Markets and Economies Report - Aug 2008

Signs of a slowing global economy were again evident in August. US economic data were weak – retail sales and personal consumption declined, while unemployment rose. The leading indicator for growth fell sharply and manufacturing surveys suggested a sluggish US economy. The US housing market implosion continued, although there are tentative signs that the pace of contraction is moderating. US producer prices recorded their strongest annual increase since 1981 and inflation was higher than expected, up 5.6% over the year to July. However, the slowing oil price and weak economy suggest inflation is likely to fade as an issue over the next six months. Despite the weak theme, some positive signs emerged.