Donald Trump shocked the world last week by withdrawing the US from the Paris agreement. This agreement was designed to organise a coordinated effort by all countries to reduce carbon emissions and combat climate change. The US will now sit alongside Libya and Nicaragua (Nicaragua only refused to sign as it believed the agreement wasn’t strict enough) as the only countries not signed up to the deal. However, given the terms of the agreement and momentum towards clean energy in the US economy, it is unlikely to make a significant difference over the longer term aside from denting good will to America on the international stage. Nevertheless, the oil price fell on the anticipation that US fossil fuel production would be less restrained by regulations or caps.

Concerns over the growth of consumer debt rose once again, in both the UK and US. In the UK credit card borrowing growth remained at over 10% over the year to April. It is likely that this has been driven by the increased prevalence of long-term 0% deals. However, given the mounting constraints on real earnings growth, the high increases in borrowing (and consumption) cannot continue indefinitely. The higher debt load will ultimately slow down consumption, impacting the growth of the economy as a whole. Similarly, in the US, the growth of auto finance, in particular, has been highlighted as an area where there may be risks. Slipping underwriting standards and prevalence of cheap debt since the financial crisis has encouraged US consumers to replace older cars, flattering auto sales and pushing down prices in the second-hand market. Furthermore, links have been made to the subprime mortgage scandal, where loans were given to buyers with reduced chance of repaying the debt.

US jobs growth negatively surprised forecasters, coming in at 138,000 against 185,000 expected. However, the unemployment continued to decline further, to 4.3%. Furthermore, downward revisions were made to the previous two months decisions totalling 66,000 and wage growth continued to disappoint. There has been a marked slowdown in job creation so far this year with the average monthly figure falling to 162,000 from the 187,000 average seen in 2016. Economists have been anticipating an increase in wage growth due to a tightening labour market; however, this has yet to materialise. It appears that US employers may be choosing not to expand rather than pay more for employees.

The UK trade balance and manufacturing output figures will be released on Friday, along with Chinese inflation data.