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
UPGRADE TO UK GDP GROWTH
The Office for National Statistics (ONS) has revised UK economic growth for Q2 2021 to 5.5% from an original estimate of 4.8%. The UK’s level of GDP is now 3.3% below where it was pre-pandemic in Q4 2019, revised from the previous estimate of 4.4% below.
BOE RAISES INFLATION FORECAST
The Bank of England (BoE) recently increased its near- term inflation forecast and signalled that the case for a ‘modest’ tightening of monetary policy over the next few years has ‘strengthened’.
MARKETS
As the third quarter drew to a close, supply chain concerns and fears of higher inflation, impacted market sentiment. In the UK, London’s indices slipped back at month end, after better-than-expected economic growth data renewed speculation that an interest rate increase could be on the cards. The FTSE 100 ended the monthon 7,086.42, a small loss of 0.47%. The FTSE 250 index closed on 23,031.29, a monthly loss of 4.44%. The Junior AIM index closed on 1,243.82.
JOB VACANCIES HIT RECORD HIGH
ONS data has revealed that job vacancies now stand at an all-time high as employers report the most severe shortage of job candidates on record.
RETAIL SALES IN DOWNWARD TREND
Although retail sales volumes remain above pre- pandemic levels, August’s official data revealed a record fourth consecutive monthly decline, while survey evidence points to a continuation of this trend in September.