Statistics released on August 13th have revealed that retail sales in the US climbed 0.2% in the month of July after four consecutive monthly drops in 2013. The cause of this upsurge is thought to be the rising fuel prices which acted as a significant contribution to making non-fuel prices lower. On a downside, US exports trickled down 0.1% in July for yet another month whilst there was no change to the PPI for finished goods in July according to the US Bureau of Labor Statistics; a contrast to the 0.8% increase seen in June. As anticipated, the Core CPI, an index monitored very closely by the Federal Reserve, rose by 0.2% on August 15th along with a number of other indices such as gasoline and food. Weekly jobless claims dropped to 320K as released on August 15th, a 5 and a half year low and a pleasant surprise compared to the predicted 334K. Likewise, continuing claims also fell to 2.969 million as opposed to the predicted 3 million.
Despite these positive developments however, predictions for next week are that the jobless claims will increase slightly to 322K. August 16th revealed that the preliminary UoM consumer sentiment failed to fall in line with the August predictions of 85.6 and fell to 80 points this month, a level unseen since summer 2007. This week in the US, existing home sales are predicted to rise to 5.51 million on August 21st, back up from the June decrease of 5.08 million which derailed the high figures recorded in April and May.
Last week, Europe showed signs of recovery when the German ZEW sentiment rose to 42 points – a higher figure than the expected 40.3 and an encouraging development in the business environment. The respective European figures also rose above expectations to 44 points, but there is still the concern that positive economic developments in Germany are not representative of Europe as a whole since they have been a stronger nation throughout the economic crisis. The final German GDP which is to be released this week on August 23rd is forecast to grow by 0.7%, an improvement from the figures seen in 2012. The French and German Flash Manufacturing PMI are also both predicted to rise to 50.4 and 51.1 respectively, injecting a dose of vitality back into the health of the EU economy.
The economy in Japan, albeit growing, has not made as big a step forward as predicted earlier on in the year. On Monday August 12th, the Cabinet Office released data indicating that Japan’s 0.6% increase in the economy was not fulfilling of the 0.9% increase which was predicted, making for a 2.6% annual rise rather than the anticipated 3.6%. Reflecting the disappointing data are predictions for July’s All Industry Activity data which is due out on August 20th and is expected to decline by 0.5% as opposed to June’s increase of 1.1%.
In the UK, a wave of progress has run into the economy as the claimant count change dropped by 29.2K in July, a profound drop considering that it was double the predicted figure of 14.3K. To top the pleasant surprise, the revised figure from June revealed that the previous month’s drop was actually higher than first thought, coming through at 29.4K instead of the initial estimation of 21.2K. Strong figures were also seen in July’s UK retail sales which rose by 1.1% instead of the predicted 0.7%, boosting the overall morale. Bank of England governor Mark Carney announced on August 14th, at the BoE’s monthly policy meeting, that interest rates should remain at 0.5% until unemployment falls below the 7% mark. Strengthening the UK’s positive economic streak are predictions for the second GDP estimate this week on August 23rd, with the figure expected to rise by 0.6%, boosting the economy and the GBP even more.
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