Suchergebnisse

Final sales have been rising relatively fast since the beginning of the year, but for a time the effect on the level of output has apparently been offset by reduced stock accumulation. Now, output is probably starting to rise again and it seems likely to continue to increase. The only substantial adjustment to the broad predictions for overall demand made in the January issue of the Review is that prospects for consumers' expenditure now suggest bigger increases than were then expected. It is unlikely that the economy as a whole will be running at the limits of capacity in the rest of this year, but there may be increasing strains in some sectors. The central problem of policy is likely still to be the discouraging outlook for the balance of payments.

In the summer the growth of industrial output and the decline in unemployment slowed down. The main reason for this is that exports have fallen since the first quarter of the year. In overseas markets the growth of demand has also been slowing down.

In the past two months, the Government has again tightened credit. In the industries producing durable consumer goods, the pressure on resources began to ease early in the year. Investment in stocks probably reached its peak in the first quarter. Since then exports seem to have lost their momentum. If this continues, the growth of demand is likely to slow down. But stagnant exports would leave the balance of payments precarious.

Industrial production has continued to expand and is estimated to have been 10 per cent higher in January than a year earlier. The main forces behind the expansion have been continuing increases in consumption and exports. Although there has been no radical change of trend in the economy, the risk that demand will become excessive appears to have increased.

Industrial expansion continues. The index of production has now risen 7 to 8 per cent in a year ; there are no signs of a labour shortage, the balance of payments surplus is still adequate, and prices are still flat. The initial effects of the Government's expansionary measures are now wearing off and production may rise more slowly—though it should still go on rising. It is unlikely that there will be any need in the coming months for Government action to check the rise in demand.

The general trend of the economy has changed little in the past two months. There is further evidence of recovery abroad. At home, expansion continues, with industrial production rising quite rapidly. Prices have remained stable and the foreign payments position, helped by the recovery in the overseas sterling area's balance, remains favourable.

This article first examines the trends and prospects in the various elements of home demand and the prospects for exports in the light of world developments. It then looks at the effects on production and imports, and reviews the changes in costs and prices. After discussing the general outlook and the Budget, it analyzes the employment position in some detail.