Closing summary
US consumer price inflation held at 2.7% in July, unchanged from the month before, confounding expectations of an uptick. However, a core measure that strips out volatile food and energy costs was higher than expected at 3.1%.
Economists are still expecting the Federal Reserve to cut interest rates at its meeting in September.
Wall Street stocks rose after the data, with the Dow Jones 0.55% ahead, while the FTSE 100 index in London was flat.
UK ministers have appointed insolvency advisers to make contingency plans for the potential collapse of Thames Water.
The company, which supplies 16 million customers, has been racing to pull together a deal to avoid financial collapse.
Employers in the UK have cut annual pay increases and pared back hiring in recent months as the economic slowdown took its toll on the jobs market.
Data from the Office for National Statistics (ONS), released on Tuesday, showed that UK unemployment edged higher in the three months to June but the official jobless rate was unchanged at 4.7%, a four-year high.
Pay growth including bonuses dropped from 5% to 4.6% over the same period. However, stripping out one-off awards, pay growth remained at 5%, suggesting employers had cut back on incentives.
Giving a strong indication of employers’ reluctance to hire new staff, the vacancy rate fell by 44,000. The drop of more than 5% in the three months to June on the previous quarter was the 37th consecutive fall in vacancies and took the total to well below pre-pandemic levels at 718,000.
Markets breathed a sigh of relief after Donald Trump once again delayed implementing sweeping tariffs on China, announcing another 90-day pause just hours before the last agreement between the world’s two largest economies was due to expire.
On Monday, the US president signed an executive order extending the deadline for higher tariffs on China until 10 November.
Thank you for reading. We’ll be back tomorrow. Take care – JK
Paloma Faith and Robert Smith among 100 musicians urging Starmer to stop Rosebank oil field
Artists including Paloma Faith, Lola Young and The Cure’s lead singer Robert Smith have urged the prime minister to reject future drilling at Rosebank in the North Sea.
In a letter addressed to Sir Keir Starmer and Energy Secretary Ed Miliband, the musicians argued that further development of the oil field north west of Shetland would undermine the UK’s climate commitments and the sustainability of the cultural sector. Estimated to contain up to 300m barrels of oil, Rosebank is the UK’s largest untapped oil field.
The Labour manifesto rules out granting new licences for new fields, but ministers say that does not apply to Rosebank and Shell’s Jackdaw, which already have their licences and are now awaiting environmental consent to begin drilling.
🚨 BREAKING: @thecure's @RobertSmith, @MassiveAttackUK, @lolayounggg, @Palomafaith, @brianeno and over 100 other musicians have added their voice urging Prime Minister @Keir_Starmer to stop the huge Rosebank oil field. pic.twitter.com/9OF2ELKpeW
— #StopRosebank (@StopCambo) August 12, 2025
Updated
Club World Cup and summer tennis bring in the bets for Entain
A flurry of bets on the football Club World Cup, England’s triumphant European Women’s Championship campaign and summer tennis tournaments helped the UK gambling company Entain to better-than-expected results, helping it brace for looming tax rises in its domestic market.
The owner of brands including Ladbrokes and Coral reported an 11% rise in underlying profits to £583m in the first half of the year, on revenues that rose 3% to nearly £2.6bn.
At BetMGM, Entain’s 50%-owned US joint venture, revenues rose by more than a third. US sports betting continues to grow rapidly following the supreme court’s overturning in 2018 of a decades-old ban on the practice.
But Entain also performed strongly in its home market, with online gambling revenues up 21% in the UK and Ireland.
As temperatures are rising again across the UK, residents have warned about unbearable heat inside some of London’s new-builds.
Experts say many new homes being built in the UK are not designed to withstand extreme summer temperatures.
Stephen Brown, deputy chief North America economist at Capital Economics, said
There was another narrative shift for the Fed to contend with in the July consumer price index data, with tariff effects once again barely perceptible... Given several FOMC participants are now more worried about the labour market outlook, this probably won’t be enough to prevent the Fed from easing policy sooner than we previously expected, but it does support our view that markets are overestimating the degree of loosening to come over the next 18 months.
Ahead of the producer price data tomorrow, our preliminary estimate is for a 0.27% month-on-month rise in the core PCE [personal consumption expenditures] deflator. With most of that coming from services prices rather than goods prices, and given we still have another set of price data and another Employment Report before the Fed’s next meeting, the Fed’s September rate decision is not yet a done deal.
But given the comments from various FOMC speakers since the weak July Employment Report, it would likely take a significantly firmer CPI reading in the next release to prevent a September rate cut.
Updated
Richard Flax, chief investment officer at the European fund manager Moneyfarm, said:
The latest inflation release was more or less in line with analyst expectations - with headline inflation marginally below expectations and core inflation marginally higher. Headline inflation came in at 2.7% in July flat from June and slightly lower than expectations. On month-on-month terms, headline inflation rose by 0.2% in July, at a slightly lower growth rate than the 0.3% in the previous month.
Excluding the volatile components of food and energy, core CPI rose 3.1% year on year, slightly higher than expected. Compared to June, core inflation climbed by 0.3% - the biggest monthly gain since the beginning of the year.
Increases in services inflation led the overall index higher, driven by medical and transportation expenses. With inflation above the Feds target and signs of slower economic growth, central bankers have an awkward decision to make at their next meeting in September. Despite that, financial markets imply a high likelihood that the Federal Reserve will cut rates in September and on balance we think this report shouldn’t significantly shift those expectations.
Food prices in the US rose by 2.9% year-on-year last month, the data showed, while energy prices slipped by 1.6%.
So far, there are few signs of trade tariffs pushing up inflation, although core inflation rose to the highest annual rate since February.
US headline consumer inflation was steady in July, rising 2.7% vs the year-ago level, but core CPI (a more reliable measure of the trend) ticked up to 3.1%, the highest since Feb. Still no sign of tariff inflation proper, but core CPI's uptick could be a sign of things to come: pic.twitter.com/CZcJP0lNKt
— James Picerno (@jpicerno) August 12, 2025
Updated
US inflation unexpectedly stays at 2.7%
US inflation unexpectedly held at 2.7% last month, confounding expectations of an uptick, while a core measure came in higher than expected.
The annual headline rate of inflation was expected to rise slightly to 2.8%.
Stock market futures gained after the figures were released. Spot gold rose by 0.2% to $3,351 an ounce.
However, the core rate of inflation, stripping out volatile food and energy costs, was slightly higher than expected at 3.1%, according to the US Bureau of Labor Statistics.
This complicates the Federal Reserve’s policy decision. It had been expected to lower rates in September, and the data is unlikely to change that expectation.
Updated
The oil cartel Opec has lifted its forecast for global oil demand next year, as it trimmed its forecast for supply increases from the US and other producers outside the wider Opec+ group, which includes Russia.
World oil demand is estimated to rise by 1.38m barrels per day (bpd) in 2026, the Organisation of the Petroleum Exporting Countries said in its monthly report, up 100,000 bpd from its previous forecast. Its estimate for this year is unchanged.
Rising demand and a drop in supply growth from outside the oil cartel would make it easier for the Opec+ group to pump more oil to claw back market share, after years of cuts aimed at supporting the market and prices.
In July, Opec+ raised oil ouput by 335,000 bpd.
US stock futures are flat ahead of US inflation figures, out in 40 minutes, that could be key to the Federal Reserve’s next interest decision.
Economists are expecting a slight uptick in the headline inflation rate to 2.8% in July, from 2.7% the month before.
The impact of new trade tariffs and uncertainty over future trade policy under Donald Trump have complicated the Fed’s decision on rate cuts.
There is some relief in markets that the US and China have extended their tariff truce for another 90 days until 10 November, staving off triple-digit increases in each other import duties.
Over here, the FTSE 100 index is flat at 9,135 while the German market is down 0.5% and the French bourse has added 0.1%.
The Liberal Democrat MP for Witney, Charlie Maynard, said:
The Liberal Democrats have been warning the government for months that the only option to get a grip on Thames Water at this point is to put it into Special Administration.
Thames Water has been allowed to continue to flounder, while customers are made to pay sky high interest payments on the company’s billions of pounds of debt.
Special Administration will allow debt to be written down so more money can be spent on cleaning up the sewage in our lakes and rivers. The final whistle needs to be blown on Thames Water and we need a new, capable regulator in place as soon as possible.
Here is our full story on Thames Water:
UK ministers have appointed insolvency advisers to make contingency plans for the potential collapse of Thames Water.
The company, which supplies 16 million customers, has been racing to pull together a deal to avoid financial collapse.
The appointment indicates that FTI is the frontrunner to act as administrator if the government enacted an SAR, although a court would ultimately approve such a step.
The government has been trying to avoid such an outcome, with the Treasury threatening that a potential £4bn bill from the SAR could be forced on to Steve Reed’s environment department. This process would ensure that the taps stayed on for customers but would heap immediate costs on to the government.
However, the government’s Water (Special Measures) Act contains a provision for SAR costs to be recouped from customer bills further down the line.
Gold prices flat; Swiss metals group wants formal US commitment on gold tariffs
In financial markets, spot gold prices are flat after dropping nearly 1.6% on Monday, when Donald Trump announced there would be no US tariffs on imported gold bars.
“Gold will not be Tariffed!” the US president said on his social media account, without giving further details.
Spot edged up to $3,352 an ounce earlier. On Friday, gold futures hit a record high after a ruling on the US customs and border protection service’s website suggested that one-kilo bars of gold could be subject to new US import tariffs. This would have been especially damaging for Switzerland, a major refining and transit hub for gold. Trump recently imposed a 39% tariff on Swiss exports to the US.
The Swiss stock exchange is also flat today.
But, the head of the Swiss precious metals association ASFCMP said only a formal decision will provide certainty. Its president Christoph Wild said:
President Trump’s statement is an encouraging signal for trade stability.
However, only a formal and binding decision will provide the certainty the gold sector and its partners require.
Updated
Investor morale worsens in Germany
Investor morale in Germany has worsened markedly, as financial market experts were disappointed by the recent trade deal between the EU and the US, according to a closely watched survey.
After increasing for several months, the Centre for European economic research (ZEW)‘s indicator of economic sentiment in Germany fell by 18 points to 34.7 points. The assessment of the current economic situation also declined, by 9.1 points.
ZEW president, Professor Achim Wambach, said:
The ZEW indicator experiences a substantial decline, also due to the poor performance of the German economy in the second quarter of 2025. The outlook has worsened in particular for the chemical and pharmaceutical industries. The mechanical engineering and metal sectors as well as the automotive industry are also severely affected.
Although initial growth estimates for the eurozone were better than those for Germany in the second quarter, they were revised lower for the currently and are currently at 25.1 points – 11.0 points below July’s reading. The assessment of the current economic situation also worsened, by 7 points.
UK ministers appoint insolvency advisers for Thames Water collapse ‘contingency plans’
UK ministers have lined up insolvency practitioners to prepare for the potential collapse of Thames Water, Britain’s biggest water company.
Steve Reed, the environment secretary, has signed off the appointment of FTI Consulting to advise on contingency plans for Thames Water to be placed into a Special Administration regime (SAR), in news first reported by Sky News.
This puts FTI Consulting as the frontrunner to act as the company’s administrator if it fails to secure a private sector bailout - although such an appointment would take place in court.
Updated
Hannah Slaughter, a senior economist at the Resolution Foundation thinktank, said that while the unemployment rate remained steady at 4.7%, it was up from 4.2% a year ago and 3.9% before the pandemic.
She said:
The UK’s post-pandemic labour market was red hot. But that period is officially over – the labour market is loose and getting looser, having shed 165,000 payrolled jobs over the past eight months.”
She added that the job losses were concentrated in low-paying sectors such as retail and hospitality. She said it meant the government was likely to push back against campaigns for a big increase to the minimum wage next year, fearing it would lead to even larger job losses.
Here is the government’s, and unions’ response to the latest job market data data from the ONS.
Employment minister Alison McGovern said:
Today’s figures show real progress with economic inactivity down, and 384,000 jobs added to the economy since last summer, putting more money in people’s pockets.
We are determined to see unemployment fall that’s why we’re focused on getting people into good jobs by joining up work, health and skills support and transforming jobcentres to focus on genuine support not ticking boxes.
Paul Nowak, general secretary of the TUC which comprises 48 trade unions and represents 5.5 million workers, said:
It is welcome that wages continue to grow and that employment rates are still rising.
However, years of Tory cuts and underinvestment have left big challenges in the jobs market – including continued growth in the use of insecure zero hours contracts.
The government is raising national investment, repairing public services, and improving the support people need to get into work. This is putting Britain on the road to recovery.
But more is needed. Bold action must continue to match the size of the problems we face. This should include improved support for disabled workers and a comprehensive youth guarantee.
On the latest zero-hours contracts figures, which show more than a million workers employed on a zero-hours contract, he added:
There are still far too many people trapped on zero-hours contracts, unsure of how much they’ll make from one week to the next.
But Tory and Lib Dem Lords have been voting to block new rights for workers to a proper contract with regular hours. The sight of hereditary Peers voting against workers’ rights belongs in another century.
Working people need the Employment Rights Bill delivered in full.
High river temperatures force French power plant to reduce production
French nuclear power stations are struggling in the heatwave – after a swarm of jellyfish forced the shutdown of the Gravelines power plant on the North Sea coast, high river temperatures in other parts of the country mean that another plant will have to reduce output.
Power production at France’s Bugey 3 nuclear reactor is expected to be reduced by 500 megawatts (MW) on Wednesday, as high river temperatures reduce the plant’s ability to take in cooling water.
A heatwave across France has led to several warnings of power reductions at a number of nuclear plants, particularly on the Rhône river in the east and the Garonne in the west.
The high water temperature warnings for the Saint Alban plant - down river from the Bugey site - and the Golfech site in the west were moved to Thursday, but restrictions have not yet been issued.
Nuclear power accounts for about 70% of total French power consumption every year, but August is the main holiday season, reducing demand for electricity.
Today,
The Recruitment and Employment Confederation’s deputy chief executive Kate Shoesmith said:
The labour market remains challenging, with many businesses maintaining a cautious approach to hiring. But if we are to harness the optimism businesses tell us they have for future recruitment later this year, we will need the autumn budget to offer employers a bit more bandwidth on costs.
The resilience of the UK labour market is apparent in today’s official statistics, with the number of people in work slightly up and unemployment only slightly higher than in the previous quarter. Tackling economic inactivity, which saw a fall over both the quarter and the year, remains the single greatest challenge for this government if they are to ever achieve their goal of 80% employment.
Our labour market picture is mixed. Construction and other blue-collar industries are showing a gentle return to hiring, which is often a strong indicator for the wider economy, alongside sustained demand for engineering skills. But hospitality and retail saw a slow start to the summer amid cost headwinds.
With pay growth steadying overall after a volatile few years – prompted in part by inflating-busting rises in national minimum wage rates – now is the time for pragmatism from the Low Pay Commission before they make any further decisions on pay rates, and as the Bank of England continues to monitor interest rates closely. Business cannot afford further cost rises.
The breakdown of the ONS data shows that the wholesale, retail, hotels and restaurants sector posted the strongest annual regular growth rate (excluding bonuses), at 6.8%, in April to June.
The finance and business services sector, which pay out more bonuses, had the lowest annual regular growth rate, at 3.1%.
Average annual pay growth was 5.7% for the public sector, and 4.8% for the private sector.
Updated
Turning to the UK labour market: it is clearly losing momentum, with employers cutting back on bonuses and hiring.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said:
These figures signal growing turmoil in the UK labour market, with April’s leap in employment costs and a flagging economy pushing more businesses to actively cut headcount and cap pay awards.
Wage growth is likely to weaken over the course of the year as softening economic conditions, rising redundancies and elevated staffing costs increasingly hinder pay settlements.
The UK jobs market is facing more pain in the coming months with higher labour costs likely to lift unemployment moderately higher, particularly given growing concerns over more tax rises in this Autumn’s Budget.
While these disheartening figures will reassure rate-setters that last week’s policy loosening was the right call, the pace at which the labour market is currently cooling is unlikely to be sufficient to prompt another rate cut in September.
The Bank of England cut interest rates for the fifth time in a year last Thursday amid concerns over a weakening economy, but warned that rising food prices could drive inflation to 4% (the central bank is charged with keeping inflation at 2%).
Updated
Oil prices are rising as the extended tariff truce between the US and China eased worries that an escalation of their trade war would disrupt the global economy.
Brent crude futures gained 0.4% to $66.90 a barrel, while US West Texas Intermediate crude futures also rose by 0.4% to $64.20.
Stock markets in the Asia-Pacific region mostly rose, with Japan’s Nikkei index hitting a record closing high and finishing 2.15% higher.
Australian stocks extended their gains for a second day, and also reached a new intra-day all-time high. China is the main export destination for Australian goods.
Updated
Introduction: US and China extend 90-day tariff truce; UK jobless rate steady, vacancies fall
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The US and China have extended their truce on trade tariffs for another 90 days, staving off triple-digit duties on imports just as US retailers start stockpiling for the key end-of-year holiday season.
Donald Trump posted on his Truth Social platform that he signed the executive order for the extension, and that “all other elements of the Agreement will remain the same”. Beijing’s Commerce Ministry announced the extension of the tariff pause early on Tuesday.
Trump’s executive order stated:
The United States continues to have discussions with the PRC [People’s Republic of China] to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns.
Through these discussions, the PRC continues to take significant steps towards remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters.
The tariff pause was due to expire on Tuesday at 12:01am EDT. The extension until November will be welcomed by US retailers who are now able to buy electronics, toys and other products at lower tariff rates ahead of Christmas.
Trump had threatened tariffs on Chinese goods imports of up to 145% while Chinese duties on US goods were set to hit 125%.
“We’ll see what happens,” the US president said at a news conference on Monday, flagging what he called his good relationship with Chinese president Xi Jinping.
China said the extension was “a measure to further implement the important consensus reached by the two heads of state during their 5 June call”.
The UK labour market continues to cool, according to the latest official figures. Regular pay growth in the UK held steady at 5% but wage growth slowed once bonuses are included, while the unemployment rate stayed at 4.7% and vacancies fell again.
The Office for National Statistics said average wages, excluding bonuses, grew by 5% between April and June, the same pace as in the three months to May, while total pay growth including bonuses slowed to 4.6% from 5%.
Vacancies fell by 44,000 between May and July. The statistics office said feedback suggests “some firms may not be recruiting new workers or replacing workers who have left”.
We’ve published the latest labour market figures.
— Office for National Statistics (ONS) (@ONS) August 12, 2025
Commenting on today’s figures, ONS Director of Economic Statistics Liz McKeown said: (quote 1 of 2)💬
Read the latest Labour market overview ➡️ https://t.co/ChjjxjRCiA pic.twitter.com/yKrxqKFFvO
Liz McKeown continued: (quote 2 of 2) 💬 pic.twitter.com/t1oLcn6irH
— Office for National Statistics (ONS) (@ONS) August 12, 2025
At lunchtime UK time, we’ll be getting the latest US inflation data.
The Agenda
10am BST: Germany/Eurozone ZEW economic survey
1.30pm BST: US inflation for July (previous: 2.7%; forecast: 2.8%)
Updated
