Amid the final countdown to Christmas, Recovery Watch derived a brief burst of seasonal joy this week from news that the number of those claiming jobseekers’ allowance fell for the first time in nearly two years.
In addition, the unemployment rate showed its slowest quarterly rise in 18 months, bringing hope that the bitter recession is ending.
But easing unemployment may not be enough. Average earnings, including bonuses, rose but by less than the official rate of inflation.
Consumers probably know intuitively that their purchasing power ahead of Christmas is limited and could fall further.
Perhaps that explains why retail sales actually fell in November rather than increased.
This defied widespread predictions that consumers would rush to spend before VAT is hiked back to its pre-recession level at the start of the new year.
There were, however, a few retailing bright spots. Inchcape, the car dealer, said it had a better quarter than it had expected. British customers in particular had rushed to buy expensive marques such as BMW and Mercedes-Benz ahead of the tax change.
John Lewis, never knowingly undersold, is having a fantastic year, with sales in the latest week higher in every single store than those the year before. Several of its stores set sales records.
Recovery Watch would like to point out that this recession has not hit uniformly; it may well be that the staple John Lewis customer could be better insulated from the crisis than the national average. Unemployment in the 16 to 24-year-old group, not the core customer group, is running at close to 20 per cent. Meanwhile, a study released this week concluded that, recession aside, income inequality has been growing at a very rapid rate in Britain for the past 30 years.
But there are positive signs coming from the business sector, which had been previously reported to have slashed investment this year at the fastest rate in 40 years.
It seems that while investment did decline in the three months to the end of September, it did so at a much slower rate. Meanwhile, a host of companies are lining up for their first listing on London’s junior stock market, Aim. That is a sign that their fortunes, and that of prospective investors, are looking up.
Housing, ever a barometer of the fortunes of British consumers, gave mixed signals over the past week. On one hand, a key survey of agents showed a bigger majority reporting that prices rose rather than fell.
However, the outlook for the future is less clear, with a drop in the number of those expecting the prices to keep on rising. Meanwhile, the pool of first-time buyers – whose participation is crucial to maintaining housing demand – has been shrinking over the past six months.
Recovery Watch approaches the festive season and the weeks ahead in a hopeful spirit, if not an expectant one, that the longed-for green shoots will sprout.
Our next posting will be in the new year.