Retail sales joins employment and inflation in providing relief.
Just think, if it wasn’t for Brexit, the U.K. would be basking in a similar position to the Eurozone!
The third week of the month is the crucial week for Sterling as three major indicators are released. Inflation, the subject of Mark Carney’s dreams, employment, which is just about as fictional as a J.K. Rowling novel and retail sales which nicely squares the circle of prices and jobs.
The data, which is backwards looking, in that it gives us a confirmation of what has already happened, has been reasonable. Inflation at least hasn’t recommenced its journey back towards 3% following June’s surprise fall. Wages rose at a slightly faster rate closing the negative gap between prices and earnings. Retail sales confirmed the other two data points by rising as a loose confirmation that people felt a little better about their situation in July.
July is the holiday month so spending does tend to rise. July ‘16 was a stellar month so the latest data looks a little weak on a year on year view despite the month on month looking acceptable.
Sterling was in a responsive mode testing the support for the Euro at 0.9070 and reacting against the dollar to the twists and turns that have become synonymous with Donald Trump’s Administration.
Sentiment indexes not providing such a bright picture.
Business investment in the U.K. is falling due solely to the concerns C level executives are having over the outcome of Brexit negotiations. This feeds through into so many parts of the economy it is little wonder that it is the major focus of the MPC. Consumer confidence stems from spending power as much as it is affected by price rises.
The British Prime Minister Theresa May now has an approval rating below that of the Leader of the Opposition Jeremy Corbyn. Given that since his accession to the leadership of the Labour Party, Corbyn had been considered as little more than a pantomime villain, it is testimony to his aides’ considerable influence as much as to the disastrous performance of Mrs May’s, that should an election take place in the Autumn, Labour could easily be the party with the largest number of seats.
Next week sees the release of the Confederation of British Industry’s industrial trends survey and this will probably be a true reflection of how concerned business is about Brexit uncertainty. Preliminary business investment data will also be released which will confirm that the future's looking grim unless the Government gets on with the job at hand rather than simply producing wish lists.
Signore Draghi only history can judge you.
The President of the European Central Bank is a job which was a political football. Even Mario Draghi was a victim of an “anyone but a German” philosophy when he took over.
The first President, Wim Duisenberg, a Dutchman was a clear compromise candidate but given the uncertainty that surrounded the common currency was an excellent choice.
Frenchman Jean Claude Trichet was praised by the Germans for defying the demands of French President Nicolas Sarkozy for more expansionist policies.
When Draghi took over, he was actually second choice after Axel Weber resigned in protest over the bailouts that were taking place following the fall of Lehman Brothers. With a German, Jens Weidmann, likely to follow Draghi, it will be interesting to see just how “Teutonic” the ECB becomes.
Sr. Draghi has managed to bring the diverse elements of the Eurozone together by concentrating on the region as a whole despite the clear attempts at influence by a number of prominent officials