Tuesday dispenses a spectrum of macro updates, including the hard data on retail spending for the Eurozone. We’ll also see several updates for business surveys. For the US, a pair of survey numbers for the services industry are on tap: Markit’s Services Purchasing Managers Index (PMI) and the ISM Non-Manufacturing Index. Today's weekly update on chain store sales for the US is also worth a close look as a proxy for estimating the trend in the monthly retail sales data.
EU: Retail Sales (09:00 GMT) Sentix labelled the sharp tumble in the July reading of its investor confidence index as a victim of the “Russia effect”, the Frankfurt-based research group noted in yesterday’s update of Eurozone sentiment. Worries are swirling that the European Union’s recently imposed set of tougher sanctions on Russia will have a substantial economic cost. The concern was underlined in yesterday's news that Germany decided to stop delivery of military parts to Russia.
The expectations component of Sentix’s sentiment index for Europe slumped to a negative 13.3 - the lowest since August 2011. The downturn was led by a sizeable decline for the German survey figures - a slide that “sends a cyclical downturn alarm” Sentix advised.
Today’s report on retail spending for the Eurozone will be closely watched for signs of contagion in the hard data. Recent numbers via Eurostat on consumer spending have been mildly encouraging, at least by European standards, of late. The monthly comparisons were flat in the last two releases but the year-on-year change through May remained positive at 0.7 percent. However, the tide seems to be turning: the annual pace posted a sharp deceleration from April’s 1.8 percent rise.
Markit’s survey data suggests that today’s retail numbers won’t reflect much growth. The Markit
Eurozone Retail Purchasing Managers Index remained stuck in neutral in the May and June reports. As a result, there’s a reasonable chance that Eurostat’s update on consumer spending for June will reflect another round of soft data. Nonetheless, economists are looking for something better, at least for the monthly comparison. The consensus view projects a 0.7 percent month-on-month increase in retail sales. Then again, today's Eurostat data doesn't reflect the latest round of worries related to Russia. 
US: Chain Store Sales (11:45 GMT) Retail sales decelerated again in June, according to the Census Bureau - the smallest monthly increase since January’s outright decline. On a year-on-year basis, however, retail spending continues to rise at a relatively modest pace of roughly 4.3 percent. Next week brings fresh data for the July profile. Meantime, the weekly numbers on chain store sales suggest that the annual trend will hold steady in the low-four-percent range.
Indeed, the annual pace for chain store sales has been inching higher in recent months, based on the linear trend for the year-over-year comparison since April. The 4.6 percent gain for the week through July 26 is tied with the last week of June as the strongest year-over-year gain this year.
Last week’s news that payrolls and personal disposable income continue to grow at a modest rate suggest that next week’s retail spending data will provide more of the same in terms of the recent annual trend. It’s still a stretch to argue that US economic growth is set to accelerate in a meaningful degree but the case for projecting moderate growth persists as a compelling forecast. That outlook will receive a fresh vote of confidence if today’s year-over-year change for chain store sales sticks close to its recent pace.
US: ISM Non-Manufacturing Index (14:00 GMT) A pair of competing indexes that track the US services sector are at odds lately. Markit’s survey data reflects a strong improvement in overall growth while ISM’s benchmark for the sector suggests a slightly softer trend. The divergence is hardly dramatic at this point. Indeed, both series tell us that there’s a healthy run of positive momentum in this corner of the US economy. That’s no trivial point for macro analysis since the services sector accounts for the lion’s share of economic activity. Nonetheless, it’ll be interesting to see how today’s data compares - both set of figures are scheduled for updates.
First up is the Markit PMI Services Index, which is released at 13:45 GMT - 15 minutes ahead of the ISM report. The flash PMI data for July show that the sector’s growth rate remained at a post-recession high - 61.0, or well above the neutral 50 mark. The initial report for last month also noted another rise in payrolls, albeit at a lesser rate against the previous month.
Nonetheless, the flash PMI data pointed to the continuation of the "upward trend [for payrolls] recorded for almost four-and-a-half years,” Markit said. If the upbeat trend holds in today’s revised July figures, we’ll have another reason to anticipate that moderate economic growth will endure for the near term. That’s a reasonable forecast at this point, based on the consensus view that today’s headline PMI release will stick to the 61,0 flash estimate for July.
Even better, analysts think that today’s first look at the ISM Services Index for July will move closer to the stronger trend in Markit's numbers. The consensus outlook for the ISM Non-Mfg Index calls for a modest rise to 56.5 for July vs. 56.0 in the previous month. 