sexta-feira, julho 04

Weaker momentum in the German and French manufacturing sector

Eurozone: PPI (May): -0.6% m/m as expected (prior: -2.2%)

  • PPI y/y: 0.3% as expected (prior: 0.7%)
  • Inflationary pressures continue to ease in the eurozone.

 

France: Industrial production (May): -0.5% m/m vs 0.3% expected (prior: -1.4%)

  • IP y/y: -0.9% vs 0.1% expected (prior: -1.9%)
  • Industrial production unexpectedly declined in May with manufacturing production down 1% m/m and down 0.1% y/y.

 

Germany: Factory orders (May): -1.4% m/m vs -0.2% expected (prior: 1.6% revised from 0.6%)

  • Y/y: 5.3% vs 5.7% expected (prior: 5.8%, revised from 4.8%)
  • Industrial orders fell in May, but they are still significantly up in Q2, helped by some upward revisions to prior months.
  • Orders have been very uneven at a sector level, with weakness mainly in terms of domestic orders.

 

Switzerland: Unemployment rate (sa) (June): 2.9% (prior: 2.8% revised from 2.9%)

  • The unemployment rate remains on an upward trend after having bottomed just under 2% in H1 2023.
quinta-feira, julho 03

US unemployment rate decreases for the wrong reason

US: Non-farm payrolls (Jun): 147k vs 106k expected (prior: 144k revised from 139k)

  • The US economy added more jobs than expected, primarily driven by state government and health care sectors. In contrast, the federal government continued to shed jobs.
  • The unemployment rate unexpectedly dipped to 4.1% from 4.2%, while wage growth slowed to 0.2% from 0.4%. Annually, wages grew by 3.7%, down from 3.9%.
  • The recent decline in the unemployment rate appears to be driven by a shrinking labor force. The participation rate unexpectedly fell from 62.4% to 62.3%, suggesting that the change is more about supply-side dynamics than increased demand for workers.
  • Initial jobless claims came lower than expected (233k vs. 241k) while continuing claims stabilized at 1964k.
  • So far, there are few signs of the trade war is hitting payrolls.
  • This seemingly robust report diminishes the likelihood of a July rate cut by the Fed, amid concerns about a weakening labor market. Instead, it supports a cautious, wait-and-see approach. We expect two rate cuts in the fourth quarter.

US: Trade balance (May): -71.5 bn USD vs -71.0 bn expected (prior: -60.3 bn revised from -61.6 bn)

  • The US trade deficit widened unexpectedly, driven by a 4% drop in exports, while imports saw a slight decrease of 0.1%.
  • Significant declines in exports were observed in nonmonetary gold, natural gas, and finished metal shapes.

US: ISM Services (Jun): 50.8 vs 50.6 expected (prior: 49.9)

  • The ISM services index surprised by rising above the 50 level, signaling expansion after a month of contraction.
  • Key areas showed strong rebounds: business activity increased to 54.2 from 50, new orders rose to 51.3 from 46.4, inventories climbed to 52.7 from 49.7, and new export orders improved to 51.1 from 48.5.
  • Although price pressures eased slightly, with the index at 67.5 compared to 68.7, concerns about rising operational costs were more frequent.
  • Middle East tensions emerged in June's commentary, yet no supply chain disruptions were reported.

US: Factory orders (May): 8.2% m/m as expected (prior: -3.9% revised from -3.2%)

  • New orders for US manufactured goods surged in May, and more than offset the revised 3.9% decline from previous month.
  • According to the US Census Bureau, firms likely took advantage of the suspension of "Liberation Day" tariffs by the US government to front-load orders before the escalation with China and the broader potential resumption in July.

 Switzerland: CPI (Jun): 0.1% m/m vs -0.1% expected (prior: -0.1%)

  • Swiss headline inflation exceeded expectations, aligning the Q2 average with the SNB's forecast of 0%.
  • Both domestic and imported inflation rose, with domestic inflation increasing by 0.1 pp to 0.7%, and imported inflation climbing by 0.5 pp to 1.9%. The rise in imported prices may be influenced by the CHF appreciation against the USD.
  • This print supports the SNB's stance from their June meeting: the threshold for implementing negative interest rates remains high, barring a significant downturn in the macroeconomic outlook. Chairman Schlegel emphasized that negative rates are reserved for "exceptional times".
  • However, a substantial escalation in trade tensions or a significant narrowing of the rate differential with the ECB, leading to further CHF appreciation, could increase the likelihood of negative interest rates.

Eurozone: Services PMI (Jun F): 50.5 vs 50.0 expected (prior: 49.7)

  • Final print of the eurozone services PMI has been revised higher from the flash estimate of 50 and firmly above the initial market expectations of 50 to reflect a slight expansion in the area's services activity.
  • Composite was also revised higher to 50.6 from 50.2.

UK: Services PMI (Jun F): 52.8 vs 51.3 expected (prior: 50.9)

  • Final estimation reveals a rapid expansion in the country's services sector, the strongest since August 2024, driven by renewed improvements in order books.
  • New orders saw a slight increase, marking the second rise this year and achieving the fastest growth rate since November 2024, fueled by heightened domestic demand.
  • Despite this growth, employment in the sector continues to contract significantly, hindered by rising payroll costs and weak capacity pressures.
quarta-feira, julho 02

US private sector cuts job in June

US: ADP Employment change (Jun): -33k vs 98k expected (prior: 29k revised from 37k)

  • The US private sector experienced its first job decline since March 2023, marking a shift from the revised increase of 29k jobs in May and falling well below the expected gain of 95k
  • The decline was led by losses in professional and business services, along with education and health services.
  • Meanwhile, manufacturing, construction, and mining sectors experienced payroll growth.
  • While the print briefly supported the front end, the move was quickly reversed given ADP’s poor ability in predicting BLS private payrolls due tomorrow.

 

Eurozone: Unemployment rate (May): 6.3% vs 6.2% expected (prior: 6.2%)

  • Eurozone jobless rate edges up from record low, with the bloc’s largest economies, Germany (3.7%) and the Netherlands (3.8%) reported the lowest unemployment rates, while Spain (10.8%), France (7.1%), and Italy (6.5%) continued to post higher levels.
terça-feira, julho 01

Mixed US ISM manufacturing index

US: ISM Manufacturing (June): 49.0 vs 48.8 expected (prior: 48.5)

  • New orders: 46.4 vs 48.1 expected (prior: 47.6)
  • Employment: 45.0 vs 47.1 expected (prior: 46.8)
  • This gauge on the US manufacturing sector ticked higher in June but 11remains in contraction mode for the fourth consecutive month, with a worsening momentum for new orders and employment.
  • The price measure edged marginally higher to 69.7, close to the highest level since June 2022.
  • Company comments suggest that they are accelerating headcount reductions due to lower demand ahead of trade-policy announcements.

 US: JOLTS Job Openings (May): 7769k vs 7300k expected (prior: 7395k)

  • Job openings unexpectedly rose to the highest level since November.
  • However, three quarters of the increase in openings is explained by the hospitality sectors. The finance, transportation, warehousing and healthcare also saw gains, but they were more moderate.
  • This adds to evidence that the job market remained solid in May.

US: Construction spending (May): -0.3% m/m vs -0.2% expected (prior: -0.2% revised from -0.4%)

  • The construction sector continues to suffer from high interest rates which weigh on affordability while non-residential construction faces uncertainty related to tariffs.

Eurozone: CPI estimate (June Prel.): 2.0% y/y as expected (prior: 1.9%)

  • Core CPI: 2.3% as expected (prior: 2.3%)
  • Fully in line with expectation with the headline inflation up 10bp from a 9-month low and core CPI steady at the lowest level since early 2022, thanks to a stronger euro and lower energy costs.

Eurozone: Manufacturing PMI (June F.): 49.5 vs 49.4 expected (prior: 49.4)

  • The final release is marginally higher thanks to a positive surprise in Spain (51.4 vs 50.5 expected, after 50.5 in May) vs a disappointing print in Italy (48.4 vs 49.5 expected, after 49.2 in May)

Germany: Unemployment rate (June): 6.3% vs 6.4% expected (prior: 6.3%)

  • Unemployment claims rate SA: 11k vs 15k expected (prior: 33k)

Switzerland: Manufacturing PMI (June): 49.6 vs 44.0 expected (prior: 42.1)

  • This stronger-than-expected rebound (to a 4-month high) probably reflects hope that an agreement with the US about the tariffs can be found.
segunda-feira, junho 30

German inflation unexpectedly slowed

Germany: CPI (Jun P): 0.1% m/m vs 0.3% expected (prior: 0.2%)

  • Germany experienced an unexpected slowdown in inflation, primarily due to declining food prices and certain core categories, which outweighed rising road fuel costs.
  • According to both the EU-harmonised HICP and the national CPI measure, consumer prices rose 2.0% y/y in June after 2.1% in May.
  • Looking forward, eurozone inflation should remain in a 1.9%-2.0% range over the next months and ECB should consider maintaining interest rates steady until the end of the year, with a potential rate cut in December.

 

Italy: CPI (Jun P): 0.2% m/m vs 0.3% expected (prior: -0.1%)

  • In June, Italy's inflation rate slowed more than anticipated. Rising fuel costs, driven by Middle East tensions, were offset by a decrease in utility bills. On an annual basis, inflation remained steady at 1.9%.

 

Eurozone: M3 (May): 3.9% y/y vs 4.0% expected (prior: 3.9%)

  • M3 growth remained stable at 3.9%, slightly below expectations. Credit growth to the private sector held steady at 2.8% y/y.
  • Notably, loans to non-financial corporations decreased by 0.1pp. to 2.5% y/y, while household loans increased by 0.1 pp. to 2% y/y.
  • Overall, the recovery in credit growth seems to have lost momentum in May.

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