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Daily Macroeconomic Digest

Thursday 18 July
US: Philly Fed on a strong rebound; firmer than expected UK retail sales

US: Philadelphia Fed. (July): 21.8 vs 5 expected (prior: 0.3)

  • A strong rebound in sentiment on both current situation and expectations. Opinions have rebounded on new orders, shipments, employment and capex. Prices paid as well as prices received were also on the rise.

  • Truce on trade could refuel business sentiment after it reached low level in past month.


US: Initial jobless claims (July 13): 216k as expected (prior: 208k revised from 209k)

  • Continuing claims: 1686 k after 1728 k past week.


UK: Retail sales (June): 1% m/m vs -0.3% expected (prior: -0.6% revised from -0.5%)

  • Contrary to expectations, sales have rebounded in almost all sectors after depressed data over the past two months.

  • Consumption has supported growth in Q2, but downside risks on activity remain in place related to Brexit.


Switzerland: Trade balance (June): 4.1 Bn CHF (prior: 3.40Bn)

  • Real exports: -0.1% m/m after -0.4% m/m past month; real imports: +1.4% m/m after 0.8% m/m past month.


Poland: Industrial production (June): -5.9% m/m vs -1.3% expected (prior: 0%)

  • Highly volatile data have shown a large fall in all sectors and particularly in manufacturing and energy sectors.

Wednesday 17 July
Disappointing US housing starts; firmer eurozone inflation

US: Housing starts (June): 1253k vs 1260k expected (prior: 1265k revised from 1269k)

  • Building permits: 1220 k vs 1300 k expected and 1299 k past month.

  • Housing starts for single family have increased by 3.5% m/m, but remained well below 900 k at 847 k; multifamily houses have sharply decreased, erasing the rebound seen past month.

  • The yearly trend has shown less negative situation for single houses, but double digit growth for multifamily houses.

  • Despite low interest rates, trend in housing construction has disappointed further.


UK: CPI (June): 0% m/m as expected (prior: 0.3%)

  • Price change was flat over the month, with upside pressures from household goods balanced by lower prices for clothes and leisure.

  • Yearly trend remained unchanged at 2% y/y, but core inflation has slightly increased from 1.7% y/y the prior month to 1.8% y/y.


UK: PPI Input prices (June): -1.4% m/m vs -0.5% expected (prior: 0%)

  • Core manufacturing prices were up by 0.5% m/m (1.9% y/y). Food and refined oil prices have fallen during the month.

  • Yearly trend has turned negative, from 1.4% y/y the prior month to -0.3% y/y.


UK: PPI Output prices (June): -0.1% m/m vs 0.1% expected (prior: 0.3%)

  • Core prices were up by 0.1% m/m; Yearly trend has moderated from 1.9% y/y to 1.6% y/y. and core prices from 2% y/y to 1.7% y/y.


Eurozone: CPI (June): 0.2% m/m vs 0.1% expected (prior: 0.1%)

  • Yearly trend has slightly accelerated from 1.2% y/y past month to 1.3% y/y; core inflation has increased from 0.8% y/y to 1.1% y/y. Inflation in services were firmer than expected and balanced lower energy prices.

  • This could reduce a bit the pressure on the ECB.


Italy: Industrial orders (May): 2.5% m/m (prior: -2.2% revised from -2.4%)

  • Both domestic and foreign orders have rebounded after the fall seen past month. Total sales have also improved, rising by 0.3% m/m after -0.8% m/m past month.

  • On yearly basis, orders were still down by 2.5% y/y, while sales were up by 0.3% y/y.


Russia: Retail sales (June): 1.4% y/y vs 1% expected (prior: 1.4%)

  • Non-food sales have improved past month.

  • Real wages have rebounded by 2.3% y/y after 1.6% y/y past month.


Russia: Unemployment rate (June): 4.4% vs 4.5% expected (prior: 4.5%)

  • Downward trend remained in place on unemployed.

Tuesday 16 July
Solid retail sales and manufacturing production in the US

US: NAHB housing market index (July): 65 vs 64 expected (prior: 64)

  • Prospective buyers traffic was also a tad higher.


US: Industrial production (June): 0.0% m/m vs 0.1% expected (prior: 0.4%)

  • Manufacturing production: 0.4% m/m vs 0.3% expected (prior: 0.2%)

  • Soft utility output (-3.6% m/m because of weather fluctuation) weighed down on the headline figure, but manufacturing output rebounded, led by a strong increase in auto production (+2.9%). Still manufacturing production is only up 0.4% y/y and remains fragile.


US: Retail sales (June): 0.4% m/m vs 0.2% expected (prior: 0.4% revised from 0.5%)

  • Ex auto and gasoline: 0.7% vs 0.3% expected (prior: 0.5%)

  • Control retail sales, which is taken into account in GDP, increased by 0.7% m/m (vs 0.3% expected), the fourth consecutive monthly increase. They increased by 7.5% q/q annualized in Q2, the strongest gain since Q4 2005, which will raise forecasts for Q2 GDP growth.

  • Healthy consumption growth is especially important now given the weakening industrial sector. This also suggests that the US consumer does see a downturn coming.

  • This should not change the FOMC's decision at the end of the month as it is already aware that consumer spending is currently an important driver of growth.


US: Import price index (June): -0.9% m/m vs -0.6% expected (prior: 0.0% revised from -0.3%)

  • The weakness reflects declines in petroleum (-6.2%), industrial supplies (-3.3%), and food (-1.5%) import prices.


Germany: Zew (July): -24.5 vs -22.0 expected (prior: -21.1)

  • Current situation: -1.1 vs 5.0 expected (prior: 7.8)

  • Investor confidence fell for the third straight month, close to the weakest level in seven years. The gauge for current conditions fell below zero for the first time since 2010


UK: Unemployment rate (ILO) (May): 3.8% as expected (prior: 3.8%)

  • Jobless claims change (June): +38.0k after 24.5k in May

  • The labor market stays resilient.


UK: Average earnings incl. Bonus (May): 3.4% y/y vs 3.1% expected (prior: 3.2% revised from 3.1%)

  • The pick-up in weekly earnings growth seems driven by temporary factors.


Russia: Industrial production (June): 3.3% y/y vs 2.0% expected (prior: 0.9%)

  • The improvement was led by manufacturing (+5.5% m/m)

Monday 15 July
US: New York empire business confidence rebounded in July

US: Empire manufacturing (Jul): 4.3 vs 2 expected (prior: -8.6)

  • Sentiment has rebounded but the report was mixed, with an increase in the new orders, but declines in the employment (the lowest level in almost three years) and shipments components.

  • Expectations have rebounded with a broad-based rises on sub-items including orders.

  • Overall, the report continues to suggest weakness in regional manufacturing activity.

Friday 12 July
Stronger-than-expected rebound in eurozone industrial production

US: PPI (June): 0.1% m/m vs 0.0% expected (prior: 0.1%)

  • PPI y/y: 1.7% vs 1.6% expected (prior: 1.8%)

  • Core PPI (ex food, energy & trade): 0.0% m/m vs 0.2% expected (prior: 0.4%); 2.1% y/y (prior: 2.3%)

  • Slightly higher than expected like yesterday's CPI but very unlikely to change Fed's policy makers decision at the end of the month.


Eurozone: Industrial production (May): 0.9% m/m vs 0.2% expected (prior: -0.4% revised from -0.5%)

  • IP y/y: -0.5% vs -1.5% expected (prior: -0.4%)

  • Solid and broad-based rebound despite subdued business sentiment in the manufacturing sector. However, persistent pessimism among manufacturers and weak factory orders suggest that June may not be as good.


Turkey: Industrial production (May): 1.3% m/m vs -0.4% expected (prior: -0.9% revised from -1.0%)

  • IP y/y: -1.3% vs -2.0% expected (prior: -4.0%)

  • Still negative on a yearly basis but the least since last September



Macro economic

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Insight 11.07.2019

Turning up the fiscal tap

In the prolonged global quantitative easing era, should the fiscal tap be turned up ? With monetary policy having basically run to its limit, fiscal stimulus through modest budget deficit can be sustained for a longer period.