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Commercial Property Market Review – August 2021

Investment in student accommodation nears £2bn in H1

The latest data from Knight Frank shows that investor appetite for purpose-built student accommodation (PBSA) was strong in H1, despite the sector being adversely impacted by the pandemic, with restrictions limiting international travel and disrupting study for a large proportion of students. The sector is in a strong position to bounce back as face-to-face teaching resumes and a pursuit for the ‘university experience’ incites students.

Total investor spending for the first half of the year reached almost £2bn, as deal volumes rose, and investors looked beyond short-term disruption. Cumulative deal volumes to the end of June were 47% higher than the same period last year and 4% higher than in 2019. Recent UCAS data shows increased optimism for the scale of demand this autumn, with year-on-year rises evident from both UK and overseas applications.

Summarising the uptick in investment transactions, Knight Frank believe it shows that investors, ‘have confidence in the sector’s ability to deliver long-term, stable income streams. It also reflects a wider pivot which has taken place over the last 18 months, from institutional investors towards residential assets across all age groups. Rising student numbers and ongoing low supply ratios in many university cities are also driving investor demand for PBSA.’

Indicators point to improving market sentiment in Q2

The newly compiled Commercial Property Survey from the Royal Institution of Chartered Surveyors, for Q2 2021, clearly highlights an improvement in overall market sentiment, with 56% of respondents currently feeling that market conditions are consistent with an upturn, this is an increase from 38% in Q1 this year.

The industrial sector continues to experience sharp growth in interest from both investors and occupiers. Respondents to the quarterly survey refer to a continuation in the sharp contraction in availability of leasable industrial space, with the net balance falling deeper into negative territory at -48%, compared with -39% in Q1. Over the next year, respondents expect strong industrial capital value growth across all UK regions.

Encouragingly, trends in demand in the office sector seem more stable than the previous quarter. Although both secondary and prime retail values are predicted to decline, projections are less negative than in previous surveys. Retail availability continues its upward trajectory. Across the retail and office sectors, returning net balances of +52% and +40% respectively in Q2, were recorded.

Demand varies widely at a sector level, with current sector net balances measuring +63% for industrials (versus +57% in Q1), -3% for offices (versus -34% in Q1) and -25% for retail (versus -55% in Q1).

In what the report declared a ‘noteworthy development‘, capital value projections are now only ‘marginally negative for hotels‘, with the latest net balance shifting significantly from -47% in Q1 to -4% in Q2.

Rising student numbers and ongoing low supply ratios in many university cities are also driving investor demand for PBSA

Commercial property currently for sale in the UK

Regions with the highest number of commercial properties for sale currently are South West and North West England
Northern Ireland currently has the lowest number of commercial properties for sale (26 properties)
There are currently 1,324 commercial properties for sale in London, the average asking price is £1,550,639.

Region	No. properties	AVG. asking price
London	1,324	£1,550,639
South East England	1,143	£2,074,320
East Midlands	745	£1,007,808
East of England	733	£633,795
North East England	777	£349,285
North West England	1,270	£446,614
South West England	1,516	£536,991
West Midlands	1,137	£488,318
Yorkshire and The Humber	1,117	£316,941
Isle of Man	51	£486,457
Scotland	1,102	£304,831
Wales	755	£422,476
Northern Ireland	26	£412,121

Source: Zoopla, data extracted 19 August 2021

Commercial property outlook

Occupier demand – broken down by sector

A headline net balance of +16% of contributors reported a pick-up in overall tenant demand over Q2, compared to -5% in the previous quarter
A net balance of +63% reported an increase in demand for industrial space
Retail and office sectors remain in negative territory at -25% and -3% respectively.

Source: RICS, UK Commercial Property Market Survey, Q2 2021

Availability – broken down by sector

There is a continuing drop in the availability of industrial space, with the latest net balance falling to -48% in Q2
Availability remains on an upward trajectory for office and retail, returning net balances of +40% and +52% respectively in Q2.

Source: RICS, UK Commercial Property Market Survey, Q2 2021

All details are correct at the time of writing (19 August 2021)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

Younger investors and social media

The Financial Conduct Authority (FCA) is concerned about how much influence social media could be having on younger investors, who could unknowingly be taking on significant financial risks.

According to the FCA, this younger, more diverse group of investors is highly reliant on social media platforms such as Instagram, YouTube, and TikTok for investment tips and advice, but they tend to lack the knowledge and understanding required to make informed choices.

A mismatch of confidence and resilience

The FCA expressed concerns that these investors are confidently investing in riskier products despite a ‘striking’ lack of awareness of any associated risk. Shockingly, 45% did not associate ‘losing some money’ as a potential risk.

This group also shows low levels of financial resilience, with the findings showing that a significant loss could have a fundamental impact on the lifestyles of 59% of inexperienced investors.

Five questions to ask yourself

A digital disruption campaign has been launched by the FCA to raise awareness of the risks, prompting people to ask themselves five questions:

1. Am I comfortable with the level of risk?

2. Do I fully understand the investment being offered to me?

3. Am I protected if things go wrong?

4. Are my investments regulated?

5. Should I get financial advice?

Take care of your financial future Its pays to take advice – we can help develop an investment plan suited to your long-term goals and risk profile.

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

News in Review

“Employers are keen to re-build following an incredibly turbulent 18 months for business”

With double jabbed people, as well as those aged under 18 in England and Northern Ireland, no longer legally required to self-isolate if they are identified as a close contact of a positive COVID-19 case, many will be breathing a sigh of relief, not least businesses who have struggled with staff shortages. A recent survey of 700 company directors conducted by the Institute of Directors (IoD), revealed that 44% of businesses are currently experiencing staff shortages, a situation which risks undermining the recovery and fuelling inflationary pressures.

While 21% of directors attribute shortages to employees forced to self-isolate due to COVID contacts, a massive 65% of directors said it’s due to the UK’s long-term skills gap, with 40% struggling because of a lack of potential workers from the EU.

Senior Policy Advisor at the IoD, Joe Fitzsimons, commented, “Employers are keen to re-build following an incredibly turbulent 18 months for business… the issue of labour shortages is proving disruptive across a huge range of sectors and at all levels. Ensuring that workers are available with the right skillset to perform effectively is a crucial pre-requisite for recovery.”

UK economic rebound confirmed in Q2

The easing of restrictions helped to support the UK economy, which grew by 4.8% in Q2, according to data released last week from the Office for National Statistics (ONS). In terms of output, growth was primarily driven by retail trade, food service activities and accommodation. Although slightly below Bank of England estimates for 5% growth, the main driver of growth was consumer spending, which increased by 7.3% during Q2, ahead of expectations. ONS data highlighted that the level of GDP is currently 4.4% below where it was pre-pandemic Q4 2019.

Head of Economics at the British Chambers of Commerce (BCC), Suren Thiru, reflected on the Q2 data set from the ONS, “Strong growth in the second quarter may be the high point for the UK economy, with economic activity likely to moderate in the third quarter as staff shortages, supply chain disruption and consumer caution to spend, limits any gains from the lifting of restrictions in July… Against this backdrop, policymakers must guard against complacency over the underlying strength of the recovery. A comprehensive rebuild strategy to turbocharge growth post-COVID is needed, alongside a clear plan for dealing with any future virus response, to give firms the confidence to start firing on all cylinders again.”

Labour statistics released by ONS on Tuesday confirmed that job vacancies have hit a record high, reaching 953,000 in the three months to July. The unemployment rate fell to 4.7% in the three months to June.

Fund inflows bolstered by earnings strength

It has been reported that in the week to 11 August, global equity funds registered inflows for a third consecutive week, with positive economic data and strong corporate earnings from the US, supporting sentiment. Inflows of $10.12bn were received into global equity funds, representing an uplift of 12% on the previous weeks’ figures. The majority of the inflows ($5.6bn) were received into European equity funds, with US counterparts obtaining $2.7bn. In Q2, it has been reported that almost 70% of global firms have beaten analysts’ profit estimates, posting average growth of 143%. Leading the earnings recovery are firms in cyclical sectors such as industrials.

China unveils regulatory plan

Last week, the Chinese government announced a plan outlining tighter economic regulation. New rules are due to be introduced on areas including technology, national security and monopolies. The 10-point plan details the strengthening of laws on science and technological innovation, culture and education. Regulations relating to China’s digital economy, including internet finance, artificial intelligence and cloud computing are also due to be evaluated.

Oil price bounce back – US urges action

As countries have gradually reopened, the oil price has rebounded. In July, members of OPEC (Organization of the Petroleum Exporting Countries) and its allies agreed to boost supply to help stabilise the situation, adding 400,000 barrels a day to their output. According to the White House, this is ‘simply not enough,’ urging the world’s top oil producers to help quell rising fuel prices to support the global recovery.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Keep one step ahead

Cutout paper family in palms of hand being clasped, offering family protection

Nearly a third of homeowners (31%) have said they would only consider purchasing protection insurance if they fell ill¹ – which defeats the point as it’s already too late by then.

Other triggers for taking out protection include having an accident (24%) or a change in employment status (25%). A further 22% say there is no circumstance that would make them consider purchasing a protection product.

Other reasons given include:

• Not thinking they need it (28%)

• Believing it to be too expensive (25%)

• Not being able to afford it (22%).

No regrets

Unfortunately, once people experience a change in their circumstances, it is often too late to protect themselves.

Protection policies rarely offer backdated cover, meaning that homeowners could find themselves in unnecessary financial difficulty as they try to meet their mortgage, bills and other essential payments.

Many of those questioned said they wish they had better understood the true value of protection, with one in seven people (14%) regretting not having financial protection in place that would have supported their mortgage payments in the past.

Get ahead

We can help explain the implications of having no protection insurance for you and your family, and advise you on suitable and cost-effective products to protect you financially – before it’s too late.

¹MetLife, 2021

Probate delayed by ‘hidden assets’

Probate software specialist Exizent has published its first Bereavement Index¹, with some interesting findings. It shows that many people fail to organise their finances before death, leading to stress and anxiety for those left dealing with a ‘financial mess’.

According to the research, one in seven (14%) of those tasked with administering the estate of someone who has died, begin the process without full knowledge of all the deceased’s accounts and assets. In fact, so many people die without leaving behind sufficient financial information, that 37% of accounts only come to light during probate.

Secret accounts

No wonder, then, that nearly 90% of those who have recently lost a loved one found the probate process ‘stressful’ – or ‘extremely stressful’ for one in six correspondents. Secret or hidden accounts were associated with higher stress, with respondents in this situation twice as likely to be ‘extremely’ stressed, while for 40%, probate had mental health implications.

Get organised

Not only will organising your financial affairs and keeping an up-to-date Will ensure your wishes are carried out when you die; it will also save your loved ones a great deal of time and stress. For guidance on getting your finances in order, speak with us.

¹Exizent, 2021

Thinking of privately educating your child?

Private school fees have once again increased this year, with an average termly fee of £12,000 (£36,000 per year) for boarding schools and £5,064 (£15,191 per year) for day pupils¹.

A lifetime endeavour

As data from the Independent Schools Council shows, sending your child to private school is a significant financial commitment – for many families, it could be their biggest expense after their homes. So, having a saving mindset from day one (contributing regularly to savings accounts and encouraging family members to do the same, for example), or even building up an investment portfolio for those with longer to save, could soon help those funds build up. Investments have the potential – although this is not guaranteed – to outstrip the returns you’ll get from savings accounts.

Getting tax-efficient

Using up those tax-free exemptions and allowances (for example the £20,000 ISA allowance), enables parents to save or invest without paying tax on their interest or returns; they can also make withdrawals without incurring tax. Grandparents can also lower their Inheritance Tax (IHT) liability through lifetime gifts – and see the benefits their money is having while they’re still around.

Other money-raising methods

Other ways of funding your child’s education include borrowing (either via a personal loan or remortgaging your property) and withdrawing your 25% tax-free lump sum from your pension if you are over the age of 55. Remember that your own financial security is also important, so make sure you still have enough to fund your retirement.

When you are making a significant and long-term financial commitment, it really is advisable to consult a professional, who can help you achieve your savings goals without compromising your own financial future – so please do get in touch.

¹ISC, 2021

The value of investments and income from them may go down. You may not get back the original amount invested.

In the News

Dividends making a slow recovery

It has been a rocky year for dividends, with data showing that investors lost almost £45bn in dividends between Q2 2020 and Q1 2021. Many will therefore be relieved to hear that, while dividends are still falling, they did so in Q1 2021 at the slowest rate recorded since the onset of the pandemic. This is according to the latest UK Dividend Monitor¹, which also revealed that half of UK companies restarted, increased or maintained their dividends in Q1, against a third in Q4 last year. Looking ahead, underlying dividends are predicted to increase by 5.6% year-on-year to £66.4bn, and banking dividends are making a slow return with ‘positive signs from miners, insurance, and media companies.’ Ian Stokes, Managing Director of Corporate Markets EMEA (part of Link Group), stated, “During the pandemic, many companies that had been over-distributing permanently reset their dividends to more sustainable levels. Most of these now hope to grow their dividends from this lower base. For others, the effect of the cuts is more transitory so they will bounce back quickly.”

¹Link Group, 2021

The value of investments and income from them may go down. You may not get back the original amount invested.

Has COVID changed our investment behaviour?

The mantra of ‘Keep Calm and Carry On’ is likely to have been a well-versed phrase for investors over the past year or so, as the pandemic profoundly impacted the investment landscape. The global impact of the virus has been the catalyst for a seismic shift in public behaviour. Investors should consider the implications of these changes when evaluating prospective investment opportunities.

Social and economic changes

While the pandemic’s impact was unprecedented in many ways, what it has done is to accelerate socioeconomic trends that were already bubbling away beneath the surface. Pointing to the labour market as an obvious example, with previously present, but rather sidelined, flexible and remote working practices rapidly becoming the norm over the past year.

Digital development

The internet has long been part of our lives, but the pandemic has accentuated the importance of digital literacy. Businesses that went into the pandemic with an established online presence and offering, did better than their less-digitally adapted peers, with web presence becoming vital for retailers as e-commerce took centre stage. It has caused typically ‘tech-averse’ groups to make the shift to digital, as older groups most at risk from the virus began shopping online.

ESG under the spotlight

ESG (Environmental, Social and Governance) investment has been around for many years, but the pandemic has sent it mainstream as consumers became more aware of the importance of supporting companies with a vested interest in corporate governance and sustainability issues. Over the past year, what businesses are doing to support ‘wellbeing’, and how they treat their employees and suppliers, have come into the spotlight like never before, driving a new commitment to ESG issues. Sustainability and governance issues have been propelled up the corporate agenda.

The value of investments and income from them may go down. You may not get back the original amount invested.

Economic Review – July 2021

UK growth forecast upgraded

The International Monetary Fund (IMF) has sharply increased this year’s growth forecast for the UK, although recent data does suggest the country’s strong economic rebound has begun to slow down.

In its latest assessment of global economic prospects, the IMF highlighted a worrying divergence in fortunes between rich and poor nations, due to differing access to COVID vaccines. Growth across all wealthy countries in 2021 is now predicted to be half a percentage point stronger than the IMF’s previous forecast published in April, but a similar-sized downgrade for other nations means the overall global growth forecast remains unchanged at 6%.

For the UK, the international soothsayer is now predicting growth of 7% in 2021 which, together with the US, is the joint-fastest rate among the G7 major advanced economies. This represents a sizeable upgrade from the previous forecast, which the IMF attributed to faster growth between February and April, when the success of the vaccination rollout and furlough scheme meant that the UK economy performed better than had been expected.

More recent data, however, does suggest UK growth has slowed across the past few months. The latest gross domestic product figures released by the Office for National Statistics (ONS), for instance, showed the economy expanded by 0.8% in May. While this was the fourth successive month of growth, the figure was significantly lower than April’s 2% rate and below market expectations.

Furthermore, survey data suggests the country’s economic rebound slowed again last month, with the IHS Markit/CIPS flash composite Purchasing Managers’ Index (PMI) dropping to 57.7 in July from 62.2 in June. While any value over 50 does still represent an acceleration in output, the latest reading was the lowest since March and suggests the rising wave of coronavirus infections and resulting ‘pingdemic’ has started to stifle business activity.

Inflation views begin to diverge

While a majority of Bank of England (BoE) policymakers continue to expect current inflationary pressures to prove short-lived, some have voiced concerns that the recent leap in prices may require more immediate policy action.

Data released last month by ONS showed the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – rose to 2.5% in June, a sharp increase from May’s 2.1% figure. This was significantly above the consensus forecast in a Reuters poll of economists and the highest rate since August 2018.

ONS Deputy National Statistician, Jonathan Athow, said the rise was widespread, with price increases across a range of categories, including food, fuel, second-hand cars, clothing and footwear. He also acknowledged that “some of the increase is from temporary effects” and that much of the rise was “due to prices recovering from lows earlier in the pandemic“.

Survey evidence, though, does suggest the surge in inflationary pressures is set to continue. Preliminary data from July’s IHS Markit/CIPS PMI, for instance, reported input costs at an all-time high, with output charges rising at a near-record rate.

Over the past few weeks, most members of the BoE’s Monetary Policy Committee (MPC) have expressed a view on the likely future path of inflation. A majority still seem to feel that the recent jump in prices will prove temporary and that the Bank’s current monetary stimulus should therefore be maintained.

However, two members – Dave Ramsden and Michael Saunders – recently broke ranks, arguing that the time for tighter monetary policy may be nearing. Minutes from the next MPC meeting, along with updated economic forecasts, are due to be published on 5 August and will provide further insight into the committee’s thoughts on the future course of action.

Markets: (Data compiled by TOMD)

London stocks ended lower on July’s last day of trading, following a weak session in Asia, weighed down by travel shares and miners, amid concerns that rising global coronavirus infections could derail economic growth. Markets in Europe also slipped back at the end of the month, with continuing concerns over China’s regulatory crackdown on tech stocks overshadowing upbeat earnings reports.

Overall, the FTSE 100 made very little progress in July, ending the month on 7,032.30, a slight loss of 0.07%. The mid-cap FTSE 250 index, which is typically made up of UK-focused businesses, reached record highs during July, as COVID-19 restrictions eased and the economy picked up, to close on 22,934.83, a monthly gain of 2.50%. The Junior AIM index closed on 1,251.11.

The Euro Stoxx 50 gained 0.62% in the month to end on 4,089.30. In Japan, the Nikkei 225 lost 5.24% as spiking COVID-19 cases, the crackdown by China on its technology sector, and mixed earnings from a range of companies reduced investor sentiment.

In the US, the Dow Jones ended July up 1.25% to close on 34,935.47, despite weaker than expected earnings results from heavily weighted companies including Amazon. The NASDAQ recorded a gain of 1.16%.

On the foreign exchanges, sterling closed the month at $1.39 against the US dollar. The euro closed at €1.17 against sterling and at $1.18 against the US dollar.

Gold is currently trading at around $1,813 a troy ounce, a gain of 2.51% on the month, having dropped back from a monthly high of over $1,829 on 15 July. Oil producing nations have agreed to increase output from August, with the aim of reducing prices and easing pressure on the global economy. Brent Crude is currently trading at around $75 per barrel, a gain of 0.57% on the month.

Index	Value (30/07/21)	% Movement (since 30/06/21)
FTSE 100	7,032.30	0.07%
FTSE 250	22,934.83	2.50%
FTSE AIM	1,251.11	0.22%
EURO STOXX 50	4,089.30	0.62%
NASDAQ Composite	14,672.68	1.16%
DOW JONES	34,935.47	1.25%
NIKKEI 225	27,283.59	5.24%

Labour market recovery continues

The latest set of employment statistics show the labour market continues to recover, with the number of employees on company payrolls growing by the largest amount since the start of the pandemic.

According to tax data, the number of people in payrolled employment rose by 356,000 in June, boosted by strong growth across both the food and accommodation sectors. While the data did show total UK employment remains below pre-pandemic levels, in some parts of the country – the North East, North West, East Midlands and Northern Ireland – payroll numbers have now actually risen beyond their pre-COVID levels.

The number of job vacancies is also now higher than before the pandemic struck. In the three months to June, there were 862,000 jobs on offer, 77,500 more than in the January to March 2020 period. Perhaps unsurprisingly, the recent increase was largely driven by rising vacancies within the hospitality and retail sectors.

Commenting on the figures, ONS Director of Economic Statistics Darren Morgan said, “The labour market is continuing to recover, with the number of employees on payroll up again strongly in June. However, it is still over 200,000 down on pre-pandemic levels, while a large number of workers remain on furlough.“

Euro 2020 buoys retail sales

Official statistics have revealed that strong demand for food boosted retail sales in June, while more recent survey evidence suggests sales volumes remain at relatively healthy levels.

According to ONS data, sales volumes rose by 0.5% in June, with the food sector the principal contributor to growth. In total, sales at food shops rose by 4.2%, as football fans stocked up on food and drink to enjoy at home during Euro 2020. In contrast, sales at non-food shops fell, with furniture and clothing demand particularly weak.

Data from the latest Distributive Trades Survey, published by the Confederation of British Industry (CBI) suggests a slight dip in sales last month, with the net balance figure falling from a near three-year high of +25 in June to +23 in July. Retailers also said they expect sales to remain broadly in line with seasonal norms in August.

Commenting on the findings, CBI Principal Economist, Ben Jones, said, “Consumer demand continues to support the UK’s economic recovery. Retail sales have been at or above seasonal norms for the last four months now, although this picture is not universal, with the clothing and footwear stores in particular yet to see demand recover to usual levels.“

News in Review

‘It’s time we recognised the quality that other countries see in the UK’

In an open letter to UK institutional investors last week, Boris Johnson and Rishi Sunak urged pension schemes to invest more of savers’ money into UK assets, to help drive the economic recovery and boost long-term growth prospects. They believe the country needs an ‘investment big bang’ to unlock ‘hundreds of billions of pounds’ sat in schemes, and that UK institutional investors should invest a greater proportion of their capital in UK assets, such as infrastructure and pioneering firms.

In the letter, which comes ahead of an Investment Summit at Downing Street in October, Sunak and Johnson highlighted that UK investors are currently under-represented in owning these assets, whilst some of the world’s largest pension funds, including from Australia and Canada, have benefited from the opportunities that UK long-term investments afford.They wrote, ‘It’s time we recognised the quality that other countries see in the UK, and back ourselves by investing more money into the companies and infrastructure that will drive growth and prosperity across our country… we want to see UK pension savers benefiting from the fruits of UK ingenuity and enterprise, being given the opportunity to back British success stories, and secure higher returns and better retirements.’

MPC maintain policy

Last Thursday, the Bank of England’s Monetary Policy Committee (MPC) voted in favour of maintaining monetary policy, keeping Bank Rate unchanged at 0.1% and bond buying at current levels. Just one member of the eight-person Committee, voted to end the bond buying programme early.

In his accompanying economic outlook, Governor of the Bank of England, Andrew Bailey, spoke about the big news story – inflation. The Bank expects inflation to peak at 4% in Q4 and Q1 2022, before falling back to around 2.5% at the end of next year, returning to target in H2 2023. The prices of traded goods have contributed to the surge in inflation, reflecting several developments including oil prices, supply bottlenecks and a global upturn in the prices of basic commodities. Bailey concluded, “The MPC’s view is that there are good reasons to suggest that above-target inflation will be temporary. But if this outlook appears to be in jeopardy, the MPC will not hesitate to act.”

The Bank expects UK GDP to have risen ‘slightly’ faster than expected in Q2, offset by slowing momentum in Q3, ‘as suggested by higher-frequency indicators of card spending, consumer confidence and mobility, which have either levelled off or fallen slightly in recent weeks.’ Consequently, UK GDP is still expected to grow by 7.25% this year, followed by growth of 6% next year.

Sterling extends gains against euro

In recent weeks, sterling has performed strongly, as confidence gathers surrounding high vaccination rates, easing restrictions and although still elevated, declining virus cases. On Tuesday, sterling extended gains to hit its strongest level against the euro since February last year.

US indices reach highs on positive jobs data

Across the pond, better than expected jobs data boosted markets at the end of last week. The labour market in the world’s largest economy remains firmly in recovery mode, registering the seventh consecutive month of jobs expansion. Nonfarm payroll employment rose by 943,000 in July, far outstripping the 870,000 jobs expected in a Reuters survey of economists. The unemployment rate dipped to 5.4% from 5.9%, also beating the median estimate of 5.7%. On Tuesday, the Senate voted to approve a $1trn infrastructure bill.

Cautious optimism for home markets

At home, cautious optimism appears to be outweighing concern about rising Delta variant rates in Asia and to a lesser extent in the US, resulting in another record high for the domestically focused FTSE 250.

China’s export growth slows

New coronavirus infections in July have resulted in authorities in many Chinese cities imposing lockdown on affected communities, ordering millions to be tested and suspending some business activity, including factory work. This has resulted in an unexpected slowdown in export growth – exports in July rose 19.3% year-on-year, compared to a 32.2% gain in June – analysts polled by Reuters had forecast a gain of 20.8% for the month.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.