The prospects of UK macroeconomic environment are becoming gradually more positive. The improvement is reflected, among other factors, in job openings at a record high and consumer confidence returning to pre-Covid levels. According to the latest Deloitte Consumer Tracker, consumers were not only more confident about their own circumstances, but they were also significantly more confident about the state of the UK economy. In Q2, consumer sentiment around the state of the UK economy bounced back by 23% to closer to its pre-COVID baseline.
Chart of the month: Total number of job openings in the UK
Source: Office for National Statistics (ONS), BBC, Blend Network
Politics & Economics
- The UK food and worker shortage has continued to grab headlines over the past months. The UK’s wholesale food industry recently warned that it cannot protect consumers from price rises forever and that worker shortage will lead to price rises[i].
- It was recently revealed that plans for Covid vaccinations for 12-to-15-year-olds across the UK are to be announced by the Government shortly, with a mass inoculation programme beginning in schools across the country towards the end of September[ii].
- According to the Deloitte Consumer Tracker, consumer confidence bounced back to its pre-Covid level in Q2 following a strong rebound in the first quarter. The index rose by 2% quarter on quarter to -9%, its highest ever recorded yearly growth, with the improved confidence mainly driven by improved sentiments around jobs and health[iii].
- Consumer sentiment about the state of the UK economy appears to be echoing CFO perceptions of external uncertainty which have dropped below the average of the last five years. According to the latest Deloitte CFO survey, only 35% of CFOs now rate the level of external financial and economic uncertainty facing their business as high or very high, similar to the pre-pandemic reading observed in December 2019[iv].
- The UK job market has also showed signs of strong recovery. According to the Office for National Statistics (ONS), the number of vacancies hit 953,000 in the three months to July, a record high while unemployment fell to 4.7% in the three months to June[v].
- UK house prices continued to increase in August. Prices were up by 11.0% year-on-year according to the Nationwide House Price Index[vi], and by 7.1% according to the Nationwide House Price Index[vii]. The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market, yet it may reflect strong demand from those buying a property priced between £125,000 and £250,000 and who are looking to take advantage of the stamp duty relief in place until the end of September[viii].
- Global stock markets continued the strong momentum started in mid-Q1 throughout the summer, but some indices have started to tumble in September[ix]. Some of the world’s major indices such as the S&P500, EuroStoxx50 and Germany’s DAX ended August in positive territory for the seventh straight month and even accelerated their upward trend – the S&P500 was up by 2.9% in August, its strongest reading since April. But momentum has started to fade in September with many indices in the red so far[x].
FX & Commodities
- The average cost of shipping a standard large container (a 40-foot-equivalent unit) has surpassed $10,000, some four times higher than a year ago. The spot price for sending such a box from Shanghai to New York, which in 2019 would have been around $2,500, is now nearly $15,000[xi]. Covid-related supply-chain disruptions are partly responsible.
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[i] Source: https://bit.ly/3933yLV
[ii] Source: https://bit.ly/3tAeN86
[iii] Source: https://bit.ly/3np2DxL
[iv] Source: https://bit.ly/3ClPCtd
[v] Source: https://bbc.in/3Eg3iHA
[vi] Source: https://bit.ly/2XgnZ5d
[vii] Source: https://bit.ly/3lgLEuR
[viii] Source: https://bit.ly/2XgnZ5d
[ix] Source: https://bit.ly/2YWNlpX
[x] Source: https://bit.ly/2YWNlpX
[xi] Source: https://econ.st/3hsID9K