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- Last week's highlight was the release of June activity data and the first print of Q2 GDP. The Q2 figure came in in line with consensus expectations of 4.8%Q/Q (a little below the BoE's 5.0% forecast). June monthly GDP data was higher than expected with May revised lower, and we have seen analysts draw both positive and negative conclusions from the data, with some upward revisions to GDP for the year, and some downward revisions, too.
- This week, there will be a lot of focus on the data again. Tomorrow we have the labour market report. As well as the headline numbers for June (recall that most businesses reopened on 17 May and all legal restrictions including social distancing were removed on 21 June), there will be focus on the more timely experimental HMRC data payroll data for July. Labour market data is arguably the most important data for the Bank of England right now, whose forecasts show that the peak in unemployment has already happened (before the furlough scheme has ended).
- Wednesday will see inflation data, where any big surprises have the potential to have a decent impact on the market. Friday will see retail sales and public finance data, both for July. Public finance data is unlikely to be market moving but retail sales data will give us the best estimate yet of the state of consumer spending in July.
- In other news, new rules come into force across England for contacts of Covid-19 cases today. For those who have received their second dose of a Covid-19 vaccine at least 14 days prior, there will be no need to self isolate if they have been a close contact of someone who has tested positive for Covid-19, they will instead be encouraged to take a PCR test as soon as possible (but will not have to isolate as they await the results). This rule change should have a positive impact on the economy as the number of people required to self-isolate (and hence to stay away from work) will be vastly reduced.
- The rule changes will not apply to any adults over the age of 18 years and 6 months who have not received both doses of their Covid-19 vaccine – they will still be required to self-isolate if they come into contact with a confirmed case. However, the rules on childcare bubbles will also end (which had also been impacting some parents' ability to work) with 5-18 year olds simply required to receive a PCR test (like fully vaccinated adults) and under 5-year-olds only required to take a PCR test if someone in their household is a confirmed case.