What’s Cooking?
26 April 2021
Investment books usually contain common-sense pieces of advice, but not the magic dust to guarantee positive portfolio returns.
5 min read
26 Apr 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.
UK
A busy week for activity data, which was, on balance, encouraging. Unemployment fell from 5% to 4.9% in February, better than forecast, although the numbers of longer-term unemployed did rise, which is of some concern. Vacancies are also increasing as employers anticipate wider re-opening of the economy. Of course, the continuation of the furlough scheme is depressing true levels of inactivity, and will do so until at least September. Retail Sales in March were well ahead of forecasts, rising 5.4% m/m, with Clothing and Footwear sales to the fore, again ahead of re-opening. The latest IHS/Markit PMI data supported the optimism, with the Composite reading rising from 56.4 to 60.0. Both Services and Manufacturing indices moved up. Only supply chains provided a disappointment, with delivery times still extended owing to various shortages. This is creating something of a squeeze in input prices. Public sector borrowing hit a record £303.1bn in the latest fiscal year, the highest percentage of GDP (14.5%) since 1947.
US
PMI data remains firm in the US, too. Friday’s release showed the Manufacturing index rising from 59.1 to 60.6, and Services from 60.4 to 63.1. Initial Jobless Claims continue to undershoot expectations, with last week’s total down from 586k to 547k. Even so, if one adds up all the people who are receiving some sort of unemployment benefit, the total is not far short of 10 million. It is this number that the Fed will focus on when considering its employment targets and eventual tightening of policy. Existing Home Sales slightly disappointed, but the reason was more a lack of supply than paucity of demand.
Europe
Despite the negative effects of the latest COVID wave, businesses continue to look ahead with some optimism. The eurozone aggregate Composite PMI rose from 53.2 to 53.7, with Manufacturing (63.3 vs 62.5) and Services (50.3 vs 49.6) rising ahead of expectations. The ECB left all of its policy rates unchanged at the latest meeting, and also stuck to its asset purchase objectives, having accelerated purchases in March.
Source: FactSet
Source: FactSet