What's going on?

Data released on Wednesday showed that the British economy grew 0.3% in May after shrinking in April � but it probably wasn�t enough to stop UK growth contracting in the second quarter overall.

What does this mean?

Most areas of the British economy picked up in May � particularly the auto industry, which got its foot back on the gas after precautionary Brexit-related factory shutdowns back in April.


But economists still predict that economic growth will turn out to have shrunk last quarter compared to the previous one � for the first time in seven years. Just last month, those boffins had thought growth would at least remain flat. They could, of course, be proven wrong � so long as the UK economy expands 0.8% in June compared to May. But with the all-important services industry (which represents 80% of the British economy) failing to grow at all last month, such an acceleration seems unlikely, to say the least.

Why should I care?

For markets: The pound is getting thumped.

Fresh Brexit uncertainty appeared partly to blame for the value of Britain�s currency falling to levels not traversed in months versus the US dollar and euro this week � and Wednesday�s data probably did little to help. A shrinking economy might convince an indecisive Bank of England to lower British interest rates, boosting growth by making borrowing cheaper. Doing so, however, might drag the UK into a currency war with the US, eurozone, and China � all of which want to have cheap currencies that will boost international demand for their products.

The bigger picture: Canary for hire.

UK-based recruitment firm PageGroup said on Wednesday that its annual profit would be lower than it thought � and that a hiring slowdown across the UK, Europe, and Asia was to blame (it said the US jobs market was strong). Such companies are often early indicators of future economic activity: bad news might therefore presage a greater slowdown to come…