US unemployment claims decline
The US labour market continued to demonstrate resilience, with the number of new unemployment benefit claims declining in the week ending July 4. Initial jobless claims fell by 2,000 to a seasonally adjusted 215,000, below both the upwardly revised 217,000 recorded in the previous week and economists’ expectations of 218,000.
The latest data supports the view that the labour market remains in a “slow-hire, slow-fire” environment, where both hiring and layoffs are occurring at a subdued pace despite a notable slowdown in job growth during June. Further reinforcing the picture of a cooling yet stable labour market, continuing claims rose modestly by 8,000 to 1.81 million in the week ended June 27, indicating only a slight increase in the number of individuals remaining unemployed.
Eurozone retail sales recover
Meanwhile, eurozone retail sales recovered in May, pointing to resilient consumer spending despite ongoing geopolitical uncertainty in the Middle East. Retail sales volumes rose by 0.2% month-on-month, reversing the 0.3% decline recorded in April, according to data released by Eurostat.
The increase was supported by stronger demand for food, beverages and tobacco, as well as non-food products excluding automotive fuel. Although automotive fuel sales declined by 0.5%, this represented a significant improvement from the sharp 3.6% contraction seen in April.
Overall, the data suggests that consumer spending remained broadly robust during the second quarter, despite weaker confidence levels and pressure on household purchasing power. Reflecting on the figures, Capital Economics’ Deputy chief eurozone economist, Jack Allen-Reynolds, stated that the data reinforces the view that higher energy prices are likely to have only a limited impact on eurozone economic growth.
UK construction sector under pressure
Finally, Britain’s construction sector remained under significant pressure in June, although the pace of contraction eased slightly from the six-year low recorded in May. The S&P Global UK Construction Purchasing Managers’ Index (PMI) edged up to 38.4 in June from 38.2 in May, remaining well below the 50 threshold that separates expansion from contraction.
While commercial construction activity showed some signs of stabilisation, it continued to record one of its weakest readings since the pandemic. Housebuilding remained particularly weak, registering its sharpest decline of 2026 to date, as elevated borrowing costs and subdued market conditions continued to weigh on demand.
Meanwhile, civil engineering activity fell at its steepest rate since April 2020, with respondents citing delays to infrastructure projects and a reduction in public sector tender opportunities. Overall, the data points to a broad-based downturn across the UK construction sector, with all major segments continuing to experience declining output levels.
This article does not constitute legal and, or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap.370 of the Laws of Malta).
