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UK Distributive Trades Data Misses Target

James Boston
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UK Distributive Trades Data Misses Target

The Confederation of British Industry has just released the June Distributive Trades Survey. This indicator, which has been known to influence policy decisions, measures short-term trends in the UK’s retail and wholesale distribution sectors. The reading this month is 4 which represents a large decrease on the May figure of 16, this is a significant miss of the ambitious consensus estimate for an increase to 24 this month.

The Governor of the Bank of England (BoE), Mark Carney, yesterday gave testimony in from of the House of Commons Treasury Select Committee. Carney surprised MPs and the markets with his somewhat downbeat analysis of the British recovery story.

According to the BoE chief there are still some serious concerns around the robustness of the labour markets. This evidence for this comes in the form of wage inflation data which is not growing at a rate that would suggest a full take up of slack in the market.

Carney did however comment that “there are signs that there’s more balance in the recovery than previously” but warned that the strength of the pound sterling made the UK somewhat uncompetitive and that it was unlikely that export growth would come close to meeting targets in the short to medium term.

Clarity was sought be the Treasury Select Committee members as to the Banks intentions towards interest rate rises. Last week the BoE Governor hinted that a hike to the country’s base interest rate could be on the agenda towards the tail end of this year. Yesterday’s testimony however firmly ruled this out until at the earliest Q1 of next year but possibly later depending on the trends in the underlying economic data. Carney further indicated that quantitative easing sales would not begin until the base interest rate has been taken above the 1% level.

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