UK car production revs up in July

UK car production jumped in July by 8% year-on-year, after disappointing data in June. However, the number of cars made in the UK in the first seven months of the year fell about 1.6% relative to 2016. Given that 80% of cars produced in the UK are exported the strength of the global economy will be a big determinant of ongoing and future demand. Furthermore, given that car exports make up over 10% of total UK exports (and were the fastest growing), any weakness will have a tangible impact on the overall trade balance. A weaker pound will help inward investment into additional UK car manufacturing capability, although uncertainty over trade tariffs with the EU may delay decisions, given the notorious complexity of the auto sector’s supply chains.

Last week the US was bracing itself for storm Harvey, which hit Texas on Friday. Traders were anticipating that there would be some damage; however, the subsequent flooding is estimated to have caused more than $20bn of damage already, with more rainfall predicted. Insurance companies were the worst hit on Monday as large pay-outs, and the risk of further damage is being priced in. It is difficult to anticipate the wider economic damage, although 30,000 people are expected to be housed in emergency shelters and some key oil trading, storage and refining areas are likely to be affected.

The heads of the world’s major central banks joined their emerging market counterparts, academics and banking executives at Jackson Hole, Wyoming last week for the 39th Economic Policy Symposium. Discussions held there are likely to influence policymakers’ decisions and interest rates globally. The general direction of travel for developed market central banks if for tighter (or less loose) monetary policy, led by the Federal Reserve. This is unlikely to change dramatically. Furthermore, delegates are expected to discuss broader topics such as wealth distribution, structural changes in the global economy and potential sources of rising inflation.

Index Open Close Change % Change
FTSE 100 7323 7401 78 1.07%
S&P 500 2430 2443 13 0.53%
Dax 12165 12167 2 0.02%
Cac 40 5114 5104 -10 -0.20%
Nikkei 225 19470 19452 -18 -0.09%
UK 10 Year Gilt Yield 1.07 1.04 -0.03 -2.80%

Japanese and US unemployment rates will be announced this week on Tuesday and Friday respectively. Furthermore, German inflation and jobs data for August will be released.