China’s economy holding up

The euro drifted lower against the dollar for a time yesterday, falling below $1.13, but  subsequently recovered and it is trading back above this level this morning. In the absence of any Brexit news, the pound is tending to weaken against the single currency, trading at over 86.5p at the start of play today. Elsewhere, US 10-year bond yields ticked up further yesterday to around 2.60%, their highest level in about four weeks, while equivalent German and UK yields were flat on the day

China’s GDP growth moderated further in the opening quarter of 2019, coming in at 1.4% q-o-q, which is an annualised rate of growth of just over 5.5% (the authorities are targeting an increase in GDP for this year as a whole of 6-6.5%) However, the quarter seemed to finish on a solid note, with the annual rate of growth in retail sales, industrial production and fixed asset investment all picking up in March from the Jan-Feb period, suggesting the authorities’ fiscal and monetary efforts to support the economy are bearing fruit

The UK labour market continues to perform well, with employment up a healthy 179,000 (or 1.4% y-o-y) in the three months to February and the unemployment rate remaining at a cycle low of 3.9%, while earnings grew by 3.5% y-o-y, well ahead of the rate inflation which will support consumer spending

Construction output in the Euro area rose strongly in February, which together with recently published industrial production data suggest growth in the zone may be stabilising after slowing quite sharply over the course of last year and at the beginning of this year

At home, the Department of Finance has lowered slightly its forecast for GDP growth for this year and next year, to 3.9% and 3.3% respectively, largely reflecting softer growth in key export markets

Data due today includes CPI inflation for March in both the UK and the Euro area