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Daily Macroeconomic Digest

Monday 03 August
Firmer Eurozone PMI and US ISM business confidence

US: Markit Manufacturing PMI (July): 50.9 vs 51.3 expected (prior: 49.8)

  • Final data were below first estimate but reached 50. A more modest rebound in production than in the first estimate, and slow rebuilding of new orders, while new exports orders have marginally decreased.


US: ISM Manufacturing (July): 54.2 vs 53.6 expected (prior: 52.6)

  • Sentiment on production and new orders has strongly rebounded and seems better oriented than in the PMI index; the related sub-index on production was up to record 62 from 57.3 the prior month.
  • New export orders have also increased and were back to 50.4.
  • Employment index has modestly improved (from 42.1 the prior month to 44.3).
  • The large firms are more present in ISM survey than in the PMI index, which seem to benefit the most from the ongoing recovery. If local lockdown is back, sentiment could ease back in August.


US: Construction spending (June): -0.7% m/m vs 1% expected (prior: -1.7% revised from -2%)

  • Residential construction was down by 1.4% m/m after -3.5% m/m the prior month. Non -residential construction was also down by just 0.2% m/m.


Eurozone: PMI Manufacturing (July): 51.8 vs 51.1 expected (prior: 47.4)

  • Business sentiment has increased more than in the first estimate in all major countries (all index now above 50 in a 51-53.5 range).
  • The rebound was mainly fueled by production with the end of the lockdown; orders have just begun to slightly improve, while sentiment stayed quite negative on employment.
  • Business sentiment could evolve in a range in the next months, but some easing is possible next month due to rebound in COVID cases and some easing in demand.


Poland: PMI Manufacturing (July): 52.8 vs 50 expected (prior: 47.2)

  • A strong rebound in new orders.


UK: PMI Manufacturing (July): 53.3 vs 53.6 expected (prior: 50.1)

  • Sentiment has regained further on production and prospects of ending the lockdown; orders have rebounded for a first time, but new exports have continued to fall; employment has contracted further, while upward pressures were seen in input and output prices.


Switzerland: PMI Manufacturing (July): 49.2 vs 50 expected (prior: 41.9)

  • Sentiment has significantly rebounded on all major components from the prior month; but the index remained below 50.
  • Production index has passed above 50, while new orders improved but remained below 50.
  • Separately, PMI services has rebounded from 49.1 to 51.6, thanks to strong increase in activity, while new orders have declined after past month rebound.


Switzerland: CPI (July): -0.2% m/m vs -0.4% expected (prior: 0%)

  • Core inflation was down by 0.2% m/m after -0.1% m/m the prior month.
  • Despite a 0.5% m/m rebound in energy prices, index has contracted due to lower food, clothes and communication prices.
  • Headline (-0.9% y/y) and core inflation (-0.2% y/y) remained in negative territory, but the decline was less pronounced than past month.


Sweden: PMI Manfacturing (July): 51 vs 50.5 expected (prior: 47.6 revised from 47.3)


Norway: PMI (July): 43.3 (prior: 48.8 revised from 48.9)


Russia: PMI Manufacturing (July): 48.4 vs 50.3 expected (prior: 49.4)

  • Index on new orders has passed below 50.


Brazil: PMI Manufacturing (July): 58.2 (prior: 51.6)

  • A strong rebound in current production and rebuilding new orders.
Friday 31 July
US: weakening consumer confidence; Eurozone Q2 GDP under sharp contraction

US: Personal income (June): -1.1% m/m vs -0.6% expected (prior: -4.4% revised from -4.2%)

  • Disposable income declined by 1.4% m/m; for another month after strong support in April (14.7% m/m); wage was up by 2.2% m/m over the month, after 2.6% m/m the prior month.


US: Personal spending (June): 5.6% m/m vs 5.2% expected (prior: 8.5% revised from 8.2%)

  • Spending has rebounded for the second month, still driven by purchases of durable goods (8.7% m/m after 28.8% m/m the prior month).
  • Purchases of services were up by another 5.2% m/m.
  • Data confirmed consumption entered a more positive and sustained trend at the end of Q2 and beginning of Q3; rebound in consumption could moderate on monthly data, if COVID cases are not under control and if tougher social distancing is extensively adopted in the next months.


US: Core PCE (June): 0.2% m/m as expected (prior: 0.2% revised from 0.1%)

  • Yearly trend has slightly eased from 1% y/y the prior month to 0.9% y/y.


US: Chicago PMI (July): 51.9 vs 44 expected (prior: 36.6)

  • Sentiment has rebounded more than expected as region has benefited from a better oriented auto sector. The index passed above the 50 level on firmer production and rebounding new orders.


US: Consumer confidence (Michigan) (July): 72.5 vs 72.9 expected (prior: 73.2)

  • Final data for July have shown significant pull back in index on current conditions and on expectations These two sub- index have come back to their low levels seen in May, erasing the June rebound.
  • The main reasons of concerns were lower future financial situation, lower business and economic future situation, rising concerns on unemployment and fears to lose jobs.
  • Willingness to buy large items has declined from the June level, to go back close to its May level, except for housing in which demand stayed on a rising trend.
  • Weakening confidence should be a huge incentive for politicians to find quickly an agreement on budget to avoid any double dip in activity in August.


Eurozone: GDP (Q2-20): -12.1% q/q as expected (prior: -3.6%)

  • The contraction was in line with expectations and reflected the lockdown of activity in all countries. Q2 results show asymmetric shock in the different euro-members even if consumption and services were all hit in all countries.


Eurozone: CPI estimate (July): 0.4% y/y vs 0.2% expected (prior: 0.3%)

  • Monthly changes were less negative than expected (-0.3% m/m vs -0.5% m/m expected): energy prices were up by 0.6% m/m, but non-energy good prices were down by 1.9% m/m. core inflation was down by 0.2% m/m; the decrease of German VAT over the month has brought some volatility and fueled monthly negative changes.
  • Core inflation was up from 0.8% y/y the prior month to 1.2% y/y.


France: GDP (Q2-20): -13.8% q/q vs -15.2% expected (prior: -5.8% revised from -5.3%)

  • The contraction was just less severe than expected; all major sectors have sharply contracted with the lockdown in place.
  • Consumption was down by 11% q/q: a strong decline in services (-15%q/q), while food purchases was down by only -0.5% q/q.
  • Investment has sharply fallen on all components (-17.8% q/q); net trade contribution was negative (-2.3 pp) while inventories have positively contributed (by 0.6 pp).


France: CPI (July): 0.4% m/m vs -0.1% expected (prior: 0.1%)

  • Energy prices were up by 1%m/m, while food prices were down by 6% m/m.
  • Yearly trend has accelerated from 0.2% y/y to 0.9% y/y.


France: Consumer spending (June): 9% m/m vs 6.8% expected (prior: 37.4% revised from 36.6%)

  • Another strong rebound in monthly sales with the end of the lockdown; all sectors have shown a strong rebound; the strongest one was in autos up by 50.6% m/m after 175% m/m the prior month.
  • Sales could moderate on a monthly basis in August if COVID cases and leisure sectors face renewed constraints.


Germany: Retail sales (June): -1.6% m/m vs -3% expected (prior: 12.7% revised from 13.9%)

  • Sales (ex-autos) have slightly declined after a strong rebound; the monthly decrease was centered on food and IT goods, while other sectors remained on a positive, even more moderate, monthly trend.


Italy: GDP (Q2-20): -12.4% q/q vs -15.5% expected (prior: -5.4% revised from -5.3%)

  • The contraction was less severe than feared; details by sector will be published later in the month, but all components of demand have sharply declined during the quarter.


Italy: CPI (July): -0.6% m/m vs -1.5% expected (prior: 0%)

  • Preliminary data have pointed towards a monthly decline in prices of food, clothes and communication prices.
  • Yearly trend has rebounded from -0.4% y/y the prior month to 0.9% y/y.


Spain: GDP (Q2-20): -18.5% q/q vs -16.6% expected (prior: -5.2%)

  • Domestic demand was heavily hit by the lockdown; consumption was down by 21% q/q and investment down by 22.3% q/q. A rebound is expected on Q3 but renewed local lockdown could affect activity in tourism and leisure and reduce the magnitude of the Q3 recovery.


Poland: CPI (July): -0.1% m/m as expected (prior: 0.6%)

  • Food and electricity prices were down over the month, while fuel prices have rebounded by 2.3% m/m.
  • Yearly trend remained quite stable at 3.1% y/y after 3.3% y/y the prior month.


UK: Nationwide house prices (July): 1.7% m/m vs -0.2% expected (prior: -1.6% revised from -1.4%)

  • A strong monthly rebound in prices; yearly trend has also been restored, prices being up by 1.5% y/y after -0.1% y/y the prior month.


Norway: Unemployment rate (July): 4.9% vs 4.4% expected (prior: 4.8%)

  • After large decrease from 9.5% to 6.4% (May) and 4.8% in June, the unemployment rate has slightly regained over the month.


Thursday 30 July
Sharp Q2 GDP contraction in US and Germany

US: Initial jobless claims (July 25): 1434k vs 1445k expected (prior: 1422k revised from 1416k)

  • Continuing claims: 17018 k (vs 16200k expected) after 16151 k the prior week.


US: GDP (Q2-20): -32.9% q/q vs -34.5% expected (prior: -5%)

  • First release of Q2 GDP contraction came just less negative than feared but remained large.
  • Consumption has plunged by an impressive 34.6% q/q; the fall in durable goods was limited (-1.4% q/q) compared to the fall in services (-43.5% q/q).
  • Investment has also sharply decreased, including the residential sector: -27% in structure, -37.7%q/q in equipment and -38.7% in residential.
  • Exports and imports have also plunged by respectively 64.1% and 53.4% q/q; net trade contribution was nevertheless slightly positive (0.68 pp)
  • Public demand was positive, up by 2.7% q/q, but contributing by a modest 1.2 pp tp GDP.
  • Inventories have also sharply declined, contributing by -3.9 pp to Q1 GDP.
  • After record contraction, a rebound is still expected in Q3, but its strength will depend on COVID control and pace of resuming activity, notably in services and in consumer purchases. Consensus has moderated Q3 expectations, from more than 20% q/q to 15-18% q/q; downside risks to a 10-12% rebound exist if COVID cases expand further and temporary local lockdown remains in place.


Eurozone: Industrial confidence (July): -16.2 vs -17 expected (prior: -21.6 revised from -21.7)

  • Sentiment has improved slightly more than expected and the pace has accelerated from the previous rebound in the prior month.
  • The main driver was a rebound in future production, reflecting progressive recovery in activity.
  • Nevertheless, opinions on orders, exports and employment have improved at a slow pace over the past two months, remaining a source of uncertainty.


Eurozone: Consumer confidence (July): -15 as expected (prior: -14.7)

  • Sentiment has eroded after the prior month rebound.
  • Concerns have rebuilt on unemployment, future economic situation and personal financial situation.
  • The index is in the middle of a -22/-6.6 index range: the lowest point was reached in April and the highest point represents its pre-COVID level, pointing towards fragile consumer confidence.


Eurozone: Service confidence (July): -26.1 vs -24.5 expected (prior: -35.5 revised from -35.6)

  • The index has regained, but it remained at depressed levels.
  • The improvement was mainly driven by a rebound in future demand, while opinions on other parameters have more modestly improved.


Eurozone: Unemployment rate (June): 7.8% vs 7.7% expected (prior: 7.7% revised from 7.4%)

  • Trend in unemployment is rising.


Germany: GDP (Q2-20): -10.1% q/q vs -9% expected (prior: -2% revised from -2.2%)

  • Preliminary data have pointed towards significant contraction in Q2. no details are yet available (to be published late August), but only public spending was positive during the quarter while private demand, capex and exports were under sharp contraction due to the lockdown in place.
  • Activity has regained in June and entered Q3 with positive momentum: nevertheless, the expected rebound in Q3 remains highly dependent from control over COVID cases and further progress on resuming activity.


Germany: Unemployment rate (July): 6.4% vs 6.5% expected (prior: 6.4%)

  • Unemployed has decreased by 18 k over the month (vs expectations of a rise by 41 k) after a 68 k rebound in the prior month.


Germany: CPI (July): -0.5% m/m vs -0.2% expected (prior: 0.7%)

  • Yearly inflation has eased from 0.8% y/y to 0% y/y, under the effect of lower VAT.


Italy: Unemployment rate (June): 8.8% vs 8.6% expected (prior: 8.3% revised from 7.8%)

  • Trend in unemployment is rising; employment has decreased at slower pace in June than in the past 3 months.


Spain: CPI (July): -1.6% m/m vs -1% expected (prior: 0.4%)

  • Inflation has turned more negative from -0.3% y/y the prior month to -0.7% y/y.


Switzerland: KOF (July): 85.7 vs 75 expected (prior: 60.6 revised from 59.4)

  • A strong rebound in business confidence, but index is still below its March level.
Wednesday 29 July
US: rebounding pending home sales; France: weakening consumer sentiment

US: Pending home sales (June): 16.6% m/m vs 15% expected (prior: 44.3%)

  • A second month of rebound, and monthly data were better than expected.
  • The index of pending home sales has reached highest level over the past two years.
  • Activity in housing has benefited from the low interest rates environment and a still intact large demand.


US: Wholesale inventories (June): -2% m/m vs -0.5% expected (prior: -1.2%)

  • A second month of inventory contraction due to the end of the lockdown period.
  • In parallel, inventories have sharply declined in the retail sector and notably for the auto sector.


UK: M4 (June): 13.1% y/y (prior: 11.9%)

  • M4 lending stayed on stable and sustained growth trend (7% y/y). M4 ex-OFC was up by 19.8% after 31.2% prior month on a 3-month annualized basis.
  • Consumers repaid debt over the past months and used cash at the end of the lockdown, with rebounding demand for housing; corporates used credit facilities and markets functioning to build large cash positions.


France: Consumer confidence (July): 94 vs 99 expected (prior: 96 revised from 97)

  • After a rebound the prior month, sentiment has eased back with still concerns on unemployment and rising concerns on inflation and standard of living,


Sweden: Consumer confidence (July): 83.4 (prior: 75.3 revised from 75.2)

  • Sentiment on personal situation has slightly improved, but opinions on future economic situation and unemployment have slightly deteriorated over the month, after initial rebound the month before.


Sweden: Manufacturing confidence (July): 95.7 (prior: 89.3 revised from 89.1)

  • Sentiment has regained further over the month in manufacturing and in other sectors as retail and construction.


Spain: Retail sales (real) (June): -4.7% y/y (prior: -18.9% revised from -19%)

  • A second strong monthly rebound in purchases; yearly trend has turned less negative from the prior month.
Tuesday 28 July
US consumer confidence (Conference Board): weakening expectations

US: S&P CoreLogic CS 20-City (May): 0.04% y/y vs 0.3% expected (prior: 0.24% revised from 0.33%)

  • Trend in prices have moderated on a monthly basis but remained positive; yearly trend has moderated in parallel from 3.91% y/y the prior month to 3.69% y/y.


US: House price Index MoM (FHFA) (May): 0.13% m/m (prior: 0.41%)

  • Other housing prices data have comforted the same pattern as seen in the S&P 20-city index: some moderation in monthly prices and slower pace in parallel on the yearly trend (4.28% y/y after 4.77% y/y the prior month).


US: Consumer confidence (CB) (July): 92.6 vs 95 expected (prior: 98.3 revised from 98.1)

  • Sentiment on current situation has rebounded further, but the index stayed below March levels; on the opposite, expectations have decreased after two months rebound and were just above the lows seen in March.
  • Current sentiment has improved thanks to better situation in labor, back to a more "normal" situation, but concerns on jobs available have increased.
  • Expectations declined due to feelings of no more improvement in economy and in labor over the next six-months.
  • Willingness to buy items has eased on autos and other major appliances but increased further on houses.
  • Recent decline in consumer sentiment in both major indices revealed doubts on future economy, related to new COVD cases, that could favor savings over purchases and challenge current administration in the next Presidential election


US: Richmond Fed manufacturing (July): 10 vs 5 expected (prior: 0)

  • Sentiment has regained further from the lows seen in May; improvement was coming from a rebound in new orders and larger use of production capacity, reflecting the end of the lockdown.
  • Sentiment on future capex remained at depressed level.


Spain: Unemployment rate (Q2-20): 15.33% vs 16.5% expected (prior: 14.41%)

  • The unemployment rate has strongly increased with the lockdown in place; furloughed workers are not included in the unemployment data.
  • Further rise in unemployment is expected in Q3, with uncertainties on tourist activity and rising COVID cases in some cities and regions (notably Catalonia).


Sweden: Retail sales (June): 1% m/m (prior: 0.8% revised from 0.5%)

  • A second month of strong rebound in sales; sales were up by 3.5% y/y (2.7% y/y the prior month).


Norway: Retail sales (June): 5.7% m/m (prior: 2.8%)

  • A large rebound in all sectors (food and non-food sales) over the month.


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