Growth in house prices in the UK slowed in August

• In response to the North Korea’s ballistic missile test, US President Trump said that all options are on the table to deal with North Korea. This reaction appears more measured than the ‘fire and fury’ and ‘locked and loaded’ kind of statements from him before. Also there was little comment on the topic via his Twitter feed. Though political issues may escalate in days to come, markets hinged on this muted reaction to regain some of the ground lost on Tuesday. Conference Board Consumer Confidence Index in the US came in stronger than last month at 122.9, its second highest since 2001. Though the cut-off date for the consumer sentiment was before the North Korea incident, overall consumer optimism appears to derive strength from the strong state of the labour market. Underlying economic growth is well entrenched and jobs seems easy to find. Against this backdrop, it is reasonable to expect consumption growth to remain rapid in the coming months.
• Growth in house prices in the UK slowed in August. On the month prices fell 0.1%, taking the annual growth to 2.1% which was the smallest since June 2013. The figures are the latest sign that worries about the wider economy are spilling over into the housing market. Britain posted the weakest expansion among Group of Seven nations this year as faster inflation and uncertainty about the future outside of the European Union weighed on consumption and investment. UK GDP growth is likely to be at 1.5% this year, compared with 1.8% in 2016.
• The week ahead is busy with economic data releases. Price inflation in Germany today is expected to show a number around 1.8% - relatively stronger than the rest of the Eurozone. ADP employment data out of the US may show an increase of 185k, the data being before the damage done by Hurricane Harvey. QoQ Core PCE in the US is expected to be stable at 0.90% and 2Q annualised GDP may come in stronger than the previous number of 2.6%.

Click here to Download Full article