The Long Road To Recovery
01 / Jun / 2009
British house prices rose for the second time in three months during May, the consumer mood steadied and a top retailer enjoyed its best week this year, further signs the economy may have started on the long road to recovery. But analysts warned against getting too carried away, arguing that the Bank of England still has its work cut out to get a weak economy growing again before the end of the year. The Nationwide Building Society said the average house price rose 1.2 percent during May, the second rise since March when house prices turned higher for first time since October 2007. The annual rate of decline slowed from 15 percent to a nine-month low of 11.3 percent. There were mixed, but encouraging, signs from a consumer confidence survey which showed the consumer mood holding steady in May, as an improvement in Britons' expectations for their own finances offset rising gloom over the economy. The GfK/NOP index, which is conducted on behalf of the European Commission, was unchanged at -27 this month, ending three months of consecutive gains and coming in just below the consensus forecast of -25. Further encouraging news was released regarding the Governments car scrappage scheme, which has boosted sales by 35,000 vehicles since its introduction following the April Budget. Car sales have been falling sharply this year as the recession has cut into household and business budgets. Concerted industry pressure resulted in the introduction of a £300,000,000 government scrappage scheme, which lets motorists trade in cars more than 10 years old for a £2000 subsidy against a new model. The scheme relies on industry to match the government funding, splitting the £2000 subsidy between the two. One in five orders in the first two weeks of the scheme, which runs from May 18 to March 2010 or until the funding is used up, were scrappage orders, the government reported.
This week we have a series of figures that will hopefully all report encouraging signs. On Tuesday we have Consumer Credit, Mortgage Lending and Mortgage approvals. On Wednesday it’s the turn of the CIPS Purchasing Managers Index, Thursday is the Bank of England base rate decision (no change expected) and finally on Friday we have the Producer input and output prices.