Inflation Report Inflation Report November 2008November 2008

DemandDemand

Chart 2.1 Nominal demand(a)

(a) At current market prices.

Chart 2.2 Contributions to quarterly consumption growth(a)

(a) Chained-volume measures. Figures in parentheses are shares in total consumption in 2007. The percentages do not sum to 100 due to rounding.(b) Includes net tourism and non-profit institutions serving households.

Chart 2.3 Real post-tax labour income(a)

Sources: ONS (including Labour Force Survey) and Bank calculations.

(a) Wages and salaries plus mixed income less taxes (including income taxes and Council Tax) plus net transfers (general government benefits minus employees’ National Insurance contributions), deflated using the consumer expenditure deflator (including non-profit institutions serving households).(b) Real post-tax labour income divided by LFS employment.

Chart 2.4 Survey indicators of income expectations(a)

Sources: Research carried out by GfK NOP on behalf of the European Commission and YouGov.

(a) Net balances of respondents thinking that their household’s financial situation will improve over the next twelve months. Data are non seasonally adjusted.

Chart 2.5 Investment intentions (plant and machinery)(a)

Sources: BCC, CBI, CBI/PwC and ONS.

(a) Measures weight together sectoral surveys using shares in real business investment.(b) Net percentage balances of companies who plan to increase investment in plant and machinery over the next twelve months.(c) Net percentage balances of companies who say they have revised up their planned investment in plant and machinery over the past three months. Data are non seasonally adjusted.

Chart 2.6 Factors likely to hold back investment(a)

Sources: CBI, CBI/PwC and ONS.

(a) Measures weight together sectoral surveys using shares in real business investment. Companies are asked for their twelve-month forecast of factors likely to limit capital expenditure authorisations. Financial services companies are not asked to distinguish between a shortage of internal, and availability of external, finance, so their single response is used for both questions.

Chart 2.7 Imports and domestic demand(a)

(a) Chained-volume measures.(b) Goods and services, excluding the estimated impact of MTIC fraud.

Chart 2.8 GDP and IMF forecasts for selected countries(a)

Source: IMF.

(a) The IMF forecasts are from the World Economic Outlook update, released on 6 November 2008.(b) Includes 141 emerging and developing economies across the world such as Brazil, China, India and Russia, weighted together using purchasing power parity exchange rates.

Chart 2.9 Euro-area consumption and household income

Source: Eurostat.

(a) Gross household disposable income divided by the consumption deflator.

Chart 2.10 US GDP(a)

Source: Bureau of Economic Analysis.

(a) Chained-volume measures.(b) Percentage point contribution to four-quarter GDP growth.

Chart 2.11 UK export market share(a)

Sources: IMF, ONS and Bank calculations.

(a) The volume of UK exports divided by the volume of UK-weighted world imports. UK exports exclude the impact of MTIC fraud. Import volumes data are weighted together using 2007 nominal export shares.

TablesTables

Table 2.A Expenditure components of demand(a)

(a) Chained-volume measures.(b) Includes non-profit institutions serving households.(c) Whole-economy dwellings investment.(d) Excludes the alignment adjustment.(e) Percentage point contributions to quarterly growth of real GDP.(f) Goods and services, excluding the estimated impact of missing trader intra-community (MTIC) fraud.

Percentage changes on a quarter earlier

Averages 2008

2006 2007 Q1 Q2

Household consumption(b) 0.5 0.9 0.9 -0.1

Government consumption 0.5 0.4 1.0 0.5

Investment 2.3 1.0 -2.0 -2.8

of which, business investment 2.7 1.5 -1.9 -1.0

of which, dwellings investment(c) 2.0 0.1 -2.8 -2.1

Final domestic demand 0.8 0.8 0.4 -0.4

Change in inventories(d)(e) 0.0 0.1 0.1 -0.4

Alignment adjustment(e) 0.2 0.0 -0.5 0.6

Domestic demand 0.9 0.9 0.0 -0.1

‘Economic’ exports(f) 0.6 0.7 0.8 -0.1

‘Economic’ imports(f) 1.1 1.2 -0.3 -0.6

Net trade(e) -0.2 -0.2 0.3 0.2

Real GDP at market prices 0.8 0.7 0.3 0.0

Table 2.B Mortgage arrears and repossessions

Source: Council of Mortgage Lenders.

(a) Mortgages in arrears at half-year end as a percentage of outstanding mortgages.(b) Earliest observation.(c) Flow of repossessions per half year as a percentage of outstanding mortgages.

Series high 2007 2008

H1 H2 H1

Stock of mortgage arrears(a)

Three to six months 1.82 (1994 H1)(b) 0.59 0.62 0.75

Six to twelve months 2.07 (1992 H2) 0.31 0.35 0.42

More than three months 3.70 (1995 H2)(b) 1.02 1.10 1.33

Repossessions(c) 0.40 (1991 H2) 0.11 0.11 0.16

Table 2.C Export orders(a)

Sources: Bank of England, BCC, CBI and CIPS/Markit.

(a) Dates refer to the period in which the survey was conducted.(b) Percentage balance of respondents reporting orders to be ‘up’ relative to ‘down’ over the past three months.(c) Percentage balance of respondents reporting volume of orders to be ‘above’ relative to ‘below’ normal.(d) Volume of sales over past three months compared with same period a year ago. End-quarter observation.(e) A reading above 50 indicates increasing orders/new business this month relative to the situation one month ago. Quarterly data are averages of monthly indices.

Averages 2007 2008

since 1998 Q4 Q1 Q2 Q3 Oct.

Manufacturing

BCC orders(b) 5 19 16 22 -4 n.a.

CBI orders(c) -26 -4 -12 -7 -32 n.a.

Agents’ scores(d) 0.9 2.7 2.6 2.7 2.1 n.a.

CIPS/Markit orders(e) 50.0 53.0 48.9 48.8 45.2 43.5

Services

BCC orders(b) 7 11 10 6 9 n.a.

How difficult are How difficult are households finding it to households finding it to

service their debt?service their debt?

Chart A Distribution of mortgage income gearing

Sources: British Household Panel Survey, NMG Research and Bank calculations.

Chart B Mortgagors reporting payment problems

Sources: British Household Panel Survey, NMG Research and Bank calculations.