Downgrade of 2012 growth forecast from +0.1% to -0.4
Although UK quarterly growth will be positive in Q3 and Q4 of this year, GDP growth will be in negative territory for 2012 as a whole
Growth forecast for 2013 is revised down from 1.9% to 1.2%, followed by an improvement to 2.2% in 2014.
Household consumption will remain subdued; after falling 1.1% in 2011 and 0.2% in 2012, it will return to positive growth in 2013 and 2014.
We predict that total UK unemployment will increase from 2.564 million (8.0% of the workforce) in Q2 2012, to 2.750 million (8.5% of the workforce) in Q4 2013, a net increase of 186,000 in the jobless total.
Youth unemployment will total some 1.048 million in Q4 2013. Unemployment in the 16-17 age group is forecast to total around 218,000 (a jobless rate of 39%) in Q4 2013. Unemployment in the 18-24 age group is forecast to total around 830,000 (a jobless rate of 21%) in Q4 2013.
In average terms, we are now predicting annual CPI inflation at 2.7% in 2012, 2.1% in 2013, and 2.2% in 2014.
For RPI inflation we are now predicting 3.1% in 2012, 2.3% in 2013, and 2.5% in 2014.
The CBI is forecasting GDP growth in 2012 to be -0.3%, below its previous forecast in May of +0.6%.
Growth should return to the UK economy towards the end of the year, and pick up a little pace during 2013
In the third quarter of 2012, quarter-on-quarter growth is expected to be +0.6%, followed by +0.2% in the final three months
In 2013, the CBI forecasts GDP growth of +1.2%, revised down from its previous forecast of +2%
Inflation is expected to fall back a little further by the end of the year, and should remain close to the Bank of England’s 2% target throughout 2013
The CBI does not expect unemployment to increase by as much as previously thought, peaking at 2.7m in mid-2013
Growth in business investment is expected to remain modest, at around 5% this year and 3.8% in 2013
Export growth is likely to be weaker than was forecast in May. The CBI expects a small contraction this year (-0.4%), followed by an increase next year (3.5%), with demand from faster-growing, emerging markets likely to provide some support
The euro area (EA17) seasonally-adjusted unemployment rate was 11.3% in July 2012, stable compared with June. It was 10.1% in July 2011.
18.002 million men and womenin the euro area were unemployed in July 2012
The highest increases in the unemployment rate were registered in Greece (16.8% to 23.1% between May 2011 and May 2012), Spain (21.7% to 25.1%) and Cyprus (7.7% to 10.9%).
The EU27 unemployment rate was 10.4% in July 2012, stable compared with June. It was 9.6% in July 2011.
25.254 million men and women in the EU27 were unemployed in July 2012. Compared with July 2011, unemployment rose by 2.104 million in the EU27.
In July 2012, the unemployment rate was 8.3% in the USA.
In June 2012, the unemployment rate was 4.3% in Japan.
In July 2012, 5.468 million young persons (under 25) were unemployed in the EU27, of whom 3.388 million were in the euro area. Compared with July 2011, youth unemployment rose by 182 000 in the EU27 and by 204 000 in the euro area. In July 2012, the youth unemployment rate was 22.5% in the EU27 and 22.6% in the euro area. In July 2011, it was 21.3% and 20.7% respectively. In July 2012 the lowest rates were observed in Germany (8.0%), Austria (8.9%) and the Netherlands (9.2%), and the highest in Greece (53.8% in May 2012) and Spain (52.9%).
The English Business Survey (June 2012: BIS) doesn’t have much exciting news to report on a monthly basis, but I like to keep watching it bacause there is not much business research available that tracks things over time so well. If there is any major change, I guess it will be big news.