PPI Input prices missed market expectations on decline by 2.3%. Month on month, the input price measure of UK manufacturers’ materials and fuels, fell 3.7% between December 2014 and January 2015, compared with a fall of 3.3% between November and December 2014.
European part of Wednesday's session was marked by UK job figures and BoE Meeting Minutes. Claimant Count Change figures showed that number of unemployed was down 38,600 from December 2014, beating market forecasts on decrease by 25,200, and also down 383,500 from a year earlier, but 44,600 higher than the pre-downturn trough of 778,400 for February 2008. The unemployment rate was 5.7%, while total pay for employees in Great Britain increased by 2.1%. Analysts were expecting smaller increase by 1.7%.
Besides good job figures Sterling was supported by BoE Meeting Minutes and opinion on inflation raise in 2016.“Absent further such movements in commodity prices or sterling, the effects of these factors on 12-month CPI would dissipate towards the end of 2015, causing inflation to pick up towards the target fairly sharply,” it said. For two members, the decision to keep rates on hold at 0.5% this month was “finely balanced,” and there may be a case to increase rates later this year. While the committee said the next most likely move in policy over the next three years was tightening, one said there was a “roughly equal” chance the next shift would be a policy loosening.
From the UK, on Thursday, CBI Industrial Orders Expectations figures were released. According to the latest CBI survey on Industrial Orders Expectations 26% of firms reported total order books to be above normal and 16% said they were below normal, giving a balance of +10%. This was well above the long run average (-16%). Analysts were expecting balance of +7%. This is the highest level in the six months.
Friday brought UK Retail Sales and Public Sector Net Borrowing figures. While analysts were forecasting 0.1% decrease in UK Retail Sales latest figures showed 0.3% fall. There was a significant increase in the quantity bought in petrol stations and department stores but this did not negate the downwards pressure from predominantly food stores, textile, clothing and footwear and other stores.
Separate report on Public Sector Net Borrowing showed 9.4 billion pounds deficit in line with market forecasts. While the deficit in 2013/14 has fallen by a third since its peak in 2009/10, public sector net debt has maintained a gradual upward trend, being £1,464.0 billion, or 79.6% of GDP at the end of January 2015.
This week markets will be looking at:
CBI Realized Sales (Monday 12:00)
BBA Mortgage Approvals (Wednesday 10:30)
Second Estimate GDP (Thursday 10:30)
