- US retail sales fall more than expected on weak autos
- UK pay growth highest since records began in 2001; economists say this means first UK rate hike could come ‘a bit sooner’
- UK productivity rises above pre-pandemic levels
- Eurozone bounces back with 2% growth in second quarter
- Stocks fall after China regulatory crackdown on tech firms as markets also track worsening situation in Afghanistan
Britain’s health regulator has approved Moderna’s Covid-19 vaccine for use in children aged 12 to 17 years, a few weeks after the Pfizer/BioNTech shot was given the green light.
The Medicines and Healthcare products Regulatory Agency confirmed that the vaccine, known as Spikevax, is safe and effective in this age group. While most children only develop mild or no symptoms if they get Covid-19, they are still able to spread the virus and some are at risk of becoming seriously ill.
James Knightley, chief international economist at ING, is less pessimistic.
US retail sales fell sharply in July, but it isn’t necessarily a disaster. The resurgence in Covid and anxiety over inflation’s impact on spending power has certainly hurt sentiment, but the re-opening, a rebalancing of priorities from goods to services and rising household incomes still means broader spending can continue to grow.
With the economy re-opening there are a greater number of options on which to spend money. We will increasingly see a rebalancing of consumers’ total spend away from “things” that are picked up in retail sales, towards “experiences”, such as travel, entertainment and leisure, which are not.
While we suspect retail sales will underperform wider spending patterns, both goods and services can continue to grow. Consumer finances remain in good shape with incomes picking up thanks to rising employment and wages. Meanwhile, the Federal Reserve flow of funds data showed households have seen their wealth surge $20tn since the end of 2019 with $3tn of that increase in liquid cash, checking and time savings deposits.
Admittedly, last Friday’s plunge in consumer sentiment is a worry, likely reflecting the Covid resurgence and anxiety over surging inflation’s impact on household spending power. So far, evidence of a moderation in high frequency tracking data, restaurant bookings and air travel is only tentative at this stage. Nonetheless, it is something we will need to keep an eye on and already presents downside risks for August activity readings.
