Coppola Comment

Last week I attended a workshop entitled "Enhancing the Bank of England Toolkit," hosted by the Progressive Economy Forum. Presented at the workshop, and underpinning most of the debate, was this report from GFC Economics and Clearpoint Advisers, which was written for the Labour Party and first issued last June. The report was widely criticised at the time, as one of its authors ruefully observed in the introduction to the presentation. Nonetheless, the authors presented it unamended. The report recommends setting a productivity target for the Bank of England in addition to its existing inflation target: An additional target will be introduced: productivity growth of 3% per annum. The Bank of England will be required to explain how its policies are impacting upon productivity and, therefore, the potential growth path of the economy. This target is extremely challenging. A footnote in the report notes that labour productivity growth since 1950 has averaged 2.4%, and

The ONS's latest flash productivity estimate is rather good. Productivity in Quarter 3 2017 was up by 0.9% on the previous quarter. Here's what ONS has to say about it: Output per hour growth in Quarter 3 2017 was the result of a 0.4% increase in gross value added (GVA) (using the preliminary gross domestic product (GDP) estimate) accompanied by a 0.5% fall in total hours worked (using the latest Labour Force Survey data). This fall in total hours was driven primarily by a 0.5% fall in average hours per worker. Yes, yes, I know - economics jargon. Let me translate. ONS in plain English: People are working fewer hours, but they are producing more every hour.  Of course, this should be set against the backdrop of persistently low productivity since the 2008 financial crisis. Productivity has taken nearly a decade to return to its pre-crisis level: The ONS says that productivity has been weak because the labour market has been relatively strong during this time: Both

Inflation is back. Here is the change in the consumer price index (CPI) for January 2017, according to ONS : Well, this doesn't look too serious. CPI is barely reaching the Bank of England's target of 2%. It has been much higher for most of the last decade, and yet the Bank of England has kept interest rates at historic lows. But consumer price inflation - the prices that people pay for goods in the shops - is only one side of the equation. On the other side is producer price inflation (PPI), the prices that companies pay for the materials and energy they need to produce goods and services. The picture here is entirely different, as this table from ONS's January 2017 producer price inflation report  shows: Annualised producer price inflation has risen dramatically in the last six months. It reached double digits in October 2016 and currently stands at an astonishing 20.5%. Most of that is due to sharply rising import prices, of which by far the most important

The sun is shining, the daffodils are flowering. Blossom is on the trees. The dark days of winter are behind us: in front of us lies a bright, glowing spring. Black zeros reap golden rewards, it seems. What is all this about? German industrial production has suddenly bounced back from recent falls, rising by 3.3% month-on-month in January 2016. The German statistical agency DEStatis reports that there are particularly strong performances in construction, capital and consumer goods production: In January 2016, production in industry excluding energy and construction was up by 3.2%. Within industry, the production of capital goods increased by 5.3% and the production of consumer goods by 3.7%. The production of intermediate goods showed an increase of 0.4%. Energy production was up by 0.1% in January 2016 and the production in construction increased by 7.0%. According to Dominic Bryant of BNP Paribas ( quoted in the FT ), Germany is "booming". And in the same FT piece, Pa

Did you know that most cars do nothing for 23 hours a day? Yes, they are totally idle. Sleeping safely in their owner's garage, or on his drive, or at her place of work, or in the station car park. Shocking, isn't it? What a terrible waste of assets. We should ensure that all these cars are DRIVEN. All the time. But there is a reason why all these cars are idle. Their owners are busy doing something else. Many people who drive to work, or to the station, do jobs that they love, that they have the skills to do, and that earn them a good living. Should these people give up their jobs and embark on new careers ferrying people around for money, just so their cars don't stay idle for large parts of the day? Really? No-one in their right mind would give up a job that was sufficiently well-paid for a quality car to be affordable, in order to drive for Uber (or any other "car sharing" business, for that matter). The remuneration just isn't that good.

The ONS has some good news about UK industrial production . Here are the summary points from its statement: Production output rose by 0.6% between Q1 2013 and Q2 2013. Manufacturing rose by 0.7% over the same period. By far the largest contribution to the quarterly growth in production came from manufacturing, which increased by 0.7% following a decline of 0.2% in Q1 2013. Looking at the broader picture, production output was 1.2% higher in June 2013 compared with June 2012, reflecting a 2.0% rise in manufacturing; 7.8% rise in water supply, sewerage & waste management; 4.4% fall in mining & quarrying; and 3.3% fall in electricity, gas steam & air conditioning. Production rose by 1.1% between May 2013 and June 2013. Manufacturing rose by 1.9% with reported rises in all of its sectors. The highest contributor to the rise was the manufacturing of transport equipment, which rose by 5.3% and contributed 0.7 percentage points to the rise in manufacturing. The preliminar