UK Economy contracts between April and June.

The UK economy shrunk in the second quarter of the year, as well as this we saw the UK economy contract by 0.6% in June. However, that figure was much better than the 1.3% fall predicted by economists. The ONS said that while the bank holiday impacted on monthly GDP, it had little impact on the quarterly figure.

A big part of the drop in GDP in June was because of the Platinum Jubilee – which meant two fewer working days of producing goods and services, in contrast to May, which had one additional working day. It was always expected that that would magnify the downswing from May to June and economists expected a sharper drop in activity. The 0.1% drop over the three months from April to June was only half as bad as some economists thought.

In the US, the number of Americans filing new claims for unemployment benefits rose for the second straight week, indicating further softening in the labor market despite still tight conditions as the Federal Reserve tries to slow demand to help tame inflation. Initial claims for state unemployment benefits rose 14,000 to a seasonally adjusted 262,000 for the week ended Aug. 6, the Labor Department said on Thursday. Economists polled by Reuters had forecast 263,000 applications for the latest week.

The U.S. economy unexpectedly contracted in the second quarter, with consumer spending growing at its slowest pace in two years and business spending declining. The second straight quarterly decline in gross domestic product largely reflected a more moderate pace of inventory accumulation by businesses as job gains overall have stayed strong. The economy created an unexpectedly robust 528,000 jobs in July, the unemployment rate fell back to its pre-pandemic low, and wage gains surprised to the upside, the Labor Department announced last Friday in a monthly employment report that makes it harder for the Fed to bring the economy into balance soon.

In the Eurozone, industrial production data are also due. Output is thought to have stagnated in June, leaving industrial production at the same level in Q2 as it was in Q1.

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