Leading Indicators | Interest Rates | UK Trade | The 'Office First' Stance
Discover key economic and financial metrics, and what to look out for in the week ahead.
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Here we look at the leading indicators in the world of economics. Download the dashboard for in-depth analysis into commodities, trade, equities and more.
Attention turns to when interest rates will peak in 2023
This week, the US Federal Reserve (Fed), Bank of England (BoE) and European Central Bank (ECB) are due to make interest rate decisions. So far, interest rates have risen from close to zero, to a range of 3.75% - 4.00% in the US, 1.50% in the eurozone and to 3.00% in the UK. Economists widely expect the three central banks to slow the pace of rate hikes, increasing rates by 50bps instead of the 75bps all three implemented last month. The BoE will have to contend with unemployment rising by 0.1ppts to 3.7% and wages growing by 6.1% in the three months to October. However, economists do not expect this to impede the slowing pace of rate hikes on Thursday. In anticipation of the BoE’s decision, the UK 10 year gilt yield has softened to its highest level in 3 weeks at 3.29%. The yield gap between the UK All Property yield and 10-year gilt yield is currently 263bps.
UK trade with the EU eclipses non-EU trade in October
Total imports of goods into the UK decreased by 2.6% in October, while total exports contracted by 2.2%. Trade with the EU partially offset these declines, as imports from and exports to the EU were £0.1 billion and £0.2 billion higher than non-EU countries, respectively in October. This is the first time both imports and exports with the EU has overtaken non-EU trade since April. Amongst heightened volatility in global trade markets with Brexit, the Russia/Ukraine war and ongoing supply chain constraints, the UK has still seen elevated levels of trade between certain countries. The UK’s total trade with Qatar (+137%), UAE (+18%), Netherlands (+16%), India (+11%), South Korea (+9%) and France (+6%) has increased in the year to October compared to full year 2021, calling into question aspects of the ‘deglobalisation’ narrative.
Economic headwinds coincide with an office first stance for occupiers
The latest ONS working arrangements survey suggests that 38% of the UK workforce works from home at least once during the week. Workers aged 30 – 49 and 50 – 69, contain the highest share of people working from home at 47% and 36%, respectively. Meanwhile, the youngest (16 – 29) and oldest (70+) workers have the lowest share. Due to the challenging economic backdrop, these levels could change as some businesses may issue bolder return to the office mandates. Occupiers could move swiftly to an office first stance, causing the shift towards hybrid to be diluted. Occupiers are unlikely to reduce space held within portfolios with the force originally anticipated and may instead repurpose space to support productivity, bolster collaboration, and align to prevailing workstyles.
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