Monthly Report: August 2025

United States

Macro-wise, this month we had mixed data with a miss in non-farm payrolls (73K vs. 110k expected), constant unemployment at 4.2%, stable inflation (2.7% year-on-year), but a slight uptick in Core inflation (by 0.1% for month-on-month and year-on-year) and an upside move in the PPI (0.9% vs. the 0.2% expected). PMIs disappointed, with manufacturing printing at 48 (down from 49 in the previous print and 49.4 expected), while services held at 50.1 (down from 50.8 in the previous reading and the 51 forecast). US GDP growth and Retail sales were the bright spots, coming out at 3.3% vs. 3% expected quarter-on-quarter and 0.5% Vs 0.4% month-on-month, respectively. The main event was Jackson Hole, where the FED appeared to pivot towards growth as a priority vs. inflation.

All eyes are on interest rates, which dictate the direction of the housing market moving forward. Mortgage rates retreated during August, with the 15-year mortgage down 15 basis points and the 30-year mortgage dropping by almost 20 basis points.  

Existing home sales increased by 2% month-on-month to an annualized rate of 4.01m for July, marking the sharpest increase since February and beating the 3.92m forecast. Notably, this reversed the decline seen last month. Median prices for existing home sales also increased by 0.2% year-on-year to $422,000. Despite slightly lower mortgage rates, existing home sales remain at the lower end of the year's range. 

For new homes, sales dropped by 0.6% from the previous month to an annualized rate of 652k for July, however, beating the 630k that was expected. 

The Case-Schiller 20-City Home Price Index rose 2.1% year-on-year for June, exhibiting slower growth from the 2.8% year-on-year recorded for May. This was the softest increase since the summer of 2023. Housing inventory remains strong as mortgage rates remain high and housing starts are healthy. Total housing remains at its high since the COVID-19 pandemic. 

United Kingdom 

Firstly, the BoE kept rates unchanged as expected at the start of this month. This was a good month for the United Kingdom, with unemployment remaining stable at 4.7% while inflation rose to 3.8% year-on-year (by 0.2%), in line with forecasts. GDP exceeded expectations and grew by 0.3% quarter-on-quarter (vs. 0.1% forecast), by 1.2% year-on-year (vs. 0.7% forecast), and by 0.4% (vs. 0.4% forecast). Services PMI outperformed as well, coming out at 53.6, exceeding the 51.9 of the previous month and the 51.7 forecast. 

Manufacturing PMI continues to disappoint, as the main sour print of this month – coming out at 47.3, missing the 48.6 forecast and remaining in contraction territory. Importantly, we have seen manufacturing PMIs in Europe improving recently, but the UK’s hasn’t followed. The Construction PMI for the UK was the main disappointment, dropping to 44.3 in July 2025 from 48.8 in June, which constitutes the largest decrease since May 2020. The areas hit the most in terms of confidence have been across civil engineering and residential building, where there is evidence of weaker demand and a series of delays. 

Looking at housing, the market appears to be supported by a slight improvement in affordability due to wage growth and mortgage rate decreases; however, the overall readings remain mixed. The Halifax House Price Index in the UK rose 0.4% month-on-month, beating the 0.3% forecast. The Index rose by 2.4% year-on-year, easing from the 2.7% increase in June and marking the softest increase since July 2024. The average property value increased to £298,237, from £297,157 in June. 

The RICS Market Survey showed the balance dropping to -13% for July, a decrease from the -7% recorded in June. This is the weakest reading in over a year and represents a significant miss of the -5% market expectation. This also marks the 4th consecutive negative reading. Having said that, the survey showed that overall confidence in the housing market improves on a longer time horizon (year-ahead view).

China

Macro-wise, both industrial production and retail sales showed softer year-on-year growth compared to expectations and previous readings. Retail sales are up 3.7% year-over-year, compared to 4.8% for the previous month and a forecast of 5%. Industrial production came out 5.7% higher year-on-year, missing the 6.8% of the previous month and 6.4% expected. Exports data was the bright spot, at 7.2% vs. the 5.1% forecast, although there might still be front-loading in anticipation of further tariffs. Finally, inflation was flat year-on-year, a slight improvement from the minor forecasted deflation (-0.1%).

China’s new home prices were down by 2.8% year-on-year for July, easing once again from a 3.2% drop in the previous reading. This now marks the 25th consecutive month of year-on-year declines in house prices. This is also down 0.3% month-on-month, highlighting the continued weakness in the property market. Having said that, we are currently at the softest contraction in more than 18months.

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References

(n.d.). US Treasuries Yield Curve. US Treasuries Yield Curve. https://www.ustreasuryyieldcurve.com/

(n.d.). CME FedWatch Tool. CME Group. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

(n.d.).Trading Economics. Trading Economics. https://tradingeconomics.com/united-states/nahb-housing-market-index 

(n.d.).Goldman Sachs. Goldman Sachs. https://www.goldmansachs.com/ 

(n.d.).Bloomberg. Bloomberg. https://www.bloomberg.com 

(n.d.). FRED. Federal Reserve Economic Data. https://fred.stlouisfed.org/

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