The Marketplace - 22nd July 2016
Over the past few days, comments from BoE’s Weale and Forbes have suggested that the MPC should not rush to provide additional stimulus, especially in the absence of any post-referendum hard data on the economy. The lack of any hard data till mid-August leaves the focus for now on survey evidence.
Already published surveys including the Lloyds Business Barometer and GfK Consumer Confidence indicator have pointed to some softening in sentiment after the vote. Further information will come from today’s ‘flash’ July PMIs for the UK. Typically, Markit do not usually provide a ‘flash’ release but have commissioned one “in order to help provide clarity on the potential impact of the UK’s EU referendum on the economy”.
Consensus expectations look for falls in both the manufacturing (48.7 from 52.1) and services (48.8 from 52.3) indices. Ahead of these, the regular ‘flash’ PMIs for the Eurozone are due and are expected to show declines in the headline indices for both manufacturing and services.
Have a great weekend!
The Marketplace - 21st July 2016
UK June retail sales are expected to show a decline today, following the 0.9%m/m rise in May. The figures will mostly covering the run-up to the referendum, but also the week after. Indicators of retail activity for June so far have been mixed.
The CBI’s survey of the distribution sector pointed to solid momentum, but BRC data suggest that some pullback in the annual pace of growth of spend is likely. Overall, we expect a 0.6%m/m drop in activity in June, but do not attribute this to referendum-related effects.
The key focus, however, will be on the ECB announcement. No policy change is expected on this occasion, but President Draghi’s comments at the press conference will be closely watched. In particular, markets will examine his assessment of any potential impact of Brexit and concerns about the Italian banking sector.
On a more technical level, Mr Draghi is likely to get questions about the potential scarcity of German government bonds that the ECB can buy under current rules and whether some of the rules may be revisited to accommodate further stimulus in the near future
The Marketplace - 20th July 2016
Despite an apparently tight UK labour market, the introduction of the National Living Wage on 1 April and some signs of stronger surveyed pay pressures, the pace of growth overall remains below pre-crisis rates. Analysts look for regular pay growth (excluding bonuses) to edge up to 2.4% from 2.3%, while headline pay growth is seen rising to 2.3% from 2.0%.
Meanwhile, increased economic uncertainty may put a brake on recent hiring momentum. For now, look for an unchanged unemployment rate in the 3 months to May, at 5.0%. In politics, Theresa May holds her first PMQs before meeting with German Chancellor Angela Merkel in Berlin.
Ahead of Thursday’s ECB policy announcement, the advance estimate of Eurozone consumer confidence is expected to show a decline in the index to 8.0 in July from 7.3 in June. It follows the sharper-than-expected drop in the ZEW survey yesterday. While downside risks to the Eurozone economic outlook has increased, the ECB is likely to keep policy unchanged for now