Carraighill

United Kingdom: UK households continue to eschew spending. Gross savings as a percentage of Gross Disposable Income (GDI) further increased to 13.3% in Q1 of 2024 (up from 12.0% in Q4 of 2023).

United States: Job openings continue to decline, down 13% YoY, indicating weakness. The number of these openings less the number of people unemployed is now 0.4 million (over 2m one year ago). The unemployment rate is rising and is now 4.2 (3.5% in July 2023). The underemployment rate is also increasing (now 7.9%). 

European Households: Gross disposable income (GDI) continues to slow from strong levels of expansion. Robust wage growth had previously been the key driver. In every region, this has fallen MoM in the latest (August) data (ex. Austria, +10bps).

UK Asset Management: The movement to tracker funds (proxy for passive) continues, with no indication of this slowing. They now account for 21.4% of gross total FUM. This will continue to put pressure on asset managers' margins.

Carraighill founder Seamus Murphy spoke to Bloomberg News' Paul Davies this week for his latest article on potential bidders for Commerzbank.

In this short note, Eoin Fitzpatrick provides an introduction to how banks fundamentally make money, explaining the implication of a steepening yield curve on banks' earnings.

Eurozone Banking Systems: As of the July ECB data, some key Eurozone geographies continue to exhibit negative YoY loan growth, including France (-0.5%), Spain (-1.1%) and Italy (-3.1%). In the latter two, the primary driver of this effect is weakness in non-financial corporate (NFC) lending.

UK: The construction industry PMI rose considerably in July to 55.3 (52.2 in June). This signifies the fastest rate of expansion since May 2022.

UK: Mortgage loan growth has shown tentative signs of recovery in recent months (+0.6% YoY to July), though nonetheless remains close to 10-year lows.

Last week, the caretaker Prime Minister of France, Gabriel Attal, set forth a “reversible budget” in a series of letters to ministers. These stated the budget for 2025 would freeze departmental spending at €492bn. General government expenditure amounted to €1,395bn in 2023 (before interest expense). The budget's "reversibility" stems from the fact that the new Prime Minister, upon appointment, is likely to have different policy priorities and may seek to significantly reshape it. The announcement comes in the wake of France being placed in an Excessive Deficit Procedure by the European Commission. France's fiscal deficit is projected by AMECO to be -5.3% of GDP in 2024 and -5.0% in 2025.