Daily macro update

US: Manufacturing PMI (June Prel.): 52.0 vs 51.0 expected (prior: 52.0)

• The PMI is unchanged in June, at the highest level since February, and employment rose to the highest level since June 2024.
• On the negative side, the index of prices paid surged by 5.4 pt to 70. A nearly similar increase in prices received suggests that producers are passing along higher costs, including higher tariffs.

US: Services PMI (June Prel.): 53.1 vs 53.0 expected (prior: 53.7)

• Modest decline at the headline level, but still solidly in expansionary mode, and significantly above April's level (50.8).
• Moreover, employment edged higher to 51.9 to the highest reading since January.
• This is consistent with US economy continuing to growth, even if the outlook remains uncertain, while inflationary pressures have clearly risen in the past two months.

US: Existing home sales (May): 4.03M vs 3.95M expected (prior: 4.00M)

• Existing home sales unexpectedly edged higher in May (+0.8%) despite the increase in mortgage rates.
• However, the median sales price for a single-family home is only up 1.3% y/y, down from 1.7% in April as affordability remains a challenge for buyers.

Eurozone: Manufacturing PMI (June Prel.): 49.4 vs 49.7 expected (prior: 49.4)

• Germany: 49.0 as expected (prior: 48.3)
• France: 47.8 vs 49.8 expected (prior: 49.8)
• New orders (+0.3pt to 50.0) and exports orders (+0.4pt to 49.9) have continued to trend higher. This trend was almost entirely attributable to Germany.
• The press release suggests that a turning point could have been reached in the German manufacturing cycle (beyond US demand front-loading in Q1).

Eurozone: Services PMI (June Prel.): 50.0 as expected (prior: 49.7)

• Germany: 49.4 vs 47.8 expected (prior: 47.1)
• France: 48.7 vs 49.0 expected (prior: 48.9)
• Germany drove the improvement thanks to outstanding business (+1.1pt to 48.5), new business (+0.8pt to 49.5) and new export orders (+0.6pt to 47.4). However, all these metrics remain in contractionary territory, indicating that services are only set to modestly fuel overall economic growth over the next months.

UK: Manufacturing PMI (June Prel.): 47.7 vs 46.8 expected (prior: 46.4)

• The PMI rose more than expected thanks to increases recorded in new orders (+3.9pt to 48.7), output and employment.
• However, manufacturing activity remains in contractionary territory while services appear to be regaining some momentum.

UK: Services PMI (June Prel.): 51.3 as expected (prior: 50.3)

• The subindices showed some improvement in outstanding (+1.4pt to 46.7) and new business (+1.8pt to 50.5) but a decline in firms' export orders assessment (-3.6pt to 46.1).
• As for manufacturing (+2.1pt to 44.5), the employment component (-0.7pt to 47.3) remains consistent with a weakening labor market, which should contribute to further disinflation in the coming months.
• Overall, this is largely consistent with muted private consumption growth.

US: Philadelphia Fed. (June): -4 vs -1.5 expected (prior: -4)

• Sentiment remained depressed on current activity and the 6-month index has decreased from the prior month.
• Views have worsened on new orders, shipments and employment; the 6-month index is negative for all major components except employment.

France: Business confidence (June): 96 as expected (prior: 96)

• Sentiment in manufacturing has marginally deteriorated (from 97 to 96). Opinions were slightly more negative on production and orders. Separately, sentiment has slightly improved on services and retail sectors.

Germany: PPI (May): -0.2% m/m vs -0.3% expected (prior: -0.6%)

• Falling energy prices have driven monthly PPI into contraction again; prices of energy, fuels and electricity were again sharply down over the month.
• The yearly change has declined from -0.9% y/y prior month to -1.2% y/y.

UK: GFK consumer confidence (June): -18 vs -20 expected (prior: -20)

• Confidence was less negative from the prior month about past and future economic situation.

UK: Retail sales (May): -2.7% m/m vs -0.5% expected (prior: 1.3% revised from 1.2%)

• After a strong rebound in April, retail sales dropped in May. The deterioration was driven by sales of food and household goods over the month.
• The momentum in labor and retail sectors has weakened over the past months.

Eurozone: Consumer confidence (June Prel.): -15.3 vs -14.9 expected (prior: -15.1 revised from -15.2)

• Consumer confidence edged marginally lower in June from May.
• It is slightly lower than at the start of the year and remains markedly below its long-term average.

Turkey: Consumer confidence (June): 85.1 (prior: 84.8)

• While households remained cautious on future purchases, sentiment has improved on economic situation after a fall in March.

Switzerland: Trade balance (May): 3.83 Bn CHF (prior: 6.33Bn)

• Real exports were down by 10.2% m/m (-3.7% m/m prior month) while real imports were up by 0.5% m/m (-10.4% m/m the prior month).

Switzerland: The SNB has cut its key rates as expected by 25 bp to 0%.

• The bank mentioned the low range of inflation (down recently thanks to oil and tourism) and parallel low range in key rates. The door is open to other action if necessary, including FX interventions.
• The bank is worried by deteriorating global activity and rising uncertainties; a slow growth is expected locally after the rebound seen in Q1; the inflation is projected to progressively regain from 0% (negative last month) to 0.5% next quarters. The average inflation is forecasted at 0.2% in 2025, 0.5% in 2026 and 0.7% in 2026.
• Growth is expected to stay in a 1-1.5% range in 2025 and 2026.
• The bank has introduced a tiered system on excess bank reserves at -0.25bp.
• The bar is high to go back into negative rates, but the option exists in case of strong CHF appreciation.

UK: The BoE left unchanged its key rates at 4.25%.

• The vote was split 6-3, with dovish gaining pressure due to weakening activity and labor.
• The bank still viewed two-sided risks on inflation coming from the rise in food and energy prices with uncertainties on Middle East. The bank expects inflation to stay around 3.5% next months with a peak at 3.7% around next Sept.
• Inflation on a plateau and weakening activity could reopen opportunities to lower key rates in H2-25.

Norway: The central bank cut by 25 bp its key rates at 4.25%.

US: Initial jobless claims (June14): 245k as expected (prior: 250k revised from 248k)

• Continuing claims: 1945 k after 1951 k the prior week.

US: Housing starts (May): 1256k vs 1350k expected (prior: 1392k revised from 1361k)

• Housing starts have strongly fallen over the month and were back to the lows seen in 2024.
• While housing starts for single houses have marginally increased over the month, the fall was concentrated in multi-family houses.
• Building permits have also declined, from 1422 k prior month to 1392 k; permits have decreased the most for single family houses.
• Past pressures on long-term yields have negatively impacted the demand for housing.

Eurozone: CPI (May): 0% m/m as expected (prior: 0.6%)

• Final data have confirmed the moderation in prices; disinflation has been driven by another fall in energy prices: -1.2% m/m after -2.3% m/m prior month (-3.6% y/y).
• Services were down by 0.1% m/m as expected after 1.4% m/m in April (Easter effects) and declined to 3.2% y/y.
• Prices of goods were up by 0.1% as the prior month and the yearly trend remained stable at 0.6% y/y.
• Yearly trend has been confirmed down at 1.9% y/y after 2.2% y/y prior month and core inflation declined from 2.7% to 2.3% y/y.
• Disinflation has been helped prior months by falling energy prices and strong euro, which could be at risk given uncertainties in the Middle East.

Sweden: Central bank has cut its key rates by 25 bp to 2.0% as expected.

• The bank has revised lower its growth scenario and expects 1.2% in 2025 and 2.4% in 2026. Inflation is expected to come closer to the 2% target.
• The dovish comment by the bank left the door open to another potential cut in next September.

UK: CPI (May): 0.2% m/m as expected (prior: 1.2%)

• Prices have moderated after the strong rise the prior month.
• Over the month, prices remained sustained for food, clothes, household goods (furniture and appliances) and leisure, while prices for transport (energy) and communication have declined over the month.
• Yearly trend has declined from 3.5% y/y to 3.4% y/y (consensus expected 3.2% y/y) and core inflation from 3.8% to 3.5% y/y; services have also declined from 5.4% y/y to 4.7% y/y. this decline was helped by a correction to prior month data.
• Inflation could remain in the range of 3.5% y/y which gives back more leeway to the BoE, but upside risks could come back from rising oil prices next months.