Inflation Report
November 2011
Demand
Chart 2.1 UK business and consumer confidence
Sources: BCC, CBI, CBI/PwC, research carried out by GfK NOP on behalf of the European Commission, ONS and Bank calculations.
(a) Data for manufacturing, financial and consumer/business services surveys are weighted using shares in nominal value added.
(b) Confidence about turnover. Data for manufacturing and services surveys are weighted using shares in nominal value added. Data are non seasonally adjusted.
(c) This aggregate confidence index is derived by averaging the answers to questions 1, 2, 3, 4 and 8 in the GfK NOP survey carried out on behalf of the European Commission.
Quarterly averages of monthly data. The diamond shows data for October.
Chart 2.2 Survey measures of global output growth(a)
Sources: HSBC, JPMorgan Chase & Co., Markit Economics, US Bureau of Economic Analysis and US Institute for Supply Management (ISM).
(a) A figure over 50 indicates rising output compared with the previous month, and a figure below 50 indicates falling output.
(b) Based on the results of surveys in almost 30 countries, accounting for an estimated 86% of global GDP.
(c) Manufacturing production and non-manufacturing business activity ISM survey indices, weighted together using their nominal shares in value added.
Chart 2.3 Euro-area and US consumer confidence
Sources: European Commission and Thomson Reuters Datastream.
(a) European Commission consumer confidence indicator.
(b) University of Michigan consumer sentiment index. Data are non seasonally adjusted.
Chart 2.4 Revisions to Consensus GDP growth forecasts for
the next calendar year(a)
Source: Consensus Economics. For further information on Consensus forecasts, see www.consensuseconomics.co.uk.
(a) Cumulative changes to forecasts for growth in the next calendar year since January forecast. For example, data for 2011 are revisions to forecasts for 2012 calendar-year growth relative
to the January 2011 forecast. The latest forecasts were released on 14 October 2011.
(b) China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.
Chart 2.5 World GDP, world industrial production and
world trade
Sources: CPB Netherlands Bureau for Economic Policy Analysis and IMF World Economic Outlook.
(a) At constant prices. Constructed by the IMF using purchasing power parity exchange rates. Composed of 184 countries. The chart shows average quarterly growth rates within each
year implied by calendar-year data. Latest data are for 2010.
(b) Volume measures. Constructed by CPB Netherlands. Country data are weighted using shares in world production and world trade respectively. The diamonds show growth between
the three months to May and three months to August.
Chart 2.6 UK goods exports and surveys of export orders
Sources: BCC, CBI, CIPS/Markit and ONS.
(a) Includes measures of manufacturing export orders from BCC, CBI and CIPS/Markit scaled to match the mean and variance of goods export growth since 2000. BCC data are
non seasonally adjusted.
(b) Excluding the estimated impact of missing trader intra-community (MTIC) fraud.
Chart 2.7 UK import penetration and relative import prices(a)
Sources: ONS and Bank calculations.
(a) The vertical lines mark the beginning of major nominal exchange rate movements that began in 1992 Q3 (a depreciation), 1996 Q2 (an appreciation) and 2007 Q3 (a depreciation).
(b) UK imports as a proportion of import-weighted total final expenditure. Import-weighted total final expenditure is calculated by weighting household consumption (including non-profit
institutions serving households), whole-economy investment (excluding valuables), government spending, stockbuilding (excluding the alignment adjustment) and exports by their
respective import intensities. Import and export data have been adjusted to exclude the estimated impact of MTIC fraud. Import intensities are estimated using the United Kingdom
Input-Output Analytical Tables 2005.
(c) Import prices, excluding the estimated impact of MTIC fraud, divided by the market price GDP deflator.
Chart 2.8 Financial balances by sector
(a) Recessions are defined as at least two consecutive quarters of falling output (at constant market prices) estimated using the latest data. The recessions are assumed to end once
output began to rise.
(b) Includes non-profit institutions serving households.
(c) Net lending by the United Kingdom to the rest of the world is equivalent to the sum of the current and capital accounts of the balances of payments.
(d) Excludes public corporations.
Chart 2.9 Contributions of expenditure components to
changes in demand in recessions and recoveries(a)
(a) Chained-volume measures at market prices. Recessions are defined as in Chart 2.8, and the recoveries from recessions are assumed to begin in the quarter that follows the trough
in output.
(b) Excluding the estimated impact of MTIC fraud.
(c) Excludes the alignment adjustment.
(d) Includes non-profit institutions serving households.
(e) ‘Other’ includes the alignment adjustment and a statistical discrepancy.
Chart 2.10 Counterparts to four-quarter growth in nominal
gross final expenditure(a)
(a) At current market prices.
(b) Includes a statistical discrepancy.
(c) Excluding the estimated impact of MTIC fraud.
Chart 2.11 Household consumption and real income(a)
(a) Includes non-profit institutions serving households.
(b) 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 by the consumer expenditure deflator.
(c) Chained-volume measure.
(d) Total available household resources divided by the consumer expenditure deflator.
Chart 2.12 Business investment(a)
(a) Chained-volume measure.
(b) Recessions are defined as in Chart 2.8.
Chart 2.13 Surveys of stock adequacy(a)
Source: CBI.
(a) Quarterly averages of monthly data. Net percentage balance of companies that say their present stocks of finished goods are more than adequate (manufacturing) or are high in relation to
expected sales (distribution). The diamonds show data for October.
Chart 2.14 Public sector net borrowing(a)
Sources: HM Treasury, Office for Budget Responsibility (OBR) and ONS.
(a) Measures exclude the temporary effects of financial interventions.
(b) Projections come from the OBR’s March 2011 Economic and Fiscal Outlook (EFO).
Tables
Table 2.A Expenditure components of demand(a)
(a)
(b)
(c)
(d)
(e)
Chained-volume measures.
Includes non-profit institutions serving households.
Excludes the alignment adjustment.
Percentage point contributions to quarterly growth of real GDP.
Excluding the estimated impact of MTIC fraud.
Revisions to the National Accounts
Chart A GDP at market prices(a)
(a) Chained-volume measures.
Chart B Net trade as a percentage of GDP(a)
(a) Chained-volume measures. Excluding the estimated impact of MTIC fraud.
Chart C Household saving ratio(a)
(a) Percentage of household post-tax income (not adjusted for the impact of Financial Intermediation Services Indirectly Measured).
(b) Recessions are defined as at least two consecutive quarters of falling output (at constant market prices) estimated using the latest data. The recessions are assumed to end once output
began to rise.
Table 1 Revisions to contributions of expenditure components
to annual GDP growth(a)
(a) Revisions to contributions to calendar-year GDP growth at market prices (chained-volume measures).
(b) Includes non-profit institutions serving households.
(c) Excluding the estimated impact of missing trader intra-community (MTIC) fraud.
Household saving: evidence from the
2011 NMG Consulting survey
Table 1 Reasons for expected decrease in monthly saving
over the next year(a)
Sources: NMG Financial Services Consulting survey and Bank calculations.
(a) Those households that responded that they were planning to decrease their monthly saving were allowed to specify up to four answers from the options listed. Question: ‘What would
you say are the main factors driving this decrease (in saving)?’.
Table 2 Reasons for expected increase in monthly saving
over the next year(a)
Sources: NMG Financial Services Consulting survey and Bank calculations.
(a) Those households that responded that they were planning to increase their monthly saving were allowed to specify up to four answers from the options listed. Question: ‘What would
you say are the main factors driving this increase (in saving)?’.