Howard Archer Cons Quotations

The February CBI survey reinforces our belief that consumer spending will be unable to sustain the relatively strong performance seen in the fourth quarter of 2005.

The consumer is the weak link in the European economic upturn story. We're past the worst, but it's hard to see a marked improvement in spending coming.

Euro region labor markets are finally beginning to see genuine, if somewhat limited, improvement, boosted by the pickup in growth since mid-2005. Rising employment is key to boosting consumer spending across the euro region.

Future growth still depends critically on developments in consumer spending, and we suspect that this will be relatively muted over the coming months.

The markedly reduced mortgage equity withdrawal since its fourth-quarter 2003 peak has undoubtedly weighed down significantly on consumer spending since mid-2004.

The MPC could remain on the sidelines for some months to come as it monitors the strength of consumer spending and the housing market, and also looks to see if high oil and energy prices are feeding through to have second round inflationary effects.

This reinforces our belief that consumer spending will remain subdued for some time to come despite September's pick-up in retail sales.

Consumer credit growth was again relatively muted in September, pointing to continuing consumer caution,

Consumer confidence is faltering anew, which does not bode well for spending in the near term at least.

Consumer confidence held up relatively well in February, following January's sharp bounce.

The underlying picture that seems to be emerging is that consumer spending will be reasonably healthy over the Christmas period. If borne out by hard data, this dilutes the case for an interest rate cut early in the New Year.

Retail sales picked up more than expected in March, which along with the current strength in the housing market, boosts hopes that the consumer is still alive, if not exactly kicking.

While the CBI survey indicated a marked softening in consumer spending following the relatively strong December performance, it nevertheless indicated a significantly stronger performance than that seen overall in recent months.

Pretty healthy retail sales growth in November reinforces belief that consumer spending is picking up to some extent, and reduces the case for a near-term interest rate cut.

The increase in inflation in August was primarily due to higher prices for fuel and some food items, while core consumer inflation actually edged back down to 1.7% after spiking up to 1.8% in July from 1.5% in June.

This is a really stunning retreat in retail sales. It reinforces our belief that the Bank of England is too optimistic about consumer spending.

Relatively subdued consumer spending, intense domestic and international competition, and high input costs continue to dampen ... the sector.

We suspect economic activity over much of 2006 will be held back by sluggish consumer spending and that the Bank of England's growth forecast will prove to be too optimistic.

This (CPI data) very much keeps the door open for an interest rate cut in February, although the Bank of England may still prefer to wait while it monitors the strength of consumer spending and wage settlement levels early in 2006.

This confirms that late in 2005 there was still no evidence that pay was starting to be pushed up by recently higher consumer price inflation and increasing energy bills.

If this is confirmed, it will reinforce our suspicion that the December performance was inflated by many consumers opening their wallets to treat their families and themselves at Christmas having held back their spending over much of 2005.

The combination of rising unemployment, falling employment and muted earnings growth is hardly supportive for consumer spending. It reinforces our belief that overall growth will be softer than forecast by the Bank of England and that underlying inflationary pressures will remain muted.

With consumer price inflation below the 2% target level in both December and January and clearly below the levels forecast by the Bank of England in their November quarterly inflation report, a near-term interest rate cut suddenly looks a very real possibility again.

While it is clearly premature to sound the all-clear on inflation, the October consumer prices data are largely reassuring for the Bank of England and boost hopes that inflation has peaked,

There is a very real risk that consumer spending will be muted for an extended period without any other areas of the economy compensating significantly.