HEADLINERS: Main Economic Developments

These metrics are correct as of 21st February, unless stated.

• GDP¹: Monthly real gross domestic product (GDP) is estimated to have fallen by 0.2% in December 2021, compared with a 0.7% growth in November 2021. This means GDP is equal its pre-pandemic level (February 2020). Services were the main contributor to GDP’s 0.2% fall, detracting 0.4 percentage points from GDP growth, but this was partially offset by a positive 0.1 percentage point contribution from construction, while production made a negligible contribution.
• Labour Force²:
  • Unemployment rate: The unemployment rate from October to December decreased to 4.1% (down 0.2 percentage points on the previous quarter).
  • Employment: The UK employment rate increased by 0.1 percentage points on the quarter to 75.5%.
  • Inactivity rate: Economic inactivity rate increased by 0.1 percentage points to 21.2%.
  • Job vacancies: Job vacancies continued record highs, reaching 1,298,000 (up 113,600 from the previous quarter).

• Nominal wage growth: Growth in total average weekly earnings (including bonuses) has grown to 4.3% (3.7% excluding bonuses).
• Real wage growth: In real terms (adjusted for inflation), wage growth fell by 0.1% for total pay, and by 0.8% for regular pay (which excludes bonuses).

• Productivity³: Output per hour worked grew by 1.0% on the previous quarter in Quarter 4 (Oct to Dec) 2021.
• NEET⁴: Young people (16-24) not in education, employment or training (NEET) stood at 10.1% from July to September 2021, up from 9.3% the previous quarter. However, in the two previous periods there were large falls, and long-term trend is down.

• Inflation rate⁵:
  • CPIH: The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.9% in the 12 months to January 2022, up from 4.8% in the 12 months to December 2021. On a monthly basis, CPIH was unchanged in January 2022, compared with a fall of 0.1% in January 2021.
  • CPI: The Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January 2022, up from 5.4% in December 2021. On a monthly basis, CPI fell by 0.1% in January 2022, compared with a fall of 0.2% in January 2021.
  • PPI⁶: The headline rate of output prices showed positive growth of 9.9% on the year to January 2022, down from 9.3% in December 2021. The headline rate of input prices showed positive growth of 13.6% on the year to January 2022, down from 13.8% in December 2021.

• Interest rates⁷: In February 2022, the Bank of England raised the Bank Rate from 0.25% to 0.5%. This was to help bring the rate of inflation down.
• UK stock indices⁸:

• • FTSE 100: FTSE 100 companies are up 2.57% over the past month, and 13.19% over past year.
  • FTSE All-share: The FTSE All-share is up 1.78% (month-to-day) and up 10.87% (year-to-day).
  • FTSE 250: FTSE 250 is down 1.66% this month, but up 0.55% YTD.
  • FTSE SmallCap: FTSE small cap companies are down 0.85% MTD, but are up 7.48% YTD.
• Global stock indices⁹:
  • S&P 500 (US): Down 1.12% MTD, up 12.19% YTD.
  • Nasdaq Composite (US): Down 1.60% MTD, up 0.11% YTD.
  • Nikkei 225 (Japan): Down 2.46% MTD, down 10.76% YTD.
  • Hang Seng (Hong Kong): Down 1.97% MTD, down 4.17% YTD.
  • EURO STOXX 600 (EURO): Down 0.34% MTD, up 10.11% YTD.
• Volatility¹⁰: The VIX index, which represents the market’s expectations for volatility (i.e. fear/ uncertainty) over the coming 30 days, is down 3.81% MTD, but is up 18.34% YTD.
• Corporate Bond Index¹¹: S&P UK Investment Grade Corporate Bond Index has fallen 1.75% MTD, and fallen 4.54% YTD.
• Gilts¹²: Yield on a 10-year UK government bond is 1.41%.
• Exchange rates¹³:
  • SERI: The Sterling Exchange Rate Index (SERI) measures sterling’s value against a ‘basket’ of currencies, based on currencies’ relative importance in UK trade. SERI rose by 1.7% between December and January.
  • GBP/USD (Cable): GBP has got stronger against the dollar from December 2021 to January 2022 by 2.0%.
  • GBP/EUR: GBP has risen against the euro by 1.7%.
• Oil prices¹⁴: Brent crude oil is currently $93.90 per barrel, up 6.8% MTD, and 48.7% YTD.

• House Prices¹⁵: House prices in January 2022 are 9.7% higher than January 2021.
• Purchasing Managers’ Indices (PMIs)¹⁶: Services PMI picked  slightly in January 2022, after hitting a 10-month low in December 2021. Construction PMI was also up. However, Manufacturing PMI fell slightly.
• Index of Production¹⁷: Output is 2.6% below its pre-pandemic February 2020 level. This is despite monthly production rising between November and December 2021by 0.3%.

• Consumer Confidence Index¹⁸: GfK Consumer Confidence Index showed a drop of four points in January to -19.

• Retail Sales¹⁹: Retail sales volumes rose by 1.9% in January 2022 following a fall of 4.0% in December 2021. Sales volumes were 3.6% above their pre-coronavirus February 2020 levels.

• Public sector finances²⁰:
  • Net borrowing: Public sector net borrowing excluding public sector banks (PSNB ex) was estimated to have been £16.8 billion in December 2021, one of the highest December borrowing since monthly records began in 1993. However, it was £7.6 billion less than in December 2020.
  • Net debt: Public sector net debt excluding public sector banks (PSND ex) was around £2.3 trillion which equates to c.96.0% of GDP, the highest ratio since March 1963 when it was 98.3%.

• Trade²¹:
  • Goods imports: Total imports of goods, excluding precious metals, increased by £0.6 billion (1.4%) in December 2021, fuelled by imports from non-EU countries.
  • Goods exports: Total exports of goods, excluding precious metals, increased by £1.1 billion (3.9%) in December 2021, fuelled by exports to EU countries.
  • Goods deficit: The trade in goods deficit, excluding precious metals, narrowed by £0.2 billion to £43.0 billion in Quarter 4 2021, as export growth exceeded import growth.
  • Services surplus: The trade in services surplus reduced slightly in Quarter 4 2021 to £30.2 billion.
  • Trade deficit: The total trade in goods and services deficit, excluding precious metals, narrowed by £0.2 billion to £12.8 billion in Quarter 4 (Oct to Dec) 2021.

This post was authored by Dominic Shaw, Chair of the Young Fabian Economy and Finance Network.

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¹ ONS.

² ONS.

³ ONS.

⁴ ONS.

⁵ ONS.

⁶ ONS.

⁷ Bank of England.

⁸ Google Finance.

⁹ Ibid.

¹⁰ Ibid.

¹¹ S&P.

¹² Bloomberg.

¹³ Bank of England.

¹⁴ Business Insider.

¹⁵ Halifax.

¹⁶ IHS Markit.

¹⁷ ONS.

¹⁸ GfK.

¹⁹ ONS.

²⁰ ONS.

²¹ ONS.