Economic Highlights

UK – Remarkably, the UK released virtually no economic data last week. Of most impact, perhaps, was the latest announcement by the Chancellor on tapering his furlough scheme. When companies start having to contribute more to their employees’ salaries while business remains below normal, will they be willing to keep them on? The outlook for employment remains difficult.

There are definite signs that the economy is past the bottom. One is the Continuing Claims data for unemployment benefits. This number fell from 24.9m to 21.1m in the week reported to 16th May. So even though a couple of million new people are signing on for benefits every week, there are even more people getting back to work. It’s an encouraging start.

For all the chat about higher inflation risks, Europe has almost fallen into deflation, with May’s CPI reading at 0.1%. The Core CPI figure is stronger at 0.9%, but the ECB is not going to take any risks at this point of falling into persistent deflation.

China’s official PMI series are back in positive territory, suggesting at least stability if not roaring growth. The Manufacturing index rose from 53.2 to 53.6,  It has been easier for the government to “encourage” a restart in manufacturing. Non-Manufacturing is lagging at 50.7 (vs 49.4), as it’s somewhat harder to get people to go out and spend, but a move in the right direction nonetheless.