The end of July usually marks the mid-point of the summer silly season, but in the last month we have learned some important information on the state of the UK economy.
More than a year on from the Brexit vote the effects of the devaluation of sterling are still being felt in the broader growth figures, but a moderation in inflation may have signalled price rises are slowing.
It may take some time for consumer confidence to recover though, after it fell to its lowest level since the aftermath of the EU referendum.
The growth slowdown was not a blip
Growth in the second quarter accelerated, but that’s about the most positive thing that can be said about the 0.3 per cent rate recorded in the second quarter of the year, according to Office for National Statistics data released this month.
A surprise boost from the retail sector and a strong film industry helped to push overall growth up. However, in contrast to upbeat company survey evidence the manufacturing sector dragged on growth.
It will take quite a recovery in the second half of the year for annual growth to meet the Bank of England’s prediction of GDP to expand by 1.9 per cent this year.
Inflation fell in the UK
The job for the Bank at this week’s monetary policy committee (MPC) meeting has been made easier by last month’s fall in inflation.
If inflation reaches three per cent the Bank's governor, Mark Carney, is obliged to write a letter to the chancellor explaining the deviation from the two per cent target. Consumer price inflation of 2.9 per cent in the year to May meant the pen must have been at the ready in June, but economists and markets were surprised by a fall to 2.6 per cent, according to the Office for National Statistics.
That has left the doves on the MPC sitting more comfortably, after pressure from colleagues to undo the stimulus rate cut introduced last August.
Consumer confidence fell further
The doves’ contention that now is not the time for a rate rise is supported by the recent drop in consumer confidence.
The relative economic strength (and even acceleration) of the UK economy last year after the Brexit vote was almost entirely down to the resilience of the British consumer. Consumer spending held up far better than expected, despite a big drop in confidence.
Yet this month’s data show a return to the post-referendum confidence lows. GfK’s long-running survey showed Brits are the equal most pessimistic since 2013, and a clear downward trend this year.
House prices could be about to fall
Mortgage approvals have weakened steadily this year, and are now at a nine-month low, according to today's Bank of England data for June.
Declining demand amid an environment of squeezed real wages could put downward pressure on house prices, economists say.
And the outlook for the coming months is not strong. The Building Societies Association’s property tracker showed this month that just 21 per cent of people think now is a good time to buy, the lowest proportion since the survey began in June 2008.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Approvals look set to decline further in the second half of this year, as lenders tighten the credit taps and households become increasingly cautious about making major financial decisions."
Welcome news for those lucky buyers able to afford a deposit perhaps, although homeowners will likely be less amused.
A mixed regional picture
While there has been a broad-based improvement in unemployment to 40-year low levels, the gains have not been evenly shared around the country.
London has seen a stunning decrease in the proportion of children in workless households, while Northern Ireland has seen no improvement whatsoever.
This comes despite unemployment falling to 4.5 per cent overall in May, according to figures released earlier in the month, the lowest since the 1970s.