Erratic UK data continues to confuse economists

Yesterday’s markets

21st August 2015

  • UK Retail Sales m/m: 0.1%
  • US Unemployment Claims: 277K
  • US Existing Home Sales: 5.59M
  • US Philly Fed Manufacturing Index: 8.3
  • CNY Caixin Flash Manufacturing PMI: 47.1

UK retail sales dominated yesterday’s morning session as economists’ analysed the UK’s largest sector; the tertiary sector. Core retail sales which excludes fuel rose in July, meeting expectations of 0.4%, whilst last month’s reading was also revised higher. Halting Sterling gains was the month-on-month retail sales figure which failed to meet forecasts and posted a slightly disappointing 0.1%. Low inflation and faster wage growth, along with a booming housing market are helping to support consumer spending. The Bank of England forecast inflation to pick up at the end of the year after the reading ticked above 0% this week.

Across the pond, the US released a raft of high tier data. Firstly, the weekly jobless claims figure posted a slightly worse than expected 277k. Although the reading failed to meet the economists’ consensus, the number is still hovering around the lowest level in several decades as firings remain subdued, unemployment continues to fall and job gains remain steady, all of which point to a healthy US labour market.

The Philly Fed and existing home sales from the US were released shortly after with both readings exceeding market expectations and adding further fuel to the fire for a September Fed rate hike.

Today’s markets

20th August 2015

  • French Flash Manufacturing PMI
  • German Flash Manufacturing PMI
  • UK Public Sector Net Borrowing
  • CAD Core CPI m/m
  • CAD Core Retail Sales m/m

Overnight and in the early hours of this morning, the Euro accelerated to eight week highs as a flight to safety was seen from Asian equities.  This appreciation in the single currency comes again as concerns still remain as to China’s economy, as China released a disappointing manufacturing PMI figure which showed that factory activity had contracted for the sixth month in a row.  Also the Greek leader Alexis Tsipras has resigned as Prime Minister, with snap elections due to be on the 20th of September.

Much of the focus will be on the manufacturing and service sector data from the Eurozone. There will be particular interest in the flash manufacturing from Germany as data from the nation has been fairly mixed. Meanwhile, the UK public sector borrowing is set for release, whilst US manufacturing hits the wires in the afternoon.