The latest job data will ease the pressure on the Bank of England to lower rates, as the sharp revision to the May payroll employees means the labor market has not deteriorated as much as had been feared. Still, the employment picture remains weak and the markets are expecting an August rate cut, even though UK inflation was hotter than expected in June.
US retail sales impress with 0.6% gain
US retail sales bounced back in June after back-to-back declines. Consumers reacted with a thumbs-down to President Trump’s tariffs, which took effect in April and made imported goods more expensive.
The markets had anticipated a marginal gain of just 0.1% m/m in June but retail sales came in at an impressive 0.6%, with most sub-categories recording stronger activity in June. This follows a sharp 0.9% decline in May.
The US tariffs seem to have had a significant impact on retail sales, as consumers continue to time their purchases to minimize the effect of tariffs.
Consumers increased spending before the tariffs took effect and cut back once the tariffs were in place. With a truce in place between the US and China which has slashed tariff rates, consumers have opened their wallets and are spending more on big-ticket items such as motor vehicles, which jumped 1.2% in June.
