Another trophy for the UK consumer
Britain carries on, long live the Queen. The UK CBI (Confederation of the British Industry) number was expected to be negative due to Brexit fears, but it came out positive. The CBI DTS (Distributive Trades Survey) is compiled to take into consideration 150 UK wholesalers and retailers.
The number for this indicator was nine, which means that the percentage of the surveyed businesses in this category/sector of the UK economy who have enjoyed higher sales in July is 9 points higher than the participants who report a decline in sales. It is not a market mover, but that´s another small victory for the Brexit camp, so take that you fear mongers.
I´m not ashamed to say though, that I´m one of them. I hate being a fear monger, but as per our first update, this only shows the bright side of the moon, the consumer side or the domestic demand at the moment. This month´s economic data showed that the business side is suffering and many sectors slipped in contraction in July.
That means, that if the same situation persists among businesses in the coming months/quarters/years, then it will be passed on to wages, employment sector (or unemployment to be precise) and finally to the domestic demand. That´s when the real trouble will start for the common Joe on the High Street. But, the BOE (Bank of England) has already acted by expanding the monetary policy to prevent such scenario and the UK government will take steps to inject money in the economy by increasing the fiscal stimulus.
By the way, I hope it all works out and the UK comes out of this stronger, since it is one of my two home countries. But, I very much doubt it. The fear will prevail on the investors´ minds and that´s what hurts the economy in the long run.
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