allies (OPEC+)\npostponed technical meetings to early December, giving themselves more time to\nassess the impact of the variant on oil demand and prices. Brent Crude is\ncurrently trading at around $68 per barrel, a loss of over 18% on the month.\nGold is currently trading at around $1,798 a troy ounce, a small gain of around\n1.6% over the month.<\/p>\n<\/div>\n\n

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On\nthe foreign exchanges, sterling closed the month at $1.32 against the US\ndollar. The euro closed at \u20ac1.17 against sterling and at $1.13 against the US\ndollar.<\/p>\n<\/div>\n\n

\n
Index<\/td>Value (30\/11\/21)<\/td>Arrow up or down<\/td>Movement since 29\/10\/21<\/td><\/tr>
FTSE 100<\/td>7,059.45<\/td>down<\/td>2.46%<\/td><\/tr>
FTSE 250<\/td>22,519.72<\/td>down<\/td>2.54%<\/td><\/tr>
FTSE AIM<\/td>1,187.56<\/td>down<\/td>2.91%<\/td><\/tr>
Euro Stoxx 50<\/td>4,063.06<\/td>down<\/td>4.41%<\/td><\/tr>
NASDAQ Composite<\/td>15,537.69<\/td>up<\/td>0.25%<\/td><\/tr>
Dow Jones<\/td>34,483.72<\/td>down<\/td>3.73%<\/td><\/tr>
Nikkei 225<\/td>27,821.76<\/td>down<\/td>3.71%<\/td><\/tr><\/tbody><\/table>\n<\/div>\n\n
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Jobs\nmarket withstands furlough end<\/strong><\/p>\n<\/div>\n\n

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The latest set of employment\nstatistics suggests the demise of furlough has done little to dent the strong\nlabour market recovery that has been evident over recent months. <\/strong><\/p>\n<\/div>\n\n

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Figures\npublished last month by ONS showed demand for staff remains high, with the\nnumber of job vacancies rising to another record level. In total, there were\njust under 1.2 million vacancies advertised in the three months to October,\nnearly 400,000 more than before the onset of the pandemic. <\/p>\n<\/div>\n\n

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The data\nalso revealed there were 160,000 more workers on company payrolls in October\nthan September; this latest rise means the overall number of employees is now\nsignificantly higher than pre-pandemic levels. Interestingly, the redundancy\nrate was reported as largely unchanged despite withdrawal of the government\u2019s\nfurlough scheme on 30 September.<\/p>\n<\/div>\n\n

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Commenting\non the figures, ONS Head of Economic Statistics Sam Beckett said, \u201cIt might\ntake a few months to see the full impact of furlough coming to an end. However,\nOctober’s early estimate shows the number of people on the payroll rose\nstrongly on the month and stands well above its pre-pandemic level. And\nbusinesses tell us that only a very small proportion of their previously\nfurloughed staff have been laid off.\u201d<\/em><\/p>\n<\/div>\n\n

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Retailers\nenjoy early Christmas lift<\/strong><\/p>\n<\/div>\n\n

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An early Christmas\nspending spree provided retailers with a significant boost in October, while\nsurvey evidence suggests sales growth looks set to continue into the festive\nperiod.<\/strong><\/p>\n<\/div>\n\n

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According\nto the latest ONS data, retail sales volumes rose by 0.8% in October to end a\nrun of five successive months with no growth at all. The increase, which beat\nanalysts\u2019 expectations, was focused on the non-food store sector, including clothing\nand toy sales. ONS noted that some retailers felt \u201cearly Christmas trading\nhad boosted sales<\/em>.\u201d<\/p>\n<\/div>\n\n

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The\nlatest Distributive Trades Survey from the CBI suggests this trend continued\nlast month with the net balance of retailers reporting sales growth rising from\n+30 in October to +39 in November; this represents the strongest pre-Christmas\nreading since 2015. Furthermore, retailers said they expect sales to remain\nabove seasonal norms in December as well.<\/p>\n<\/div>\n\n

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CBI\nPrincipal Economist Ben Jones commented, \u201cChristmas seems to have come early\nfor retailers, with clothing and department stores in particular seeing a big\nupward swing in sales volumes. It seems likely that reports of supply chain\ndisruptions prompted consumers to start their Christmas shopping early.\nOverall, retailers are becoming more optimistic.\u201d <\/em><\/p>\n<\/div>\n\n

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It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.<\/strong><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

Inflationary pressures mount Official statistics show the UK headline rate of inflation now stands at a 10-year high, with surveys pointing to further upward pressure as firms continue to report rapidly-rising cost burdens.  Data released last month by the Office for National Statistics (ONS) revealed that the Consumer Prices Index (CPI) 12-month rate \u2013 which […]<\/p>\n","protected":false},"author":15,"featured_media":3365,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,34],"tags":[],"hd_content_source":[],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/3364"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/comments?post=3364"}],"version-history":[{"count":6,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/3364\/revisions"}],"predecessor-version":[{"id":3803,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/3364\/revisions\/3803"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media\/3365"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media?parent=3364"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/categories?post=3364"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/tags?post=3364"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/hd_content_source?post=3364"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}