Welcome to the weekly macroeconomic round-up, where we spotlight a few of the most significant events in the last few weeks.
UK inflation continues to climb but fails to surprise
UK CPI rose again in May to 9.1% year-on-year, an increase of 0.1% from the previous month. Whilst the spike in inflation continues to weigh on consumer sentiment and is beginning to prompt industrial action, May’s increase was widely expected.
Rising food prices caused most of the upward pressure, adding around 0.2% to the overall figure, which has hit a 40-year-high. The rise in headline inflation would have been more pronounced had it not been for a decline in computer games prices, which are notoriously volatile. As such, it seems that a broad-based spike in inflation will not be easing any time soon.
Eurozone business managers survey hits lowest level since lockdown
Eurozone business managers’ confidence, as measured by the composite PMI survey, has fallen to its lowest level since February 2021, when much of the continent was in a lockdown. The June data came in at 51.9, down from 54.8 in May, and significantly lower than consensus estimates.
The measure surveys business confidence in both the services and manufacturing sectors, with the latter being particularly weak. Much of the weakness was attributed to softening demand in new orders and exports, rather than the supply chain issues that plagued manufacturing at the start of this year.
This data will add to concerns that post-lockdown recovery tailwinds are fading faster than expected and that headwinds in the form of a wider economic slowdown are on the horizon.
It was a much more positive week for equity markets, with the S&P 500 up 7.5% and the tech-heavy NASDAQ rising 7.5%. In what may be temporary - yet welcome - relief for consumers and businesses, the MSCI ACWI Energy index eased by 1.2%.
Bond markets also finished the week in positive territory, with the BAMLK UK gilt market index up 1.6%.
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