The Dow Jones Industrial Average (DJIA) soared above 22,000 for the first time ever following strong second quarter results, while US employment data revealed a steady picture for wages and jobs. The total number of people employed increased by 209,000 in July and the unemployment rate remained relatively unchanged at 4.3 per cent. The next rate rise is dependent on whether inflation picks up and this requires stronger wage growth, something that has been relatively muted to date.
Other US data included factory orders which rallied in June following two months of declines. New orders for manufactured goods jumped 3 per cent, its biggest gain in eight months, while growth in durable goods orders held steady, rising 6.4 per cent in June. The relatively robust snapshots of the US manufacturing sector were tempered however by a separate report showing that the rate of expansion in the vast US services sector slowed to its weakest level in 11 months and short of expectations.
The Bank of England left interest rates unchanged and slashed growth forecasts as uncertainty over Brexit weighed on the UK economy. Projected growth for 2017 was cut from 1.9 per cent to 1.7 per cent. Persistent uncertainty over the UK’s future relationship with the EU is holding back business investment and household spending, the Bank of England governor warned. Companies were already delaying decisions about investments and entering new markets.
In contrast, the Eurozone grew at its fastest pace in five years. The pace of growth accelerated by 0.6 per cent year-on-year in the three months to June. There was also strong job creation in the Eurozone’s manufacturing sector. The weak euro and subdued inflation has helped Eurozone exports in a global economy that has remained buoyant.
Geo-political tensions were raised last week as the United Nations Security Council unanimously imposed new sanctions on North Korea over its intercontinental ballistic missile tests in July. The UN vote gained approval from both China and Russia aiming to deprive North Korea of $1bn in revenues, and halt their country’s nuclear programme.
If you would like more information on the above article or advice on your personal financial circumstances, please contact us >>