Inflation Report
November 2008
Demand
Chart 2.1 Nominal demand(a)
(a) At current market prices.
Chart 2.2 Contributions to quarterly consumption growth(a)
(a) Chained-volume measures. Figures in parentheses are shares in total consumption in 2007. The percentages do not sum to 100 due to rounding.
(b) Includes net tourism and non-profit institutions serving households.
Chart 2.3 Real post-tax labour income(a)
Sources: ONS (including Labour Force Survey) and Bank calculations.
(a) Wages and salaries plus mixed income less taxes (including income taxes and Council Tax) plus net transfers (general government benefits minus employees’ National Insurance
contributions), deflated using the consumer expenditure deflator (including non-profit institutions serving households).
(b) Real post-tax labour income divided by LFS employment.
Chart 2.4 Survey indicators of income expectations(a)
Sources: Research carried out by GfK NOP on behalf of the European Commission and YouGov.
(a) Net balances of respondents thinking that their household’s financial situation will improve over the next twelve months. Data are non seasonally adjusted.
Chart 2.5 Investment intentions (plant and machinery)(a)
Sources: BCC, CBI, CBI/PwC and ONS.
(a) Measures weight together sectoral surveys using shares in real business investment.
(b) Net percentage balances of companies who plan to increase investment in plant and machinery over the next twelve months.
(c) Net percentage balances of companies who say they have revised up their planned investment in plant and machinery over the past three months. Data are non seasonally
adjusted.
Chart 2.6 Factors likely to hold back investment(a)
Sources: CBI, CBI/PwC and ONS.
(a) Measures weight together sectoral surveys using shares in real business investment. Companies are asked for their twelve-month forecast of factors likely to limit capital
expenditure authorisations. Financial services companies are not asked to distinguish between a shortage of internal, and availability of external, finance, so their single
response is used for both questions.
Chart 2.7 Imports and domestic demand(a)
(a) Chained-volume measures.
(b) Goods and services, excluding the estimated impact of MTIC fraud.
Chart 2.8 GDP and IMF forecasts for selected countries(a)
Source: IMF.
(a) The IMF forecasts are from the World Economic Outlook update, released on 6 November 2008.
(b) Includes 141 emerging and developing economies across the world such as Brazil, China, India and Russia, weighted together using purchasing power parity exchange rates.
Chart 2.9 Euro-area consumption and household income
Source: Eurostat.
(a) Gross household disposable income divided by the consumption deflator.
Chart 2.10 US GDP(a)
Source: Bureau of Economic Analysis.
(a) Chained-volume measures.
(b) Percentage point contribution to four-quarter GDP growth.
Chart 2.11 UK export market share(a)
Sources: IMF, ONS and Bank calculations.
(a) The volume of UK exports divided by the volume of UK-weighted world imports. UK exports exclude the impact of MTIC fraud. Import volumes data are weighted
together using 2007 nominal export shares.
Tables
Table 2.A Expenditure components of demand(a)
Percentage changes on a quarter earlier
Averages
2008
2006
2007
Q1
Q2
Household consumption(b)
0.5
0.9
0.9
-0.1
Government consumption
0.5
0.4
1.0
0.5
Investment
2.3
1.0
-2.0
-2.8
of which, business investment
2.7
1.5
-1.9
-1.0
of which, dwellings investment(c)
2.0
0.1
-2.8
-2.1
Final domestic demand
0.8
0.8
0.4
-0.4
Change in inventories(d)(e)
0.0
0.1
0.1
-0.4
Alignment adjustment(e)
0.2
0.0
-0.5
0.6
Domestic demand
0.9
0.9
0.0
-0.1
‘Economic’ exports(f)
0.6
0.7
0.8
-0.1
‘Economic’ imports(f)
1.1
1.2
-0.3
-0.6
-0.2
-0.2
0.3
0.2
0.8
0.7
0.3
0.0
Net trade(e)
Real GDP at market prices
(a) Chained-volume measures.
(b) Includes non-profit institutions serving households.
(c) Whole-economy dwellings investment.
(d) Excludes the alignment adjustment.
(e) Percentage point contributions to quarterly growth of real GDP.
(f) Goods and services, excluding the estimated impact of missing trader intra-community (MTIC) fraud.
Table 2.B Mortgage arrears and repossessions
Series high
2007
2008
H1
H2
H1
Stock of mortgage arrears(a)
Three to six months
1.82 (1994 H1)(b)
0.59
0.62
0.75
Six to twelve months
2.07 (1992 H2)
0.31
0.35
0.42
More than three months
3.70 (1995 H2)(b)
1.02
1.10
1.33
0.40 (1991 H2)
0.11
0.11
0.16
Repossessions(c)
Source: Council of Mortgage Lenders.
(a) Mortgages in arrears at half-year end as a percentage of outstanding mortgages.
(b) Earliest observation.
(c) Flow of repossessions per half year as a percentage of outstanding mortgages.
Table 2.C Export orders(a)
Averages
2007
2008
since 1998
Q4
Q1
Q2
Q3
Oct.
5
19
16
22
-4
n.a.
CBI orders(c)
-26
-4
-12
-7
-32
n.a.
Agents’ scores(d)
0.9
2.7
2.6
2.7
2.1
n.a.
50.0
53.0
48.9
48.8
45.2
43.5
7
11
10
6
9
n.a.
Manufacturing
BCC orders(b)
CIPS/Markit orders(e)
Services
BCC orders(b)
Sources: Bank of England, BCC, CBI and CIPS/Markit.
(a)
(b)
(c)
(d)
(e)
Dates refer to the period in which the survey was conducted.
Percentage balance of respondents reporting orders to be ‘up’ relative to ‘down’ over the past three months.
Percentage balance of respondents reporting volume of orders to be ‘above’ relative to ‘below’ normal.
Volume of sales over past three months compared with same period a year ago. End-quarter observation.
A reading above 50 indicates increasing orders/new business this month relative to the situation one month ago. Quarterly data are averages of monthly indices.
How difficult are
households finding it to
service their debt?
Chart A Distribution of mortgage income gearing
Sources: British Household Panel Survey, NMG Research and Bank calculations.
Chart B Mortgagors reporting payment problems
Sources: British Household Panel Survey, NMG Research and Bank calculations.