The UK economy returned to growth in May, expanding by 0.4% in gross domestic product (GDP) terms, with the pound climbing and economic prospects improving after the Labour party's election victory. In North America, the US annual inflation rate eased to 3% in June, boosting hopes of an interest rate cut in September. In Europe, German factory orders dropped, and Eurozone construction remained in the doldrums. Meanwhile, China recorded a record trade surplus in June, but its GDP numbers disappointed, and India's CPI inflation picked up to 5.1% in June.
Jerome Powell, Chair of the US Federal Reserve, testified to Congress that the inflation environment was improving and that holding interest rates too high for too long would threaten economic growth and jobs. The UK's economic prospects for the rest of the year have improved since the General Election, according to credit ratings agency Fitch, which stated that the election result will mean more near-term political stability. The headline US annual inflation rate eased to 3% in June, the lowest in a year, and down from 3.4% in May, according to official figures, boosting hopes of an interest rate cut in September.
In Europe, German factory orders dropped a significant 1.6% month-on-month, continuing their recent broad downtrend, while Eurozone construction purchasing manager index (PMI) surveys signalled that the sector remained in the doldrums in June. China recorded a record $99bn trade surplus in June, amid signs of importers bringing forward orders to beat higher tariffs on goods. The latest inflation figures in China showed annual consumer price index (CPI) inflation dipped from 0.3% in May to 0.2% in June, despite Beijing's measures to revive consumer demand. Indias CPI inflation picked up to 5.1% in June, reversing declines seen over the previous three months, as weather-related crop damage drove food prices higher.
Overall, the global economic update presents a mixed picture, with various regions experiencing different economic trends and challenges.