ONS Economic Forum, 17 April 2023.pptx
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This document provides an agenda and summaries from an economic forum held by the Office for National Statistics. The agenda includes welcome remarks, presentations on the state of the UK economy, energy intensity in consumer prices, and changes in the private rental sector. The state of the economy presentation notes that forecasts point to challenges ahead but the economy has performed better than expected recently. Unemployment is near historic lows while investment remains subdued. Inflation continues to be broad-based. The energy intensity presentation finds that higher energy intensity goods have faced higher inflation recently. The rental sector presentation shows tenants are more likely to have faced price increases over the past year compared to a year ago, especially in London.
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ONS Economic Forum, 17 April 2023.pptx
- 1. Economic Forum Chair – Grant Fitzner @ONSfocus #ONSEconForum slido #39642 Chief Economist Director, Macroeconomic and Environment Statistics and Analysis @GrantFitzner
- 2. Agenda 09:30am – 09:35am Welcome and introduction – Grant Fitzner, Chief Economist, Office for National Statistics 09:35am – 09:50am State of the UK economy – Sam Beckett, Second Permanent Secretary, Office for National Statistics 09:50am – 10:00am Energy intensity of Consumer Price Index (CPI) basket – Kathryn Keane, Office for National Statistics 10:00am – 10:10am Changes in private rental sector behaviour, England, February 2022 to February 2023 – Aimee North, Office for National Statistics 10:10am – 10:25am Questions and answers 10:25am – 10:30am Closing remarks – Grant Fitzner, Chief Economist, Office for National Statistics @ONSfocus #ONSEconForum slido #39642
- 3. Questions can be submitted via the slido app using code #39642. You can also access slido via the link in the chat box.
- 4. State of the Economy April 2023 Sam Beckett Second Permanent Secretary Joint Head of the Government Economic Service, Office for National Statistics @ONSfocus #ONSEconForum slido #39642
- 5. The economy has performed better than expected, but the outlook remains challenging Source: Office for Budget Responsibility Source: International Monetary Fund 98 99 100 101 102 103 2022Q4 2023Q2 2023Q4 2024Q2 2024Q4 2022Q4 = 100 Real GDP projections, 2023-24 November 2022 forecast March 2023 forecast -0.4 0 0.4 0.8 1.2 2023 2024 2023 2024 G7 UK Per cent Real GDP projections, 2023-24 Oct-22 Apr-23 @ONSfocus #ONSEconForum slido #39642
- 6. While GDP growth has been flat, there is variation between sectors -0.8 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 Feb-22 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Per cent and percentage points Contributions to change in monthly GDP, February 2022 - February 2023 Construction Production Services GDP -50 -40 -30 -20 -10 0 10 20 Activities of households as employers, undifferentiated… Other service activities (S) Mining and Quarrying (B) Human health and social work activities (Q) Wholesale and retail: repair of motor vehicles and… Transport and storage (H) Real estate activites (L) Electricity, gas, steam and air (D) Manufacturing (C) Education (P) Agriculture, forestry and fishing (A) Arts, entertainment and recreation (R) Public administration and defence (O) Financial and insurance activities (K) Accommodation and food service activites (I) Administrative and support service activities (N) Construction (F) Water supply, sewerage etc (E) Professional, scientific and technical activities (M) Information and communication (J) Per cent Cumulative change in industry level GVA, February 2020 to February 2023 Source: Office for National Statistics Source: Office for National Statistics @ONSfocus #ONSEconForum slido #39642
- 7. The employment-to-population ratio remains near historic highs, but investment remains subdued Source: Office for National Statistics -0.03 -0.025 -0.02 -0.015 -0.01 -0.005 0 0.005 0.01 0.015 Population share Men 16-17 employment rate Men 18-24 employment rate Men 25-34 employment rate Men 35-49 employment rate Men 50-64 employment rate Men 65+ employment rate Men 16-17 activity rate Men 18-24 activity rate Men 25-34 activity rate Men 35-49 activity rate Men 50-64 activity rate Men 65+ activity rate Women 16-17 employment rate Women 18-24 employment rate Women 25-34 employment rate Women 35-49 employment rate Women 50-64 employment rate Women 65+ employment rate Women 16-17 activity rate Women 18-24 activity rate Women 25-34 activity rate Women 35-49 activity rate Women 50-64 activity rate Women 65+ activity rate Changes in EPOP ratio by gender and age, Jan-Mar 2008 to Nov-Jan 2023 Pre-GFC to Pre-COVID- 19 Pre-COVID-19 to Latest Pre-GFC to Latest 60 70 80 90 100 110 120 2010 Q1 2012 Q1 2014 Q1 2016 Q1 2018 Q1 2020 Q1 2022 Q1 2015 = 100 UK Business Investment, 2010 Q1 – 2022 Q4 Source: Office for National Statistics @ONSfocus #ONSEconForum slido #39642
- 8. Lower-than-expected borrowing provided space for additional fiscal measures -5 0 5 10 15 20 25 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 £ Billion Effects of policy measures on borrowing, FYE 2022 - FYE 2027 Indirect effects of policy Energy support measures Labour supply package 100% capital allowances Other spending decisions Other tax decisions Total policy effects Source: OBR, ONS Source: Office for Budget Responsibility 0 20 40 60 80 100 120 140 160 2022 APR 2022 MAY 2022 JUN 2022 JUL 2022 AUG 2022 SEP 2022 OCT 2022 NOV 2022 DEC 2023 JAN 2023 FEB £ Billion Public Sector Net Borrowing: Outturn vs Forecast Outturn Novemeber OBR profile @ONSfocus #ONSEconForum slido #39642
- 9. Inflation continues to be broad-based -2 0 2 4 6 8 10 12 Jan-02 Jul-04 Jan-07 Jul-09 Jan-12 Jul-14 Jan-17 Jul-19 Jan-22 Per cent Annual rate of CPI and core CPI inflation, January 2002 – February 2023 Headline 15% trim Excluding energy, food, alcoholic beverages and tobacco Source: Office for National Statistics Source: Office for National Statistics 0 200 400 600 800 1000 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14 Jan-17 Jan-20 Jan-23 Weight CPIH by weight, range of 12-month inflation rates, January 2002 – February 2023 <0% 0% to 2% 2% to 4% >4% @ONSfocus #ONSEconForum slido #39642
- 10. The side effects of monetary policy have crystallised recently Source: Bank of England Source: International Monetary Fund -20 -15 -10 -5 0 5 10 15 20 01/2018 09/2018 05/2019 01/2020 09/2020 05/2021 01/2022 09/2022 Per cent Annual change in loans to non-financial businesses Non-financial businesses Large Businesses 0 5 10 15 20 25 30 35 40 UK Japan US Euro Area Other advanced economies Per cent Banks' security holdings, as a percentage of total assets Total securities Debt securities @ONSfocus #ONSEconForum slido #39642
- 11. Conclusions • Independent forecasts point to a challenging year ahead but the economy has performed better than expected in recent months • Underlying inflation remains elevated • Financial conditions have received more coverage in recent weeks @ONSfocus #ONSEconForum slido #39642
- 12. Office for National Statistics Energy intensity of Consumer Price Index (CPI) basket Kathryn Keane @ONSfocus #ONSEconForum slido #39642
- 13. Background • Consumer price inflation has risen to 40-year highs in recent months, driven largely by energy prices. • Energy costs have both direct and indirect effects on consumer prices as energy is a key input into almost all industries. • Indirect energy intensity refers to the proportion of the consumer price for a good or service that is driven by the energy used in its production. • Consumer prices reflect a range of factors that also include labour and capital costs, distribution, direct imports and taxes less subsidies. @ONSfocus #ONSEconForum slido #39642
- 14. Methods • The Input-Output Tables (IOTs) provide estimates of the inputs into the production of the goods and services available for use in the UK economy. • We use these to estimate energy usage as a proportion of total expenditure for each product. • This shows us the indirect energy intensity of CPI by estimating the energy intensity of each product we consume. @ONSfocus #ONSEconForum slido #39642
- 15. Energy intensity is below 3% for divisions that don’t contain direct energy components • Divisions that contain energy components have the highest indirect energy intensity • All other divisions have energy intensity between 0.3% and 2.7% • Clothing and footwear has the lowest energy intensity at 0.3% 0 5 10 15 20 25 Miscellaneous goods and services Restaurants and hotels Education Recreation and culture Communication Transport Health Furniture and furnishings Housing and household services Clothing and footwear Alcoholic beverages and tobacco Food and non-alcoholic beverages Per cent Indirect energy intensity by division @ONSfocus #ONSEconForum slido #39642
- 16. Service components have more varied energy intensity than goods • Services classes have a wider range of energy intensity than goods classes • Services include very low energy intensity (insurance, financial services) and very high energy intensity (transport services) • Non-energy goods with high energy intensity include fruit and plants, those with lower energy intensity include books and newspapers 0 5 10 15 20 25 30 35 40 0-0.5 0.5-1 1-1.5 1.5-2 2-2.5 2.5-3 3-3.5 3.5-4 4-4.5 4.5-5 5-5.5 5.5-6 6-6.5 6.5-7 7-7.5 7.5-8 8-8.5 8.5-9 9-9.5 9.5-10 10+ Per cent Proportion of non-energy goods and services classes by energy intensity Goods excl energy Services @ONSfocus #ONSEconForum slido #39642
- 17. Higher energy intensity components have contributed more strongly to rising inflation in the last year • We split the basket equally by weight and allocate classes into categories by their energy intensity • High and very high energy intensity products have been making the biggest contributions to CPI growth since energy costs increased -2 0 2 4 6 8 10 12 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Per cent Contributions to CPI inflation by energy intensity, Jan 2019 to Feb 2023 Very low Low High Very high Energy Rents @ONSfocus #ONSEconForum slido #39642
- 18. Before the Russian invasion of Ukraine lower energy intensity components contributed most to inflation • The difference in contributions between higher (high and very high) and lower (low and very low) energy intensity products shows a clear trend since the Russian invasion of Ukraine • Until April 2022 lower energy intensity products were contributing more to inflation than higher ones -2 -1 -1 0 1 1 2 2 3 3 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Per cent Difference in contributions to CPI between higher and lower energy intensity @ONSfocus #ONSEconForum slido #39642
- 19. Key takeaways • By estimating the energy intensity of CPI we can look beyond household gas, electricity and fuel costs and see the wider impact of energy price increases. • More energy intensive goods and services have seen higher inflation over the last year than less energy intensive components. • These estimates may give some indication of where energy price pressures are strongest but other factors such as labour costs are also key. @ONSfocus #ONSEconForum slido #39642
- 20. Head of Housing Market Indices Prices Division Office for National Statistics Changes in private rental sector behaviour, England: February 2022 to February 2023 Aimee North @ONSfocus #ONSEconForum slido #39642
- 21. Background • ONS’ Index of Private Housing Rental Prices (IPHRP) has reported record high UK annual rental price inflation for the past ten consecutive months. • This analysis provides new insight into the changing behaviour observed in the private rental sector. • Estimates were obtained by comparing the rental price of each property with its rental price when the same property was last visited. • Median length of time between visits was 12 months. @ONSfocus #ONSEconForum slido #39642
- 22. Proportion of properties that have experienced a price increase since last visit, by region • London was the region with the highest proportion of properties revisited in February 2023 that had experienced a price increase (66.8%). • The North West was the region with the lowest proportion of properties that had experienced a price increase (27.9%). @ONSfocus #ONSEconForum slido #39642
- 23. Average rental price percentage increase, by region • In February 2023, London was the region with the highest average price increase (12.0%), up from 4.7% in February 2022. • The West Midlands saw the lowest price increase (8.2%). • England’s average price increase for the same period was 9.7%, up from 6.7% in February 2022. @ONSfocus #ONSEconForum slido #39642
- 24. Size of rental price percentage change for London properties, Feb-23 vs Feb-22 • The London average price percentage increase has risen compared with a year before. • One third (33.3%) of London properties revisited in February 2023 experienced a price increase of more than 10%. • This was up from 4.6% a year before. @ONSfocus #ONSEconForum slido #39642
- 25. Proportion of revisited London properties that experienced a price increase, by property type • The proportion of London properties revisited between December 2022 and February 2023 that saw a rental price increase was highest for flats and maisonettes (70.3%). • Detached houses had the lowest proportion experiencing a price increase (37.5%). @ONSfocus #ONSEconForum slido #39642
- 26. Key findings • Tenants in England are more likely to have faced recent rental price increases compared with a year ago. • The size of those price increases are likely to be larger now than a year ago. • Tenants in London are more likely to have experienced a price increase and a larger price increase, compared with other regions. • In London, tenants renting flats are more likely to have experienced a price increase compared with other property types. @ONSfocus #ONSEconForum slido #39642
- 27. Questions can be submitted via the slido app using code #39642. You can also access slido via the link in the chat box. Q&A
- 28. Closing remarks Grant Fitzner Chief Economist Director, Macroeconomic and Environment Statistics and Analysis @GrantFitzner @ONSfocus #ONSEconForum slido #39642
- 29. Forthcoming ONS economic analysis 17 April 2023 The Energy Intensity of the Consumer Prices Index: 2022 17 April 2023 Experimental gross UK Government research and development expenditure estimates by ITL1 regions 24 April 2023 Tracking the impact of winter pressures in Great Britain 26 April 2023 Sickness absence in the UK labour market: 2022 3 May 2023 Insulation and Energy Efficiency of Housing in England and Wales 2022 4 May 2023 UK Environmental Taxes 2023 All information on upcoming analysis can be found via the ONS website @ONSfocus #ONSEconForum slido #39642
- 30. Dates for your diary 19 April 2023 ONS Business data and statistics user event 11 May 2023 Annual Crime and Justice Statistics Forum 15 May 2023 ONS Economic Forum – Registration to open shortly Further details on the above event and any upcoming events will be published at ons.gov.uk/economicevents @ONSfocus #ONSEconForum slido #39642
- 31. Dates for your diary 19 April 2023 ONS Economic Forum – Registration to open shortly 11 May 2023 Annual crime and justice statistics forum 2023 15 May 2023 ONS Economic Forum – Registration to open shortly Further details on the above event and any upcoming events will be published at ons.gov.uk/economicevents @ONSfocus #ONSEconForum slido #39642
- 32. Thank you for attending the Economic Forum You can keep up to date on all upcoming events via ons.gov.uk/economicevents If you would like to ask a question or provide any feedback, please do so via economic.engagement@ons.gov.uk