· US Durable Goods Orders for June to illustrate strength of economic bounce back

· UK Consumer debt set to grow for first time in four months

· Federal Reserve Meeting may fail to provide much guidance

The Ifo German Business Climate Survey for July kicks off the week. After some significantly better than expected PMI data from Germany at the end of last week, expectations are that confidence will continue to move back in. That said, sentiment is still likely to remain a little subdued and below the 95 level which became standard in the second half of 2019.

US Durable Goods Order data for June is next up, and the key point here will be to see if the reading remains in positive territory. The May print lurched higher after two months of contraction and although the shortfalls in March and April will take some time to recoup, a month-on-month improvement of around 6% would again offer some confidence that the US economy is working towards recovery, even if the country is still struggling to keep the effects of COVID-19 in check.

There’s not much economic news scheduled for release on Tuesday, but Wednesday sees the publication of UK Consumer Credit data for June. After contracting sharply for the preceding three months as fragile consumer confidence was mixed with many retail outlets being shuttered, the number is forecast to edge back into positive territory. Coming off the back of those better than expected UK retail sales figures for June, that certainly follows and given the seemingly relentless appetite for borrowing, even the most fragile of economic recoveries would likely support further growth.

The US Federal Reserve’s latest two day policy meeting concludes, although detail here as to how the central bank aims to foster economic growth may still be elusive. The challenge seems to be that there is so much uncertainty over the near term economic outlook that it’s difficult for policymakers to decide how to manage the longer term view. That said, one key point seems to be the commitment to hold interest rates close to zero for a while yet. Long periods of below target inflation seem to suggest that there would be no real panic if the 2% level was to be breached.

Thursday sees the release of German Q2 GDP flash data. This is set to confirm that the country has slipped into a technical recession – that’s two consecutive quarters of negative growth – but many will be quick to note that there’s a rebound already in play. Again, Germany has posted bumper PMI readings with some especially strong growth being seen in the services sector. So long as the threat of a second wave of the pandemic can be suppressed, the temptation may well be to look beyond readings like this.

Eurozone Unemployment for June may however serve to keep any positive sentiment in check. Expectations are that this reading will continue to move higher and whilst it’s worth bearing in mind the number was at a historic low at the start of the year, it will be the pace of gains, and the rise in youth unemployment, that stand to cause the most concern. The May figure was below expectations so there’s a risk some lag could be seen here. Anything above 8% could offer some real cause for concern.

Rounding out the week – and indeed the month – we have US Personal Spending & Income data for June. Recent readings have been distorted by the Federal cash grant paid out to Americans, so this print will offer a cleaner perspective. Another decent uplift in spending after the May +8.2% would lend support to the idea that consumers can prop up the economy, whilst any growth in income at all is likely to be cheered, too. That said, the unknown is how these important metrics will play out in the latter part of the year.

Article by Tony Cross of Monk Communications. This article first appeared in Octo Members, the app-based private community for UK financial services professionals.

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