Economics highlights (week 28/2022)
Updated: Aug 21, 2022
UK GDP Growth
The UK economy returned to growth in May, surprising economists. The Office for National Statistics said on July 13th that gross domestic product (GDP) rose by 0.5% on the month, after a revised 0.2% decline in April.
City economists had expected zero growth amid fears over the impact from the cost-of-living crisis. Growth came across all sectors. But this positive data may cause the Bank of England to raise rate by 50 basis points at its next meeting in August.
The consumer price index (the broadly recognized measure of inflation) soared 9.1% from a year ago in June of 2022, as data from the U.S. Bureau of Labor Statistics showed on Wednesday, July 13th. That marked the fastest pace for inflation in 40 years.
Energy prices rose 41.6%, the most since April 1980. On a monthly basis, prices rose 1.3% from May to June. This will likely prompt the FED to take a more aggressive path towards inflation.
China GDP growth
Gross domestic product in the world's second largest economy expanded by just 0.4% in the three months to June 30, compared with the same period last year, according to the National Bureau of Statistics (NBS) on Friday, July 15th. It was the weakest performance since the first quarter of 2020. Analysts, polled by Reuters, had a forecast growth of 1% in the second quarter. Industrial production in June also missed expectations, rising by 3.9% from a year ago, versus the 4.1% forecast.
However, retail sales in June rose by 3.1%, recovering from a prior slump and beating expectations. For the first half of this year, the economy expanded 2.5%, way below the 5.5% annual target set by the government. Beijing admitted Friday that reaching its GDP goals this year would be hard.
Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid controls.