The partial lifting of the UK’s lockdown has led to a strong bounceback in economic activity, next week’s numbers will show.
Friday’s official figures could show that retail sales soared in April, probably to a record high. Purchasing managers’ surveys the same day could also hit records for both the manufacturing and services sectors: these surveys, however, show the proportion of firms enjoying rising output rather than the size of those rises. The CBI’s survey of manufacturers might not be quite so strong, but even it should show rising order books and output expectations.
This upturn, however, is bringing with it rising inflation. CPI inflation on Wednesday should post another rise partly because a petrol price fall last April will drop out of the annual data but also perhaps because retailers have raised prices a little upon re-opening.
Figures the same day will also show a strong annual rise in producer input prices. This isn’t entirely due to last year’s oil price falls dropping out of the numbers. The numbers will show that prices have risen at an annualised rate of around 14 per cent so far this year, thanks to rising commodity prices.
Annual wage growth is also picking up. Tuesday’s numbers could show that it was around 5.5 per cent in March, a 14-year high – although this is partly because wages fell last year and not just because of new growth.
Such growth certainly does not reflect a general labour shortage. Tuesday’s numbers will show that in the first quarter there were 1.7 million people out of work: that’s much less than economists feared last year thanks in part to the extension of the furlough scheme, but also to migrants returning home. However, there are also one million part-time workers and 1.9 million out of the labour force who want a job. If we do see rising wage growth, it’ll be because of mismatches between supply and demand, not because of general labour shortages.
Other figures will show that the rest of the world is also doing well. Surveys by the New York and Philadelphia Federal Reserves should show that manufacturers are reporting rising output and are unusually optimistic about the future – no doubt in part because of President Biden’s fiscal stimulus. And even in the eurozone, purchasing managers are likely to report that both the manufacturing and services sectors are enjoying rising demand.
