Global output returned to growth for the first time since January. July was a pivotal month for the PMI surveys with a surge in the number of economies crossing the expansion (>50) threshold. The US, Eurozone, UK, the Republic of Ireland and Northern Ireland PMIs all returned to growth last month for the first time since COVID-19 struck. Notable absentees still stuck in the red (contraction) include Brazil, India, Japan and Scotland.
Today sees the release of July data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – showed that companies in Northern Ireland increased their output amid signs of a recovery being underway following sharp falls earlier in the year. New orders also returned to growth, but employment continued to decline and firms were often required to lower selling prices in order to secure new work.
With the worst quarter on record for new car sales behind them, local dealerships finally enjoyed their first lockdown-free month in July. Following a 76% y/y decline in Q2, showrooms reported 4,398 new car sales last month. That represented a 17% increase on the corresponding month a year ago and marked the largest number of sales in five months. More importantly, it marked the best July for new car sales in 13 years according to the SMMT figures.
Q2 GDP fell off a cliff. Yet months of shocking headlines has made record declines feel somewhat “normal”. They’re not. What is creating a stir is the rising number of hotspots locally as well as globally. The battle with the virus is going to be long, drawn out, and fraught with unpalatable trade-offs, especially between lives and livelihood.
Both the UK and the Euro area PMIs rebounded strongly in July. And, in a historic moment, the members of the Euro area finally agreed on the recovery fund, widely touted as the first step towards a limited fiscal union. But US indicators painted a more sobering picture, like a mirror to the world, revealing how things could stall if the virus spread intensifies.
Rishi Sunak may be a relative novice as Chancellor of the Exchequer, but he is already a veteran of economic statements and has outspent all of his predecessors. And come the autumn, we can expect an even more extensive set of measures to protect and create jobs in the autumn Budget.
The US economy had been sprinting into the lead, as key indicators for May and June recovered much of the pandemic imposed losses. But at a huge cost – the second wave will leave behind a weaker than earlier projected Q3. The UK’s disappointing May GDP data signalled a modest initial recovery. Welcome to the world of slow healing.
As the data points to the initial post-Covid economic liftoff continuing, attention has turned squarely to limiting further economic fallout and encouraging the recovery. Last week Chancellor Sunak targeted support at the jobs market. This week European leaders meet to approve a proposed €750bn coronavirus recovery package. Expect plenty more in the coming months as the scale of the recovery challenge becomes ever more apparent.
Continue readingToday sees the release of June data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – indicated that the Northern Ireland private sector continued to be impacted by the coronavirus disease 2019 (COVID-19), seeing further reductions in output, new orders and employment. That said, rates of decline softened amid a loosening of lockdown restrictions.
Rishi Sunak may only have been Chancellor for five months but he is already a crisis veteran. Having already splashed out hundreds of billions of pounds worth of support – £281.5bn since 11 March 2020 – today’s package added a further £30bn. Phase 1 of the Chancellor’s response was about protection via blanket support for the economy. Significantly Phase 2 of the economic response, today’s package, is more targeted support and focussed on jobs. The third phase is rebuilding.
