May failed to upset our equilibrium and, of course, other markets around the world have also been enjoying a strong recent performance. The rumblings of a trade war in the background have barely registered in investors’ thinking.
The slow march towards leaving the European Union has also seen its fair share of fireworks. The pound briefly saw buying interest as a soft Brexit seemed on the cards, only for the resignation of David Davis and Boris Johnson to bring back the sellers. Even with the support of the greater majority of the Cabinet, there is no guarantee that Prime Minister May’s plan will be accepted in Brussels.
But investors seem content to shrug aside these concerns. True, we are in the silly season so far as hard news is concerned. Parliament will shortly start its summer holidays and although the company reporting season for those concerns trading to a calendar year end will commence soon, it will only be the first half figures that will be announced which generally attract less attention than those of the full year.
Of more importance has been the publication of economic growth data from the Office of National Statistics that has introduced a departure from the previous quarterly update. The ONS will in future publish monthly and provide a rolling three months figure that it believes will allow a better judgment to be made on our economic progress. The figures for May showed a 0.3% rise in GDP, helped apparently by better weather and the Royal Wedding.
The three months to the end of May was slightly less positive – a rise of just 0.2% - but in March our weather was still iffy. Indeed, the poor winter undoubtedly held back the economy, just as the current long hot summer is providing something of a boost. Overall the picture was mixed, with manufacturing and construction lagging the service sector, though retailing clearly benefitted from both the wedding and the weather.
Come the autumn and investors are likely to be giving more thought to what life might be like post our departure from the EU. In the meantime, the prudent course of action seems to be to enjoy the better weather and just reflect that Gareth Southgate’s boys did better than most expected. It is sad that we do not find ourselves in the final, but in the absence of another Royal Wedding, perhaps our achievements in the World Cup did provide a modest boost to the economy, if only in the sale of waistcoats.
