A report on UK production for May offered a misleading signal. Data from the Office of National Statistics showed that:

Production rose by 1.0 per cent between April 2012 and May 2012, with manufacturing rising by 1.2 per cent.

But when adjusted for the number of working days in the month, the data continued to point to a recession:

In 2012, the end of May bank holiday was moved to June resulting in an additional working day in May, which may have been a contributing factor to the month on month growth shown in the production and manufacturing sectors.

Even without the move of the holiday from one month to the next, there is not much to cheer economists who watch the UK gross domestic product and employment situations. The Bank of England recently said it would step in to aid the country, which has started to suffer a GDP contraction. Concern is rising that the government’s austerity program has robbed business and consumer confidence.

No Summer Rally for U.S. Markets

Back in the United States, stock markets continue a retreat. The indexes have fallen for most of the past 10 trading days on a slow American economic recovery, as well as concerns about a financial cliff due to the lack of a deal on individual taxes for 2013. Also, the trouble in Europe has started to erode corporate profits, which will extend the “hiring strike” among U.S. companies that are unsure business conditions will improve enough to add workers. Recently, the International Monetary Fund said American GDP growth could be less than 1% next year, if the political gridlock in Washington cannot be broken to offer Americans some reason for hope about the economy next year. All of these factors taken together make a summer rally in the markets very unlikely.

Gasoline Prices Continue to Fall

Gasoline prices have began to fall again, roughly following the price of oil as usual. The AAA Fuel Gauge showed the average price for a gallon of regular nationwide was $3.381 yesterday, compared to $3.382 the day before and $3.542 a month ago. Few states have an average price for a gallon of regular of over $3.50. These include some of the most populous states — California, New York and Illinois. Overall, gas prices will continue to fall. Stockpiles are larger than expected. And factors that might have sent oil high, which most recently included a strike by Norway’s oil workers, have gone away.

Douglas A. McIntyre

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