Giving the Bank of England something to think about this week, data came in on Tuesday (15 August 2023) revealing that the UK’s labour market is finally showing some signs of softening. Reports highlighted a fall of 66,000 job vacancies in the three months leading up to June

Rainy days in July kept UK shoppers indoors. The British Retail Consortium (BRC) reported that sales rose by 1.5% compared with July last year, which is less than half the 12-month average growth rate.

There has been plenty of economic data releases already this week for markets to digest. In the Eurozone, despite remaining higher than the European Central Bank’s target of 2%, the headline figure for the region dropped to 5.3% in July from 5.5% in June.

PMI services and manufacturing data came in this week for the UK, Eurozone and US.
With regards to the UK, manufacturing PMI reflected a decrease in production from a downturn in orders both domestic and foreign.

The news at the start of the week spoke of the noise surrounding China’s latest GDP figure. Reports noted that GDP grew 0.8% in Q2, versus 2.2% in Q1.

Data this week showed signs of a loosening labour market in the UK. From March to May 2023, the UK witnessed a rise in its unemployment rate, reaching 4.0%.

Manufacturing PMI data released on Monday came in lacklustre for both the Eurozone and the UK. In relation to PMI, a figure above 50 indicates an expansion while anything below indicates a contraction.

Even as the economy softens, the European Central Bank (ECB) have not yet declared victory in their battle with inflation that remains ‘too high’, it was revealed on Tuesday at the ECB Forum on Central Banking.

In a further effort to pick up what is thought to be cooling economic momentum, the world’s second largest economy, China, saw two more key lending rates cut on Tuesday

It’s not just the weather that is heating up this week, as markets got off to a strong start fuelled with optimism that the Federal Reserve will announce its first pause in monetary policy.