The document summarizes economic news and data from the week. Key points include: 1) Global economic data disappointed, with slowing growth in the US, Brazil, China, and rising unemployment in the Eurozone. 2) UK manufacturing output slumped in May according to a survey, suggesting official GDP data will also be negative. 3) Money supply and lending data from the UK showed little impact from quantitative easing on the real economy. 4) World trade growth slowed to 2% in March, with slowing import growth across many countries including the Eurozone.

1. The Saturday Economist johnashcroft.co.uk
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In this issue : Saturday June 2nd 2012
Page No.
The week in review
2
UK Manufacturing
3
Money Supply
4
World Trade update
5
Discussion Papers - the 2012 series
6
Latest Economic Indicators
7 John Ashcroft is Chief Executive
of pro.manchester, a director of
Marketing Manchester, a member
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2. The Saturday Economist johnashcroft.co.uk
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Saturday June 2nd 2012
The Week in Review - manufacturing output slumps, money
supply is flat, world trade data disappoints.
Global data raise fear of downturn - the headline in the FT as US payroll data
disappoints, growth is sluggish in Brazil, PMI data for China slows and Euro
unemployment rises to 11%. Spain is determined to jump the bail out queue as hot
money flows out of the economy, almost 100 million euros the level of Spanish bank
withdrawals in the first quarter.
As we report on page 5, world trade slowed to 2% in March compared to over 5% in
2011. Import growth has slowed across the world with Euro imports falling by 2.5%.
The impact on world energy and commodity prices is marked. Brent Crude closing sub
$100 per barrel at the end of the week.
Manufacturing slumps
In the UK, economics data was sparse just the money supply and lending figures from
the Bank of England to enliven, as the ONS had nothing to offer. News from the latest
PMI Markit manufacturing survey suggested output slumped in May.
So much for those who argue the official GDP data is out of touch with survey
information. This week the Chamber of Commerce argued for £6 billion of spending
cuts to stimulate growth. No more QE please.
The Chancellor responded to the need for stimulus by reversing planned tax increases
on static pasties and hot caravans. Yes there is an alternative. JKA
Our GDP growth forecast for 2012 is already down to 0.2% for the year.
The situation will just get worse .......
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3. The Saturday Economist johnashcroft.co.uk
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Saturday June 2nd 2012
Manufacturing
Markit / CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®)
The UK manufacturing sector took a sudden sharp turn for the worse in
May. Companies scaled back production and employment as inflows of
new business declined at the steepest pace since March 2009, amid
rising uncertainty among domestic and overseas business.
At 45.9 in May, down from 50.2 in April, the seasonally adjusted Markit/
CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®) fell to its
lowest level for three years and below the neutral 50.0 mark for the first
time since last November. The headline index fell by 4.3 points over the Index fell to 45.9 in May
month, the second-steepest fall in its 20-year history.
The data suggests the official ONS data will surely follow with negative
implications for GDP output in the second quarter.
I promise to let one week pass without a comment on rebalancing the
economy - the March of the Makers rebuilding the workshop of the world
but this is not that week. JKA
Official data will follow ..
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4. The Saturday Economist johnashcroft.co.uk
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Saturday June 2nd 2012
Money Supply and Lending
Data from the Bank of England - lending to individuals increased by just 1% in April
and by 0.8% year on year in the twelve months to April. Households remain the
key engine of growth in the UK economy and the housing market a measure of
activity and confidence.
Narrow money, notes and coins increased by 5% in April compared to 5.5% in the
first quarter. Money stock at £61.8 billion represents an implied velocity of
circulation of 24.3. Can’t remember why this is important any more.
Broad money M4 increased by £10.6 billion in April, compared to an average
monthly increase of £3.9 billion in the previous six months. The three-month
annualised growth rate was 3.8%. Lending secured on dwellings up by 0.8%
M4 lending increased by £2.3 billion in April, compared to an average monthly
increase of £0.9 billion in the previous six months. The three-month annualised
growth rate was 0.7%.
For those concerned about QE and inflation, take note. As we have argued QE and
the Asset Purchase Facility have had little impact on money and lending in the real
economy.
Broad Money M4
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5. The Saturday Economist johnashcroft.co.uk
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Saturday June 2nd 2012
World Trade update
In a special report this week, we look at the latest world trade data for
March and the first quarter of 2012 based on the data release from the
CPB Netherlands Bureau of Economic Policy Analysis.
World trade growth fell to 2% in March compared to 2.7% for the first
quarter and over 5% for 2011 as a whole.
Import growth slowed markedly with a fall in Euro imports (-2.5%)
particularly evident.
The impact on manufactures prices of lower demand, energy costs and World trade growth is slowing
raw materials was to reduce manufactures inflation to 2% in March
compared to over 9% in 2011.
Energy prices are falling with oil Brent Crude closing the week at sub
$100 dollars per barrel. Good news for UK inflation but bad signals for
growth and output. The double dip not just a slip. The slump is coming
unless policy makers get to grip with the challenges in Euroland.
Manufactures pricing slowing
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Discussion Papers 2012 Saturday June 2nd 2012
Depreciation and the UK trade in goods 2008 - 2011 April 2012
Forty years of UK trade - 1970 - 2012 April 2012
A comparison of UK recession and recoveries 1930 - 2012 May 2012
What’s wrong with Quantitative Easing? May 2012
Don’t worry about the Euro May 2012
The IMF, QE, Credit Easing and SME bonds May 2012
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7. The Saturday Economist johnashcroft.co.uk
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Latest Economic Indicators Saturday June 2nd 2012
Indicator Period Latest Notes, next release Source
Inflation CPI April 3.0% ONS
Inflation RPI April 3.5% .. ONS
Inflation RPIX April 3.5% .. ONS
Earnings March 1.6% ONS
Retail Sales volume January 2.0% ONS
Retail Sales value January 4.4% ONS
Unemployment March 2.62 LFS Million trailing 3 months ONS
Unemployment % March 8.2% LFS trailing 3 month ONS
Claimant count April 1.59m Million ONS
PPIs output April 3.3% Manufacturing prices (output) ONS
PPIs input April 1.2% Manufacturing prices ( input) ONS
GDP growth Q1 2012 -0.3% ONS
Manufacturing March -0.9% year on year growth ONS
ONS : Office for National Statistics, LFS : Labour Force Survey
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The Saturday Economist
The Saturday Economist is a round up of the week’s economics news for the UK
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