The US and UK will this week release PMI data for June, with the US also due to publish key labour market data on Wednesday and Friday. In Australia, all eyes will be on tomorrow’s RBA policy meeting with analysts divided as to whether the central bank will again cut rates 25bp. The Eurozone calendar is reasonably light, but speeches by a number of ECB Board members may get some attention, as could German industrial output data for May.
Monday 1st July
United Kingdom: Manufacturing PMI (June). This measure of economic activity in the manufacturing sector, which accounts for about 10% of UK GDP, fell to its weakest point since July 2016 in May 2019 and the consensus forecast is that it slowed further from 49.4 to 49.2 in June. If this proves correct, it would provide further credibility to the Bank of England’s recent forecasts that GDP growth slowed to zero in Q2 in quarter-on-quarter terms.
United States: ISM manufacturing PMI (June). These data will help complete the picture for US economic growth in Q2, with the Atlanta GDPNow tracker currently estimating that GDP growth halved to 1.5% qoq annualised in Q2 from 3.1% qoq in Q1. The ISM manufacturing PMI has been on a downward trend since August when it hit 60.8 and the consensus forecast is that it fell from 52.1 in May to a 34-month low of 51.0 in June.
Tuesday 2nd July
Australia: Reserve Bank of Australia policy meeting. Analysts are somewhat divided as to whether the RBA will deliver its second successive 25bp policy rate cut, with 18 out of 26 analysts expecting a 25bp rate cut to 1.00% and 8 forecasting that rates will remain unchanged at 1.25%. This broadly tallies with the market’s pricing of a 70% probability of a 25bp rate cut.
Eurozone: Germany retail sales (May)
Australia: Reserve Bank of Australia Governor Lowe to speak. Markets will still be digesting the RBA’s policy meeting and statement but Lowe may provide additional guidance as to whether the current market pricing of 50bp of rate cuts between now and end-year is appropriate.
United States: FOMC members Williams and Mester to speak. While the Federal Reserve has clearly moved in a dovish direction in recent months, including at last week’s policy meeting, FOMC members are seemingly still divided as to when and how aggressively the Fed should cut its policy rate.
United Kingdom: Bank of England Governor Carney to speak. Carney has in the past ten days become somewhat less hawkish, with the uncertainty surrounding Brexit and the weakness of the UK economy weighing on the odds that a majority of the nine MPC members will vote for a policy rate hike any time soon. Markets are currently pricing 8bp of rate cuts between now and May 2020.
Wednesday 3rd July
Australia: Building approvals and trade (May)
United Kingdom: Services PMI (June). This measure of economic activity in the services sector, which accounts for about 75% of UK GDP, has been more stable than its manufacturing counterpart, oscillating in a narrow range of 48.9-51.3 since November. Analysts forecast an incremental increase from 51.0 in May to 51.2 in June.
United Kingdom: Bank of England Monetary Policy Council Members Cunliffe and Broadbent to speak. These two MPC members are, if anything, more likely to talk up the odds of a rate cut than a rate hike.
United States: ADP non-farm private sector employment (June). According to this non-official survey, the US economy created only 27,000 private-sector jobs in May – a multi-year low – and the question is whether this was a one-off or the start of a trend of weaker US jobs creation. Analysts tend to think it was the former.
United States: ISM non-manufacturing PMI (June). This is a very choppy data time series but if analysts’ consensus forecast of a fall to 56.0 in June from 56.9 proves correct it would provide further evidence that US GDP growth slowed quite sharply in Q2.
Thursday 4th July
United States: Public holiday
Australia: Retail sales (May). This is a volatile series but Australia has more often than not recorded positive monthly growth so markets may be more sensitive to a contraction in retail sales in May.
Switzerland: CPI-inflation (June). Headline CPI-inflation has been stable around 0.6% yoy since December and analysts forecast a similar print in June. The weakness of Swiss CPI-inflation has not stopped the Swiss Franc from appreciating but may temper the Swiss National Bank’s appetite for sustained and/or rapid appreciation from current levels.
Eurozone: Retail sales (May)
Eurozone: European Central Bank board members De Guindos and Enria to speak. ECB President Draghi last week suggested that the ECB could cut its policy rates and re-activate its quantitative easing program but not all ECB board members reportedly share this dovish stance.
Friday 5th July
Eurozone: Germany industrial production and factory orders (May). Industrial production in April suffered its largest monthly contraction in over two years (-1.9% mom), while factory orders contracted nearly 10% between October 2017 and February 2019. Factory orders rose 0.9% in March-April but analysts still forecast that industrial production in the Eurozone’s largest economy contracted a further 0.4% mom in May.
United States: Labour market data (June). Non-farm payrolls rose only 75,000 in May but analysts forecast a return to trend of +160,000 in June. Wage developments will likely be as important to the Federal Reserve as growth in weekly earnings slowed to 3.1% yoy in May from 3.4% yoy in February.
