UK annual growth data for Q2 of 2017 disappointed on Friday showing that UK growth dropped to levels last seen in 2013 when Europe was recovering from the Eurozone Debt Crisis.
Expectations were for growth in the UK to be 1.7% (revised down from previous forecasts of 2%) but missed forecast coming in at 1.5% for Q2 versus the same period in 2016.
The Head of Gross Domestic Product at the ONS, Darren Morgan said that “there was a notable slowdown in growth in the first half of 2017” and that “the often-buoyant services sector was the only area to grow in Q2”. The quarter over quarter growth rate was unchanged at 0.3%.
In a separate report by the Bank of England, lending data has shown that “net lending to individuals” continues to rise each month as outstanding lending stood at 5.6 Billion in August versus 4.8 Billion a month before. Borrowing figures for the same time last year were £4.5 Billion, £4.3 Billion in 2015, £3.2 Billion in 2014 and £1.6 Billion in 2013.
London House prices declined in Q3 for the first time since the most recent financial crisis as reported by Nationwide on Friday. The drop has been associated with the ongoing economic uncertainty in the UK.
This week’s key data releases for the UK include Manufacturing PMI today, Construction PMI on Tuesday and Services PMI on Wednesday.
The US Dollar continued to give and take ground on Friday afternoon after Core PCE (Personal Consumption Expenditure) which is one of the US Central Banks’ most critical inflation indicators dropped to 1.3% on an annual basis to its lowest level since October 2015.
Chairwoman Janet Yellen has for some time now been convincing the market of ‘transitory’ shifts in inflation but this however is the 6th monthly decline in this key measure so it will be interesting to see where inflation is in October’s release.
This week’s key data releases for the US include Manufacturing PMI today, ADP Employment report, Services PMI and speech from Janet Yellen on Wednesday, 2 FOMC member speeches on Thursday and labour market data on Friday which will include the current unemployment rate and Non-farm payrolls.
The Euro ended last week somewhat flat following a disappointing German election (for the EU) and heightened risk with regards to events that took place in Catalonia last week.
Reports on Friday suggested that Jean-Claude Juncker, president of the European Commission, has said that “Britain needs a miracle” if it wants Brexit talks to progress onto trade negotiations next month.
The European Union has been adamant up to date that trade talks will not start until “sufficient progress” is made on the key issues of the Brexit divorce bill, EU citizens’ rights in the UK and the Irish border. Trade talks had been penciled in to start in October.
This week’s key data releases for the Eurozone include Manufacturing PMI and Unemployment rate today, Producer Price figures on Tuesday and Services PMI and Retail Sales on Wednesday.
9.00 am – Eurozone Manufacturing PMI (Sept): No change expected at 58.2
9.30 am – UK Manufacturing PMI (Sept): Slight drop to 56.4 expected from 56.9 in August
3.00 pm – US Manufacturing PMI (Sept): Decline to 58 expected from 58.8 in August
9.30 am – UK Construction PMI (Sept): Decline to 50.8 expected from 51.1 in August
11.00 am – Eurozone Producer Prices (Aug): Expected to increase to 2.3% annually
9.00 am – Eurozone Services PMI (Sept): No change expected at 55.6
9.30 am – UK Services PMI (Sept): No change expected at 53.2
1.15 pm – ADP Employment change: 135K new jobs expected for September. A decline of 102K from 237K in August
2.45 pm – US Services PMI (Sept): 55.1 in August
8.15 pm – Fed’s Yellen Speech: Central Bank Speech
2.10 pm – FOMC Member Powell Speech
3.00 pm – FOMC Member Harker Speech
1.30 pm – US Non-Farm Payrolls (Sept) and Unemployment rate: 98K new jobs expected to have been created in September, down from 156K in August. Unemployment rate forecast to have held steady at 4.4%. Both releases could have been affected by the effects of the recent hurricanes.
5.45 pm – FOMC Member Kaplan Speech