- UK retail sales rose by 0.3% in July
- USD lost ground as Trump disbanded two business councils
- Australian unemployment rate remains at 5.6%
By Joe De Berniere
Yesterday it was reported that UK unemployment dropped by 57k in the three months to June, bringing the jobless rate down to 4.4% - a 42-year low and its lowest since 1975. Average weekly earnings increased by 2.1% compared to the same time last year. This is slightly higher than last month's increase of 2%. At 75.1%, the proportion of people in work is the highest it has been since 1971 - partly due to the introduction of a later state pension age for women. There were 32.07 million people in work in the three months to June - 338,000 more than for the same period last year. The jobs created were in the construction, accommodation and food services sectors. The pound rose against both USD and EUR pushing just shy of 1.29 and 1.10 respectively, before losing most of those gains yesterday evening.
Yesterday also saw the release of the minutes from the July Federal Reserve Monetary Policy Committee (FOMC) meeting. Despite the recent run of soft inflation readings, FOMC members appear comfortable moving forward with further tightening of monetary policy and that most expect inflation to bounce back in the coming years. Given the still limited concerns surrounding the undershoot of inflation, a few months of healthy price increases over the back half of this year will keep a December rate hike alive. Currently markets are predicting a 50% chance of a rate hike this year.
Today, key UK Retail Sales data was released, showing an overall increase in retail sales volume of 0.3% for July, compared to June, as food sales picked up, recovering from their 1.1% drop the previous month. However, other than food and household sales, there was a monthly drop for all other sectors, reflecting the squeezed wallets of the UK consumer over the past month. At the same time, quantity of goods bought in the UK increased by 1.3% since last year, representing consistent growth over the past four years. Online sales have gone up annually by 15.1% and 0.3% compared to last month, now making up around 16% of overall retail spend. The figures are better than expected, despite only small improvement, and reflect ongoing overall consumer confidence in the UK.
The US Dollar lost ground as President Trump disbanded his two business councils. The CEOs of Merck, Intel, Campbell Soup and others had already left the group following the President’s response to the violence in Charlottesville. Mr Trump is increasingly losing support from the business sector and this is another blow to a weakening administration. He also seems to be losing the goodwill from within the Republican Party and this will only lead to more concerns that he will find it difficult to push through his proposed aggressive fiscal stimulus. The US Dollar may lose ground if this continues. US Unemployment Claims data will be released this afternoon and will be closely monitored for market movement.
Overnight, the Australian unemployment rate remained at 5.6%, but the change in the number of employed people during the previous month increased to 27.9k. The Reserve Bank of Australia welcomed the sharp turnaround in the labour market, however, policymakers are concerned over spare capacity and the impact on wage growth, which is still floundering around 1.5%. The data was good news overall and the Australian Dollar continues to gain ground.
I got another letter from the lawyer today. It said “Final Notice”. Good that he will not bother me anymore.
Mechanic: You know how it is in life. One door closes – that means another door opens…
Car Owner: Yeah, very nice, but you either fix that door or I’m expecting a serious discount on that car!