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UK unemployment at 30 year low

Published: Wednesday 15 August 2018

  • UK inflation expected to pick up
  • Massive US data diary to liven up the afternoon
​​By David Johnson

Australia affected by gold prices
Australian average wages rose at a faster pace in Q2, but consumer sentiment for August slipped a little. The Australian Dollar was left to wriggle in a small range after the data. Curiously, gold prices have fallen to their lowest level since January 2017. That is odd because, usually, when there is political or economic tension in the air, investors seek out gold investments as a safe haven against the woes of the world. Whatever the reason, this will damage income from gold exports which make up something like 6% of Australia’s exports.

UK eyes on inflation data
After yesterday’s very positive UK data, the markets will focus on inflation data today. With unemployment at a 30 year low, wages growing at 2.7% and very high levels of job vacancies, there is undoubted upward pressure on wages levels. This inflation data will, through the RPI index, set next year’s rail fare increases and that (speaking as someone who can’t afford to trust Southern Rail to ever arrive on time) is a crime, because the Retail Price Index (RPI) will most likely be 3.5% or thereabouts. Consumer Price Inflation is likely to edge up to 2.5%, narrowing the disposable income gap. If the forecasters have used their accurate calculators, the Pound should steadily gain today.
Public holiday means break for most of Europe
European data is notable by its absence today, but it is Assumption Day, and therefore a public holiday in many European countries today. The Euro did recover a little yesterday, as mentioned in yesterday’s report. The plateauing of the Turkish Lira (TRY) helped a lot, but the threat of further weakness still hangs in the air. The Turkish President is in a quandary. The normal course of action for a central bank faced with a run on its currency is to raise interest rates, but Erdogan has demonised high interest rates in the past, so that is probably not an option. Tighter monetary control may come in a different guise but, can I say that not buying US technology is probably a futile gesture if he wants to damage the American economy.
US announcements make up for dearth of international data
The US diary more than makes up for the lack of news elsewhere. We are awaiting (deep breath)…Retail Sales, Non-Farm Productivity, Unit Labour Costs, Industrial Production, Business Inventories, Crude Oil Inventories, and Uncle Tom Cobley an’ all. It could well be a very lively afternoon.
The forecasts are very mixed, but Retail Sales looks set to be uninspiring, whilst unit labour costs may be lower and productivity is expected to be very strong.  The dark horse here is the Crude Oil Inventories. A sizeable drop is forecast, which suggests future demand; and that could strengthen oil, which tends to weaken the US Dollar. If you followed all that, as Mr Kipling said, ‘you're a better man than I am, Gunga Din! That’s the writer and not the cake maker, BTW.
Stadium greats
And anyone who has ever stood penned into a stadium to watch specs in the distance playing music can thank this day and the Beatles for the experience. On this day in 1965, the Beatles played at Shea Stadium in front (and to the side) of 60,000 fans. It was the first stadium event for a music band and it spawned so many other events. I am sure even the Cheeky Girls played to a stadium at some point, gawd love 'em.
Some music jokes-ish
Rick Astley will let you borrow any movie from his collection of Pixar films except one. He's never going to give you Up. 

Worst Christmas present ever: a Bonnie Tyler sat nav. Keeps telling me to turn around, and every now and then it falls apart. 

My girlfriend said she was leaving me because of my obsession with the Monkees. I thought she was joking. But then I saw her face. 

How do you turn a duck into a soul singer? A: Put it in the microwave until its Bill Withers.
How many sound engineers does it take to change a light bulb? One two, one two three four.
I asked Arnold Schwarzenegger what costume he was wearing to the composer lookalike ball. He said “I’ll be Bach”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Consumer Price Index 2.4% 2.5%
GBP 09:30 UK: Core Consumer Price Index 1.9% 1.9%
GBP 09:30 UK: Retail Price Index 3.4% 3.4%
GBP 09:30 UK: Producer Price Index Input 0.2% 0.1%
USD 13:30 US: Retail Sales 0.5% 0.1%
USD 13:30 US: Core Retail Sales 0.4% 0.3%
USD 13:30 US: Empire State Manufacturing Index 22.6 20.1
USD 14:15 US: Industrial Production 0.6% 0.3%
USD 14:15 US: Capacity Utilization Rate 78.0% 78.2%
USD 15:30 US: Crude Oil Inventories -1.4m -2.6m

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