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Economists had expected GDP to rise by 0.2% in July. In June, there was also zero growth.
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GDP growth was flat in July 2024 but grew 0.5% in the three months to July 2024.
In July services grew (+0.1%) but production (-0.8%) and construction (-0.4%) both fell.
Read more ➡️ https://t.co/rI5JUOz1LX pic.twitter.com/8KVdtuuBEK
— Office for National Statistics (ONS) (@ONS) September 11, 2024
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The dollar fell by more than 1% against the yen to its weakest level of the year, after Kamala Harris put Donald Trump on the defensive in the first and only television debate in the presidential race last night.
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The yen also got a boost from Bank of Japan board member Junko Nakagawa, who reiterated in a speech that the central bank would continue to raise interest rates if inflation and the wider the economy move in line with its forecasts.
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The dollar dropped as much as 1.2% to 140.71 yen, a level not seen since 28 December before recovering slightly.
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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
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The UK economy is expected to have returned to growth in July, after flatlining in June.
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The latest GDP figures from the Office for National Statistics, out at 7am, are expected to show that the economy expanded by 0.2% in July, after zero growth in June.
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Deutsche Bank economist Sanjay Raja, who is predicting a 0.3% rise in GDP in July, said:
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What’s driving the increase in output? Mainly, a stronger rebound in services activity, led by a pick up in retail and leisure services. Industrial production output also likely expanded to start the third quarter, lifted in large part by an increase in oil production, and to a slightly lesser extent, manufacturing output. Last but not least, we expect the construction sector to see its third monthly consecutive rise (0.2% month on month).
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Where are risks to our nowcast skewed? To the downside, with our modelled estimates having a downward skew relative to our point estimate.
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Looking ahead, we continue to see GDP expanding at a steady clip, averaging roughly 0.4% quarter on quarter in the second half. It’s early days, but risks to our quarterly nowcasts are skewed to the upside, raising upside risks to our annual growth projection too.
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We are also getting figures for trade and industrial production at the same time.
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It’s also US inflation day. The annual headline rate is expected to have fallen to 2.6% from 2.9%, while the core rate, which strips out volatile food and energy costs, is set to have stayed at 3.2%.
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Investec economist Ryan Djajasaputra said:
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July’s outturn provided further reassurance that inflation remains on a disinflationary path, with the 2.9% print being the first below 3% since March 2021. Early consensus estimates are for a further moderation to 2.6%.
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Also today:
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The British steel industry is braced for 2,500 job cuts at the Port Talbot steelworks, with thousands more jobs at risk in the UK, as the government prepares a taxpayer-backed deal for the south Wales plant.
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The business secretary, Jonathan Reynolds, is expected to outline this morning the details of a rescue deal which will see the government hand the historic Welsh plant’s owners, Tata Steel, £500m to build a new electric furnace – but at the cost of huge redundancies from the closure of its last remaining blast furnace.
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Natarajan Chandrasekaran, the chair of Tata Group, told the Financial Times on Tuesday that talks were “going well” and it was “very close” to agreeing a deal.
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It is understood the government, which previously promised to “push for job guarantees”, has been unable to protect these jobs, with 2,500 still expected to go in the coming months.
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The Agenda
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7am BST: UK GDP for July (forecast: 0.2%, previous: 0%)
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7am BST: UK trade, industrial production for July
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1.30pm BST: US inflation for August (forecast: 2.6%, previous: 2.9%)
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Main Events
Services activity rose 0.1% following a 0.1% decline in June but failed to show the stronger recovery expected, while industrial production fell 0.8%.
Construction production fell 0.4% in July.
The services sector grew by 0.6% in the three months to July. The construction sector also grew by 1.2%, but output fell by 0.1% over the same period.
Professional, scientific and technical activities were the largest contributor to the increase in services output over the three-month period, increasing by 2 percent. The next largest contributors were wholesale and retail trade, and repairs of motor vehicles and motorcycles, with output growing by 0.7 percent.
UK economy remains stable
The UK economy remained stable in July, according to the latest official figures, growing by 0.5% in the three months to July.
Economists had expected GDP to rise 0.2% in July, after growth was also zero in June.
GDP growth was flat in July 2024 but increased by 0.5% in the three months to July 2024.
The services sector grew in July (+0.1%), while both the production sector (-0.8%) and the construction sector (-0.4%) declined.
Read more ➡️ https://t.co/rI5JUOz1LX pic.twitter.com/8KVdtuuBEK
— UK Office for National Statistics (ONS) (@ONS) September 11, 2024
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Dollar falls 1% against yen as Harris puts Trump on the defensive
The dollar fell more than 1% against the yen, hitting its lowest level this year. Kamala Harris put Donald Trump Last night, in the first and only televised presidential debate, Trump found himself on the defensive.
The yen also strengthened following comments from a Bank of Japan director. Junko NakagawaIn his speech, he reiterated that the central bank would continue to raise interest rates if inflation and the overall economy progress as expected.
The dollar fell as much as 1.2% to 140.71 yen, its lowest level since Dec. 28, before recovering slightly.
An economist at Daiwa Securities Capital Markets said:
Economic output was flat in June but is now expected to pick up steam in July, growing 0.3% month-on-month, leaving the three-month growth rate unchanged at 0.6%. Growth will also reflect in part a 0.5% rise in retail sales, as much-needed better weather lifted demand.
The survey also showed growth in the services sector as a whole, not just construction, with the manufacturing production PMI rising to its highest level in more than two years. So while factory output rose in June by the most in four months, we expect GDP expansion in July to be broad-based.
Introduction: UK economy expected to return to growth in July
Good morning and welcome to our continuing coverage of business, financial markets and the global economy.
The UK economy is expected to grow in July after flattening out in June.
The latest GDP figures, due to be released at 7am by the Office for National Statistics, are expected to show the economy expanded by 0.2% in July, after zero growth in June.
Economist at Deutsche Bank Sanjay RajaHe predicts GDP will rise 0.3% in July, he said:
What is driving the increase in output? A strong recovery in services activity, driven primarily by a recovery in retail and leisure services. Industrial output is also expected to expand in the early third quarter, mainly due to higher oil production and, to a slightly lesser extent, manufacturing output. Finally, the construction sector is expected to increase for the third consecutive month (0.2% m/m).
Where are the risks to our forecasts? There is a downward bias, and the modeled estimates are downward biased compared to the point estimates.
Looking ahead, GDP is expected to continue expanding steadily, averaging around 0.4% quarterly growth in the second half of the year. While it is still early days, risks to the quarterly forecasts are biased to the upside, and upside risks to the annual growth forecast are also increasing.
At the same time, trade and industrial production figures are also available.
Today is also Inflation Day in the United States. Headline inflation for the year is expected to ease to 2.6% from 2.9%, while core inflation, which excludes volatile food and energy costs, is expected to remain at 3.2%.
Economist at Investec Ryan Jajasaputra said:
July's results provide further confirmation that inflation remains on a disinflationary trajectory, with the 2.9% reading falling below 3% for the first time since March 2021. Early consensus forecasts call for it to ease further to 2.6%.
Also today:
The UK steel industry is bracing for 2,500 job cuts. Port Talbot SteelworksThe UK government is preparing a contract to build a taxpayer-backed factory in South Wales, putting thousands more UK jobs at risk.
Secretary of Business, Jonathan Reynoldsis expected this morning to set out details of a bailout package which will see the Government hand over a rescue package to owners of the historic Welsh factory. Tata SteelThe company has spent £500 million building new electric arc furnaces, but the cost is huge job cuts as its last remaining blast furnaces are closed.
Natarajan ChandrasekaranChairman Tata Group, He told the Financial Times He said Tuesday that negotiations were “progressing well” and that they were “very close” to an agreement.
Despite the government previously promising to “push ahead with a jobs guarantee”, it has failed to protect these jobs, with a further 2,500 jobs expected to be lost in the coming months.
agenda
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7am BST: UK GDP July (Expected: 0.2%, Previous: 0%)
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7am UK time: UK trade, industrial production in July
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1.30pm BST: US inflation in August (forecast: 2.6%, previous: 2.9%)
