Economic Highlights

Mortgage Approvals were disappointing in May, falling to 9.3k vs 15.9k in April. However, this is a lagging series, so there could well be an uptick over the summer. There has been lots of talk about the boom in activity on property websites - let’s see how that translates into actual selling/purchasing activity. Consumer Credit was reduced again in May, by £4.6bn this time. That’s a £15.8bn total reduction in the last 3 months. That’s what happens when there’s less ability to spend. It does also lend some support to the “pent up demand” theory, which triggers a spending spree as lockdowns ease. But for how long remains to be seen.

Personal Spending recovered by a record 8.2% in May from April, following the record 12.6% drop in April, yet more evidence that the economy has bottomed. Similar evidence is seen in the weekly Continuing Claims for unemployment benefits, with the total dropping from 20.29m to 19.52m. But that still leaves an awful lot of people unemployed.

A nice recovery in the latest PMI surveys in the 2 largest economies. German Manufacturing rose from 36.6 to 44.6, and Services from 32.6 to 45.8. France was even better, with Manufacturing at 52.1 (vs 40.6) and Services at 50.3 (vs 31.1). That doesn’t necessarily mean that the economies are booming, but the worst is definitely over.

China’s Industrial Profits, having been down 35% y/y at the trough in March, are now running +6% y/y. That is a touch stronger than the outcome for the whole of 2019, so a pretty positive development.