Good economic news for the UK but little improvement in GBP
Today saw the first revision of the Q2 GDP figures for both the UK and the US with the UK up first this morning and managing to beat expectations with a revision upwards of 0.1% to 1.2% the strongest quarter on quarter growth since Q1 of 2001. The market was expectation no change to the existing estimate of 1.1% and takes the year on year growth up to 1.7%. Construction was a key growth sector that had its strongest quarter since 1982 but these are recovering from exceptionally low levels.
The UK received some more positive data yesterday from the CBI retail sales volumes which showed a year-on-year increase for a consecutive month. Over half of the retailers surveyed (53%) had seen a rise in sales volumes over the first two weeks of August and only 18% said sales had dropped. Clothing, grocers, durable household goods and hardware were the key sectors and where most likely boosted by the untypical British summer that we are having, actually being sunny in summer seems to be good for the economy.
The US has seen some quite positive results from many of the large companies recently with profits up and costs down but on closer inspection much of the money has been saved by cost cutting rather than increase in volumes and the cost cutting has come from reducing staff. Obviously this in not a sustainable way to grow and the massive number of unemployed in the US is going to be one of the main stalling points in a recovery. In slightly more positive news yesterday with the Mortgage Bankers Association saying that the mortgage delinquency rate dropped from 10.06% to 9.85% in Q2. This was coupled with yesterdays Initial Jobless Claims for the US showing a drop of 31,000 to 473k. Economists say that the jobless claims need to get down to around 400k before the US economy can sustainably create jobs but with the figures coming in below the 500k mark it is definitely going in the right direction albeit very slowly.
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