This week just ended

Sitting on his suitcase in a busy London Terminal, with a note attached to his coat reading "Please look after this bear. Thank you." Everyone’s favourite marmalade sandwich loving mammal, Paddington Bear, has been commemorated this week by the Royal Mail, with the release of 10 special stamps celebrating his 65th anniversary. 

Whilst stamps featuring Paddington were making headlines for stamp collectors up and down the country, for economists, it was more a case of stamp duty, as Monday saw online estate agent, Rightmove, release its Housing Price Index numbers. Interestingly, the data showed that UK property sellers are cutting the prices they’re asking at the sharpest pace since December, adding to evidence that soaring interest rates are weighing on the ability of buyers to afford purchases. Rightmove also commented that the cost of homes coming to market fell 1.9% month on month, marking the biggest decline for this time of year since 2018 and the sharpest drop since the end of last year, when sellers were trying to wrap up deals quickly.

Keeping us posted on how companies are seeing the global economy, Wednesday delivered a host of Purchasing manager Index survey results, covering some of the world’s largest economies for both the Services and Manufacturing sectors. The data is a useful tool for economists as it acts as a leading indicator of an economy’s health, businesses tend to react quickly to market conditions, with their purchasing managers holding perhaps the most current and relevant insight into the company's view of the economy. 

With a reading of over 50 indicating expansion and below, contraction, the dominant services sector in the UK came in at a second class 48.7 versus estimates of 50.9, as UK firms signalled a renewed downturn in business activity in August, thereby ending a six-month period of expansion. This mostly reflected a faster fall in new business as sluggish domestic economic conditions and higher borrowing costs led to caution among clients.  Average prices charged by UK private sector companies also increased at the softest rate since February 2021 Survey respondents also suggested that they had adjusted their pricing strategies in response to weaker demand and falling input cost inflation.

Like a Paddington Bear stamp, the end of the week really sees us going places…this time to Jackson Hole in Wyoming, USA. Holding its annual Economic Policy Symposium, the town welcomes in a who’s who of financial movers and shakers, including central bankers, finance ministers, academics, and financial market participants from around the world. Friday will see two central bankers, whose speeches could cause heightened market volatility, with Jay Powell, US Federal Reserve Chair, and Christine Lagarde, the President of the European Central Bank address the media. Both will cover the hot topics of the day, including their views on inflation and respective rate policy going forward. 

In company news, microchip and most recent member of the $1 trillion market club, Nvidia, went postal during the middle of the week, announcing results which far exceeded analyst expectations. Beating Wall Street forecasts by billions of dollars, the company demonstrated that a boom in generative AI technologies, powered almost exclusively by Nvidia's chips, shows no signs of slowing down, with its results showing demand increasing from all over the globe, from Paddington to even Peru…

This coming week

With the Summer bank holiday leading to a shortened week for those in the City of London, we should see something of a quieter start to the week than normal.

Both consumers and economists will be hoping for a dry weekend at least, after what has been a largely disappointing summer so far has led to shoppers not only tightening their purse strings but also the draw strings on their cagouls, as the unseasonable wind and rain puts many off updating their summer wardrobe according to retail sales figures.

Tuesday will give us a further chance to monitor how the high street has been performing as the British Retail Consortium (BRC) releases its Shop Price Index numbers. The data actually leads the government released consumer inflation data by about 10 days but has a narrower scope as it only includes goods purchased from retailers who belong to the BRC, however the data still has quite the impact on consumer facing stocks upon release. 

From the high street to Main Street, we travel across to the US during the middle of the week for the Conference Board’s Consumer Confidence figures. The data is so respected due to its sheer breadth, surveying about 3,000 households which asks respondents to rate the relative level of current and future economic conditions including work availability, business conditions and their overall economic situation. 

In typical fashion, the first Friday of the month brings with it Non-Farm Payrolls. Often considered one of the Fed’s favoured pieces of information when determining their next rate move, we should expect heightened market volatility come the end of the week during its release. The employment data itself will be accompanied by Average Hourly Earnings, allowing us to gauge future inflation expectations as the more consumers earn, the more they tend to spend. It all combines to be a vital piece of data for the Federal Reserve and should take on added significance as the central bank considers halting its rate cycle.

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used, you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding as at 25 August 2023.