Surprise fall in UK unemployment

- US builders' optimism at five-year high
- Slight fall expected for UK retail sales

America has hit upon a way to avoid the "fiscal cliff" towards which the US economy would be heading if no way were found to balance taxation and public spending. Regulators have discovered that by accusing foreign banks of handling Iranian money they can collect roughly $400m with each attack. And the more often they do it, the more money they get. Fired with success the US authorities are now going for seven banks in one hit, citing collusion in fixing LIBOR. To avoid any allegation of bias they have included two token US institutions in the list. One cannot but admire the strategy, especially in an election year. Foreign bankers and Iranian terrorists; what's not to dislike?

With a flat-lining UK economy and quantitative easing that is usually the situation for sterling but so far this week the data have been working for the pound, not against it. On Tuesday it was the inflation figures that came to its aid and yesterday it was the employment data. The number of jobseeker claims went down by -5.9k in July, the June increase was revised lower by -5.1k and unemployment ticked down from 8.1% to 8.0%. Whilst there is inevitably a suspicion that the improvement was driven by the Olympic games it is nevertheless welcome. 

Appearing at the same time, the minutes of the Monetary Policy Committee's (MPC) August meeting were less obviously helpful. The result was positive enough; all nine members voted to leave the asset purchase programme on hold. But the minutes revealed that some members favoured increasing it in the future and this month's decision was "finely balanced".

Sterling was quite finely balanced on Wednesday too. It went up against the euro, the franc and the yen, it moved lower against the Canadian, Australian and New Zealand dollars and it was steady against the US dollar. Typically for the dog days of August the net movements were mostly of less than half a cent and the ranges narrow. 

US data on Wednesday afternoon showed inflation slowing to 1.4% and industrial production increasing by 0.6% in July. There was a ray of light from the NAHB housing market index, the barometer of Bobs' expectations, which improved by two points to 37, its highest level in five years.

Europe returns to work today after its Assumption Day break, but the only Euroland ecostat in the timetable is inflation, expected to be steady at 2.4%. Canada reveals international investment flows for June and the US figures cover building permits, housing starts, weekly jobless claims and the Philadelphia Fed's manufacturing index. 

Britain's contribution this morning is the change in retail sales. For the last four years this statistic has oscillated, almost monthly, above and below zero. Analysts expect that pattern to hold, with June's 0.1% increase followed by a -0.1% fall in July. Doubtless the Jubilee and the Olympics will share the blame or credit for any off-target outcome.