Further tentative sings of economic recovery emerged yesterday, with better news on the property market, jobs and consumer confidence – but all carried warnings that the improvements were fragile and may not last.
The Bank of England said that mortgage approvals continued their painful progress upwards with a further modest rise in the number of new mortgage approvals – some 43,000 people managed to raise a home loan in April, up from 40,000 in March, on a seasonally adjusted basis. Having seen a low point of 27,000 approvals last November, the new figures remain substantially below the monthly long-run average of about 100,000 new approvals, one consistent with rising house prices.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "Recent numbers have been far lower than would typically be expected even in the midst of a recession, and it is unclear how rising unemployment levels will affect recovery."
The data was reflected in the latest survey from the Chartered Institute for Purchasing and Supply, which followed Monday's news of improved confidence in manufacturing with a relatively upbeat report from the construction sector.
Consumer sentiment is also brightening, according to the Nationwide index, but unevenly. Martin Gahbauer, Nationwide's chief economist, warned: "While some reports suggest tentative signs of a slowing in the pace of economic decline, it is important to remember that a number of sectors are continuing to contract and any recovery is likely to be sluggish." The percentage of those believing that now is a good time to make a major purchase, for example, fell to 39 per cent in May, down from 42 per cent in April.
The latest KPMG Report on Jobs again suggests that the pace of redundancy is slowing – but concerns are now gathering around the sustainability of employment in the public sector. Mike Stevens, head of business services at KPMG, explained: "The uncertainties of public sector spending associated with the final year of a government that is losing the capacity to borrow make it all the more difficult for businesses to contemplate the investment – in people, ideas and capital spend – that would begin to show evidence of a sustainable recovery."Reuse content