Construction: Economy

Annual CPI inflation was 2.0% in June, unchanged from May, according to the ONS. The ONS reported that falling prices for motor fuels, accommodation services and electricity, gas and other fuels provided the largest downward contributions to June’s rate. However, these downward effects were offset by upward contributions from clothing and food. Annual RPI inflation was 2.9% in June, down from 3.0% in May.

 In June, output prices for manufactured goods rose 1.6% year-on-year, down from 1.9% in the previous month and the lowest annual growth since September 2016, according to the ONS. Petroleum products provided the largest downward contribution to the annual rate, with prices declining (-2.4%) for the first time since August 2016 due to lower diesel and gas oil prices. The input price index for manufactured goods fell 0.3% in the year to June, down from 1.4% in May. This marked the first decline since June 2016, driven by a sharp fall in crude oil prices (-11.6%).

Average weekly earnings across the whole economy increased 3.4% year-on-year (including bonuses) in the three months to May, up from 3.2% in the three months to April, according to the ONS. In the three months to May, earnings in manufacturing increased 2.1% compared with the same period a year earlier and in construction, earnings rose 5.2%. In real terms, average weekly earnings for employees in Great Britain increased 1.4% including bonuses and 1.7% excluding bonuses in the three months to May, compared with a year earlier. The latter marked the strongest annual growth since the three months to October 2015.

In June, the volume of retail sales increased 3.8% year-on-year and rose 1.0% month-on-month, following two consecutive monthly declines, according to the ONS. The pick-up in the monthly sales was driven by growth in non-food stores, with higher sales recorded in second-hand stores. Monthly data, however, tends to be volatile, and in Q2, the volume of retail sales increased 3.6% in annual terms, down from 5.2% in Q1 and rose 0.6% on a quarterly basis. The latest data show that growth in retail sales slowed in the second quarter of 2019, as consumers reined in their spending at food and department stores. By value, retail sales increased 4.3% year-on-year in June and were 1.3% higher over the month.