US retail sales grew strongly in July, and the numbers from America’s largest bricks-and-mortar retailer back that up: Walmart raised its sales and profits forecasts on Thursday as well.

Both suggest that the US consumer is not in recession mode. Arun Sundaram, an analyst at CFRA Research, said (according to Reuters):

The US consumer seems to be in a stable position relative to the start of this year, which is encouraging given concerns of a looming slowdown.

Walmart’s chief executive, Doug McMillon, told analysts that “so far, we aren’t experiencing a weaker consumer overall,” according to the Financial Times.

Ronald Temple, chief market strategist at Lazard, an investment bank, said:

Today’s retail sales data and jobless claims offer yet more evidence that recession risk remains low in the US even as the economy decelerates from unsustainably strong growth levels. The case for the Fed to ease by 25 basis points is rock solid, but there is little evidence to suggest a need for a 50 basis point reduction.

In other business and economics news today:

• The UK economy grew by 0.6% in the second quarter, continuing relatively strong growth over the course of this year. That performance came despite election uncertainty hitting output in July.

• Brian Niccol, the new chief executive of Starbucks, is in line for a sign-on pay package worth up to $113m (£88m), in one of the largest such executive deals in corporate history and which is four times larger than that of his predecessor.

• Danish energy group Ørsted cut the value of investments after delays to wind projects in the US and elsewhere.

• Texas officials have added NatWest Group to a growing list of financial firms considered to be taking part in a “boycott” of energy companies, in a move that could limit the UK bank’s business with the oil-rich US state.

• Evoke, the owner of William Hill and 888 reported widening losses in the first half of 2024, in a “disappointing” update that led its new management team to admit that its turnaround plan for the gambling group was running behind schedule.

You can continue to follow the Guardian’s live coverage from around the world:

In our coverage of the Middle East crisis, the Gaza death toll passes 40,000 as ceasefire and hostage talks begin in Doha

In our coverage of the Russia-Ukraine war, Zelenskiy says Ukraine’s troops have full control of Sudzha in Kursk

In US politics, Kamala Harris is set for a joint rally with Joe Biden and the Vance-Walz vice-presidential debate is confirmed for 1 October

In UK politics, Labour ‘putting rail passengers first’, says minister as she blames Tories for prolonging strikes

Thank you for following today, and please do join Graeme Wearden tomorrow to take you through to the weekend. JJ

Europe’s stock markets have regained all of the losses of the past fortnight, after the weaker-than-expected US non-farm payrolls caused days of turmoil.

US stock markets have now also opened higher, boosted by the strength of retail sales.

Here are the opening moves via Reuters:

• The Dow Jones industrial average rose 287.3 points, or 0.72%, at the open to 40295.74.

• The S&P 500 rose 45.9 points, or 0.84%, at the open to 5501.13​.

• The Nasdaq Composite rose 201.9 points, or 1.17%, to 17394.545.

The US dollar and stock market futures have jumped in value after stronger than expected US retail sales.

The dollar surged after the data release. The pound was worth $1.2865 before the data after strong UK GDP growth, but it has lost half a cent to be worth $1.2812 after the dollar strengthened.

An index tracking a trade-weighted basket of currencies was below 102.6 shortly before the data, but jumped above 103 immediately after.

US retail sales jumped by 1% in July, according to data that suggest the world’s largest economy may be in better state that some economists fear.

Economists had expected retail sales to rise by 0.3% month-on-month in July, but data from the US Census Bureau showed they rose by 1%.

Labour market data released at the same time showed initial jobless claims at 227,000, slightly below the 235,000 expected by economists polled by Reuters and below the 233,000 in June.

The new chief executive of Starbucks is in line for a sign-on pay package worth up to $113m (£88m), in one of the largest such executive deals in corporate history and which is four times larger than that of his predecessor.

The American coffee chain poached the boss of Chipotle Mexican Grill, Brian Niccol, naming him as its new chief executive this week in a surprise management shake-up, ousting Laxman Narasimhan from the job after just 17 months.

Niccol has been given a large pay deal to switch roles and will also be allowed to work remotely from his home in Newport Beach, California. Starbucks has agreed to cover the costs of establishing the “small remote office” and a dedicated local assistant, and Niccol will be able to use the company aeroplane to travel to its headquarters in Seattle when required.

Niccol, who will take over the reins on 9 September and will become its fourth boss in less than three years, is in line for the bumper pay packet largely because of a huge tranche of share options.

The contract, if paid out in full, would bring Niccol’s pay to $113.2m. He was paid $22.5m at Chipotle in 2023, and $17.2m a year earlier.

You can read the full report here:

The continued strong GDP growth in the second quarter of the year will probably mean that the Bank of England delays interest rate cuts past September, according to financial market bets.

Derivatives trades allow the implied probabilities of rate cuts to be worked out. Refinitiv data suggests that the next 0.25% percentage point rate cut will not happen until the Bank’s meeting on 7 November, skipping the meeting on 19 September.

The implied probability of no change to rates in September is 63%, according to Refinitiv. This morning the probability was 59% for no change, and 41% for a cut (according to one Graeme Wearden), so there has been a slight firming up of the conviction that the Bank will hold in September.

You can see the implied probabilities in the below table. Note the “no change” column giving the probability for the 19 September meeting:

Those figures still give a 37% chance of a cut, so it is not out of the question – but something would probably have to change markedly in the next month for that to happen.

However, if you look at the 19 December expected target rate, you can see that markets are just about pricing in a second cut by the end of the year. Bank rate is at 5%, so a move to 4.5% would imply two 0.25% cuts.

Danish energy group Ørsted has cut the value of investments by 3.2bn krone (£370m) after delays to wind projects in the US and elsewhere.

Shares in the company dropped 7% on Thursday morning.

Ørsted was one of the darlings of the coronavirus pandemic bubble, as investors rushed to invest in green energy. The company – which, perhaps advisedly, rebranded from DONG Energy – had a particularly uplifting story, having slipped off its heritage as an oil and gas producer to pivot to green technology.

However, its shares are valued at less than a third of their peak in early 2021 after it hit a series of setbacks – even as it ramped up its wind generation capacity around the world.

The US has been particularly problematic. On Thursday Ørsted said it would push the start of its Revolution Wind project off the coasts of Connecticut and Rhode Island states from 2025 to 2026.

Mads Nipper, Ørsted’s chief executive, said:

Despite encouraging progress on our US offshore wind project Revolution Wind, the construction of the onshore substation for the project has been delayed. This means that we have pushed the commercial operation date from 2025 into 2026, which led to an impairment. This is, of course, unsatisfactory, and we continue our dedicated efforts to de-risk our portfolio.

Despite today’s “uninspiring” growth data for June, analyst at Investec say they remain optimistic on the UK’s prospects as an investment destination.

The political landscape is more stable than some of the UK’s allies, economic activity is much stronger relative to this point last year and the monetary policy easing cycle has commenced. When it comes to the UK, the sun appears to be breaking through the storm clouds.

Jeremy Hunt, the former Conservative chancellor, has seized on today’s GDP report as proof that he didn’t leave the new Labour government a shambles to clean up.

Hunt says today’s growth figures are “further proof that Labour have inherited a growing and resilient economy”.

He posted on X:

The Chancellor’s attempt to blame her economic inheritance on her decision to raise taxes - tax rises she had always planned - will not wash with the public.

Labour promised over 50 times in the election they would not raise people’s taxes and we will hold them to account on their promises.

However, as we’ve covered earlier in this blog, the strong growth in Q1 and Q2 2024 follows a very weak 2023 – real GDP is estimated to have increased by 0.1% last year.

And real GDP per head of population is still 0.1% lower than a year ago (see here)

Today’s GDP report is good news for Rachel Reeves, and the Bank of England, says Sanjay Raja, UK chief economist at Deutsche Bank Research.

Raja says the UK recorded “another stellar quarter” in April-June, but also sees a slowdown ahead.

He told clients this morning:

Q2-24 GDP growth surged for a second straight quarter hitting 0.6% q-o-q. Much of the growth was in line with our expectations, with household spending expanding by 0.2% q-o-q and business investment shrinking by 0.1% q-o-q. The bulk of the uplift in growth came from government spending (1.6% q-o-q) with stocks and net acquisitions also seeing big uplifts.

The good news is that this should lift the overall size of the economy, leaving the Chancellor with a slightly better near-term outlook than what the OBR presented in March. For the Bank of England, the slightly lower growth rate (including its composition) should leave the door open to further rate cuts – particularly given yesterday’s weaker inflation data.

But, we shouldn’t expect the strong growth in the first half of 2024 to last, Raja adds:

We should see some slowdown. Indeed, June GDP flatlined, with the services sector shrinking by 0.1% m-o-m. Carry-over effects into Q3-24 will be weaker. And catch-up effects, following on from the short and shallow technical recession we had in H2-23, will likely diminish.

Deutsche Bank predict the economy will grow by 1.2% this year, rising to 1.6% in the next two years.

Labour’s goal is to secure the highest sustained growth in the G7.

Today’s GDP data suggests the economy was near the front of the G7 pack as the new government took office, but not top of the podium.

Data released overnight shows that Japan grew at an annualised rate of 3.1% in the second quarter of 2024 – which means a quarterly rise of almost 0.8%.

That puts Japan ahead of the US, where GDP increased at an annual rate of 2.8% in Q2 (or quarterly growth of 0.7%).

Growth has been more modest in the eurozone, which only expanded by 0.3% in Q2 as Germany shrank slightly.

We don’t get official Q2 data for Canada until the end of August, though; Statistics Canada says the latest data suggests that the economy expanded 0.5% in the second quarter of 2024.

One quarter’s data doesn’t a full insight into an economy, but as things stand…

• Japan: +0.8% growth in Q2

• US: 0.7% growth in Q2

• UK: +0.6% growth in Q2

• Canada: estimated to have grown by 0.5% in Q2

• France: 0.3% growth in Q2

• Italy: 0.2% growth in Q2

• Germany: contracted by 0.1% in Q2

Chancellor Rachel Reeves is not hanging out the bunting.

Following the news that the economy grew by 0.6% in April-June (a decent growth rate), Reeves says:

“The new Government is under no illusion as to the scale of the challenge we have inherited after more than a decade of low economic growth and a £22 billion black hole in the public finances.

“That is why we have made economic growth our national mission and we are taking the tough decisions now to fix the foundations, so we can rebuild Britain and make every part of the country better off.”

Pre-election uncertainty, and industrial action, may both have weighed on the economy in June.

The Office for National Statistics says anecdotal evidence from businesses suggests some clients were reluctant to place orders until they knew who had won the election.

That could have contributed to the lack of growth in June.

The ONS says:

Comments provided for June 2024 suggested some industries may have been affected by the general election held on 4 July 2024. In a range of industries across the economy, businesses stated that customers were delaying placing orders until the outcome of the election was known. These comments covered all of manufacturing, construction, and services.

A strike by junior doctors in late June, and the impact of last year’s Hollywood strikes, could also have hit activity.

The ONS adds:

While perhaps not as frequently mentioned as in recent months, industrial action in certain industries was also cited as a possible reason for reduced output.

This was stated as a reason for reduced output in human health with the junior doctors strikes towards the end of June, and in TV and film production where the Screen Actors Guild strikes in America in 2023 are still affecting UK production schedules.

The UK economy is in ‘good health’, says Neil Birrell, chief investment officer at Premier Miton Investors:

Following this morning’s Q2 GDP report, Birrell says:

“The second quarter seems like a long time ago, but the GDP data confirms that the UK economy is in good health. The Bank of England is in the nice position, unlike other central banks, of having a level of surety in the data it is seeing, when setting policy.

With inflation playing ball as well, the path to lower interest rates looks to be set, the timing of the cuts is now the focus.”

When you adjust for population changes, growth was less vigorous

The ONS reports that real GDP per head is estimated to have increased by 0.3% in Quarter 2 2024 – only half as fast as the headline growth rate for the quarter.

Real GDP per head is 0.1% lower compared with the same quarter a year ago.

GDP per head, or per capita, is commonly used as a broad measure of average living standards or economic well- being.

The UK has now grown “strongly” for two quarters in a row, says ONS director of economic statistics Liz McKeown:

“The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year.

“Growth across the three months was led by the service sector, where scientific research, the IT industry and legal services all did well.

“In June growth was flat with services falling, due to a weak month for health, retailing and wholesaling, offset by widespread growth in manufacturing.”

Today’s GDP report also shows the economy did not grow in June.

GDP showed no change in June, the Office for National Statistics reports, following growth of 0.4% in May.

Digging into the details… services output fell by 0.1% in June, while production output grew by 0.8% in the month, and construction output grew by 0.5%

Newsflash: The UK economy grew by 0.6% in the second quarter of the year, as it continues to pull away from last year’s shallow recession.

That’s a slight slowdown on the first quarter, where the economy expanded by 0.7%, but still a healthy growth rate – and in line with expectations.

The Office for National Statistics reports that the services sector drove growth, while the production sector and construction both shrank slightly.

Compared with a year ago, real GDP is estimated to have increased by 0.9%.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

How strongly, or weakly, was the UK economy growing at the end of Rishi Sunak’s premiership?

We’ll find out shortly, when GDP data for June – and for the second quarter of 2024 – are released.

City economists predict the UK posted a quarter of solid growth. GDP is forecast to have grown by 0.6% in April-June, which would be a slight slowdown on the 0.7% recorded in January-March.

But in June alone, the economy may have stalled – with no growth forecast.

Sanjay Raja, chief UK economist at Deutsche Bank, says the service sector was driving activity in the last quarter:

On our calculations, the services economy will likely bounce up by 0.7% q-o-q – despite expected contractions in both the production and construction sectors over the same quarter.

On the expenditure side, we expect government spending, business investment, inventories, and net acquisitions to provide the bulk of the lift to quarterly GDP.

The strength – or otherwise – of the UK economy will also influence how soon the Bank of England feels confident to cut interest rates again, after inflation rose by less than expected in July:

The agenda

• 7am BST: UK GDP report for June

• 7am BST: UK trade report for June

• 7am BST: UK GDP report for Q2 2024

• 9am BST: Norwegian central bank interest rate decision

• 9.30am BST: UK labour productivity statistics

• 1.30pm BST: US weekly jobless claims

• 1.30pm BST: US retail sales for July