UK and Europe posting strong data in an uncertain environment – Rabobank

Stefan Koopman, Market Economist at Rabobank, notes that the UK’s latest labour market figures showed that UK unemployment fell to 4.9% in the three months through May.

Key Quotes

“This is a post-crisis low. Employment increased by 176,000 in this same period and this lifted the employment rate to 74.4%. However, the data also indicate that this increase in employment was primarily driven by self-employment, whereas hiring of full-time employees has been more or less flat since the start of the year. It’s hard to fathom that this has been an entirely voluntary shift in workers’ preferences (flexibility over stability) and indeed may reflect some weakness in hiring ahead of the Brexit referendum.

In one of the first macro releases that covers the post-referendum economy, Eurozone consumer confidence slipped from -7.3 to -7.9 in July. This was still a tad higher than initially expected. So far, the effect of Brexit on Continental consumer confidence has been marginal, but this shouldn’t come as a big surprise. Even though the economic outlook of the Eurozone has been clouded, on which we elaborate more in the Day ahead, we expect this uncertainty to show up in the business surveys first.

This uncertainty may continue lingering for quite a while, if we go by the comments that PM May made while visiting her German colleague. She said that formal exit negotiations won’t start before Britain has made up its mind on what it actually wants and that this may not happen before year-end.”