![]() The Fed has started to take more aggressive action in recent months to try and combat this.ġ5 July: May’s US retail sales unexpectedly declined 0.3%, against market expectations of 0.2% growth, thanks to inflationary pressures on households and higher energy costs. In May, US inflation hit its highest level since December 1981, up 8.6% year-on-year. Concerns about a recession later this year will challenge the Bank of England’s monetary policy of increasing interest rates to combat record inflation. Average earnings increased by 5.2%.ġ3 July: The UK economy contracted by 0.1% in March and 0.3% in April – the first consecutive months of negative growth since March-April 2020. The overall unemployment rate remained at 3.6%, providing further signals of a tight labour market. The number of job vacancies remained close to record levels at 11.4 million.Ĩ July: US non-farm payrolls increased above expectation in May, with 390,000 workers added to the payroll against predictions of 325,000. New orders did increase as consumers continued to switch spending from goods to services, but supply-side issues, China’s Covid lockdowns and the war in Ukraine all limited growth.ħ July: US initial jobless claims remained close to 200,000 for much of June, increasing slightly after hitting a 53-year low of 166,000 in March. US non-manufacturing PMI was down slightly to 55.9 in May, from 57.1. Concerns over inflation and staffing drove this. In the UK, services PMI experienced the biggest one-month drop since the survey began in 1996, dropping from April’s 58.9 to 53.4 in May. The latest ECB forecasts predict inflation will be at 6.8% this year, 3.5% in 2023 and 2.1% in 2024.ĥ-6 July: May’s EU services PMI of 56.1 was slightly down from April’s 8-month high of 57.7. Following a boost from the rollback of Covid restrictions, demand has started to taper off, while businesses have lower growth expectations. Inflation in the Eurozone increased to 8.1% year-on-year in May, with energy costs up 39%. Despite an increase in demand, supply issues are still a drag on growth. UK manufacturing PMI also hit a 16-month low in May, dropping to 54.6 from 55.8 due to the increasing cost-of-living issue and declining consumer confidence.īucking the downward trend, US manufacturing PMI was up to 56.1 for May, from 55.4. 1 July: May’s EU manufacturing PMI was down to 54.6, a 16-month low. Continuing supply-side issues and a switch in consumer spending to tourism and hospitality were contributing factors.
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