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Daily Macroeconomic Digest

vendredi 16 août
US consumer confidence slumped in August

US: Consumer confidence (Michigan) (Aug. Prel.): 92.1 vs 97.0 expected (prior: 98.4)

  • Consumer sentiment fell the most since January (related to the government shutdown) and reached its lowest level in seven months.

  • The new escalation in trade tensions, the fall in equity markets and the prospect of higher prices for some goods due to additional tariffs on China imports are probably the key reasons behind this meaningful deterioration in confidence.


US: Housing starts (July): 1191k vs 1256k expected (prior: 1253k)

  • Building permits: 1336k vs 1270k expected (prior: 1232k revised from 1220k)

  • Housing starts were lower than expected but this reflects the usual volatility in multi-family. Single family starts were strong (876k from 865k).

  • The sharp rise in permits last month (+8.4%, with an increase in both single-family and multi-family permits) reversed prior month’s decline.


Turkey: Industrial production y/y (June): -3.9% y/y vs -0.3% expected (prior: -1.3%)

jeudi 15 août
Broadly reassuring US economic data despite weak industrial production

US: Industrial production (July): -0.2% m/m vs 0.1% expected (prior: 0.2% revised from 0.0%)

  • Manufacturing production: -0.4% m/m vs -0.3% expected (prior: 0.6% revised from 0.4%)

  • The July weakness goes against signs of stabilization in May and June and the forward indicators remain weak.


US: Retail sales (July): 0.7% m/m vs 0.3% expected (prior: 0.4%)

  • Retail sales rose for the fifth consecutive month, lifting the y/y change to 3.4% from 3.3%.

  • The improvement was broad-based with 10 of the 13 primary categories of sales increasing.

  • Importantly, spending on discretionary categories of retail sales (like restaurant) were mostly robust, reflecting the elevated consumer confidence.

  • Consumption should continue to support moderate economic growth but the global industrial slump as well as the associated heightened financial market volatility pose serious risks.


US: NAHB housing market index (Aug.): 66 vs 65 expected (prior: 65)

  • Sentiment among US homebuilders rose in August to match its 2019 high, helped by falling mortgage rates.


US: Philadelphia Fed. (Aug.): 16.8 vs 9.5 expected (prior: 21.8)

  • Down but less than expected.

  • The underlying composition was mixed with  new orders (+6.9pt to +25.8) component increasing whle the shipments (-5.9pt to +19.0) component decreased and the employment (-26.4pt to +3.6) component sharply declined.


US: Empire manufacturing (Aug.): 4.8 vs 2.0 expected (prior: 4.3)

  • The underlying composition was firm with shipments (+2.1pt to +9.3), new orders (+8.2pt to +6.7) and employment (+8.0pt to -1.6) components all on the rise.


US: Nonfarm productivity (Q2 Prel.): 2.3% q/q vs 1.4% expected (prior: 3.5% revised from 3.4%)

  • Labor costs: 2.4% q/q vs 2.0% expected (prior: 5.5% revised from -1.6%)

  • Looking beyond the volatile quarterly data, the yearly changes paint a healthy picture for the US economy: productivity gains are up 1.8% (vs only 0.8% annualized between 2012 and 2016 and 1.3% in 2017), compensation has risen 4.3%, and unit labor costs are up 2.5%.  That means that inflation-adjusted compensation is rising at a solid pace while businesses have lifted productivity by constraining operating costs, which is allowing them to maintain margins (without raising prices and hence inflation).


US: Initial jobless claims (Aug. 10): 220k vs 212k expected (prior: 211k revised from 209k)

  • The four-week moving average of claims edged up by 1k to 214k.



UK: Retail sales (July): 0.2% m/m vs -0.2% expected (prior: 0.9% revised from 1.0%)

  • Retail sales y/y: 3.3% vs 2.5% expected (prior: 3.8%)

  • Unexpected increase in July, driven by online promotions; non-store retailing sales surged by 6.9% m/m. By contrast, non-food sales posted the biggest drop in seven months (-1.4%).


Russia: Industrial production (July): 2.8% y/y vs 3.0% expected (prior: 3.3%)

mercredi 14 août
The vulnerability of the German economy to trade uncertainty is confirmed

US: Import price index (July): 0.2% m/m vs -0.1% expected (prior: -1.1% revised from -0.9%)

  • Y/y: -1.8% vs -2.0% expected (prior: -2.0%)

  • Import prices rose by more than expected, driven by increases in petroleum, industrial supplies, and consumer goods prices.


Germany: GDP (Q2 Prel.): -0.1% q/q as expected (prior: 0.4%)

  • GDP y/y:0.4% vs 0.1% expected (prior: 0.9% revised from 0.7%)

  • The press release issued by the statistical office suggests that positive contribution came mainly from domestic demand with private and public consumption both picking up in Q2. On the other hand, foreign trade developments dragged GDP growth down with exports contracting more than imports.

  • This confirms the vulnerability of the German economy to external demand slowdown.


Eurozone: GDP (Q2 Prel.): 0.2% q/q as expected (prior: 0.2%)

  • GDP y/y: 1.1% as expected (prior: 1.2%)

  • Unchanged from the first estimate.

Eurozone: Industrial production (June): -1.6% m/m vs -1.5% expected (prior: 0.8% revised from 0.9%)

  • IP y/y: -2.6% vs -1.5% expected (prior: -0.8% revised from -0.5%)

  • The data flows from the manufacturing sector continues to worsen. The decline was broad based across categories.


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

  • CPI y/y: 2.1% vs 1.9% expected (prior: 2.0%)

  • Inflation surprised on the upside, notably on the back of high goods prices.

  • Lower energy prices should bring inflation slightly lower by the end of the year.

  • For now, the policy outlook is more dependent on the outcome of Brexit than on inflation.


mardi 13 août
US core CPI above expectations for the second consecutive month

US: CPI (July): 0.3% m/m as expected (prior: 0.1%)

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

  • Core CPI: 0.3% m/m vs 0.2% expected (prior: 0.3%); 2.2% y/y vs 2.1% expected (prior: 2.1%)

  • With this second consecutive 0.3% monthly rise, core CPI increased to 2.8% annualized in the last three months.

  • Price increases were broad based as 44 of the 63 primary categories of the CPI increased (m/m), the highest share since January 2018.

  • The 0.5% m/m increase in medical care services prices should lift core PCE inflation (to be released on August 30).

  • Even with this rise in annual inflation, real average hourly earnings rose by 1.3% y/y in July, exceeding 1% for the ninth consecutive month and contributing to solid private consumption.


US: NFIB Small Business optimism (July): 104.7 vs 104.0 expected (prior: 103.3)

  • Sentiment among US small businesses improved in July for the fifth time in 6 months to the second highest level since late last year amid a temporary trade truce and record stock prices last month (survey was conducted prior to Trump's tweet about additional tariffs)

  • Hiring plans, inflation-adjusted sales expectations and the economic outlook all improved. Finding qualitied workers appears to be the biggest issue.


Germany: Zew (Aug.): -44.1 vs -28.0 expected (prior: -24.5)

  • Current situation: -13.5 vs -6.3 expected (prior: -1.1)

  • Investor confidence in Germany's economic outlook declined for the fourth consecutive month with the expectations index falling to the lowest since 2011.


UK: Unemployment rate (ILO) (June): 3.9% vs 3.8% expected (prior: 3.8%)

  • Jobless claims change (July): +28k after 31.4k (revised from 38k)

  • The UK economy added 115k jobs in June (vs 60k expected). The slight increase in the unemployment rate reflects a rise in participation.


UK: Average earnings incl. Bonus (June): 3.7% y/y as expected (prior: 3.5% revised from 3.4%)

  • This acceleration in wage growth probably reflects a tight job market, which constitutes a high hurdle for the BoE to ease policy.


lundi 12 août
Higher Russia GDP growth in Q2

Russia: GDP (Q2 Prel.): 0.9% y/y vs 0.8% expected (prior: 0.5%)

  • Just above estimates thanks to a pickup in mining and manufacturing while consumer demand was still soft.

  • Fiscal spending and rate cuts should support GDP growth in H2.


Macro economic

The Chief Economist's weekly update

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Expertise 09.08.2019

The end of the US-China trade war...

Spotlight - The ‘trade war’ between the US and China is likely to be nearing an end as both the US and China exhaust available imports on which they can levy new tariffs.