Service Sector Doing Well - UK

[RVR800]

Latest figures indicate that the service sector in the UK is still booming

Sorry Guv to be the bearer of good news

See
http://www.statistics.gov.uk/pdfdir/oie0801.pdf

[The Guvnor]

Unfortunately, with the industrial sector of the economy officially in recession, this is simply a repeat of the last recession (91-94) where the service sector trails the industrial one by about a year.

Ask Pinky to brief you ... she's the economics expert around here! :D :D :D

"Lies, damn lies and statistics" - Benjamin Disraeli

[RVR800]

Only 17% of the UK economy is none-service..

Its significance is over estimated in the US and UK.

The 91-92 recession was initiated in the UK by 15% interest rates we have 1/3 of this rate now and inflation is low 2.4% and
growth is still 2.1% same as last month
Unemployment is still falling - very disappointing for all these doom merchants
- I am not a member of the Labour Party by the way just interested in the way certain people talk down economic success

Analysts predictions are upbeat - good time
to borrow money

What gives on your airline Guv?

[The Guvnor]

Thought you might like to see the following, from today's Telegraph. A lesson for us all, perhaps??


US slump leaves new poor in shell-shock
(Filed: 23/08/2001)
Philip Delves Broughton reports from an affluent yet jittery corner of Middle America

SOMERSET County, New Jersey, is the richest county - in terms of personal income - in the richest state in America.

Leafy roads wind past large houses, and the car park of the local YMCA is packed with Jeeps, Saabs and Volvos.

Inside, 25 recently sacked or "retired" executives have gathered to learn how to find a job in an increasingly bleak economy.

Russell Potter, a management consultant, tells the career forum support group in Basking Ridge: "All jobs are temporary. Loyalty doesn't last and isn't there anymore. You've always got to be ready to bail out."

Everyone nods, yet the lesson is coming too late for many. While the White House puts a brave face on the American economy, a raft of evidence points to a much longer slump than anyone imagined.

The fall from boom to bust has been faster than any since the 1973 oil crisis, say some economic analysts, and the chorus calling it a recession is gaining voice.

After a decade of explosive growth, people have been reluctant to accept that the good times are over.

When technology stocks began their free fall 16 months ago, pundits cheerfully predicted an early rebound.

Instead, what has followed has been continuing economic gloom. Stock-heavy pension funds have dropped in value, forcing many to postpone retirement.

Company profits are hurtling downhill, personal debt is rising and jobs have been cut at a rate of more than 100,000 a month all this year.

Many now believe that the economy has run off a cliff and, like a cartoon character, is frozen in mid-air, leaving people terrified of an impending fall.

Joy Montgomery, 50, a marketing consultant and single mother from Basking Ridge said: "You've got people round here who have worked their whole life. Suddenly they're out of work. A lot of people are shell-shocked right now."

At the big local employers, including the telecommunications companies Lucent and Avaya, hundreds of people have been sacked or have taken early retirement in the past few weeks.

By the end of the year, Lucent hopes to have slashed its workforce from 155,000 12 months ago to 60,000.

Disclosures about Lucent's boom-time excesses have stoked local anger. Last month, the firm said it was selling two golf courses it had bought for executives, as well as a £14 million corporate jet. Those who never enjoyed the perks - and are now jobless - are furious.

Anne Mellen, a technology specialist who has taken the firm's early retirement package said: "There's a lot of hostility about this."

All across the American landscape, there are signs of a slump, which the more formal economic statistics have yet to register.

The number of CVs posted on Monster.com, a popular job-seekers' website, has risen from four million in January to 11 million.

Restaurants and airlines are suffering their worst slowdown since the 1990-91 recession. Many of those who experienced that slump are now better prepared financially.

Lloyd Feinstein, a career counsellor in Basking Ridge said: "People are coming off 10 good years. People have more resources. They can go without a pay cheque longer."

But among younger people, getting their first taste of economic gloom - and, especially, the poor - there are high levels of debt.

US consumers are taking twice as much debt into this slump - $7.3 trillion dollars (£5.1 trillion) by the Federal Reserve's estimate - as they did in the last recession.

In previous decades, slack in the domestic economy would be picked up by a boom somewhere else in the world.

But this time round, the whole world seems to be slumping together - a consequence, say some economists, of the increasingly integrated global economy.

"On balance, I'd say that the likelihood of continued difficulties here and abroad is higher than the prevailing view of most economists," Robert Rubin, the former US
Treasury Secretary, said this week. Those on the front line in places such as Basking Ridge would agree.

[RVR800]

But good news from the BBC...

BBC Thursday, 23 August, 2001, 17:13 GMT 18:13 UK UK 'to avoid recession'

The CBI expects manufacturing upturn before year end

Britain will avoid a full-blown recession, according to the Confederation of British Industry (CBI).

The greatest problem is that we may talk ourselves into a recession

Richard Jeffrey
Charterhouse Economics
The CBI says the manufacturing sector will start to recover by the end of the year.

And this news seems to be backed up by an exclusive survey of the UK's top companies by the BBC's Radio Five Live.

Only a handful of the UK's biggest 100 companies plan to make redundancies over the next twelve months, indicating that business confidence could be healthier than previously thought.

Talking it up

Radio Five Live surveyed the companies which make up the FTSE 100's share index, and obtained a response from 85 of these firms.

Thirty companies planned to keep staffing levels the same, while 23 firms said they planned to increase their workforce.

Company plans for the year ahead
Increase workforce
23 out of 85
Workforce unchanged
30 out of 85
Decrease workforce
13 out of 85
Just 13 out of the 85 indicated that redundancies may be on the cards.

Although the news cannot really be described as upbeat, it is far from overwhelmingly gloomy.

And Richard Jeffery, chief economist at Charterhouse Economics says that the biggest problem is that a recession could become a self-fulfilling prophesy.

"The greatest problem is that we may talk ourselves into a recession," Mr Jeffrey told the BBC.

But the larger companies could well be faring better than the smaller and medium size enterprises.

And the Federation of Small Businesses say that the number of small firms taking on new staff are outweighed by those planning job cuts.

A brighter picture

The CBI forecasts that GDP - the broadest indicator of economic growth - will grow by 2% this year and by 2.5% in 2002.

Fears of a recession are overdone and we are expecting a recovery next year

Sudhir Junankar, CBI
"Fears of a recession are overdone and we are expecting a recovery next year," Sudhir Junankar told the BBC.

But while the overall picture looks brighter, the manufacturing sector will continue to struggle.

Britain's manufacturing sector is the only part of the UK economy officially in recession, defined by two consecutive quarters of negative growth.

After declining for the first nine months of the year, the CBI forecasts that manufacturing output will improve in the last three months of the year and grow by a modest 0.6% in 2002.

"Despite benefiting from stable oil prices and some revival in export markets, manufacturing will continue to be the key weak spot in the UK economy," said Digby Jones, CBI director general.

The CBI also called on the Bank of England to cut interest rates by another quarter point to 4.75% in order to try and help the manufacturing sector to a speedier recovery.

[The Guvnor]

This is interesting ... the Beeb say that the CBI is relatively upbeat, whereas we have this decidedly downbeat article in today's Scotsman:

http://www.thescotsman.co.uk/pic/2408cbib.jpg

CBI warns of more gloom Michael Glackin Business News Editor
([email protected])

PROSPECTS for UK manufacturing are worsening according to the latest snapshot of the economy from the Confederation of British Industry.

The CBI said manufacturers’ current order books and their expectations of future output were at their lowest for two-and-a-half years, and reiterated its call for the Bank of England to cut interest rates further to kick start an upturn in the beleaguered sector’s fortunes.

CBI director general, Digby Jones, said: "Firms are continuing to do all they can by raising productivity, but a further interest
rate cut will be needed.

"We would expect to see interest rates at 4.75 per cent by the end of the year."

He added: "With inflation set to stay below the government’s own target there is no obstacle to a cut."

However, following this month’s shock quarter percentage point cut, which left rates at five per cent, it is extremely unlikely the Bank will implement any further reductions in the coming months barring further disasters in the US.

Despite warning that manufacturers will struggle to recover this year, the CBI said it still expects the sector to start to emerge from recession later before Christmas and expand 0.6 per cent in 2002.

But squeezed by feeble global demand and the high pound, manufacturers expect things to get worse before they improve. The output expectations balance plunged to -13, its worst reading since December 1998, from +3 in July.

HSBC economist John Butler added: "The key message from the survey is that the prospects for the manufacturing sector continue to worsen. Moreover, with the good start to the third quarter for retail sales, the tug-of-war between the two-speed economy lives on."

Meanwhile the latest government figures from Germany, showed growth ground to a complete halt during the second quarter, with gross domestic product unchanged from the previous quarter’s meagre 0.4 per cent increase.

Year on year GDP in Europe’s largest economy rose 0.6 per cent in the three months to June, its slowest rate of increase in more than four years.

The gloomy, though not unexpected news, will undermine the surprising increase in business confidence recorded in the respected Ifo index earlier this week, and will lead to increased demands within Germany for a cut in eurozone interest rates when the European Central Bank meets at the end of this month.

The German finance ministry said: "The gross domestic product estimates show without a doubt that the risks for the economy haven’t diminished."