For a start, the International Monetary Fund has revised its estimates for UK economic growth downwards from 2% to 1.7% for this year. This was based largely on a disappointing result for the first quarter of this year when GDP growth fell to just 0.2%, but second quarter figures were better at +0.3%.
The improvement was down to the service sectors, with a buoyant film industry singled out in the report. Retail also did well, suggesting that the inflationary drag on incomes is not yet hitting people’s spending plans. The US had its forecasts cut as well and President Trump’s spending plans continue to be bogged down in the legislature. Little wonder that the dollar remains under pressure.
But markets are holding up well, with the S&P 500 Share Index hitting new highs. As it happens we are in the middle of an important reporting season for American companies, many of which are disclosing second quarter results. Our own FTSE 100 Share Index has not been doing too badly either. Mining shares have been in the vanguard of the recent bounce, buoyed by a stronger copper price. Oil also saw a modest recovery as Saudi Arabia reaffirmed it wanted to see production cuts, but the price of so-called black gold remained below $50 a barrel.
Sterling has continued to suffer, principally against the euro which is now worth very nearly 90p. Holidays on the continent will be dearer this year, so little wonder much is currently being made on how to avoid unnecessary costs when it comes to buying your foreign currency for travelling. Indeed, the euro is maintaining its strong position as economic prospects for Eurozone countries continue to improve. With the European Central Bank likely to rein back on monetary easing, this trend could continue.
With thin trading volumes in these summer months and governments in recess, markets look unlikely to establish any definitive trends. It is important to watch the big picture carefully, though. The IMF seems confident that the global economy remains on course for continuing recovery. The devil will be in the detail, of course, so how individual countries fare could prove interesting.