Boe Publics Inflation Expectations Survey - Up!

[R K]

http://www.bankofengland.co.uk/publications/Pages/news/2014/015.aspx

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This news release describes the results of the Bank of England’s latest quarterly survey of public attitudes to inflation, undertaken between 7th and 15th of August 2014.

Highlights from the survey

Question 1: Asked to give the current rate of inflation, respondents gave a median answer of 3.4%, compared with 2.9% in May.

Question 2a: Median expectations of the rate of inflation over the coming year were 2.8%, compared with 2.6% in May.

Question 2b: Asked about expected inflation in the twelve months after that, respondents gave a median answer of 2.8%, compared with 2.5% in May.

Question 2c: Asked about expectations of inflation in the longer term, say in five years’ time, respondents gave a median answer of 3.4%, compared with 2.9% in May.

Question 3: By a margin of 54% to 9%, survey respondents believed that the economy would end up weaker rather than stronger if prices started to rise faster, compared with 54% to 10% in May.

Question 4: 50% of respondents thought the inflation target was ‘about right’, down from 53% in May, while the proportions saying the target was ‘too high’ or ‘too low’ were 21% and 11% respectively.

Question 5: 11% of respondents thought that interest rates had fallen over the past 12 months, compared with 12% in May, while 24% of respondents said that interest rates had risen over the past 12 months, compared with 21% in May.

Question 6: When asked about the future path of interest rates, 29% said rates might stay about the same over the next twelve months, down from 36% in May. 49% of respondents expected rates to rise over the next 12 months, up from 42% in May.

Question 7: Asked what would be ‘best for the economy’ – higher interest rates, lower rates or no change – 20% thought rates should ‘go up’, unchanged since May. 14% of respondents thought that interest rates should ‘go down’, compared with 15% in May. 37% thought interest rates should ‘stay where they are’, compared to 38% in May.

Question 8: When asked what would be ‘best for you personally’, 23% of respondents said interest rates should ‘go up’, down from 25% in May. 22% of respondents said it would be better for them if interest rates were to ‘go down’, unchanged since May.

Question 14: Respondents were asked to assess the way the Bank of England is ‘doing its job to set interest rates to control inflation’. The net satisfaction balance – the proportion satisfied minus the proportion dissatisfied – was +30%, compared with +31% in May.

Next up..........wage demands

Edited September 5, 2014 by R K

[PatientlyWaiting]

So overall there is support for interest rate increase. So Camoron and Ostrich can't justifiably use the "helping the ordinary man" ******** any more. Good.

[zugzwang]

And when Osborne can no longer borrow £120bn £140bn every year?

[spyguy]

I call wage inflation.

Just noticed the local bus company is advertising fro drivers.

This only happens after the labour market has gone beyond very tight.

Last time this occurred was in 2002-3ish - when the debt splurge happened.

This time its probably due to all that imported labour discovering what the natives knew - just sign on tax credits and do a pretend job for 16h/week for your money.

[simonsaid]

I call wage inflation.

Just noticed the local bus company is advertising fro drivers.

This only happens after the labour market has gone beyond very tight.

Last time this occurred was in 2002-3ish - when the debt splurge happened.

This time its probably due to all that imported labour discovering what the natives knew - just sign on tax credits and do a pretend job for 16h/week for your money.

West Midlands travel are always hiring. Adverts always on the back off their buses.

[19 year mortgage 8itch]

http://www.bankofengland.co.uk/publications/Pages/news/2014/015.aspx

​

Next up..........wage demands

I expect to see you on the 18th

http://britainneedsapayrise.org

[19 year mortgage 8itch]

http://www.bankofengland.co.uk/publications/Pages/news/2014/015.aspx

​

Next up..........wage demands

Just looked at the long run chart. Q14 satisfaction with rates is still higher than it has been for years and a 1% change can't be anything more than noise.

As for increased inflation expectations, didn't help for the last 7 years, did it?

[Venger]

I expect to see you on the 18th

http://britainneedsapayrise.org

Can see it now* - RK wakes up early to catch premium train to London - opens the double garage and decides to take the 3 year old Audi sleeper for the trip to the train station, rather than the Bentley. Sweeps down the long driveway, swish electric gates open, and he's away.

RK in London at the front with his sign; "Wage Inflation Now. Help Them Pay What It's Worth."

* (in my imagination, influenced by some of his postings).

[R K]

As for increased inflation expectations, didn't help for the last 7 years, did it?

Different point in the unemployment cycle.

I've been giving you advance 'heads up' on this. What you choose to do with it is entirely up to you.

Remember the Boe will be 'surprised' and 'didn't see it coming from their data'.

[R K]

Can see it now* - RK wakes up early to catch premium train to London - opens the double garage and decides to take the 3 year old Audi sleeper for the trip to the train station, rather than the Bentley. Sweeps down the long driveway, swish electric gates open, and he's away.

RK in London at the front with his sign; "Wage Inflation Now. Help Them Pay What It's Worth."

* (in my imagination, influenced by some of his postings).

Adhom as per usual.

[19 year mortgage 8itch]

Different point in the unemployment cycle.

I've been giving you advance 'heads up' on this. What you choose to do with it is entirely up to you.

Remember the Boe will be 'surprised' and 'didn't see it coming from their data'.

If I'm wrong, I can live with that as I'll get a pay rise.

Need evidence, not promises.

[R K]

If I'm wrong, I can live with that as I'll get a pay rise.

Need evidence, not promises.

Hence the thread. Inflation expectations are rising. Unemployment is falling. Carney is holding off rate increases. New start salaries are rising. Some sectors are already seeing real wage rises blah di blah.

Evidence happens after price moves have occurred. Hence why the nominal low in the housing market was April 2009. 5 years later some people are still in denial. When they have the 'evidence' they typically start to buy, which will most likely be when they ought not to. That's how markets work.

Edited September 5, 2014 by R K

[Venger]

Solved the productivity mystery yet RK ?

Let me help you out with my view; fewer high earning/high growth positions (although some requiring high level skills), and more position in lower order work.

Nominal low in a crash they was overridden by QE/0.5%? We've not had a hpc. It's coming though. Credit/money velocity going ever lower, is going to leave those holding (and still chasing) overvalued risky assets, already yielding very thin returns, stranded.

If we get a pickup in wages, it will be a phase shift via deflation in other sectors - imo.

[onlyme2]

Hence the thread. Inflation expectations are rising. Unemployment is falling. Carney is holding off rate increases. New start salaries are rising. Some sectors are already seeing real wage rises blah di blah.

Evidence happens after price moves have occurred. Hence why the nominal low in the housing market was April 2009. 5 years later some people are still in denial. When they have the 'evidence' they typically start to buy, which will most likely be when they ought not to. That's how markets work.

Admission - I have already bought so I could post either way in terms of wishes for anything.

Reality - lot of jobs not even laying the costs, inflation metrics so highly riddled with modifications and adjustments they are meaningless. Most of the public dumb, ignorant of the real causes of infaltion around them and would like to believe what they are told so as not to upset their own view of a benevolent state / state bank looking out for their best interests.

Since 2009 - a lot of inflation, some jobs pickup - but there would have been anyway after the massive stock reductions 2007/8, the rest - plain old debt based / QE based fluff.

Pay rises now going to go smashing head on into train driven by robot / computerized functions and foreign competition going the other way. It will be gruesome becasue once that kicks off every competitor that wishes to stay inthe market will have to follow. This is what happened to manufacuring - starts with a tricke and in the end those remaining resistant to that change either follow the same course or shut down becuase the competitive dynamics have totally changed around them.

[Billy soy]

And when Osborne can no longer borrow £120bn £140bn every year?

I thought they had fiddled it down to £100billion?

[FreeTrader]

I've been giving you advance 'heads up' on this. What you choose to do with it is entirely up to you.

Remember the Boe will be 'surprised' and 'didn't see it coming from their data'.

What the BoE didn't see coming from their data was the LOW nominal wage growth of the past few months. They were fooled by the survey data, just as you were, even though I explained in 2013 what was likely happening and I repeated this in June on your wages thread.

Instead of objectively looking at the numbers in the AWE series you chose to listen to anecdotal claims from the likes of John Mann.

In case you need more evidence (which I know you'll choose to ignore because it doesn't conform to your world view), this is from a TUC press release yesterday:

Low-paid job creation has pushed earnings growth to record low

The shift in employment from higher to lower paying industries, combined with rising levels of under-employment have helped push earnings growth to a record low, according to a new report published today (Thursday) by the TUC.

The TUC-commissioned report examines why average weekly earnings growth – a measure of pay growth published every month by the Office for National Statistics (ONS) – is so low when most pay settlements are keeping touch with inflation.

Last month average weekly earnings growth (excluding bonuses) fell to 0.6 per cent – its lowest level since records began in 2000 – despite employment rising by 167,000 over the same period. Median pay settlements are currently around 2.5 per cent – below their pre-recession level of between 3 to 3.5 per cent.

The report, written for the TUC by Incomes Data Services (IDS), identifies several reasons for the dramatic falls in average weekly earnings growth across the UK:

• The changing composition of the labour market, with low-paying sectors creating far more jobs than high-paying ones. High-paying industries such as finance and construction have both shed jobs over the last five years.

• The shift from full-time to part-time work and the increasing number of people wanting more hours in their current job. TUC analysis published yesterday found that under-employment reached a record high of 3.4 million earlier this year.

• Additional analysis of figures from the Annual Survey of Hours and Earnings (ASHE) found that people who only featured in the 2013 survey, for example young people joining the workforce for the first time, earned 3.9 per cent less than those who only appeared in the 2012 survey, for example people who had left employment.

http://www.tuc.org.uk/economic-issues/labour-market-and-economic-reports/low-paid-job-creation-has-pushed-earnings-growth

[R K]

What the BoE didn't see coming from their data was the LOW nominal wage growth of the past few months. They were fooled by the survey data, just as you were, even though I explained in 2013 what was likely happening and I repeated this in June on your wages thread.

ob-creation-has-pushed-earnings-growth

If you care to look at my very first post on my wages thread I made it perfectly clear that I was NOT claiming wages were ABOUT to take off.

I very specifically said I was starting the thread EARLY since it's abundantly clear (to me) that nominal wage rises are the BoE's target as the economy improves.

I've repeatedly told you this so you can stop trolling me, but you and others continue to do so.

I don't read your posts 'Freetrader'. I care not whether you read mine. I'm quite content with my macro calls. They've been consistent and correct which is all I'm interested in. I'm afraid I have no knowledge of yours and less interest.

What the BoE didn't see coming from their data was the LOW nominal wage growth of the past few months

We're talking about a 15-20 year credit cycle. Who gives a t9ss what happens over a few months? We're talking about from 2009 to 2025/30. Not what happened in June ffs. What are you going to do? Make a decision about buying a house on a few months data points? Perhaps you ought to look to your own 'world view' rather than attacking what you perceive to be other peoples.

Edited September 5, 2014 by R K

[cybernoid]

I've been giving you advance 'heads up' on this.

Thanks!

[19 year mortgage 8itch]

Hence the thread. Inflation expectations are rising. Unemployment is falling. Carney is holding off rate increases. New start salaries are rising. Some sectors are already seeing real wage rises blah di blah.

Evidence happens after price moves have occurred. Hence why the nominal low in the housing market was April 2009. 5 years later some people are still in denial. When they have the 'evidence' they typically start to buy, which will most likely be when they ought not to. That's how markets work.

We're obviously observing different markets. Such is life as a prole.

[R K]

Thanks!

Welcome.

Unlike 'Freetrader' who stopped updating his own house price thread when it no longer agreed with his outlook (a tad paternalistic for a supposed 'free trader') it doesn't bother me in the slightest when I'm proved correct. I'm interested in the long term macro calls, and I'd have thought anyone who wanted to buy/sell a house would also want to be aligned with how the long term macro environment unfolds. I'm content that calling the nominal low in 2009 was the correct call.

If others wish to persist with the notion we'll see 90% nominal falls in house prices then good luck to them! It's their money.

[Venger]

Welcome.

Unlike 'Freetrader' who stopped updating his own house price thread when it no longer agreed with his outlook (a tad paternalistic for a supposed 'free trader') it doesn't bother me in the slightest when I'm proved correct. I'm interested in the long term macro calls, and I'd have thought anyone who wanted to buy/sell a house would also want to be aligned with how the long term macro environment unfolds. I'm content that calling the nominal low in 2009 was the correct call.

If others wish to persist with the notion we'll see 90% nominal falls in house prices then good luck to them! It's their money.

Are you expecting another long wave, 2009-2025/30 round of house price inflation, in areas (outside of London - hyped parts of SE)?

That's the view I get; I'm fairly sure you've indicated on a few occasions to 1980s for the future/cycles, where mortgage debt back then has, for some people become irrelevant today (against the long wave).

[R K]

We're obviously observing different markets. Such is life as a prole.

You know perfectly well from our discussions in our local thread(s) that I said buying from a distressed seller in 2009 would likely be as good as it was going to get. At the same time I said high end developments/redevelopments would get spanked.

You have been telling me that the market you are looking at has been stronger even than I thought, so I'm not sure why this is a surprise to you.

[Venger]

Those high end developments are beginning a new spanking around our way.

Quite a few creeping onto market asking just a touch more, or even a touch less, than when they bought them 2006-12.

If that goes, I can't see mid-level holding up. Cascade.

Edit update: There is definately some renewed anxiety at the £750K-£1m+ level (imo).

Edited September 5, 2014 by Venger

[R K]

RBS Economic Insight ‏@RBS_Economics 11m

Latest Bank of England Inflation Attitudes Survey shows medium term expectations well anchored...at 3-3.5%. Hmmm... pic.twitter.com/v0z1Y0jhhn

[FreeTrader]

I don't read your posts 'Freetrader'. I care not whether you read mine.

Fair enough - that would explain why you keep making the same errors with wage data interpretation even after they've been pointed out to you.