Week 22-28 june
HSBC Flash China Manufacturing PMI 22 June
Key points:
- Flash China Manufacturing PMI™ at 49.6 in June (49.2 in May). Three-month high.
- Flash China Manufacturing Output Index at 50.0 in June (49.3 in May). Two-month high.
In June, the Flash China Manufacturing PMI survey provided a pool of different types of data analysis. While purchases increased slightly, the output stabilizes shoving strong signs of improvement. One the other hand, unemployment is on the rise due to staff cuts all over the manufacturing industry. This may be a backfire of the still low demand at home and abroad, which mutes the growth expectations of the companies. These pieces of data might suggest a move in the near future from the authorities' side, which may step in and give an impulse to new jobs creation.
French Output rises at sharpest rate since August 2011
Key points:
- Flash France Composite Output Index climbs to 53.4 (52.0 in May), 46-month high
- Flash France Services Activity Index improves to 54.1 (52.8inMay), 46-month high
- Flash France Manufacturing Output Index rises to 50.0 (48.6in May), 13-month high
- Flash France Manufacturing PMI increases to 50.5 (49.4in May), 14-month high
The last flash data on the French PMI confirmed what was expected, a five months continuous rise in the output of the private sector. This was the strongest rate of expansion in the last 46 months, as per the seasonally adjusted Market Flash France Composite Output Index. The epicenter of the growth wave is the service sector, which hasn't recorded such increase since August 2011. At the other end is the manufacturing sector, which has an unchanged output.
German Private sector output increases at stronger rate, but new order growth slowsThe increase of the seasonally adjusted Markit Flash Germany Composite Output Index from 52.6 to 54.0 in June signals a shift in the private sectors' output. This shift is debatable because, although there was an increase from May to June, the whole Q2 stands lower at 53.6 than Q1 at 54.2.
Orders for U.S. Capital Equipment Rise as Investment Stabilizes
As order for business equipment increased the second time this year in May, the American manufactured goods market is finally stabilizing. As per rates communicated by the Commerce Department on Tuesday, the demand for non-military capital goods (aircrafts being excluded) bounced up by 0.4% last month, after a decrease of 0.3% in April. Durable goods' index dropped 1.8%, pulled back mainly by the aircraft component. Also, the data reveals that fuel costs are beginning to stabilize. The dollar appreciation on the other hand might bring a decrease in exports due to the fact that American goods become less competitively worldwide.
German Business Confidence Falls as Greek Risk Weighs
The confidence in German business fell the second month consecutively as a direct effect of the implications of Greece's default. The Ifo Business Index came down from 108.5 in May to 107.4 in June, with 0.4 beyond investor's estimation of 108.1. In a worst case scenario, if Germany fails to reach an agreement with Greece the country will miss a debt repayment and probably be forced out of the Euro zone. If such, Germany relies on the record-low unemployment as a fail-safe net for the turbulences to come.Tsipras says creditors didn't accept Greek proposals: OfficialAccording to government officials, the Greek Prime Minister Alex Tsipras announced that the country's proposals have not been accepted by the creditors, preparations been made for an urgent meeting in Brussels on Wednesday. Here, Tsipras will meet with Mario Draghi (CEB's President), Christine Lagarde (IFM's Director) and Jean-Claude Juncker (EC's President). This meeting is utterly important because of its strategic impact, Greece trying to reach a deal before the 1.5 billion Euros (approximately $1.7 billion) deadline is due and before the country declares bankruptcy.
As a short recap, the package of measures proposed by Tsipras last Monday included a tax increase for companies and high-income retailers in order to meet the targets set by the creditors to receive the next IMF payment. Although these terms were applauded by the European leaders, they marched forward with the idea that the terms should be the ones imposed by IFM, ECB and EC.
US Gross Domestic Product: First Quarter 2015
The Bureau of Economic Analysis from USA issued a report that estimates that the real GDP (gross domestic product) decrease within their borders by 0.2% per year in Q1 of 2015, a opposite figure regarding last year's Q4 which brought a 2.2% increase. This 0.2% estimate was the third one in a series of press-releases, the second one being of a decrease of 0.7%. Although the indecisiveness, one thing is certain: there are negative contributions from exports, increasing non-residential fixed investments and government expenses. These were counteracted with slightly positive contribution of the PCE, private inventory and residential fixed investments, and also the increase in imports.
US Unemployment Insurance Weekly Claims
At the end of the week, in June 20, we had the results of Unemployment Insurance Weekly Claims which was 271,000, an increase of 3,000 from the previous week's revised level. The numbers from previous week was revised up by 1,000 claims from 267,000 to 268,000.
Week 29 June 5 July
Monday, June 29
Tuesday, June 30
- 1:00 a.m. NZD ANZ business confidence
- 8:30 a.m. GBP current account
- 8:40 a.m. AUD RBA Governor Glenn Stevens speaks
- 12:30 p.m. CAD GDP, month-over-month
- 2:00 p.m. USD CB consumer confidence
Wednesday, July 1
- 1:00 a.m. CNY manufacturing PMI
- 1:30 a.m. AUD building approvals, month-over-month
- 1:45 a.m. CNY HSBC final manufacturing PMI
- 8:30 a.m. GBP manufacturing PMI
- 12:15 p.m. USD ADP nonfarm employment change
- 2:00 p.m. USD ISM manufacturing PMI
Thursday, July 2
- 1:30 a.m. AUD trade balance
- 8:30 a.m. GBP construction PMI
- 12:30 p.m. USD nonfarm employment change
- 12:30 p.m. USD unemployment claims and unemployment rate
Friday, July 3
- 1:30 a.m. AUD retail sales, month-over-month
- 8:30 a.m. GBP services PMI
All times GMT
What we’re watching:
USD – Payrolls due. The labor data next week should give support to Fed rate expectations of benefitting the greenback.
EUR– Downside risk intact. The Euro will remain under downside risk, no matter what the result with Greece will be. This is due to the ECB’s aggressive policy.
SEK – Focus turns to Riksbank. Although there aren't any expectations for Riksbank to lower rates again next week, monetary policy is prone to remain capped as drawback for the currency.
GBP– Wealth effects to aid consumer spending. Although the Euro zone's financial problems are likely to persist despite of any Greek deal, the UK economic outlook is revealing as supporting with the GBP in the week ahead.
JPY– Tankan unlikely to lift investor spirits. In foresight, the key Japanese indicators will remain soft, keeping up with the cautious BoJ message from the recent weeks.
As we are used to, this week also revolves around the seemingly ever-lasting Greek-European deal. Also, the schedule consists of indicator releases worldwide.
Today's market opening should come with a final answer to the Greek debt agreement, whether or not the first piece of the domino has fallen. Going forward, on Thursday the attention will shift to the US market. The employment indicators lead off with ADP's private payroll figure, and on July 2 at GMT 12:30 PM the NFP (nonfarm payrolls) will be published. Highlights will be also in the global manufacturing and trade sector, PMI (purchasing managers' index) being released in the UK, China and US.