UK: Labour Market Report (08:30 GMT) Britain’s annual inflation rate was unchanged in June, marking the continuation of flat to slightly negative pricing in recent months. The soft trend would be worrisome if the economy was stumbling, but recent numbers suggest otherwise.
Nonetheless, with inflation at a 14-year low, the stakes are higher for seeing robust growth to offset the potential risk of deflationary blow-back. With that in mind, the crowd will be eager to pore over today’s monthly update on Britain’s labour market.
Economists are expecting a fresh round of moderately encouraging news. Econoday.com’s consensus forecast sees the jobless rate sticking to a moderately low 5.5% while the claimant count is on track for another dip.
But keep your eye on the claimant count change. Although the number of people claiming unemployment benefits has continued to fall, the decline rate is looking relatively sluggish these days. In last month’s report, the claimant population fell 6,500 against the previous update – the smallest decline in more than two years.
Is that a sign that Britain’s economic growth is slowing? Not necessarily, according to James Knightly, an economist at ING Bank in London. “The economy is growing briskly and the labor market is tightening,” he told Bloomberg yesterday. “Wages are finally starting to respond.” His rosy outlook will certainly resonate if today's update on the labour market delivers upbeat numbers.
NY Fed Empire State Manufacturing Index (12:30 GMT) Yesterday’s disappointing numbers on retail spending for June raise new questions about the strength of economic growth, questions that will fuel talk about a new date about the timing for the Federal Reserve's rate hike.
But while the latest report suggests that the appetite for spending is weak, the stronger trend in payrolls and disposable personal income point to a pick up in consumption in the months ahead.
Meanwhile, today’s update from the New York Fed will offer a new clue for deciding if the recent slowdown in manufacturing has run its course. Economists are expecting a bit of relief via this influential regional benchmark. Briefing.com’s consensus forecast sees a rebound in the works with the index moving back into positive territory for the July profile.
The projected rise to 3.0 for the New York Fed Index is still quite mild by the standards of late 2014 and this year’s first quarter. Nonetheless, a positive number in today’s release will boost confidence that something similar is due in the monthly update for US industrial production that follows this number in today's lineup of macro reports.
US: Industrial Production (13:15 GMT) Industrial output has had a rough year so far. That's quite clear when we look at the year-on-year change in the data, which decelerated to a weak 1.4% annual rise to May. But that may prove to be the trough for the foreseeable future.
Exhibit A for thinking positively is the recent firming in the ISM Manufacturing Index, which has posted two straight months of modestly higher readings through June after a period of slower growth. Is that a clue for expecting that today’s update on industrial activity will bring encouraging numbers too?
Yes, according to Econoday.com’s consensus forecast, which sees output advancing 0.2% in June. That would be welcome news after months of flat or negative monthly comparisons.
Even if the forecast holds up, production’s trend will remain weak by historical standards. Nonetheless, a positive number will provide a timely counterpoint to yesterday’s surprisingly soft report on retail sales.
Disclosure: Originally published at Saxo Bank TradingFloor.com