The US-China trade war officially started, with American import tariffs coming into force on $34bn of Chinese goods, and China imposing a similar 25% levy on the same amount of US products.
US president Donald Trump also reiterated plans to target a further $16bn of Chinese goods in coming weeks and threatened to extend tariffs to all $500bn of US imports from China.
In the UK, purchasing managers’ surveys for June pointed to recovery for the UK economy in the second quarter, after growth of just 0.2% in the first three months of the year.
IHS Markit’s purchasing managers’ indexes (PMI) all came in higher: 54.4 for manufacturing (compared with 54.3 in May); 53.1 for construction (52.5 in May); and 55.1 for services, the dominant UK sector (54 in May).
IHS Markit’s composite PMI for the three sectors rose to 55.2, its highest for eight months. PMI readings above 50 indicate expansion.
While the manufacturing PMI was higher than expected, Markit cautioned that the sector was ending the second quarter on “subdued footing”, with a slowdown in new order growth since earlier in the year and lower business optimism.
The construction PMI reading was its highest in seven months, with the sector enjoying a rebound in commercial property construction and house-building after bad weather in the first quarter hit activity.
And the service sector was boosted by better weather and increased demand for financial services, with activity growing at its fastest rate since the autumn.
Chris Williamson, chief business economist at IHS Markit said the survey data suggested the UK economy grew 0.4% in the second quarter: “Stronger growth of service sector activity adds to signs that the economy rebounded in the second quarter and opens the door for an August interest rate rise”.
In a speech on Thursday, Mark Carney, governor of the Bank of England, said: “The incoming data have given me greater confidence that the softness of UK activity in the first quarter was largely due to the weather, not the economic climate.”
“A number of indicators of household spending and sentiment have bounced back strongly from what increasingly appears to have been erratic weakness in Q1. The UK labour market has remained strong, and there is widespread evidence that slack is largely used up. Pay and domestic cost growth have continued to firm broadly as expected.”
Meanwhile, data from the Halifax reaffirmed the housing market slowdown. House prices were just 1.8% higher than a year ago, with a 0.3% rise between May and June.
International research also showed that the UK had the weakest wage growth of any G7 country over the past decade, despite good economic growth over much of the period and strong employment. Real wages in the UK contracted by 0.3% a year on average, according to the OECD.
Over the decade, the UK had the second best economic performance – after Canada – in the G7, while unemployment is also below average. The OECD said the UK’s poor wage growth was “caused in part by slow labour productivity growth”.
Main source of information: Company Report and Accounts, Bloomberg
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