The latest monthly UK PMI surveys point to stagnating growth in Q2, with the rising risk of a contraction in activity. Last week’s dovish speech by BoE governor Carney hinted the central bank may hesitate in raising UK rates.
Today sees the release of June data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – signalled a deepening downturn in the Northern Ireland private sector. Brexit uncertainty led to sharper falls in output and new orders, with firms pessimistic regarding the 12-month outlook.
(up in Q2 y/y but down y/y in June)
New car sales are traditionally viewed as a key barometer of consumer confidence. Despite the labour market being the strongest it has ever been, consumer confidence – viewed through the lens of new car sales – remains uninspiring. Last month proved to be the weakest June for dealers in seven years with 5,170 new vehicles rolling out of showrooms. That was six per cent lower than last year. However, the latest figures follow the best May in 11 years and a mediocre April. As a result, the second quarter still posted a respectable 2.7% y/y rise (+369 cars) and the strongest Q2 in three years.
President Trump agreed a détente with President Jinping, bringing some respite from the ongoing trade war. It should provide some short-term relief to markets. But it’s premature to suggest a deal is a foregone conclusion
Economists are stereotyped as being, let’s say, not the most rock and roll people. But of late, those of us working on Northern Ireland have had reason to focus strongly on drugs, cigarettes and heavy metals. That’s because these are some of the subsectors of the economy and the manufacturing sector that have seen the biggest highs or are the most troubled.
There’s a renewed sense of caution amongst central bankers. Both the Fed and the ECB are moving towards renewed policy support while the Bank of England has softened its stance on rate hikes. Pessimism over the global outlook and below-target inflation are to blame. The problem is their armouries are looking rather bare.
A weaker than expected US employment report is adding to rising concerns about the global economy, fuelling expectations that the Federal Reserve will cut rates soon, possibly this summer. ECB president Draghi signalled the door is open for further monetary measures to support the weak Euro area economy, if needed.
Today sees the release of May 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 remained in contraction territory. Activity and new business continued to fall markedly, often linked to Brexit uncertainty. In turn, companies lowered their staffing levels again. There was some relief on the price front, as the rate of input cost inflation eased. That said, the extent of input price increases far outweighed that of selling charges again during the month.
About this time last year, the price of beer in Belfast’s now iconic Grand Central Hotel caused much reaction, with its Observatory Bar selling a pint for £8. Clearly, this is a niche indicator, but it led to questions by some observers in relation to what this said about the local economy, the strength of the tourism sector, and the spending power of local consumers.
Global trade tensions are ratcheting up. Whilst the US and China trade blows President Trump warned of a 5% increase in tariffs on Mexican imports, rising 5% a month up to a maximum 25% in October. Meanwhile China’s manufacturing PMI came in a little soft. But tariffs can only partly be blamed there.