Daily Market Report 27/05/16


Yesterday’s GDP figure showed that Britain’s economy grew at 0.4% in the first three months of the year, despite a slump in manufacturing and construction output that has dragged down growth.

The economy only expanded in the first quarter after increases in business services and government spending, especially on the NHS, and a surge in consumer spending boosted expansion. Real household spending was up 0.7% on the quarter and added 0.5 percentage points to the growth rate.

The disappointing manufacturing and construction figures were blamed by economists on the uncertainty over the referendum’s outcome, weak overseas growth and financial market volatility. Most worryingly, business investment was estimated to have fallen by 0.5% in the first quarter as companies shelved plans to buy new equipment and build new offices and factory space as another sign of the uncertainty surrounding the Brexit debate affecting business confidence and investment.


Orders for long-lasting (durable) U.S. manufactured goods surged in April on strong demand for transportation equipment but continued weakness in business spending plans suggested the manufacturing rout was far from over. Manufacturing, which accounts for 12 percent of the economy, is struggling with the lingering effects of the dollar's past surge and sluggish overseas demand.

The Commerce Department said on Thursday orders for durable goods, items ranging from toasters to aircraft meant to last three years or more jumped 3.4 percent last month and non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent.

The other key data release showed the number of Americans filing for unemployment benefits fell more than expected last week, moving back to near cycle lows as the labour markets remain healthy and the economy regains momentum after stumbling in the first quarter.


Key Announcements

13:30 – USD – Prelim GDP is expected to increase to 0.8%

18:15 – USD – Fed Chair Yellen is speaking