UK House Prices

UK house prices fell by 0.1 per cent last month taking growth over the year to only 0.9 per cent, according to the latest monthly survey of the property market by Halifax. The slowdown means that prices rose at their slowest annualised rate this year and the cost of an average house this month stands at £232,249, the Halifax said.

ISM falls to 47.8

The Institute for Supply Management (ISM) index of manufacturing activity fell last month to its lowest since June 2009, when the economy was just emerging from the Great Recession. It now stands at 47.8, which is below the 50 mark that separates growth from contraction.

PMIs at 7 year low

Increased Brexit uncertainty and escalating global trade tensions knocked British manufacturers in August. The purchasing managers’ index fell to 47.4 from 48 in July, its lowest reading since July 2012.

UK wage growth at 11 year high

Wage growth has risen to 3.7%, buoyed by surprise second-quarter jobs growth. Data from the Office for National Statistics showed that the level of employment rose to a record 32.81 million between April and June with 115,000 jobs created.

Chinese yuan

Today the Chinese yuan (CNY) finally broke through to the downside to the psychologically important level of 7.0 to the US dollar. 7.0 was a clear line in the sand defended by monetary authorities in Beijing since late 2016. While we are not currency experts, we would not be surprised to see the yuan weaken further now that 7.0 has finally been breached.

US increases sanctions against Russia

The US has announced a fresh round of sanctions against Russia, effective from the 26th August. These restrictions represent the 2nd round of sanctions in line with the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act). The announced sanctions include US opposition to the financial or technical assistance to Russia provided by international financial institutions, restrictions to exports of dual-use chemical and biological items and, most importantly: the prohibition of US financial institutions to participate in FX-denominated financing of the Russian government.

US Increases China Trade Tariff

President Trump has revealed plans to intensify his trade war with China by imposing tariffs on another $300 billion of its exports. Oil prices fell after the latest escalation in the dispute between the world’s two largest economies.

Weak PMIs

The purchasing managers index (PMI) for the UK construction sector dropped down to 43.1 from 48.6. Unfortunately manufacturing PMI also dropped to 48 from 49.4 and also the service sector dropped to 50.2 from 51.  It looks like the effect of a delayed Brexit is showing in the numbers.

Change of ECB president

European bond markets can breathe a sigh of relief this morning as Christine Lagarde is poised to be the new president of the European Central Bank, succeeding Mario Draghi in October.

The relief is perhaps more about who is not going to be the new president, rather than who will be at the helm; German Bundesbank chief Jens Weidman was considered to be one of the frontrunners for the post. While Draghi will be remembered for pledging to do ‘whatever it takes’ to preserve the euro, Weidman will be known for trying all he could to prevent some of Draghi’s policies being enacted.