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Market insight 07.07.2020

Disappointing May industrial production data in Germany

Disappointing May industrial production data in Germany

US: JOLTS Job Openings (May): 5397 vs 4500 expected (prior: 4996 revised from 5046)

  • This positive outcome is consistent with the stronger than expected June jobs report.

 

Germany: Industrial production (May): 7.8% m/m vs 11.1% expected (prior: -17.5% revised from -17.9%)

  • IP y/y: -19.3% vs -16.9% expected (prior: -25.0%)
  • The rebound from April was significantly slower than expected, so that industrial output was still down about a fifth relative to the level seen in February.
  • This may be partly explained by a slower or lagging recovery in the rest of the world.

 

France: Business sentiment (Bank of France) (June): 89 vs 90 expected (prior: 83)

  • The headline index rose to its highest level since February, but the sentiment on orders declined from May.

 

Italy: Retail sales (May): 24.3% m/m vs 15.0% expected (prior: -10.7% revised from -10.5%)

  • Y/y: -10.5% vs -17.0% expected (prior: -26.7%)
  • Non-food retail sales surged by 66% m/m but were still down 20% y/y.

 

 


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Market insight 15.07.2020

Strong rebound in US industrial production in June

US: Industrial production (June): 5.4% m/m vs 4.3% expected (prior: 1.4%)

  • Production increased in three of the four major industries: autos & parts (+105% m/m), manufacturing ex autos (+3.9% m/m) and utilities (+4.2% m/m). Mining production declined for the fifth consecutive month (-2.9% m/m), reflecting idiosyncratic factors and low oil prices.
  • Despite this rebound, industrial production was in June still 11% below February’s level.
  • Due to elevated uncertainties weighing on many businesses and global chain disruptions, industrial production and capex are likely to lag consumption and housing activity in the recovery. For instance, several Ford plants may have to close next week because of shortages of engines built in Mexico.

US: Import price index (June): 1.4% m/m vs 1.0% expected (prior: 0.8% revised from 1.0%)

  • Y/y: -3.8% vs -3.7% expected (prior: -6.2%)
  • The monthly rise was driven by increases in prices of petroleum (+23%) and industrial supplies (+7%).

US: Empire manufacturing (July): 17.2 vs 10.0 expected (prior: -0.2)

  • The index increased by more than expected in July and is back into expansionary territory. The composition of the report was firm, with increases in the shipments, new orders, and employment components.

 

UK: CPI (June): 0.1% m/m vs 0.0% expected (prior: 0.0%)

  • CPI y/y: 0.6% vs 0.4% expected (prior: 0.5%)
  • Core CPI y/y: 1.4% vs 1.2% expected (prior: 1.2%)
  • Annual inflation rose (modestly) for the first time this year, mainly explained by core inflation.
  • Energy prices were up in June although the annual rate remains deeply negative (-11.2% y/y after -11.6%).
  • The announced VAT cut will weigh on inflation in the coming months.
Market insight 14.07.2020

US: core inflation on moderate monthly pace; improving sentiment among small-sized firms

 

US: NFIB Small Business optimism (June): 100.6 vs 97.8 expected (prior: 94.4)

  • Sentiment continued to improve as states reopened and owners expected the current recession to be short-lived.
  • However, even with the advance, the measure remains below the 2020 high of 104.5 reached in February.
  • In details, 8 of 10 sub-indexes picked up in June, though the measure of sales expectations contributed more than half of overall monthly increase.

 

US: CPI (Jun): 0.6% m/m vs 0.5% expected (prior: -0.1%)

  • Food prices rose by 0.6% in June, while energy prices jumped by 5.1% after five large consecutive declines. As a result, the y/y rate rose by 0.6% from 0.1% in May.
  • Core inflation rose by 0.2% in June, leaving the y/y rate roughly unchanged at 1.2% in June.
  • Both core goods and core services were firmer in June, led by rebounds in many of the categories that showed outsized weakness in recent months (e.g. motor vehicle insurance, apparel, hotels), although there was a notable deceleration in rent and OER (Owners' equivalent rent) prices.

 

UK: Industrial production (May): 6% m/m vs 6.5% expected (prior: -20.2% revised from -20.3%)

  • IP declined by -20% y/y vs -20.4% y/y expected (prior: -23.8% revised from -24.4%).
  • Manufacturing production: 8.4% m/m vs 7.8% expected (prior: -24.4% revised from -24.3%); -22.8% y/y vs -24% expected (prior: -28.2% revised from -28.5%).

 

Germany: Zew (Jul): 59.3 vs 60 expected (prior: 63.4)

  • Expectations fell from last month's record high and current conditions improved much less than expected.

 

Germany: CPI (Jun F): 0.7% m/m as expected (prior: 0.7%)

  • On a y/y basis/ 0.8% as expected (prior: 0.8%)
  • Food and healthcare prices were unchanged, while transport prices rose by 1.2% in June.

 

Eurozone: Industrial production (May): 12.4% m/m vs 15% expected (prior: -18.2% revised from -17.1%)

  • IP declined by -20.9% y/y vs -18.9% y/y expected (prior: -28% revised from -28.7%).

 

Spain: CPI (Jun F): 0.4% m/m as expected (prior: 0.4%)

  • On a y/y basis: -0.3% as expected (prior: -0.3%)
Market insight 10.07.2020

US PPI lower than expected in June

US: PPI (Jun): -0.2% m/m vs 0.4% expected (prior: 0.4%)

  • The decline was driven by food (-5.2% m/m) and trade (-1.8%) while energy prices have rebounded (7.7% m/m).
  • Core measures were soft, with the PPI excluding food, energy, and trade services increasing by 0.3% m/m (higher than expected).

 

France: Industrial production (May): 19.6% m/m vs 15.4% expected (prior: -20.6% revised from -20.1%)

  • IP declined by 23.4% y/y vs -24% y/y expected (prior: -35% revised from -34.2%).
  • Manufacturing production: 22% m/m vs 22.8% expected (prior: -22.3% revised from -21.9%); -25.2% y/y vs 23.6% expected (prior: -37.9% revised from -37.1%).

 

Italy: Industrial production (May): 42.1% m/m vs 24% expected (prior: -20.5% revised from -19.1%)

  • IP declined by 20.3% y/y vs 30.7% y/y expected (prior: -43.4% revised from -42.5%).

Further reading

Market insight 15.07.2020

Strong rebound in US industrial production in June

US: Industrial production (June): 5.4% m/m vs 4.3% expected (prior: 1.4%)

  • Production increased in three of the four major industries: autos & parts (+105% m/m), manufacturing ex autos (+3.9% m/m) and utilities (+4.2% m/m). Mining production declined for the fifth consecutive month (-2.9% m/m), reflecting idiosyncratic factors and low oil prices.
  • Despite this rebound, industrial production was in June still 11% below February’s level.
  • Due to elevated uncertainties weighing on many businesses and global chain disruptions, industrial production and capex are likely to lag consumption and housing activity in the recovery. For instance, several Ford plants may have to close next week because of shortages of engines built in Mexico.

US: Import price index (June): 1.4% m/m vs 1.0% expected (prior: 0.8% revised from 1.0%)

  • Y/y: -3.8% vs -3.7% expected (prior: -6.2%)
  • The monthly rise was driven by increases in prices of petroleum (+23%) and industrial supplies (+7%).

US: Empire manufacturing (July): 17.2 vs 10.0 expected (prior: -0.2)

  • The index increased by more than expected in July and is back into expansionary territory. The composition of the report was firm, with increases in the shipments, new orders, and employment components.

 

UK: CPI (June): 0.1% m/m vs 0.0% expected (prior: 0.0%)

  • CPI y/y: 0.6% vs 0.4% expected (prior: 0.5%)
  • Core CPI y/y: 1.4% vs 1.2% expected (prior: 1.2%)
  • Annual inflation rose (modestly) for the first time this year, mainly explained by core inflation.
  • Energy prices were up in June although the annual rate remains deeply negative (-11.2% y/y after -11.6%).
  • The announced VAT cut will weigh on inflation in the coming months.
Market insight 14.07.2020

US: core inflation on moderate monthly pace; improving sentiment among small-sized firms

 

US: NFIB Small Business optimism (June): 100.6 vs 97.8 expected (prior: 94.4)

  • Sentiment continued to improve as states reopened and owners expected the current recession to be short-lived.
  • However, even with the advance, the measure remains below the 2020 high of 104.5 reached in February.
  • In details, 8 of 10 sub-indexes picked up in June, though the measure of sales expectations contributed more than half of overall monthly increase.

 

US: CPI (Jun): 0.6% m/m vs 0.5% expected (prior: -0.1%)

  • Food prices rose by 0.6% in June, while energy prices jumped by 5.1% after five large consecutive declines. As a result, the y/y rate rose by 0.6% from 0.1% in May.
  • Core inflation rose by 0.2% in June, leaving the y/y rate roughly unchanged at 1.2% in June.
  • Both core goods and core services were firmer in June, led by rebounds in many of the categories that showed outsized weakness in recent months (e.g. motor vehicle insurance, apparel, hotels), although there was a notable deceleration in rent and OER (Owners' equivalent rent) prices.

 

UK: Industrial production (May): 6% m/m vs 6.5% expected (prior: -20.2% revised from -20.3%)

  • IP declined by -20% y/y vs -20.4% y/y expected (prior: -23.8% revised from -24.4%).
  • Manufacturing production: 8.4% m/m vs 7.8% expected (prior: -24.4% revised from -24.3%); -22.8% y/y vs -24% expected (prior: -28.2% revised from -28.5%).

 

Germany: Zew (Jul): 59.3 vs 60 expected (prior: 63.4)

  • Expectations fell from last month's record high and current conditions improved much less than expected.

 

Germany: CPI (Jun F): 0.7% m/m as expected (prior: 0.7%)

  • On a y/y basis/ 0.8% as expected (prior: 0.8%)
  • Food and healthcare prices were unchanged, while transport prices rose by 1.2% in June.

 

Eurozone: Industrial production (May): 12.4% m/m vs 15% expected (prior: -18.2% revised from -17.1%)

  • IP declined by -20.9% y/y vs -18.9% y/y expected (prior: -28% revised from -28.7%).

 

Spain: CPI (Jun F): 0.4% m/m as expected (prior: 0.4%)

  • On a y/y basis: -0.3% as expected (prior: -0.3%)
Market insight 10.07.2020

US PPI lower than expected in June

US: PPI (Jun): -0.2% m/m vs 0.4% expected (prior: 0.4%)

  • The decline was driven by food (-5.2% m/m) and trade (-1.8%) while energy prices have rebounded (7.7% m/m).
  • Core measures were soft, with the PPI excluding food, energy, and trade services increasing by 0.3% m/m (higher than expected).

 

France: Industrial production (May): 19.6% m/m vs 15.4% expected (prior: -20.6% revised from -20.1%)

  • IP declined by 23.4% y/y vs -24% y/y expected (prior: -35% revised from -34.2%).
  • Manufacturing production: 22% m/m vs 22.8% expected (prior: -22.3% revised from -21.9%); -25.2% y/y vs 23.6% expected (prior: -37.9% revised from -37.1%).

 

Italy: Industrial production (May): 42.1% m/m vs 24% expected (prior: -20.5% revised from -19.1%)

  • IP declined by 20.3% y/y vs 30.7% y/y expected (prior: -43.4% revised from -42.5%).