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Daily Macroeconomic Digest

Montag 18 Juni
US: eroding sentiment in housing

US: NAHB housing market index (June): 68 vs 70 expected (prior: 70)

  • Sentiment on housing has eroded, due to lower current and future sales.
  • Higher construction costs (rising imported prices of lumber) and higher mortgage rates may weigh down further on the sector.


Turkey: Unemployment rate (March): 10.1% (prior: 10.6%)

  • Unemployment rate has eased after a rise in Jan.-Feb. period; in seasonally adjusted data, the unemployment has evolved around 9.9% over the past three months.
Freitag 15 Juni
US: weakening consumer expectations and disappointing industrial production

US: Empire manufacturing (Jun): 25 vs 18.8 expected (prior: 20.1)

  • In the underlying details, both new orders (21.3; prior: 16), and shipments (23.5; prior: 19.1) improved further in June. The ongoing strength in these components suggests the headline should continue along at a solid level into the third quarter.

US: Industrial production (May): -0.1% m/m vs 0.2% expected (prior: 0.9% revised from 0.7%)

  • Capacity utilization: 77.9% vs 78.1% expected (prior: 78.1% revised from 78%)
  • The weakness was concentrated in auto production, which collapsed 6.5% m/m. Adjusting for this, the report was not as bad as manufacturing excluding autos only fell 0.2% m/m, while utilities surged 1.1% m/m and mining ramped up 1.8% m/m.

US: Consumer confidence (Michigan) (Jun P): 99.3 vs 98.5 expected (prior: 98)

  • Current conditions: 117.9 (prior: 111.8)
  • Expectations: 87.4 (prior: 89.1)
  • Inflation expectations have marginally increased from past month (2.9% at 1-year; +0.1pp; 2.6% y/y on 5-10y horizon).

Eurozone: CPI (May F): 0.5% m/m as expected (prior: 0.5%)

  • On a y/y basis: 1.9% as expected (prior: 1.3%)
  • CPI core y/y: 1.1% as expected (prior: 0.8%)
  • The breakdown of the report was largely unchanged; at the headline level, energy inflation stood at 6.1% from 2.6%, while unprocessed food inflation increased to 2.4% from 1.5%.
Donnerstag 14 Juni
Solid retail sales in the US, ECB: Draghi still on the dovish side

US: Retail sales (May): 0.8% m/m vs 0.4% expected (prior: 0.4% revised from 0.3%)

  • Strength in retail sales was broad-based, with the notable exception of furniture (-2.4% in May vs. +2.7% in April) and sporting goods (-1.1% vs -0.2%). The value of motor vehicle sales rose by 0.05% m/m and higher gasoline prices translated into a 2% m/m increase in the value of gasoline station sales. Building materials sales rebounded by a strong 2.4% m/m and restaurant sales increased by 1.3% m/m, which reflects the slightly later start to spring in the northeast this year.


US: Import price index (May): 0.6% m/m vs 0.5% expected (prior: 0.6% revised from 0.3%)

  • On a y/y basis: 4.3% vs 3.9% expected (prior: 3.6% revised from 3.3%)
  • Petroleum prices rose by 5.9% m/m, while capital goods declined by 0.1% m/m.


US: Initial jobless claims (Jun 9): 218k vs 223k expected (prior: 222k)

  • Continuing claims: 1697k vs 1732k expected (prior: 1746k revised from 1741k)
  • By state, jobless claims fell by 4k in California and 2k in Florida while filings rose by 2k in Pennsylvania.
  • Overall, today’s report suggests that the pace of layoffs remains low.


ECB Meeting: key points

  • The ECB made two important announcements today.
    • First, the ECB will continue to make net purchases at the current monthly pace of EUR 30 billion until the end of September 2018. Then, the Governing Council that, after September 2018 and subject to incoming data confirming the its medium-term inflation outlook, it will reduce the monthly pace of the net asset purchases to EUR 15 billion until the end of December 2018, which will mark the end net purchases. Moreover, they reiterated that their intention to maintain reinvestments of the principal payments from maturing securities for an extended period of time after the end of net asset purchases.
    • Perhaps more importantly, on forward guidance about interest rates, the ECB expects them to remain at their present levels "at least through the summer of 2019 and in any case for as long as necessary to ensure that the evolution of inflation remains aligned with the current expectations of a sustained adjustment path".
  • About Italy, Draghi mentioned that redenomination risk has not re-emerged and contagion from Italy to other member states has been limited. In our view, as long as the problem remains largely contained to Italy, the ECB will probably stay on the sidelines.
  • The Government Council finally took the decision to give the details about the end of the net purchase today, rather than in July as was expected by most observers until last week. This does not make much difference and the path is in line with expectations. The surprise came from the pledge on rates – no rate hike at least until summer 2019 -, which highlights the huge dichotomy between the ECB and the Fed and explains the sharp fall in the EUR.


Germany: CPI (May F): 0.6% m/m as expected (prior: -0.1%)

  • On a y/y basis: 2.2% as expected (prior: 1.4%)
  • Food prices rose by 0.2% m/m, while transport prices increased by 1.2% m/m.


France: CPI (May F): 0.5% m/m vs 0.4% expected (prior: 0.4%)

  • On a y/y basis: 2.3% as expected (prior: 1.8%)
  • Food prices rose by 0.9% m/m, while energy prices increased by 2% m/m.


UK: Retail sales (May): 1.3% m/m vs 0.3% expected (prior: 1.4% revised from 1.3%)

  • Retail sales rebounded strongly in May with the ONS pointing to warm weather and the royal wedding celebrations as the main drivers.
Mittwoch 13 Juni
Weak eurozone industrial production data, in-line UK CPI

US: PPI (May): 0.5% m/m vs 0.3% expected (prior: 0.1%)

  • Ex food & energy: 0.3% vs 0.2% expected (prior: 0.2%)
  • PPI y/y: 3.1% vs 2.8% expected (prior: 2.6%); core PPI y/y: 2.4% vs 2.3% expected (prior: 2.3%)
  • Largest yearly increase since January 2012, driven by a 16.5% rise in energy prices.
  • Core PPI has been in a 2.2-2.7% range since last August (peaking in March), indicating a firming of price inflation compared to previous years but not a sharp acceleration.


Eurozone: Industrial production (April): -0.9% m/m vs -0.7% expected (prior: 0.6% revised from 0.5%)

  • IP y/y: 1.7% vs 2.5% expected (prior: 3.2% revised from 3.0%)
  • A significant decline in energy production (-5.0% m/m) weighed on IP but manufacturing output declined by 0.3% m/m with broad-based weakness both in terms of sectors and countries.
  • This adds to evidence that the economy has not rebounded strongly since Q1’s slowdown.


UK: CPI (May): 0.4% m/m as expected (prior: 0.4%)

  • CPI y/y: 2.4% as expected (prior: 2.4%)
  • Core CPI: 2.1% y/y as expected (prior: 2.1%)
  • Removing some temporary factors among the most volatile components, underlying inflation trend appears to be slowing.


UK: PPI Output prices (May): 0.4% m/m vs 0.3% expected (prior: 0.4% revised from 0.3%)

  • PPI output: 2.9% as expected (prior: 2.5% revised from 2.7%)


Brazil: Retail sales (April): 1.0% m/m vs 0.6% expected (prior: 1.1% revised from 0.3%)

  • Retail sales y/y: 0.6% vs -0.5% expected (prior: 8.0% revised from 6.5%)
  • This provides more evidence that activity gained traction at the beginning of Q2. Prior months' data were also revised upward.


Turkey: Industrial production (April): 0.9% m/m vs 0.7% expected (prior: 0.2%)

  • IP y/y: 6.2% as expected (prior: 7.8% revised from 7.6%)
Dienstag 12 Juni
Solid headline and core CPI in the US, ZEW index lower than expected in Germany

US: CPI (May): 0.2% m/m as expected (prior: 0.2%)

  • The headline inflation rose to 2.8% y/y in May from 2.5%, which is partly due to the rally in energy prices. The core  CPI was also solid (2.2% y/y as expected), which will keep the Fed on course to raise interest rates tomorrow.
  • At the core level, goods prices remained in deflation territory particularly in non-food consumer items and autos (-0.9% y/y). Core services inflation was in line with its recent trend and remains anchored by shelter inflation.


US: NFIB Small Business optimism (May): 107.8 vs 105 expected (prior: 104.8)

  • The healine was very strong, coming in at 107.8 - the highest level of small business optimism since 1983.
  • Price indicators in the survey were also very strong with average selling prices at a new cycle high and those reporting a rise in worker compensation at a 18-year high.


UK: Unemployment rate (ILO) (Apr): 4.2% as expected (prior: 4.2%)

  • Jobless claims change (April): -7.7k after +28.2k (revised from +31.2k)
  • Core average weekly earnings 3m/y: 2.8% vs 2.9% expected (prior: 2.9%)
  • Wage growth slowed following negative base effects of last year. Core and headline growth slowed and continue to signal limited inflationary pressures.


Germany: Zew (Jun): 80.6 vs 85 expected (prior: 87.4)

  • Investor sentiment continues to point to a slowdown. Expectations fell by 7.9pts (prior) to -16.1.
  • Survey participants were mostly concerned about the political situation in Italy and further protectionist measure the US administrative.
Macro economic

The Chief Economist's weekly update

To help you navigate through the economic news, here is a summary of last week’s main events and what to look out for next week.

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