Let's just say that UK payrolls for April published today are quite unlikely to be giving an accurate steer on April job growth.

In his response @robwoodecon.bsky.social emphasises the importance of the risks from US tariffs, pressure on the Fed and how all this will play out for UK fiscal policy.

Discussion has focused on risks to UK monetary policy. @robwoodecon.bsky.social makes the point that any windfall from lower US rates spilling over to larger UK fiscal headroom is likely to spent given the unpopularity of the government.

At our event earlier today, @robwoodecon.bsky.social discussed how political pressures meant that any fiscal windfall from lower US policy rates would likely lead to more spending by the Chancellor.

The fiscal rules add a lot of noise and little else, it's time to drop them and focus on the actions needed to deliver sustainable fiscal policy. www.linkedin.com/pulse/ballot...

UK inflation expectations are modestly deanchored. 5-year ahead expectations higher than when inflation was in double digits and the survey is biased vs. history down by a method change in 2020. Paging MPC.

You've got to the love the UK CBI retailing survey. Volatile much? But for what it's worth, sales for the time of the year reach the strongest in 14 months in July.

UK payrolls driven by NICS rather than weak demand. Sectors with high share of part-time workers—whose employment costs rise most after NICS hike—and self-employment—opportunity to cut tax liability by switching from employee status—see payrolls most. Latter means payrolls exaggerates job falls.

UK political views increasingly seem to be driving responses to consumer sentiment—a phenomenon seen for some surveys in the US too—making them a less reliable leading indicator.

Which do you believe? Payrolls that just got massively revised, or the other two series which are also revision prone and in the case of the LFS not firing on all cylinders yet. Jobs falling or rising solidly?....What the MPC would give for accurate data.

Surprise, surprise, UK payrolls were revised up bang in line with their typical pattern. The question is, why would anyone believe the dodgy first estimates from this series showing tanking jobs? With a typical revision to June data, job falls are easing now.

Shall we call it the estate agents' PMI?

Here's the thing about the UK PMI. The higher uncertainty goes the worse an indicator of growth the PMI becomes. Policy uncertainty was nearly 5 standard deviations above normal in April/May, so the PMI is giving a far too pessimistic steer.

Cautious consumers you say? Retail sales growing the fastest in 3 years and now liquid asset accumulation dropping sharply. For my money the ONS saving rate data are wrong—they often revise it down sharply. Consumers will keep GDP growth ticking along.

The MPC will struggle to cut twice more this year after inflation surged to 3.5%, well above consensus of 3.3% but close to our call of 3.6%. Administered prices drove the surge, and there was a small Easter boost, but underlying pressures are stubborn. 'Skips' are likely now.

It's difficult to reconcile the data around the cautious consumer - not least another pick up in the savings ratio - with the strength in the retail sales. There are probably good reasons to put more weight on either set of data, but the discrepancy does muddy the true picture of consumer activity

Are more bad data leading us to misdiagnose the UK economy. Put another way can we really trust that the UK cash saving rate rose to an all-time high in Q4 2024 as the ONS reported this morning? The chart is startling, with households saving 12.0% of their income in Q4 (1/n)

Retail sales continue their rebound after the Budget knocked confidence for a couple of months. Retail sales volumes have been trending up pretty solidly since late 2023 and 3m year-over-year growth reached the highest since March 2022. GDP growth will rebound in Q1.

Meanwhile, in other news that may have gone under the radar today. Uh-oh. Household 5-10 year ahead inflation expectations rise to the highest since October 2022, when actual inflation was 11.1%. Anchored these are not. Paging Andrew Bailey.....

Fiscal statements are quite something to watch. The Chancellor talked a good game, but ultimately Ms. Reeves plans to borrow more in every year of the OBR's forecasts and raised spending in the near-term. Make me virtuous, but not yet (1/n)

Ah, PMI day. Always fun. Job cuts apparently moved from as bad as the month after Lehman's bankruptcy, to merely as bad as last October—when payrolls rose. We all know the problems: qualitative survey; responses can reflect sentiment. Treat with plenty of salt.

Have been part of one of the longitudinal HH surveys. Every time I fill in the same pages and pages of info for everyone in the household. The survey has no ‘memory’ in terms of showing me previous answers to check. All from scratch in each wave. If I didn’t care I’d have given up.

Guardian December 2024 talks about internal problems: unrealistic targets and management/exec unwilling to listen to expert advice; low pay, constantly being told to find more savings, and poor morale; difficulty getting people to engage with survey staff.

The latest disaster at the ONS. I wonder if they'll cease all data publication before too long. In all seriousness, if labour market, trade and PPI data can't be trusted, there must be questions about what other errors and problems are lurking that we haven't found out yet.

Contrast BoE MPC minutes. Dec. 2024 "Monetary policy **was acting** to ensure that longer-term inflation expectations were anchored at the 2% target." Mar. 2025 "Monetary policy **would act** to ensure that longer-term inflation expectations were anchored at the 2% target."

Job growth is far from great, but it does seem to be improving from a soft patch in the second half of last year. Payroll tax hikes are a risk to employment, but the blood-curdling business warnings are failing to show up in the hard data. We expect that to continue; jobs will hold up.

Fun chart from @robwoodecon.bsky.social on how decoupled the British and American economies now look.

The BoE turned more cautious. They added flexibility to skip a quarterly cut and raised concern about inflation persistence, adding that policy would anchor expectations. They have been far too sanguine about expectations, but they are well above normal levels. The MPC needs to be careful.

The latest Bank of England inflation attitudes survey shows long-term expectations high and rising, especially once we adjust for the structural break in the BoE data in 2020. The MPC is wrong to assume this year's inflation rise will have no second-round effects.

A clear picture is emerging about the UK economy late last year. A temporary slowdown, rather than collapse. Growth dipped in October as consumers worried about tax hikes, but spending has rebounded. Retail sales rose 1.0% November-to-January, matching GDP improvement (1/2)

January inflation is just the start. More government set price rises will push inflation to 3.7% in September. 4% is possible. Granted, underlying services inflation slowed. But surveys say disinflation is over, and the MPC have a new problem from goods inflation. Core still looks strong.

There is little sign of a 'non-linear' UK jobs collapse. After the predictable payrolls revisions, employment is stalling—far from rosy, but also far from the collapse dire business survyes suggest. Vacancies have stabilised and jobless claims have fallen since October.

Well. The economy is in better shape than thought. Monthly output now looks to have been trending up late last year. The consumer seems fine, with strong spending in pubs offsetting weak retail sales. Uncertainty and taxes hit capex though. But growth can rebound in 2025.

So how weak is the UK consumer really?

This is spot on, only the vote was dovish and I see no signal in two voting outliers. Mann seemed to attempt, if there is such a thing, a ‘hawkish 50bp cut’. Maybe careful was entirely intended to counter that vote.

Two votes for 50bp cut from MPC grabs market attention, but BoE pay settlements survey at top of the 2-4% range MPC were anticipating strongly points to caution from rate-setters. Still too strong for inflation at target.

Well, hello PMI services output price balance, and 5%+ 3m/3m annualised underlying services inflation again.

And the survey says.... disinflation is over as rising costs boost inflation and cut jobs. Tricky trade-off for the MPC, they will want to focus on supporting employment but need to watch accelerating inflation.

The final UK manufacturing PMI emphasises the big picture today. Growth is weak, but look at these price trends too. Believe this and disinflation is over with core CPI inflation still above 3% year-over-year.

It's almost like have a large effective home market gave incentives to invest. Worth reflecting on as the Chancellor scrabbles around for ways to boost investment.

Nationwide house price index gain of only 0.1% m/m in January superficially suggests slowdown. But the indices are volatile; mix adjusting houses is hard. Never look at one monthly change. Strip out the noise and house price inflation is trending up, nearing 6% m/m annualised.

Not much sign of consumer gloom in the BoE's borrowing data this morning. Mortgage approvals rebounded and will keep rising strongly judging by buyer enquiries. Households squirrelled away less in bank accounts than most of last year too, supporting spending.

We’ve been making this exact point in our retail briefings this week. Inflation may have subsided and incomes may be rising, but continued “sticker shock” at the shops means that inflation is the #2 concern of UK consumers… and only just.

The BoE MPC need to be careful about structural changes raising inflation, like increasing inflation attentiveness. Households are watching inflation closely now and expectations responding. Rate setters cannot afford to 'look through' headline inflation like they used to.

A bugbear of mine is a feeling that the BoE MPC are harder to follow now. So we looked at speeches. More in our note www.pantheonmacro.com/documents/uk... Rate setters are giving fewer speeches over time, and MPC failed to ramp up speeches much during the inflation surge (1/2)

UK consumer confidence is better than the headlines. The five point drop was driven by 'pure sentiment', which is unrelated to spending. Fundamentals point to steady retail sales growth. Consumers were probably spooked by headlines on rising gilt yields which have now faded.

On top of that, UK 10-year gilts have now outperformed every equivalent G7 bond this year apart from Treasuries

30y gilt yields the lowest, or least high, since January 3. Not sure if I missed the headlines saying a chunk of fiscal credibility had been restored?

Last year first estimates showing falling UK payrolls month-to-month were revised up an average of 42K. So the first estimate of a 47K drop in December probably means payrolls were flat.

UK labour market stats show gradually rising unemployment. Careful though, m/m payrolls changes revised up 22K on average. Job falls are small—look at claimant count—PMI is overstating. Still, weak jobs will keep BoE cutting. But wage growth will keep BoE cautious.... (1/n)