Good morning
UK Industrial and Manufacturing Production won’t capture Brexit fallout, NIESR GDP Estimate of more interest
Today’s production and trade balance figures from the UK will certainly fill headline space and be used to construct arguments about why the EU referendum was the best/worst decision in modern British history, but the fact of the matter remains: it is too soon to tell. The same goes for retail spending numbers that we’ve seen released from the likes of Visa, Barclaycard and, just this morning, from the British Retail Consortium. Fashion and food product spending rose sharply in the days following the vote as this coincided with a short and sharp burst of great weather and that, as far as the UK consumer is concerned, is an excuse to splurge.
Perhaps of greater relevance, today’s NIESR GDP Estimate is compiled using survey and corporate data captured across July, which should be a more effective gauge of the UK’s current economic strength. The release is due at 1500BST.
China Inflation data improves as better environment for manufacturers develops
Overnight, Chinese inflation figures improved modestly for the manufacturing sector, as factory-gate prices contracted at a shallower rate than expected. Despite annual producer prices still falling for what seems like the umpteenth month in a row, today’s fall of 1.7% was a marked improvement on last month’s -2.6%.
What does this mean for markets? A more balanced inflation picture on the consumer and producer side in China would allow both shoppers and business owners to make more comprehensive and confident decisions based on future price trajectories, something that’s commonly found in strong and stable economies and very rarely in weak and volatile ones. Equity markets have responded positively, with markets rising across East Asia.
India keeps rates unchanged at 6.5% in Rajan’s final meeting
The Reserve Bank of India’s governor, Raghuram Rajan, is seen by many academics and market commentators as one of the last remaining central bank governors with a shred of credibility and it’s easy to see why. Whilst others are criticised for being too hasty to cut rates the moment economic data begins to turn south, Rajan has guided India’s policy-setting board with a focus on moderation and the long-term. This has helped protect India from the worst of the global economic downturn which impeded growth and inflation across the world. Today’s meeting is expected to his final outing as he returns to academia at the beginning of September.
Have a great day.