Review of Q2 and the Post-Referendum Property Market: September 2016
Euro-zone economies have shown little sign of improvement (or deterioration) since the UK’s vote to leave the EU. Indeed, headline inflation was unchanged at 0.2%y/y in August. Meanwhile, at 10.1% in July, the unemployment rate was also unchanged from a month earlier. And while the composite PMI saw a marginal improvement, rising from 53.2 in July to 53.3 in August, the forward-looking aspects of the index, such as those relating to new orders and employment intentions, were less rosy. Meanwhile, the first estimate of US GDP growth for the second quarter disappointed, at 1.2% annualised. This was considerably below the consensus estimate of 2.6%. In addition, downwards revisions to the last few quarters mean that GDP growth is now expected to end the year at 1.5%, rather than our previous forecast of 2%. Moreover, headline inflation is below 1% and may yet ease on the back of softer energy prices.