US adds oil rigs for seventh week
US oil drillers have added rigs for the seventh week in a row, taking the edge off crude prices.
Seventeen rigs in total were added last week compared to just one the previous week. Of these 15 were oil rigs and 2 gas, the largest weekly rise for more than a year.
BAKER HUGHES US rig count rose +17 to 481 this wk (oil +15 to 396, gas +2 to 83) largest one-wk rise since Jul 2015 pic.twitter.com/O6W6rLofDN
— John Kemp (@JKempEnergy) August 12, 2016
Following the figures Brent crude is still ahead but has moved from a 1.6% rise to a 0.65% increase at $46.34 a barrel.
On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back next week.
Updated
European markets slip after US data
In a quiet day’s trading, the main impetus in the end came from a poor set of US data, including retail sales, which suggested weakness in the world’s second largest economy and a possible delay to any US rate rise. An early dip on Wall Street helped take away any impetus from European markets, despite oil continuing to hold firm after its recent gains. The final scores showed:
- The FTSE 100 finished virtually flat, up just 1.31 points or 0.02% at 6916.02 although the index was up nearly 2% on the week
- Germany’s Dax dipped 0.27% to 10,713.43
- France’s Cac closed down 0.08% at 4500.19
- Italy’s FTSE MIB edged up 0.17% to 16,997.83
- Spain’s Ibex ended down 0.04% at 8716.4
- In Greece, the Athens market added 0.66% to 576.12
On Wall Street the Dow Jones Industrial Average is currently down 49.41 points or 0.27%.
Meanwhile, despite an initial hit to the dollar following the US data, the pound failed to hold onto any gains and is currently down 0.3% at $1.2917. Against the euro, sterling has fallen 0.59% to €1.1564.
A Chinese slowdown, the fallout from Brexit and a Trump presidency are among the main worries among businesses, according to Oxford Economics:
Which risks are firms most worried about? The results of our latest global risk survey: https://t.co/mkKAFPfuvv pic.twitter.com/KNkYy1tpYt
— Oxford Economics (@OxfordEconomics) August 12, 2016
The International Monetary Fund has appointed a new senior representative for Greece, replacing an American with a Dutch national specialising in financial crises and social security reform (no comment necessary).
Dennis Botman will take over from Wes McGrew who ends his three year assignment this month and will return to the IMF’s headquarters. A spokesman said:
Mr Botman... previously worked in the Asia and Pacific Department—as the deputy chief on Japan as well as the IMF’s Resident Representative in the Philippines—the Economic Modeling Division in the Research Department, and the Fiscal Affairs Department.
He participated in numerous missions, including in Europe (e.g. Germany, UK), and his research covers a variety of topics, including general equilibrium modeling, financial crises and speculative attacks, aging and social security reform in Europe and Japan, and public finance.
Back in the UK and Aberdeen Asset Management is detecting signs of calm in the property market after the post-Brexit slump.
The firm has revised the fair value adjustment of its property fund from -7% on 6 July to -5%. Chief executive Martin Gilbert said:
There is further evidence that calm and order are being restored to the UK commercial property market. The impact of the vote to leave the EU is being felt most in the Central London office market, which the portfolio has little exposure to, whereas the retail and logistics markets are holding up relatively well along with longer-leased properties and those less dependent upon future rental growth. The quality of our holdings has allowed us to re-assess the fair value adjustment we are applying in the light of further emerging evidence. Of course the situation remains very fragile so we will remain watchful and act accordingly in the interests of all our underlying investors.
Something to note for early next week:
Reminder European markets will be quiet Monday with French, Italian, Spanish holidays for Assumption of Mary, some German states also off
— Anthony Cheung (@AWMCheung) August 12, 2016
Stock markets and the dollar are still in negative territory - just - after the disappointing US data. Analyst Connor Campbell at Spreadex said:
A worrisome afternoon of US data ensured that trading continued at the same uninspired pace it did during the morning.
Dipping back under 18600 the Dow Jones was suitably unimpressed with what the US economy threw up this Friday. Retail sales were the most alarming figure, an upwards revision to 0.8% for June failing to compensate for the 0.0% growth managed across July; things get even worse when the automobile sector is stripped out, core retail sales plunging by -0.3% against the 0.2% increase that had been expected.
Unsurprisingly given those sales figures the preliminary UoM consumers sentiment reading failed to see the recovery forecast, coming in at 90.4 against 90.0 last month and the 91.5 analysts had estimated. Yet the Dow Jones didn’t bear the brunt of the bad news; that honour went to the dollar, which immediately began to suffer as its hopes of a 2016 rate hike were dealt a significant blow.
Brexit concerns appear to have been replaced by uncertainty ahead of the US election, according to the consumer confidence report. The survey’s chief economist, Richard Curtin said:
Confidence inched upward in early August due to more favorable prospects for the overall economy offsetting a small pullback in personal finances. Most of the weakness in personal finances was among younger households who cited higher expenses than anticipated as well as somewhat smaller expected income gains.
Concerns about Brexit have faded amid rising references to the outcome of the presidential election as a source of uncertainty about future economic prospects... Overall, the data remains consistent with real personal consumption expenditures improving at an annual rate of 2.6% through mid 2017, with new and existing home sales also benefitting from low mortgage rates.
Updated
US consumer confidence disappoints
More weaker than expected US economic data, and thus more food for thought for Janet Yellen and her colleagues at the Federal Reserve.
The University of Michigan survey of consumer sentiment came in at 90.4 in August’s preliminary reading, up from the final figure of 90 for July but below the expected level of 91.5.
US markets open lower
Wall Street has reacted to the disappointing US economic data, notably retail sales, by coming off the all time highs it hit on Thursday.
The Dow Jones Industrial Average is currently 41 points or 0.23% lower while the S&P 500 and Nasdaq have also opened lower.
IMF warns China’s economic transition will be ‘bumpy’
The International Monetary Fund has warned that China’s economic transition to more balanced, sustainable growth will be “complex, challenging and potentially bumpy”.
In its latest assessment of the Chinese economy, the fund said China’s economy slowed to 6.9% growth last year, which is projected to ease to 6.6% this year due to slower private investment and weak external demand.
It said: “The economy is advancing on many dimensions of rebalancing, particularly switching from industry to services and from investment to consumption. But other aspects are lagging, such as strengthening state-owned enterprise and financial governance and containing rapid credit growth.”
The Washington-based fund welcomed the “impressive progress” on structural reforms in many areas, notably interest rate liberalisation, internationalisation of the renminbi, and urbanisation; and the 13th five-year plan, with its ambitious goals centred on economic rebalancing.
IMF directors “stressed the need for decisive action to tackle rising vulnerabilities; reduce the reliance on credit-financed, state-led investment; and improve governance, risk pricing, and resource allocation in the state-owned enterprise and financial sectors”.
Inflation in China dipped below 1.5% in 2015 and is expected to pick up to around 2% this year, reflecting the rebound in commodity prices and the weaker renminbi since mid-2015 (the currency has lost some 4.5% of its value).
China’s current account surplus is projected to decline to 2.5% of GDP this year, from 3% of GDP in 2015, as imports increase and the services deficit widens, with Chinese tourists continuing to head abroad.
Here’s a chart showing the movement in US retail sales:
The Fed is not likely to raise rates this year, according to economist James Knightley of ING Bank:
US retail sales for July are disappointing, coming in flat on the month versus expectations of a 0.4% month on month gain. There was a modest upward revision (2 tenths of a percentage point) to June’s figure, but it is still a miss. Car sales were actually the strong point of the report, rising 1.1%. There had certainly been some good volume numbers, but with GM having offered deep discounts we thought that the value of auto sales may not be quite so good.
In terms of other categories, there was a 2.7% drop in gasoline station sales, due to price falls, but there was also weakness in sporting goods (-2.2%), building materials (-0.5%) and food/beverages (-0.6%). Looking at the “control group” which excludes volatile items and has a better relationship with overall consumer spending growth, it was also flat on the month. This suggests that after a pretty disappointing second quarter GDP, the economy isn’t exactly roaring ahead at the start of the third quarter.
We have also had some softer than expected producer price inflation numbers, with the headline annual rate dropping into negative territory at -0.2% year on year, while the core (ex food and energy inflation rate slowed markedly to 0.7% year on year from 1.3%.
So with activity being softer than hoped and pipeline inflation pressures looking benign it doesn’t offer much support to the view the Fed will be hiking rates imminently. We favour the next Fed move higher to come in the first quarter of 2017.
The US retail sales figures also showed a 0.3% fall excluding automobiles compared with expectations of a 0.2% rise.
The data puts the Federal Reserve is something of a quandary, say analysts. Dennis de Jong, managing director at UFX.xom, said:
Investors had waited with bated breath to see what today’s US retail sales numbers would say about the strength of the American economy, but have been left disappointed by a result that leaves opinions divided.
Neither particularly strong, nor catastrophic, the slight decline in monthly data shows that the world’s largest economy is merely ticking along, which will leave Fed chair Janet Yellen with a head-scratcher.
An interest rate rise will remain in the back of her mind, but with no real clues as to whether consumers would withstand monetary tightening, the wait goes to see if and when she’ll exact one.
Peter Read, co-founder of trading network Pelican, said:
Fed Chair Janet Yellen will be disappointed to not be able to add today’s retail sales data to the body of evidence she is building that supports raising interest rates later in the year.
The possible intervention on rates received a notable backer in San Francisco Fed chief John Williams this week, which comes off the back of a second successive better than expected non-farm payroll result last week.
However, Yellen and Co. will know that today’s surprisingly poor data is a significant drop from last month’s figures and further global market uncertainty, including equally poor Chinese data, may tempt the Fed to exercise caution. Next week’s inflation data will give observers further food for thought.
US retail sales flat
July’s retail sales in the US are disappointing, coming in unchanged compared to expectations of a 0.4% increase
However June’s figure was revised up from a 0.6% increase to 0.8%.
The news has weakened the dollar, with the slowdown in sales suggesting the Federal Reserve may have less room to raise interest rates.
The pound has hit a day’s high of $1.3030 while oil prices and gold have both risen after the figures.
Updated
Better than expected US retail sales - the figures are due shortly - could provide more fuel to those hawks within the Federal Reserve who believe an interest rate rise is justified this year. And it will also give more support to the dollar. Analyst Lukman Otunuga at FXTM said:
With expectations continually fluctuating over the Fed raising US interest rates in 2016, dollar sensitivity has become a dominant theme in the currency markets
If today’s retail sales exceed expectations then this period of sensitivity could be dispelled with bulls sending the dollar higher. Sentiment is still somewhat bullish towards the dollar and today’s key release could potentially provide another compelling reason for the Fed to break the trend of central caution.
Following the recent weakness in the pound after the Brexit vote and the Bank of England’s stimulus package, here’s a chart from Bloomberg clearly illustrating the bad time sterling has had:
The pound just became the world's worst-performing major currency once again https://t.co/62ZLeEuhJb pic.twitter.com/D5Y3wyDigT
— Bloomberg (@business) August 12, 2016
Lunchtime summary
Eurozone economic growth was confirmed at 0.3% in the second quarter, half the first quarter’s growth rate, while the EU as a whole expanded by 0.4%. Germany grew 0.4% between April and June, more than expected; Spain 0.7% and the Netherlands 0.6%. However, France and Italy recorded zero growth.
UK construction output fell 0.7% in the second quarter, and by 0.9% in June, ahead of the EU referendum.
European stock markets are lacklustre, and broadly flat, ahead of US retail sales data at 1.30pm BST and the International Monetary Fund’s report on China at 2.00pm BST.
The National Housing Federation warns that a slowdown in housebuilding similar to that of the 2008 recession would over the next decade:
- Wipe out more than a third of GDP growth (£142.5bn).
- Result in the loss of nearly 120,000 construction jobs.
The federation notes that a poll by Reuters of almost 60 economists has predicted that GDP will decline by 0.1% for the next two quarters, pushing the UK into recession.
David Orr, chief executive of the National Housing Federation said believes that housing associations could pick up the baton from housebuilders.
We know that an uncertain economic environment will cause builders to put the brakes on. Our country’s prosperity and thousands of citizens’ livelihoods depend on a strong building sector – we cannot let a slowdown take hold.”
Housing associations have a track record of building through tough times, having upped their output through the last recession when private developers could not. With the right flexibility from Government, and at no extra cost to the taxpayer, housing associations can keep the nation building.
Let’s take a look at the markets. They are a bit dull today...
- FTSE 100 index in London up 5.2 points at 6919.97, up 0.08%
- Dax in Frankfurt down 0.18% at 10,723.77
- CAC in Paris down 0.03% at 4502.69
- Ibex in Madrid up 0.03% at 8722.00
- FTSE MiB in Milan up 0.19% at 17,001.84
Still to come: US retail sales at 1.30pm BST and the International Monetary Fund’s latest assessment on the Chinese economy.
According to the investor confidence index from retail investment firm Hargreaves Lansdown, confidence bounced back somewhat in August from the Brexit blues.
The August reading is up 19% from July to 80, but is still below the pre-Brexit level of 92, and below the long-term average of 101.
Investors have become more confident in European shares, although sentiment is still modestly negative. As you might expect, investors are most confident about the US, followed by global emerging markets.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said:
The sharp fall and subsequent recovery in confidence underlines how volatile sentiment has been in the last few months, and why it’s a particularly inappropriate time to be hanging too much significance on one or two data points.
The UK stock market is still trading near its long term historical average, and looks attractive when compared to government bonds, some of which have traded at negative yields in recent days, offering investors the dubious privilege of actually paying for the privilege of lending money to the UK government.
When it comes to income, the UK stock market is pretty much the only game left in town, with cash on its back, bonds yielding next to nothing, and buy to let being taxed to the bone. Income-seekers investing in the stock market must accept fluctuations in prices and dividends however.
Investors remain most confident in the US stock market despite relatively high valuations, which is understandable seeing as economic growth and monetary policy appear to be going in different directions on either side of the Atlantic.
The latest GDP figures show the eurozone growing at the same pace as the US economy between April and June, by 0.3%. You can read the full release here (pdf).
Here’s an expert’s view on the fall in UK construction output.
Andrew Bridges, managing director of London estate agents Stirling Ackroyd, points out that big infrastructure projects like HS2 and Crossrail will boost construction:
There’s been a dip in total new housing work – but housing remains a stable and reliable source of construction work. Brexit may not have put developers off building yet but this slow down needs to be reversed if enough new homes are to be built over the next few years. Work has dropped quarter-on-quarter and so too has the number of new homes approved in the capital – with a 22% drop in Q2 2016 from the previous year.
But, as ever with construction and house building, it’s all about the pipeline. Next year will see huge construction projects like HS2 and Crossrail take centre stage – having a huge knock on benefit for housing and infrastructure opportunities. This will open up new areas of London and once the bricks start being laid momentum will keep growing. London desperately needs more homes to be built. Planning inefficiency is one of the main delays leading many developers to re-think projects. One of the new government’s top priorities should be a new willingness to challenge the rigid planning system and bring new homes to London.
Employers obviously want free movement to continue, according to the NIESR study. They cannot see how a points-based system could work in low-skilled sectors. They are interested in the use of sector-based schemes but are concerned that any system should involve minimal additional cost and bureaucracy. They are also concerned that any visa systems will not allow them to respond quickly to fluctuating labour requirements.
The study re-interviewed employers who took part in research on free movement before the referendum. Following the Brexit vote, a number are looking more seriously at how they might recruit more UK workers but can see no easy answers. The CEO of a bakery company employing 280 staff, including 168 EU migrants, said:
The outer’s view is that migration will stop and we’ll suddenly have a sensible level of tens of thousands net migration whereas anybody I know who works in a food manufacturing industry is thinking ‘oh crikey, if that happens, we’re going to be seriously stuffed in terms of what we can do to make food’.
Employers in three sectors that employ large numbers of EU nationals – hospitality, food and drink, and construction – reveal they were unprepared for the Leave result and believe it is bad for business, new research by the National Institute of Economic and Social Research shows.
The study reveals employers were surprised by June’s referendum result and some expressed strong feelings including ‘shock’, ‘horror’ or devastation. Employers are worried about recruitment once free movement ends, are concerned for the wellbeing of their EU workers who have been left in the dark about their future, and want a say in future immigration policy.
The research covering 17 employers with workforces of between 30 and 15,000, reveals their EU workers feel they are unwelcome in the UK and have even experienced hostile comments from customers. This led many companies to issue reassuring messages about the value of EU staff to the business.
The research reveals:
· Few employers sent out information to their workforces about the referendum before the vote but many regretted not doing so
· Workplace discussion about the referendum has been livelier after polling day than before
· A number of employers have needed to put in place policy to deal with xenophobic incidents involving the public towards their EU employees
Updated
In other news, Eurostar workers have begun a four-day strike, in a dispute over their work-life balance – bringing misery to travellers this weekend. PA reports:
Members of the Rail, Maritime and Transport (RMT) union will walk out from Friday to Monday, followed by three days over the bank holiday weekend from 27 August. A picket line will be mounted outside London St Pancras station, where trains depart for Paris and Brussels.
One train in each direction between London and Brussels was cancelled on Friday, and Eurostar said it expected to operate a normal service on Saturday. The company said it was working on plans for Sunday and Monday and would be able to accommodate all customers booked to travel.
Eurozone industrial production bounces back in June; GDP growth slows as expected
More economic data from the eurozone – it’s a mixed bag. Industrial production bounced back in June, rising by 0.6%, but this was not enough to offset May’s steep fall of 1.2%, according to Eurostat figures.
GDP growth in the 19-nation currency bloc slowed to 0.3% in the second quarter from 0.6% in the first quarter, as previously estimated. GDP in the European Union rose by 0.4%.
Germany grew 0.4% between April and June, Spain 0.7% and the Netherlands 0.6%. However France and Italy recorded zero growth.
Updated
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said:
June’s official data confirm that the construction sector re-entered recession in the first half of this year, as public sector cuts and Brexit risk took their toll.
The downturn looks set to deepen in Q3; July’s construction PMI broadly is consistent with output falling by about 3.5% quarter-on-quarter. Meanwhile, Brexit negotiations will be protracted, so businesses will hold off committing to major capital expenditure for a long time to come. In addition, the public investment plans won’t be reviewed until the Autumn Statement at the end of the year and few construction projects are genuinely ‘shovel ready’. Accordingly, we continue to think that a slump in construction activity will play a key role in pushing the overall economy into recession over the coming quarters.
The chart shows the downturn in construction output has been broad based. The surge in housebuilding has run out of steam, while the fiscal squeeze has depressed output in the public and infrastructure sectors. Meanwhile, Brexit risk has kept a lid on private industrial and commercial work.
Back to the UK construction figures.
Eurozone bond yields recover from record lows
Eurozone bond yields are recovering from their record lows – supported by oil price rises and comments from a top US central banker that the Fed should raise interest rates this year.
Bonds react to moves in crude prices because of the impact they have on inflation. And San Francisco Fed president John Williams cited the prospect of higher inflation as a reason for rate hikes in an interview last night.
German 10-year bond yields, the eurozone benchmark, rose to minus 0.15% this morning, pulling away from the record low of minus 0.20% hit early last in the wake of the Brexit vote. Other eurozone bond yields are also rising.
RBC’s chief European macro strategist Peter Schaffrik told Reuters:
Since we had that drop to a record low in July, German bond yields have been pretty stable and oil prices will have a role in where we go from here.
We will have to wait until next month for July figures, to ascertain the impact from the Brexit vote on construction and the rest of the economy.
UK construction output down ahead of EU referendum
UK construction output fell 0.7% in the second quarter from the first, the Office for National Statistics said. New work was down 0.8% while repair and maintenance dropped 0.5%. In June alone, construction fell 0.9% from May.
Renzi is considering fresh stimulus measures to revive Italy’s flagging economy, the Financial Times reported last night (£).
Sometimes I worry that in the future we're realise we didn't worry enough about this https://t.co/R6SfgJwB8w
— Mike Bird (@Birdyword) August 12, 2016
The pound is also having a bad time this week, and is trading near a one-month low today. Traders are betting on further monetary easing from the Bank of England.
Sterling has fallen nearly 3% since the Bank unveiled a bigger-than-expected stimulus package last week and dropped to $1.2952 this morning, after hitting a one-month low of $1.2936 yesterday.
The poor GDP figures for Italy are a big blow for prime minister Matteo Renzi, ahead of a referendum on constitutional reform in November. He has said he will resign if he loses the referendum. Aside from the economic slowdown, Renzi needs to contain the country’s worsening banking crisis.
Another blow to Renzi as #Italy’s economy continues to disappoint. Q2 GDP stagnated vs +0.2% expected. pic.twitter.com/rv8mQlbGpA
— Holger Zschaepitz (@Schuldensuehner) August 12, 2016
Italy records no growth in Q2
The Italian economy ground to a halt in the second quarter, disappointing analysts who had pencilled in 0.2% growth. In the first quarter, it grew by 0.3%.
Ouch, Italy. No growth in second quarter.
— Todd Buell (@ToddBuell) August 12, 2016
No big surprise, unfortunately. Italy underperforms once again as GDP remained flat in Q2, ending a five-quarter long (modest) expansion.
— Frederik Ducrozet (@fwred) August 12, 2016
Updated
European shares at 7-week high
European stock markets have turned positive, with the exception of the Dax in Frankfurt, which is down 0.2%, while the FTSE 100 in London is flat. Italy’s FTSE MiB is now 0.35% ahead and Spain’s Ibex has gained 0.2%.
Strong corporate earnings and higher energy stocks, which are tracking crude oil prices, have pushed European shares to the highest in seven weeks. The pan-European STOXX 600 index rose as high as 346.93 this morning, recouping all of its post-Brexit losses.
Updated
Germany’s annual GDP growth slowed to 1.8% from 1.9% in the first quarter, according to Germany’s statistics office Destatis in Wiesbaden.
European markets open lower
European markets have opened slightly lower, as expected.
The FTSE 100 index in London is down about 7 points at 6907.94, a 0.1% fall.
Germany’s Dax is down 0.2%, France’s CAC and Spain’s Ibex edged down 0.1%, and Italy’s FTSE Mib was flat in early tradng.
Oil prices are edging higher, supported by the prospect of talks by exporters about ways to prop up the market. Brent crude is trading 9 cents higher at $46.13 a barrel, a 0.2% gain, while US West Texas Intermediate crude has risen 0.5% to $43.69, up 20 cents, after touching a high of $44.17 earlier.
European stock markets are expected to open slightly lower, but have had a good week, while bond yields have been falling to new record lows.
Michael Hewson, chief market analyst at CMC Markets UK, has sent us his thoughts, as usual:
This week’s break higher by the German DAX through the 10,500 level, along with new all-time highs for all three of the US main benchmarks does appear to have given European equity markets the extra impetus to kick on further yesterday.
The move higher in the DAX while welcome, does appear to be an outlier, in terms of the rest of the core Eurozone markets, and despite outperforming the rest of Europe it still hasn’t been able to wipe out all of its losses year to date.
As for the UK, continued weakness in the pound, which is now at 5 year lows on its trade weighted index, has driven the FTSE100 and FTSE250 to their highest levels in 14 months.
A sharp turnaround in oil prices also helped sentiment, after the Saudi Arabian oil minister said that oil producing countries would look at discussing prices when they meet in Algiers at the end of next month. This sort of jawboning has been a familiar tactic over the last few months by OPEC and non OPEC members as they attempt to put a floor under prices near $40 a barrel. While it can be effective in the short term, the eventual actions have rarely matched the narrative.
Updated
Back to the German growth data. Higher exports coupled with strong government and household spending made up for weaker investment in construction and machinery.
Updated
The agenda: GDP data from Germany, Italy, EU; IMF report on China
Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.
There is a fair amount of economic data coming out today. The first estimate for German GDP for the second quarter is already out. It shows Europe’s biggest economy growing at 0.4%, twice as fast as expected. It’s a slowdown from the first quarter though, when Germany expanded 0.7%.
#Germany beats: German econ grew 0.4% in Q2, double the speed expected. pic.twitter.com/V2JSHlO6VH
— Holger Zschaepitz (@Schuldensuehner) August 12, 2016
We will also get preliminary Italian GDP data, at 9am BST, with another 0.2% growth number expected, down slightly from 0.3% in the first quarter. The broader eurozone GDP number (the final estimate) is expected to be confirmed at 0.3%, at 10am BST. UK construction output for June is out at 9.30am.
Construction has struggled over the past year, shrinking in the past two quarters, which means that it is fallen into recession. Construction output is estimated to have fallen by 0.4% in the second quarter. Philip Shaw, chief economist at Investec, said:
We suspect that at least some of this hesitancy, and possibly some of the prior weakness too, was due to fears over a ‘leave’ vote in the referendum on 23 June. The forthcoming figures are for June, early estimates of which were published by the ONS at the time of last week’s GDP data. These suggested that the sector shrank by 1.0% over the month following a (revised) decline of 1.5% in May.
Of course the main interest will be in the economic data for all sectors for July onwards, following the result of the referendum. In this respect anecdotal indicators are not encouraging with, for example, the construction PMI edging down to a new seven year low of 45.9 in July. This would tend to suggest that output in the sector declined at a faster pace than before the referendum, with a possibility that the economy as a whole has begun to contract as well.
In China, industrial production rose by 6% in July, down from 6.2% growth in June, but markets seem less concerned about the slowdown in China than they were at the beginning of the year. The International Monetary Fund will publish its article IV assessment on the Chinese economy at 2pm BST.
In the US, retail sales, released at 1.30pm BST, will shed further light on the strength of the economy.
Updated
