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17 Aug 2021

Economic Highlights

Welcome to our Economic Highlights, bringing you market updates from across the UK, US, Europe and China, as well as the FTSE weekly winners and losers.

London skyline showing the financial district
UK

UK GDP growth in the 2Q was in-line with the consensus at 4.8%, with both private consumption and government spending remaining strong. Interestingly, business investment was below consensus at 2.4% for the quarter, suggesting business confidence is potentially lagging. GDP for June remained strong at 1%. However, uncertainty remains on the outlook for economic activity for the rest of the year.

New York skyline
US

The key US data print for the week was CPI, which came in at 0.5% month-on-month, with the year-on-year figure remaining strong at 5.4%. The less volatile core CPI (excluding energy and food) figure came in at consensus with a print of 4.3%, lower than the 4.5% in the previous month – suggesting we may be hitting the near-term peak in core inflation pressures. There was some weakness in the University of Michigan economic survey data, with the Sentiment index coming in at 70.2 against a consensus figure of 81.2. We will need to watch the data to see if this is an early indicator of a deceleration in wider consumer spending activity.

EU flags
Europe

July's German current account balance remained strong at €22.5bn against a consensus figure of €18.9bn, confirming that global manufacturing demand remains robust. The German ZEW economic sentiment index was weaker than expected, with the expectations sub-index at 40.4 against 55. Given that the survey is from the financial sector rather than consumers, the below-consensus print suggests market participants are probably becoming a bit more cautious on the macro backdrop – despite the strong equity market in Europe.

Tokyo, Japan, skyline
China

The July CPI print was a bit above consensus at 1% year-on-year, against a forecast figure of 0.8%. For those focused on the higher-level macro data, July's aggregate social financing figure came in at 1060bn versus a survey figure of 1700bn, indicating a tapering in financial support to the economy. Given the near-term pressure on the economy given the Delta variant wave, the figure is likely to increase in the coming months as monetary support increases.

FTSE 100 Weekly Winners and Losers

Source: FactSet

Year to Date Market Performance

Source: FactSet

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