Overview

The arrival of summer is sadly doing little to brighten the dark clouds and changeable economic forecasts ahead. There is still value to be found in some areas of the markets but this is getting harder for many fund managers to find. Both global and regional economic forecasts look fragile. Some questions remain to be answered, particularly around the western debt crisis and the sustainability of Asian growth.

UK
The FTSE 100 ended June at 5,946 from a starting point of 5,989. June saw the demise of some big name retailers; Jane Norman, TJ Hughes and Thorntons all making headlines for the wrong reasons. No surprises that retailers are still feeling the pain.

The British public remain cautious in their willingness to spend - with increasing inflationary pressure and little positive news regarding jobs and pay rises this can only be expected. The news that Lloyds is shedding another 15,000 jobs doesn't encourage positive sentiment.

Manufacturing has slowed to a 21 month low in the UK according to the Purchasing Managers Index June figures. This figure will be disappointing news to policy makers who have been buoyed by manufacturing progress over the past year.

Comment on housing is receiving fewer column inches as most now seem resigned to the fact that little can be expected from the sector for the foreseeable future. The Nationwide Housing Index shows house prices are 1.1% lower in the 12 months since June 2010.

Europe
Never far from the headlines, Greece continues to battle social instability and significant economic challenges as the Greek parliament agreed further austerity measures. Increasingly seen as 'kicking the can down the road,' is the Greek problem just too big to be solved by monetary policy and fiscal intervention alone?

Whilst Greece is in the spotlight, others are happy to avoid the headlines but the general outlook remains gloomy.

Reflecting the UK, manufacturing also fell across the eurozone to an 18 month low in June according to the Purchasing Managers Index. Importantly, although manufacturing has slowed it remains in a period of positive growth. Let's hope that the slowdown is only temporary.

US
The US economy is making spluttering progress, but at least it's progress of sorts. The monetary and fiscal policies implemented by the Obama administration may not have stimulated robust growth but there remains hope that the recovery of the world's largest economy remains heading in the right direction.

The recent decline in the oil price has proved to be a little respite for the oil thirsty nation but consumer confidence remains low. Figures from the Institute for Supply Management show that manufacturing has grown in June ahead of expectations and after a poor previous quarter. Continued growth in the sector should feed through into jobs and consumer confidence over the next couple of months.

Global
Chinese manufacturing slowed again in June reflecting the government's fiscal tightening. It's hard to tell but the Chinese government may just be doing the right thing by slowing economic growth to avoid a hard landing.

Inflation remains a concern across Asia with rising food prices being the main cause. Growth across the region remains, although with the outlook for more of the same.

Summary
The recovery continues but remains fragile. Unemployment and sovereign debt across western economies continue to cause problems. There is no doubt that the Greek problems will continue and they may be joined by others.

Markets continue to react to newsflow and remain in a sensitive state. Value can be found in some markets but judging the timing and strength of the investment opportunity remains a significant challenge.