Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.
Overview
MPC MAINTAINS MONETARY STANCE
Following its latest meeting held on 22 June, the Monetary Policy Committee (MPC) judged that the existing monetary stance remains appropriate, despite inflation rising above the Bank of England’s target level.
RECORD JUMP IN EMPLOYEE NUMBERS
The jobs market continues to show signs of recovery with the latest labour market statistics reporting a record rise in the number of employees on company payrolls, another decline in unemployment and a rise in job vacancies.
MARKETS
Major UK benchmarks closed June largely flat. At month end, market sentiment was hindered by Q1 economic growth figures from ONS, showing UK GDP shrank by 1.6%, compared to an initial estimate of a 1.5% decline. The fall can be attributed to the closure of shops and restaurants during lockdown.
GOVERNMENT BORROWING CHASM NARROWS
The latest public sector finance statistics confirmed that government borrowing is declining more rapidly than the Office for Budget Responsibility (OBR) had predicted in its March Budget forecast.
SALES DIP AS SHOPPERS EAT OUT
Official statistics revealed an unexpected decline in retail sales during May as shoppers reduced their consumption at food stores, although more recent survey data suggests consumer demand remains strong.