“The British Economy…”

Source: Reuters

Britain’s economy contracted by a record 20.4 percent between April and June, when the lockdown measures were tightest. This is the largest contraction reported by any major economy so far, official figures published on Wednesday showed. The data highlights that the sixth-biggest economy entered a recession as it shrank for a second quarter in a row. The Office of National Statistics said that there were signs of a recovery in the month of June, whilst gross domestic product grew by 8.7 percent from May. The level of output in June was 16.8 percent below its level a year earlier, compared with a 23.3 percent drop in May. British GDP shrank by 2.2 percent in the first quarter of the year, reflecting the lockdown that started on March 24. Meanwhile British consumers spent the most in July as businesses reopened according to industry figures on Tuesday. Sales of takeaways and fast food were 20 percent higher than last year as people preferred to eat at home. Finance minister Rishi Sunak is trying to change this using government subsidies for dining in restaurants in August. Spending in groceries, furniture and electronics was also strong however travel spending was weak. Total spending across the British Retail Consortium members, mostly large chains, was 3.2 percent higher than a year earlier close to June’s increase of 3.4 percent, the biggest rise since May 2018. According to the Chief Executive of BRC Helen Dickinson, “The strongest performance came from food, furniture and homeware, as consumers increasingly invest in their time at home.”

UK- Drop in Unemployment the biggest since 2009

The number of people in employment in the UK dropped by 220,000 in the three months to June. This is the most the labour market has been hit since 2009 amid the coronavirus pandemic said the Office for National Statistics. The unemployment rate held at 3.9 percent but that reflected an increase in people who had given up looking for work.

Second Quarter German Wages

Gross monthly earnings for full and part-time workers in Germany dropped 2.2 percent on average in the second quarter from a year ago amid the wide use of short-time work during the coronavirus crisis, said the Federal Statistics office on Tuesday. In a statement the Office said, “the broad use of short-time working due to the coronavirus pandemic had a negative impact on the level and development of gross monthly earnings and working hours”. It further added that the short-time work programme, under which employees temporarily work shorter hours but keep their jobs while the state make-up for the shortfall, cushioned the loss of income for employees to a large extent.

Eurozone Industry Output

Industrial production in the eurozone rose in June, according to official data on Wednesday. The increase in manufacturing output was driven by a surge in production of durable goods such as cars or fridges. This could be a positive sign of consumer confidence as coronavirus restrictions were eased in the eurozone. According to the European Union Statistics office, Eurostat, manufacturing output in the 19-country currency bloc rose by 9.1 percent in June from May, after it had increased by 12.3 percent in May on the month. Eurostat has also slightly revised downward from 12.4 percent its previous estimate of industrial output in May. Meanwhile, the year on year drop was less pronounced than in May and April further confirming a slow rebound. Out of the countries in the EU for which data is available, all have posted an annual drop, except Ireland where industrial output grew by 4.5 percent in June compared to a year earlier. The month-on-month production of durable goods increased by 20.2 percent, which is the highest increase among segments studied by Eurostat. Capital goods output rose significantly by 14.2 percent indicating stronger appetite for investments among factory managers. Meanwhile, while the production of energy increased by only 2.6 percent, output of non-durable consumer goods, like clothing and canned food increased by 4.8 percent on the month.

Australia – Employment

Employment in Australia was steady through July, according to weekly data however the state of Victoria which is experiencing a new wave of coronavirus infections, suffered a setback. Data from the Australian Bureau of Statistics (ABS) showed that the number of payroll jobs nationwide eased 0.1 percent in July while Victoria recorded a drop of 1.5 percent amid strict mobility restrictions.

Donald Trump Signed Executive Orders

On Saturday US President Donald Trump signed executive orders restoring unemployment payments to American employees who lost their jobs due to the pandemic. The number reached milestone of 5 million cases. Meanwhile, Trump signed two other executive orders banning two popular Chinese apps. Meanwhile, China on Monday imposed sanctions on 11 US citizens including lawmakers from President Donald Trump’s Republican Party after the sanctions on Hong Kong and Chinese Officials last week. Investors are closely watching the Sino-US tensions ahead of a meeting on trade that reviews the first six months of the Phase 1 trade deal.

US Consumer prices

US consumer prices increased more than expected in July with underlying inflation rising the most in 29 ½ years as the costs of goods and services increased. The consumer price index rose 0.6 percent last month, with gasoline accounting for a quarter of the gain. The CPI increased by the same margin in June. In the 12 months through July, the CPI accelerated 1 percent after rising 0.6 percent in June.

US Weekly Jobless Claims

The number of Americans seeking unemployment benefits dropped below one million last week for the first time since the start of the COVID-19 pandemic in the US as the expiration of a $600 weekly jobless supplement discouraged some from filing claims. The Labour Department said on Thursday that initial claims for state unemployment benefits totalled a seasonally adjusted 963,000 for the week ended 8th August compared to 1.191 million in the prior week. That was the lowest level since mid-March when authorities started shutting down non-essential business to slow the coronavirus pandemic.


Oil prices fell about 1 percent on Tuesday as hopes dropped over a swift stimulus package to relieve the US economy as the coronavirus cases increased globally. Brent crude futures dropped 1.1 percent to settle at $44.50 a barrel while US West Texas Intermediate (WTI) crude futures fell 0.8 percent to finish at $41.61 a barrel. The US Energy Information Administration (EIA) said that US crude oil production is expected to drop by 990,000 barrels per day this year to 11.26 million bpd, a steeper decline than its forecast last month for a decline of 600,000 bpd. Oil prices collapsed this year due to shattered demand and restricted travel worldwide. Consumption worldwide including Asia has started to recover as some countries eased lockdowns. The drop in oil prices prompted US oil producers to slash new drilling activity and curtail production from existing wells. Oil prices rose on Wednesday after an industry report showed US crude inventories last week dropped more than expected raising hopes that fuel demand in the US can offset the coronavirus pandemic. Brent crude was up 1.5 percent to $45.17 a barrel after dropping around 1 percent on Tuesday. West Texas Intermediate oil was up 1.6 percent at $42.26 a barrel after dropping 0.8 percent in the previous session. On Thursday the International Energy Agency (IEA) cut its 2020 oil demand forecast warning that reduced air travel due to the coronavirus pandemic would lower global oil demand this year by 8.1 million barrels per day.


The price of gold was steady on Monday after a steep fall in the previous session, as concerns over the coronavirus and the tensions between the US and China increased. Spot gold was steady at $2,033.40 per ounce. Gold is used as a safe investment in times of political and financial uncertainty. According to a Reuters tally, more than 19.73 million people have been reported infected by the coronavirus globally and 726,414 people have died. Meanwhile on Tuesday Gold fell more than 1 percent breaking below the $2,000 level for the first time in a week as the dollar strengthened and spurred investors to lock in profits. Gold looked expensive for holders of other currencies as the dollar gained and the US bond yields rebounded from multi-month lows. The price of gold tumbled roughly 7 percent in two days dragged on by the Australian dollar since Australia is the world’s second biggest gold producer. Furthermore, the yield on the 10-year US debt made its steepest gain in two months on Tuesday ahead of the largest ever 10-year auction later on Wednesday. This resulted in a wave of gold selling that deepened in Asia and has pressured the yen as better returns on the US debt attracts investment from the zero-yielding Japan. Gold rose on Thursday amid a softer dollar, consolidating further above the key $1,900 level after retreating earlier this week from an all-time high.

Currency Roundup

The Dollar maintained its gains on Tuesday after rising to a one-week high against the euro on support for safe-haven assets due to the US-China tensions and the stalemate in the US Congress over the fiscal stimulus. US Treasury Secretary Steven Mnuchin said companies from China and other countries that do not comply with accounting standards will be delisted from US stock exchanges as of the end of 2021. The euro has recently been bolstered by the views that the continent was outperforming the US and handling the coronavirus pandemic much better. Meanwhile the Turkish lira stayed near the record low reached on Friday on concerns about the country’s dropping foreign-exchange reserves, leading to expectation that the central bank will take action to stem its drop. Sterling held near five-month highs on Tuesday against a steady dollar irrespective of data showing that job losses in Britain spiked to their highest levels in more than a decade in the three months to June. The dollar moved higher against the Japanese yen on Wednesday amid a jump in US yields. Sterling rose against the dollar on Thursday, amid a weak dollar as traders shrugged off Wednesday’s dismal GDP data however remained cautious about the long-term economic outlook for Britain. In early trading the dollar was weaker as investors were losing hope that the US government would agree on a stimulus deal to support the economy and the many employees who have lost their jobs. Against the euro the dollar dropped to $1.1829 adding to a 0.4 percent decline on Wednesday. The Japanese yen recouped some of its losses from the previous day, trading 0.3 percent higher at 106.62 yen per dollar. Sterling rose 0.4 percent to $1.3076. President Donald Trump accused congressional Democrats on Wednesday of not wanting to negotiate over a US coronavirus aid package as Republican and Democratic negotiators traded blame for a five-day lapse in talks over relief legislation.

Market Wrap

Asian stocks rose on Tuesday on relief that another round of Sino-US tensions appear not to have spread on to trade. Japan’s Nikkei returned from a holiday with a 1.85 percent gain led by healthcare and industrial stocks and the Hang Seng bounced 2.3 percent. S&P 500 futures hit an all-time high on Tuesday, reaching levels last seen before the coronavirus crisis hit in February. Investors were hoping that Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans. UK mid-caps climbed to a two-month high on Tuesday amid hopes of a stimulus-led rebound that helped investors to look past a mixed batch of quarterly earnings updates. The blue-chip FTSE 100 added 1.6 percent tracking the gains in Asia and on Wall Street. Also, European stocks rose for a third straight session on Tuesday as automakers gained on strong China sales data. German government bond yields rose to a two-week high on Tuesday after a survey showed investors were more optimistic about the trajectory of the European economy than before. Other high-rated eurozone bonds followed suite. In a survey the ZEW institute showed that investor sentiment in Germany picked up more than expected in August, reflecting hopes that Germany is recovering after the pandemic. Meanwhile in early trading, Spain’s 10-year government bond yield dropped to 0.254 percent its lowest since early March. On Tuesday the S&P 500 and the Dow put a break on seven days of gains after the benchmark index came within 0.15 percent of its closing record high, amid historic fiscal and monetary stimulus. With better than expected second-quarter earnings season mainly over, investors will turn their attention to the upcoming US presidential elections. Also, on Tuesday, Democratic candidate Joe Biden chose Senator Kamala Harris as his choice for vice president. Meanwhile, President Vladimir Putin said on Tuesday that Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine after less than two months of human testing. The vaccine still has to complete final trials, raising concerns among some experts at the speed of its approval. US Stock index futures climbed on Wednesday after a pullback on Tuesday on Wall Street as markets focused on the political holdup in Washington over a new stimulus package. The differences centred around issues such as unemployment benefits and aid to state and local governments. US stocks rallied on Wednesday despite a deadlock in negotiations on a relief package, with the S&P 500 index of stocks reaching record highs. Microsoft Corp, Amazon.com Inc and Apple Inc were some of the top boosts to the S&P 500. On Thursday European stocks put a break on the four-day gains as the US government left tariffs and a host of other European goods unchanged. The pan-European STOXX was down 0.4 percent and London FTSE led the declines among the major European bourses. Washington said it would maintain 15 percent tariffs on the planes and 25 percent tariffs on other European goods, despite the moves by the European Union to resolve a long-standing dispute over aircraft subsidies.

Malta: International Trade in Goods – June 2020

A news release from the National Statistics Office shows that provisional figures for registered trade in Malta recorded a trade deficit of EUR 222.3 million during June in comparison to a deficit of EUR 423.3 million in the corresponding month of 2019. Both imports and exports registered decreases of EUR 291.6 million and EUR 90.6 million respectively when compared to the same month last year. The decrease in the value of imports was primarily due to machinery and transport equipment and mineral fuels, lubricants and related materials. On the exports side, the decrease was registered in mineral fuels, lubricants and related materials. Meanwhile, during the first six months of this year, the trade deficit narrowed by EUR 95.1 million when compared to the corresponding period of 2019, amounting to EUR 1,230.7 million. Both imports and exports decreased by €1,129.1 million and €178.1 million respectively. Lower imports were mainly recorded in machinery and transport equipment and mineral fuels, lubricants and related materials. On the exports side, mineral fuels, lubricants and related materials accounted for the main decline. Meanwhile Imports from the European Union reached €1,382.7 million, or 50.4 per cent of total imports.

Antonella Mercieca

Client Relationship Manager


Reuters, https://nso.gov.mt/


August 14th, 2020

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