Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.
Overview
OBR FORECASTS STRONGER GROWTH
The Office for Budget Responsibility (OBR) has upgraded its UK economic growth forecast and is now predicting the economy will return to its pre-pandemic level six months earlier than previously expected.
UK INFLATION LIKELY TO HIT 5%
The Bank of England’s new Chief Economist has said he expects inflation to reach 5% by early next year and that the Monetary Policy Committee (MPC) will have a “live” decision on interest rates at its next meeting on 4 November.
MARKETS
Although supply chain issues and inflation concerns continue to weigh on sentiment, many global indices closed October in positive territory. In the US, despite downbeat financial updates from tech heavyweights Apple and Amazon toward month end, a more positive earnings picture was recorded by some other major US large caps, who posted better-than-expected revenue growth, reflecting strong demand trends across pockets of the economy. The Dow and NASDAQ closed the month registering robust gains; 5.84% and 7.27% respectively.
RETAIL SALES EXTEND RECORD DECLINE
Official statistics show that retail sales fell for a record fifth month in a row, although the latest survey evidence does point to a more recent recovery in sales volumes.
WORKERS ENJOY PAY REBOUND
Data from the ONS annual earnings survey confirms pay levels have rebounded sharply this year, particularly for those workers hardest hit during the early part of the pandemic.