· Flash PMI data from UK & Eurozone to give clues over speed of recovery
· US incomes for May set to retreat after government inspired bounce in April
The Flash Eurozone Consumer Confidence survey reading for June will be released on Monday and expectations are that the mood will continue to improve having hit that 11-year low back in April. It’s worth noting that this number comes with a pessimistic bias, but there may be some concern over the sluggish pace of improvement here. Forecasts are for a reading of around -15, up from -18.8 in May but maintaining momentum here could be critical.
Keeping with the Eurozone, Flash PMI data for June will be published on Tuesday. There are three key prints here, services, manufacturing and composite. Optimism is high that manufacturing will continue to chart a course of recovery, although it is still expected to fall well short of the break-even 50 level. Again, it’s the pace of improvement rather than a return to recent highs that will be front of mind here.
Also on Tuesday, UK Flash PMI data for June is set to be published but given the fact the UK is emerging from lockdown slower that continental Europe, the figures here are expected to be less impressive. A composite reading above 40, so the best since February, would arguably be seen as an endorsement that the economy is slowly recovering.
A valuable forward-looking indicator is set for release from Germany on Wednesday in terms of the Ifo Business Climate Survey. This canvasses opinions of 9,000 different businesses and looks to judge the split between those who are optimistic and pessimistic over the outlook. Having hit a low of 74.2 in April, a figure around 85 is expected, lofting confidence back above the lows seen at the depths of the 2008 financial crisis.
US Durable goods order data for May will be out on Thursday. The month on month figure is expected to break back into positive territory, although after two consecutive months of contraction, down 16.6% in March and 17.2% in April, even the more ambitious suggestions of 8% growth only account for a modest reversion. Evidence that this rate of growth can be sustained for several months will be what the market is looking for now.
A slightly left field number here but one that has the potential to grab the headlines, will be the UK Car Production figure for May. In April this posted a year-on-year decline of 99.7%, so a marked improvement is expected here. Forecasts suggest the number will still be depressed, with contraction, again on an annualised basis, of around 80% being eyed.
Rounding off the week is US Personal Income and Spending data for May. Income jumped last month, spurred on by a generous cash handout for most Americans from the White House, but that will bode badly for the month-on-month reading which is expected to show a 5% contraction. There is however optimism that spending will start to show signs of recovery after falling 6.9% in March and 13.6% on April. A 4% increase is being forecast here, but again it’s a case of sustaining this in the longer term – something that may only prove possible with yet more Federal handouts.
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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