agenda 4

Makroökonomische Daten – 01 – 05 August 2011 (Englisch)

The scant data due out will likely show a fall in German factory orders and industrial production in both Germany and Italy, plus a bounce in Euro area retail sales and an unemployment rate steady or falling slightly in the Euro area and in Italy. .  

          The preliminary 2Q11 Italian GDP estimate  should show a decent rebound after the stagnation seen in 4Q10 and 1Q11.

          The coming week in the United States brings a slew of important data, showing signs of an economic improvement. In July, the ISM manufacturing and service indices should be up, confirming the transitory nature of most of the slowdown seen in the previous months, while auto sales should start to pick up from their May and June slide. The employment report is expected to improve on the weak indications seen in June, showing an uptick in the employment dynamic. Personal spending and income should be up slightly in June, with core inflation rising further.

          Monday 1 August

          Euro area

          The unemployment rate should be down one-tenth in the Euro area in June (at 9.8%) and should be steady in Italy (8.1%). The Euro area figure will again show considerable divergence between the core countries (notably Germany, where the jobless rate hit an all-time low in June) and the periphery (the unemployment remains double-digit in Spain, Greece, Ireland and Portugal, as well as in Slovakia). In this context, Italy’s performance is not bad, although the fall in the unemployment rate seen this last year (high of 8.7% in April 2010) is also due to growth in the inactive rate probably due to discouragement.

          United States

          The manufacturing ISM should rise to 55.5 in July. The ISM did not experience the sharp correction seen in the regional surveys in May and June. The composite index has remained below the February highs, but without indicating a contraction in activity like the Philly Fed and Empire. Production should be up in July after remaining steady at 54.5 in June (vs. 54 in May). Orders should also improve, boosted in part by export orders. Prices should fall further, though less than the aggregate 17.5 points recorded in May and June. The manufacturing sector data should improve over the summer months as the effects of the Japanese earthquake peter out.

          Construction spending should be up 0.2% mom in June, vs. -0.6% mom in May. New starti showed a surprising gain in June and this should trigger a recovery in residential building activity. Spending in the private non-residential sector posted three straight months of gains, and might show a further small increase.

          Tuesday 2 August

          Euro area

          Producer prices might be steady in June (with some upside risks), after -0.2% mom in May. The year-on-year movement will slow to 5.9% from 6.2% (high of 6.8% in March). The cooling of upstream pressures in the production chain should continue through the coming months.

          United States

          Personal spending is expected to be up +0.2% mom in nominal terms in June. Personal income should show a similar gain. The saving rate should be unchanged at 5% as in May. The consumption deflator should be down 0.2% mom, signalling a positive real-terms spending dynamic. The core deflator, on the other hand, should be up 0.2% mom, while in trend terms the index should continue its uptrend, rising to 1.3% yoy from 1.2% yoy in May.

          Auto sales should grow again in July, rising to 12M units ann. from 11.4M in June. With the normalisation of auto production and inventories post-earthquake, sales in the USA should accelerate rapidly to make up the ground lost due to supply-side shortages. Sales should be back above 13M units by year-end, bolstering a substantial recovery in consumption in the second half of the year.

          Wednesday 3 August

          Euro area

          We expect Euro area retail sales to be up +2% mom in June after -1% mom in May. 2Q11 sales would show only modest growth (+0.2% qoq) vs. -0.2% qoq in 1Q11. In any event, aside from the month-on-month volatility, retail sales have yet to show a clear uptrend. United States 

          The non-manufacturing ISM is expected to rise to 54 in July from 53.3 in June. The breakdown of the June survey was relatively weak, with orders down and activity broadly steady on May. Activity conditions in July should have improved for services too and expectations are for some of the ground lost in past months to be recouped, though without revisiting the February highs (59.7).

          Thursday 4 August

          Euro area

          The August ECB meeting might do little more than mark time. The ECB will hail the Eurogroup debt crisis management deal of 21 July, allowing the central bank to focus on the price stability goal while the line, long held by Frankfurt, prevailed whereby the central bank’s duties do not include buying securities on the secondary market (but will be entrusted to the EFSF). However, the ongoing contagion of Spain and Italy makes uncertain the continuation of the “planned” path of one rate hike every three months with a refi rate target of 2%, and in the meantime the ECB may re-activate the securities purchase programme. We suspect that, given the uncertainty, the ECB will seek to avoid any pre-commitment; accordingly, the August meeting is unlikely to produce clear signs regarding the future monetary policy path.

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