There was positive economic news to round off last week with the latest UK retail sales figures showing a healthy rebound in May after April’s weather-affected washout.

Sales by volume climbed 2.9% after April’s 1.8% decline, meaning the three months to the end of May saw a 1% increase on the three months to the end of February.

In contrast, the latest UK PMI (purchasing managers’ index) composite reading showed a slowdown in business activity towards the end of the second quarter.

Manufacturing output rose to the strongest degree since April 2022 driven by better order books and improved business confidence, but service-sector activity slowed as companies paused spending.

The survey also highlighted a jump in input cost inflation in June as severe global shipping constraints led to higher transport costs, which in turn led to producers raising their prices at the sharpest rate in over a year.

This resurgence in cost pressures is something the Bank of England will need to take into account when it considers whether or not to cut rates at its next meeting.

Looking ahead, the Federal Reserve will be watching the latest US core PCE (personal consumption expenditure) figure for May, which is expected to drop to 2.6% from 2.8% in April, as well as the JOLTS labour market survey and ADP employment data, as it considers the timing of rate cuts.

Asia-watchers will want to keep an eye on Chinese PMIs, Japan’s Tankan business survey of manufacturing confidence and South Korean exports, which are seen by some as a useful barometer of global economic health given the country produces a wide range of consumer goods from smart phones and TVs to cars.

Next week’s calendar is fairly light, with the focus on UK house prices and mortgage approvals, with the biggest news by far the outcome of the general election which takes place on 4 July. 

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