Daily Update: Good News Continues for UK Economy
Today is Thursday, September 5, 2024, and here’s your?curated selection of essential intelligence on financial markets and the global economy?from?S&P Global.?Subscribe?to be notified of each new?Daily?Update.?
The UK economy had been in a prolonged swoon since Brexit, with weak growth, high unemployment and stubborn inflation. However, the heat of summer appears to have led to a revival.
Following the victory of the Labour Party under new Prime Minister Keir Starmer, the flash Purchasing Managers’ Index (PMI) survey data for July showed a significantly more promising outlook for the UK economy. The data indicated that the UK’s GDP grew at a quarterly rate of just over 0.2%. The manufacturing sector enjoyed a significant upturn, job growth climbed to a 13-month high and demand bounced back. The composite PMI Prices Charged Index for the month was consistent with core consumer price inflation cooling to about 2.5%, within spitting distance of the Bank of England’s 2% target inflation rate.
Preliminary PMI survey data for August continues to paint a rosy picture for the UK economy. The flash PMI indicated that the economy is expanding at a solid quarterly rate of about 0.3%, a slight improvement on July’s data. Output has also ticked higher, with the seasonally adjusted S&P Global UK PMI Composite Output Index rising to 53.4 in August from 52.8 in July.
Job creation hit a 16-month high in August, with approximately 100,000 jobs being added to the economy in the third quarter. The revived manufacturing sector continued to lead the way, and services also showed improvement.
The Bank of England lowered rates by 25 basis points to 5% at its July meeting. So far, lower rates and lower unemployment do not seem to have accelerated inflation, which continues to trend toward the target rate.
The continued outperformance of the UK economy is unexpected. For the last two months, the UK has outperformed all other major developed economies except for the US. The UK economy rebounded in the first half of 2024 from the recession of 2023, but the effects of this rebound have only become clear since the second half of the year began.
“Looking ahead, future output expectations softened in both manufacturing and services in August, though the overall level of optimism remained well above the survey's long-run average,” said Chris Williamson, chief business economist for S&P Global Market Intelligence. “Thus, while the pull-back in sentiment hints at output growth potentially slowing in September, any slowdown is likely to be only modest, with contraction avoided in the near term.”
Today is Thursday, September 5, 2024, and here is today’s essential intelligence.
Written by Nathan Hunt.
Sustainability
Prioritizing Employee Wellbeing May Help Stem The Tide Of Rising Turnover
Voluntary turnover is rising across all sectors, according to S&P Global Sustainable1 data, creating higher hiring and training costs for companies. Companies are devoting resources to employee wellbeing at work through policies like flexible working conditions and family benefits, but only a small percentage of companies are assessing mental and physical wellbeing in workplace surveys, S&P Global Sustainable1 data shows.
—Read the article from S&P Global Sustainable1
Economy
Top Five Economic Takeaways From August's PMI As The Global Manufacturing Decline Continues
At 49.5, down from 49.7 in July, the Global Manufacturing PMI, sponsored by J.P.Morgan and compiled by S&P Global Market Intelligence, signaled a deterioration of operating conditions for a second successive month in August. The rate of decline, while only very modest, was the steepest since last December. The deterioration points to a halting of the manufacturing recovery seen in the first half of the year, which had seen the sector's best performance for two years.
—Read the article from S&P Global Market Intelligence
Capital Markets
Listen: Private Markets 360° | Episode 16: Staking Claims — Inside The Business Of GP Stakes
Anthony Maniscalco, Managing Partner and Head of Strategic Capital Group at Investcorp, joins our hosts to discuss the dynamic realm of GP stakes. In this episode, we explore Anthony’s professional journey into GP stakes investments, how Investcorp operates in this area, and advice for newer entrants into private markets.
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—Listen and subscribe to the podcast from S&P Global Market Intelligence
Global Trade
Major Rice Exporters Post Big Gains Amid India Ban
India imposed certain export restrictions on rice in August 2022 and followed it up with another set of bans in July 2023. Such policies from the world’s largest rice exporter have proved to be a boon for regional peers. Thailand, Vietnam and Pakistan all posted significant gains in rice shipments, leading to a notable shift in regional trade flows.
—Read the article from S&P Global Commodity Insights
Energy & Commodities
Offshore Wind 'Back On Track' As UK Awards Support For 9.65 GW New Renewables
The UK's sixth allocation round of Contracts for Difference has awarded support to 9.65 GW of new renewables, more than double last year's round after the government increased the AR6 budget, the Department for Energy Security and Net Zero said Sept. 3. The awards included CFDs for 4.94 GW of conventional offshore wind and 3.3 GW of solar PV. The auction also supported 990 MW of onshore wind and, at 400 MW, what would be the world's largest floating offshore wind farm project to date.
—Read the article from S&P Global Commodity Insights
Technology & Innovation
The Shifting Of China Tech Supply Chains: The Hard Part Starts
Global tech hardware firms have largely completed phase one of their shift out of China; phase two will be much more disruptive and costly. S&P Global Ratings believes this reordering of supply lines is happening in stages. The current focus on adding "midstream" tech production outside of China presents more credit risks than the prior stage, the expansion of downstream output outside the country. The reallocation of midstream capacity from China will involve even more spending, higher ongoing operational costs and the possibility of botched executions.
—Read the article from S&P Global Ratings
Events & Webinars
Webinar: The Path To Unlocking Value In Your ESG Reporting Journey, Featuring Novisto (Sept. 10, 2024)
Capital markets, regulatory bodies, employees, third-party data providers and customers alike are increasingly seeking transparency from companies on their performance in managing environmental, social and governance (ESG) issues. The time is now to get ESG right and own your narrative for important stakeholders. Join our upcoming webinar where our experts will discuss the importance of quality ESG data collection/management.
—Register for the webinar from S&P Global Market Intelligence