The expectation here of a significant pick-up in UK growth in 2013 – based partly on a simple money supply / share price forecasting rule – is supported by the fourth-quarter British Chambers of Commerce survey released today. A weighted average of home and export orders in the manufacturing and services sectors, seasonally adjusted, rose to its highest level since the fourth quarter of 2007 – see first chart.
Other aspects of the survey were positive: confidence in turnover and profitability as well employment expectations similarly reached new post-recession highs – second chart.
The manufacturing optimism revealed by the survey accords with recent PMI and CBI results but upbeat services responses are a surprise given a weak December PMI services poll released last week (although the PMI is an overrated indicator and often gives false signals).
In other news today, the EU Commission consumer confidence measure fell back in December but remains above the averages for 2012 and 2011. The slippage was probably related to a pick-up in inflation expectations: the sum of the balances reporting higher prices over the last 12 months and predicting a faster increase over the coming year rose to its highest level since May – third chart. Consumers have correctly anticipated inflation swings in recent years and their increased pessimism is consistent with the forecast here that CPI inflation will move back above 3% in early 2013.
