· UK Construction PMI set to remain below break-even
· German economy eyes bounce – but data could illustrate two speed Eurozone rebound
UK Construction PMI data will kick off the week, in a reading that has the scope to illustrate the pace of the country’s economic recovery. Expectations are that the June print will record a third successive month of improvement, although critically the number is forecast to come in around 45 and like last week’s Services PMI reading, still being some way short of the break-even 50 mark. In other words, the sector would still be contracting but at a far slower pace.
Eurozone Retail Sales for May will also be closely followed, with a significant bounce expected for the monthly figure, although the more measurable annualised reading is set to show year-on-year contraction of around 14%. However, with many retailers still largely shuttered across the Euro area in May, the depressed reading is unlikely to cause much surprise.
Tuesday sees German Industrial Production data for May being released. After two sharp month-on-month declines, a dramatic rebound of at least 10% is anticipated. Even though this doesn’t come close to reversing the impact of the COVID-19 shut down, as the Eurozone’s economic powerhouse, a double-digit spike in German performance has the potential to lift sentiment across the wider currency bloc.
May’s JOLT Job Openings figure from the US is also due for publication. This fell to its lowest level in six years in April and expectations remain that a further tightening will be seen in this print. However, the US labour market is clearly in a state of flux, as was seen with last week’s impressive gains in non-farm payrolls which came in well ahead of predictions. With that in mind, markets may be reluctant to invest much into this print, unless something well below the anticipated reading of 4.5 million is seen.
The German Balance of Trade for May is expected to lurch higher on Thursday, having hit a 19-year low in April. Whilst the uptick in trade activity will be broadly welcomed, there may be some concern coming off the back of this that Germany is emerging from the lockdown in an even stronger position than many of its Eurozone counterparts. As the ECB wrestles with growth stimulus measures, this has the potential to raise fresh concern over how the currency bloc manages any recovery in a balanced manner.
Rounding off a relatively quiet week in terms of economic news, US Producer Price Index data for June is set to be published. This reflects the prices paid by manufacturers so can be used as an early indication of inflationary – or deflationary – threats. Prices have been depressed in recent months but a trend of recovery is being forecast. The year on year figure printed -0.8% in May, with a reading around -0.5% expected for June.
Article by Tony Cross of Monk Communications. This article first appeared in Octo Members, the app-based private community for UK financial services professionals
Any opinions, news, research, analyses, prices or other information (“information”) contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument.
Sugarcane Capital has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry. Sugarcane Capital will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, Sugarcane Capital does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk