Uk Services P M I "skyrockets"

[Pent Up]

UK March Services PMI surges to Feb '10 high; consistent with +0.8% GDP in Q1

No link yet.

Best get them interest rates up sharpish to quell this surging home grown demand!

[Ruffneck]

Inflation?

[Pent Up]

Services PMI jumps to 13-month high in March

Tue Apr 5, 2011 9:45am BST

By David Milliken

LONDON (Reuters) - The service sector activity jumped unexpectedly in March to show its fastest pace of growth in over a year, pointing towards a 0.8 percent expansion for the economy as a whole in the first three months of 2011.

The Markit/CIPS services PMI index, a measure of activity growth as reported by purchasing managers, surged to a 13-month high of 57.1 in March from an unrevised 52.6 in February, beating even the most optimistic analyst's forecast.

There is a question mark over the sustainability of the increase, however, as some firms reported benefiting from a spurt of public spending in March, the end of the last fiscal year before government spending cuts begin in earnest.

The 4.5 point rise in the index is the second-biggest increase since the survey started in 1996, and was only exceeded in January this year, when activity rebounded strongly after contracting due to December's unusually heavy snow.

Data company Markit said that based on March's figures it now believed British GDP grew 0.8 percent in the first quarter of the year, up from a 0.5 percent estimate after February's PMI data for the services, manufacturing and construction sectors.

The strength of first-quarter GDP is seen by most economists as the key to whether the Bank of England raises interest rates in May from a record low of 0.5 percent.

Three of the nine members of the Bank's Monetary Policy Committee supported a rate rise in March, but the others worried that Q4's shock GDP contraction could mark the start of an extended period of sub-par growth.

Markit economist Paul Smith said it was unclear whether March's data was a blip or marked the resumption of solid growth in the services sector, which must grapple with weak consumer sentiment and public spending cuts.

"Service providers remain very cautious about expanding headcounts in the face of numerous economic headwinds," he said.

"The degree of confidence regarding prospects for the year ahead slipped lower, and cost pressures remained elevated, leading to doubts over whether the rate of services growth seen in March can be sustained in the coming months."

Some firms reported a boost to business from public sector bodies using up their budgets before the end of the fiscal year -- money which is unlikely to be so readily available in future as a four-year programme of roughly 20 percent spending cuts takes effect across most government departments.

The survey's new business index rose to 55.6 from 53.4, its highest level since March 2010. The amount of outstanding business increased for the first time since September 2007, and firms hired more people for the first time since June last year.

The Markit/CIPS survey does not include state-provided services or the beleaguered retail sector, and so accounts for about 40 percent of GDP compared to around 75 percent for the service sector as a whole.

Personal services, such as hairdressers, were the fastest growing segment. But more of the index rise was driven by the business services component, which includes firms that rent machinery, conduct research and development or otherwise benefit from growth in Britain's export-led manufacturing industry.

Since the end of the recession, manufacturers have benefited from the sharp fall in sterling that took place between 2007 and 2008, but retailers have suffered from weak consumer demand, especially after a rise in sales tax at the start of this year.

http://uk.mobile.reuters.com/article/idUKTRE7341C320110405?ca=rdt

[mattyfc]

UK March Services PMI surges to Feb '10 high; consistent with +0.8% GDP in Q1

No link yet.

Best get them interest rates up sharpish to quell this surging home grown demand!

http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=7894

March was the strongest month for about 3 years according to the PMI releases. Manufacturing 57.1. Construction 56.4, Services 57.1. The surprise CBI realized sales figures pointed to a surge as well. Latest employment data also points to a surging recovery.

The only thing holding back IR is consumer confidence. This is hardly surprising considering the daily talking down of the economy led by the BBC and other media organisations.

[okaycuckoo]

I don't understand this survey. What is "activity growth"? Does it rely on PPI?

Anyway, plenty of caveats in there - caution over hiring, doesn't include retailers etc.

I suppose the only issue, regardless of whether this is a true reflection of economic activity, is how the BoE is bound to react to it.

[MinceBalls]

In another story, retailers are falling, the high streets are feeling the pinch and the spectra of real wage decreases of 15-25% over the next few years due to high inflation is all too apparent to the consumer.

So what does this survey tell us seeing as we have all been told in the past that the main UK economic driver is the UK consumer? Can someone please reveal the secrets of this survey to me?

I've also asked before, surely with inflation running at 5%p/a (actually we all know its more but let's just keep it t that for now), businesses need to increase prices by 5% just to stay on an even keel yoy. Is this 'surge' simply an indicator of inflation?

Edited April 5, 2011 by MinceBalls

[MinceBalls]

PS: look at that 'Input Cost' chart. that must be worrying the Bank of England; at what point does Output Cost start to tick up?

[Caveat Mortgagor]

The only thing holding back IR is consumer confidence. This is hardly surprising considering the daily talking down of the economy led by the BBC and other media organisations.

I had to show this link. Seems confidence is so unexpectedly high that even the headline underestimates it!!!! That or some factions of the media havent caught up with the message.

http://www.24dash.com/news/housing/2011-04-05-Third-of-homeowners-expect-UK-house-prices-to-rise-in-next-six-months

'Third of homeowners expect UK house prices to rise in next six months'

Three out of five (59%) homeowners in the UK expect house prices to rise over the next six months, according to the latest Zoopla.co.uk Housing Market Sentiment Survey.

Confidence in the market outlook has strengthened from its record low at the end of last year when only 54% of homeowners expected prices to rise, but remains some way below the levels seen one year ago when four out of five (81%) expected prices to climb.

Homeowners are also more optimistic about the amount by which they expect house prices to rise in the coming months. According to 7,984 homeowners surveyed by Zoopla.co.uk, house prices are expected to rise by an average of 2.8% over the next six months, noticeably up from the 1.9% predicted three months ago. The number of respondents who expect values to drop over the next 6 months has fallen to 1 in 4 (25%), down from 1 in 3 (33%) in December.

And, in typical British fashion, homeowners remain more confident about the prospects of the value of their own home compared to those of their neighbours. On average, homeowners predict the value of their own properties to grow by 3.2% over the next six months while they expect overall prices for property in their area to rise by only 2.8%.

Improved confidence in the future of the property market combined with the arrival of spring has resulted in a rise in the number of homeowners planning to conduct home improvements over the next six months to 40% of all households. And contributing to the increased confidence in the property market is the feeling that lending conditions are improving, with 12% of respondents stating that mortgage availability is better now than 3 months ago.

The greatest improvement in confidence over the last three months has been in Northern Ireland where 57% of homeowners now expect house prices to rise over the next six months, up from only 42% three months ago. In England 59% of owners expect house prices to rise up from 55% three months ago and in Wales 54% expect prices to climb, up from 49% three months ago. In Scotland confidence remains unchanged from December when 63% of those surveyed expected house prices to rise over the next six months.

Nicholas Leeming of Zoopla.co.uk, said: “After almost nine months of falling confidence and falling house prices, it looks like the property market is now starting to turn a corner. Falling prices have created attractive buying opportunities and with continued low inventory of property on the market, homeowners are increasingly expecting prices to rise in their local area. We still remain somewhat short of the confidence levels seen in early 2010 but there has been a clear improvement over the previous quarter and this is welcome news.”

[mattyfc]

Snip

This seems to be VI trash, if the Q4 HEW figures are anything to go by sentiment in the housing market has never been worse. If confidence was improving HEW would not be -£7bn.

Overpriced houses are the main domestic problem going forward. Reduces our competitiveness and strangles the real economy as far too much disposable income is sucked in to housing. No way to fix it other than prices to reduce 50% over the next few years. The speed of reduction will be lead by how fast IR rise.

[Arbitrage]

I had to show this link. Seems confidence is so unexpectedly high that even the headline underestimates it!!!! That or some factions of the media havent caught up with the message.

http://www.24dash.com/news/housing/2011-04-05-Third-of-homeowners-expect-UK-house-prices-to-rise-in-next-six-months

'Third of homeowners expect UK house prices to rise in next six months'

Three out of five (59%) homeowners in the UK expect house prices to rise over the next six months, according to the latest Zoopla.co.uk Housing Market Sentiment Survey.

Confidence in the market outlook has strengthened from its record low at the end of last year when only 54% of homeowners expected prices to rise, but remains some way below the levels seen one year ago when four out of five (81%) expected prices to climb.

Homeowners are also more optimistic about the amount by which they expect house prices to rise in the coming months. According to 7,984 homeowners surveyed by Zoopla.co.uk, house prices are expected to rise by an average of 2.8% over the next six months, noticeably up from the 1.9% predicted three months ago. The number of respondents who expect values to drop over the next 6 months has fallen to 1 in 4 (25%), down from 1 in 3 (33%) in December.

And, in typical British fashion, homeowners remain more confident about the prospects of the value of their own home compared to those of their neighbours. On average, homeowners predict the value of their own properties to grow by 3.2% over the next six months while they expect overall prices for property in their area to rise by only 2.8%.

Improved confidence in the future of the property market combined with the arrival of spring has resulted in a rise in the number of homeowners planning to conduct home improvements over the next six months to 40% of all households. And contributing to the increased confidence in the property market is the feeling that lending conditions are improving, with 12% of respondents stating that mortgage availability is better now than 3 months ago.

The greatest improvement in confidence over the last three months has been in Northern Ireland where 57% of homeowners now expect house prices to rise over the next six months, up from only 42% three months ago. In England 59% of owners expect house prices to rise up from 55% three months ago and in Wales 54% expect prices to climb, up from 49% three months ago. In Scotland confidence remains unchanged from December when 63% of those surveyed expected house prices to rise over the next six months.

Nicholas Leeming of Zoopla.co.uk, said: “After almost nine months of falling confidence and falling house prices, it looks like the property market is now starting to turn a corner. Falling prices have created attractive buying opportunities and with continued low inventory of property on the market, homeowners are increasingly expecting prices to rise in their local area. We still remain somewhat short of the confidence levels seen in early 2010 but there has been a clear improvement over the previous quarter and this is welcome news.”

1. Print up the cash

2. Distribute to plebs via nationalised banks

3. Make mortgages affordable via 50 year mortgages - transferrable from one generation to the next

4. Watch brain debt Brits borrow and house prices will fly

This market will only crash if credit dries up - the government won't allow that

[JaneTracy]

On a similar theme I spotted this about the Bank of England.

Bank of England Governor Mervyn King acts on food prices but only for staff!

Thanks Mervyn I thought the price rises were supposed to be temporary......

[ralphmalph]

In another story, retailers are falling, the high streets are feeling the pinch and the spectra of real wage decreases of 15-25% over the next few years due to high inflation is all too apparent to the consumer.

So what does this survey tell us seeing as we have all been told in the past that the main UK economic driver is the UK consumer? Can someone please reveal the secrets of this survey to me?

I've also asked before, surely with inflation running at 5%p/a (actually we all know its more but let's just keep it t that for now), businesses need to increase prices by 5% just to stay on an even keel yoy. Is this 'surge' simply an indicator of inflation?

This Services survey does not include retail or public sector. So it tells us all services except those are growing.

[mattyfc]

This Services survey does not include retail or public sector. So it tells us all services except those are growing.

Retail is included in CBI realized sales though which also surged in March and was much higher than expected. (http://www.fxstreet.com/news/forex-news/article.aspx?storyid=9eb70bb2-b687-40e8-a23c-98f916ae297a)

The only bad piece of recent economic data was retail sales for Feb. from the ONS. Frankly I think there calculation of online sales is incorrect and retails sales have actually been stronger than there figures suggest.

[Pent Up]

Retail is included in CBI realized sales though which also surged in March and was much higher than expected. (http://www.fxstreet.com/news/forex-news/article.aspx?storyid=9eb70bb2-b687-40e8-a23c-98f916ae297a)

The only bad piece of recent economic data was retail sales for Feb. from the ONS. Frankly I think there calculation of online sales is incorrect and retails sales have actually been stronger than there figures suggest.

So all things considered a very strong case for raising rates.

[Ruffneck]

Catastrophe in Japan having no effect?

[Caveat Mortgagor]

This seems to be VI trash, if the Q4 HEW figures are anything to go by sentiment in the housing market has never been worse. If confidence was improving HEW would not be -£7bn.

Overpriced houses are the main domestic problem going forward. Reduces our competitiveness and strangles the real economy as far too much disposable income is sucked in to housing. No way to fix it other than prices to reduce 50% over the next few years. The speed of reduction will be lead by how fast IR rise.

You are right, it is VI nonesense. The reason I posted it was a frivolous response to the assertion that IRs are likely to be held low due to low consumer confidence. It seems I was too subtle for many!

Edited April 5, 2011 by Caveat Mortgagor

[Quicken]

I had to show this link. Seems confidence is so unexpectedly high that even the headline underestimates it!!!! That or some factions of the media havent caught up with the message.

http://www.24dash.com/news/housing/2011-04-05-Third-of-homeowners-expect-UK-house-prices-to-rise-in-next-six-months

'Third of homeowners expect UK house prices to rise in next six months'

Three out of five (59%) homeowners in the UK expect house prices to rise over the next six months, according to the latest Zoopla.co.uk Housing Market Sentiment Survey.

Confidence in the market outlook has strengthened from its record low at the end of last year when only 54% of homeowners expected prices to rise, but remains some way below the levels seen one year ago when four out of five (81%) expected prices to climb.

Homeowners are also more optimistic about the amount by which they expect house prices to rise in the coming months. According to 7,984 homeowners surveyed by Zoopla.co.uk, house prices are expected to rise by an average of 2.8% over the next six months, noticeably up from the 1.9% predicted three months ago. The number of respondents who expect values to drop over the next 6 months has fallen to 1 in 4 (25%), down from 1 in 3 (33%) in December.

And, in typical British fashion, homeowners remain more confident about the prospects of the value of their own home compared to those of their neighbours. On average, homeowners predict the value of their own properties to grow by 3.2% over the next six months while they expect overall prices for property in their area to rise by only 2.8%.

Improved confidence in the future of the property market combined with the arrival of spring has resulted in a rise in the number of homeowners planning to conduct home improvements over the next six months to 40% of all households. And contributing to the increased confidence in the property market is the feeling that lending conditions are improving, with 12% of respondents stating that mortgage availability is better now than 3 months ago.

The greatest improvement in confidence over the last three months has been in Northern Ireland where 57% of homeowners now expect house prices to rise over the next six months, up from only 42% three months ago. In England 59% of owners expect house prices to rise up from 55% three months ago and in Wales 54% expect prices to climb, up from 49% three months ago. In Scotland confidence remains unchanged from December when 63% of those surveyed expected house prices to rise over the next six months.

Nicholas Leeming of Zoopla.co.uk, said: “After almost nine months of falling confidence and falling house prices, it looks like the property market is now starting to turn a corner. Falling prices have created attractive buying opportunities and with continued low inventory of property on the market, homeowners are increasingly expecting prices to rise in their local area. We still remain somewhat short of the confidence levels seen in early 2010 but there has been a clear improvement over the previous quarter and this is welcome news.”

Disregarding the VI spin, this is great bear food. First, confidence has crashed year-on-year from 81% to 59%. That's a big fall, and quite possibly 59% is a record low for the time of year. Second, only 12% of respondents said mortgage availability had increased, meaning 88% did not.

Cheers,

Q

[erranta]

This seems to be VI trash, if the Q4 HEW figures are anything to go by sentiment in the housing market has never been worse. If confidence was improving HEW would not be -£7bn.

Overpriced houses are the main domestic problem going forward. Reduces our competitiveness and strangles the real economy as far too much disposable income is sucked in to housing. No way to fix it other than prices to reduce 50% over the next few years. The speed of reduction will be lead by how fast IR rise.

That will fekk the economy up even further - as the ones with huge borrowings on mortgages/other debts pay back more when the rates rise.

They fill out the sector which prob spends most on items such as holidays, cars, new furniture, house services/carpets/extensions etc.

It will also close down social mobility further ie being able to move easily to new areas for new job. Petrol for long distance travel to reducing wage job is now - well

[MinceBalls]

This seems to be VI trash, if the Q4 HEW figures are anything to go by sentiment in the housing market has never been worse. If confidence was improving HEW would not be -£7bn.

Overpriced houses are the main domestic problem going forward. Reduces our competitiveness and strangles the real economy as far too much disposable income is sucked in to housing. No way to fix it other than prices to reduce 50% over the next few years. The speed of reduction will be lead by how fast IR rise.

I would agree, it seems complete bullsh1t. They might as well print:

Spring is here and people think their own property will be worth more after the Spring Bounce

[Realistbear]

UK March Services PMI surges to Feb '10 high; consistent with +0.8% GDP in Q1

No link yet.

Best get them interest rates up sharpish to quell this surging home grown demand!

Lotsa paper being shuffled around--some monster bankster bonuses brewing up!

Meanwhile Germany has back orders for Mercedes, Porshces, Audi, BMWs and heavy industrial equopment.