Key Takeaways
- The UK economy expanded by 0.3% in the second quarter of 2025, surpassing expectations of 0.1% growth, driven by strong exports and a rebound in monthly GDP.
- However, total business investment in the UK saw a significant contraction of 4.0% quarter-over-quarter, raising concerns about future economic growth.
- German industrial conglomerate Thyssenkrupp announced a cut to its annual profit and revenue guidance, citing sluggish demand and falling prices.
- Chinese tech giant Lenovo (LNVGY) reported a rebound in profit, navigating ongoing tariff risks.
- U.S. President Trump reiterated calls for lower interest rates and indicated he is nearing a decision on a new Federal Reserve chairman.
The United Kingdom's economy demonstrated resilience in the second quarter of 2025, with preliminary Gross Domestic Product (GDP) figures showing a 0.3% expansion quarter-over-quarter, exceeding market expectations of 0.1% growth. This marks a slowdown from the 0.7% growth recorded in the first quarter but indicates continued economic activity. Monthly GDP data for June also showed a strong rebound, rising 0.4% month-over-month, significantly better than the estimated 0.2% and reversing the previous month's -0.1% contraction.
A notable positive contributor to the UK's Q2 performance was exports, which surged by 1.6% quarter-over-quarter, vastly outperforming the estimated 0.1% increase. Imports also rose by 1.4%, above the 0.5% estimate.
Despite the headline GDP growth, a sharp decline in business investment presents a challenge for the UK economy. Total business investment contracted by a substantial 4.0% quarter-over-quarter, a significant miss compared to the estimated 0.3% growth and a sharp reversal from the 3.9% increase in the previous quarter. Year-over-year, total business investment grew by a mere 0.1%, down from 6.1%. Gross fixed capital formation also fell by 1.1% quarter-over-quarter. Private consumption saw modest growth of 0.1%, while government spending increased by 1.2%.
In corporate news, German industrial group Thyssenkrupp (TKA) announced a cut to its annual profit and revenue guidance. The company cited tough market conditions, sluggish demand, and falling prices as reasons for posting a deeper third-quarter loss.
Conversely, Chinese personal computer maker Lenovo (LNVGY) reported a rebound in its profit, successfully navigating ongoing tariff risks. The company's ability to rebound despite trade tensions highlights its diversified global manufacturing footprint.
Meanwhile, an explosion at a U.S. Steel (X) plant near Pittsburgh has raised concerns about Nippon Steel's investment plans for the American steelmaker. The incident presents a challenge to the Japanese company's commitment to invest billions in U.S. Steel's operations.
In broader market developments, crude oil prices appear to be range-bound, awaiting clearer signals for future direction. Geopolitical tensions continue to influence global trade, with Chinese imports notably falling during President Trump's first term, a trend that appears to be re-emerging. President Trump also signed an executive order aimed at cutting regulations for the space industry.
On the monetary policy front, U.S. President Donald Trump continued to exert pressure on the Federal Reserve, stating that interest rates should be "three or four points lower." He also indicated that he intends to name a new Fed chairman "a little bit early" and has narrowed his list to "three or four names." Federal Reserve Governor Austan Goolsbee ([2025 voter]) commented on upcoming Fed meetings, with economists emphasizing the importance of the Fed's independence from political interference. Separately, Chinese think tanks have urged the strengthening of the Yuan amidst escalating trade tensions.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.