In the euro area, focus will be on the ECB meeting, as well as on the potential developments of the crisis in Spain and Greece…
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Monday 4 June
Euro area
Producer prices are expected to prove stable in April, after surging (on average by +0.7% m/m) in the first three months of the year. The year-on-year trend of the PPI would slow significantly as a result, to 2.5% y/y. Companies’ assessment of input prices based on the manufacturing PMI survey point to a further slackening of pressures upstream of the production chain in the months to come.
Tuesday 5 June
Euro area
The second reading of the April composite PMI should be confirmed at 45.9; after the upward revision (of one tenth) of the manufacturing index, we do not exclude a downward update on the services index; all in all, the composite index could remain unchanged (falling sharply compared to the previous month). The PMI’s level is consistent with negative year-on-year GDP growth at least until the third quarter of this year.
Retail sales are expected to grow by 0.1% m/m in April, after increasing by 0.6% m/m in March. In the month, sales were up in Germany and France, but plummeted in Spain. In any case, the trend of consumer confidence indicates that retail sales trend will remain weak.
Germany. Factory orders could drop by 1.2% m/m in April, after surging unexpectedly by 2.2% m/m in March. The year-on-year change would drop even further into negative territory, showing a contraction of over 4%. Based on survey data, the slowdown in orders could continue in the months ahead.
United States
The May non-manufacturing ISM should recover part of the significant drop recorded in April, rising to 54.2 from 53.5. In April the composite index had dropped by 2.5 points, marking the strongest decline since November 2008. The whole survey was markedly negative, with the activity, orders, and employment components all dropping sharply. Even the forecast recovery in May would not lead the composite index back in line with the average of the first four months of the year (55.9), although the trend would stay moderately positive compared to the autumn months.
Wednesday 6 June
Euro area
The second reading of Q1 GDP should confirm the preliminary estimate, certifying a stagnation of economic activity (both month-on-month and year-on-year) in the opening months of 2012. Broken down data should show a semi-stagnation (growth of just one-tenth, in our estimation) of public and private consumption, and a sharp drop (estimated at -1.3%) of investments. Exports, on the rebound by almost one-and-a-half per cent after the decline seen at the end of 2011, should be the only component to support GDP (the contribution of the foreign channel should amount to around four tenths of a point, in line with the previous quarter). Surveys data signals the risk of a slide back into negative GDP growth this quarter.
Germany. Industrial output is expected to drop by -1.3% m/m in April, after surging unexpectedly by 2.8% m/m in March (probably on the back of seasonal factors). The year-onyear change would slow back to 0.6%. The quarter would therefore get off to a negative start, implying the risk of GDP contracting again in the spring, after rebounding in the winter.
United States
Productivity in Q1 2012 should remain in negative territory, in line with the preliminary estimate. The downward revision of growth should lead to productivity also being corrected downwards, to -0.6% q/q from a preliminary estimate of -0.5% q/q. Unit labor costs should be revised to +2.2% q/q.
The Fed will publish the Beige Book ahead of its 20 June meeting. The report should confirm the expansion of manufacturing, and of the auto sector in particular; real estate should also continue along its gradual uptrend. Retail sales figures should point to ongoing growth, albeit at a slower pace than in Q1. Data on the labour market and price trends will be important, and should confirm a moderate employment growth scenario, with no pressures tied to wages; the price trend is expected to confirm an easing in the upward tension of input costs. The Beige Book should therefore be consistent with a wait and see phase for both economic data and monetary policy, with downside risks tied to fiscal policy and to the European debt crisis.
Thursday 7 June
Euro area
ECB meeting: The announcement of further liquidity measures and/or a rate cut next week is a very close call. One can only hope that, at least verbally, the ECB will assure it stands ready to act to protect systemic stability, as it remains the sole European institution equipped with adequate tools that can be activated swiftly.
France. The unemployment rate should increase to 9.6% in Q1 2012, from 9.4% in the previous three months. Conditions on the labour market should continue to worsen at least throughout 2012. In harmonised EU terms, unemployment in France is already 10% (in March), and is set to rise further in the months ahead.
Friday 8 June
Euro area
Italy. Industrial output could contract by four-tenths monthly in April, after rebounding by 0.5% in March. The year-on-year rate would slip further into negative territory, both in unadjusted terms and adjusted by workdays (respectively -9.7% and -7.2% y/y). There is a tangible risk of May and June bringing an acceleration of the downtrend in production, also due to the effects of the recent earthquake in Emilia Romagna.
United States
The trade balance deficit is expected to decrease to -49.5Bn in April, after increasing by 6.4Bn to -51.8Bn in March. In May, the reduction of the deficit should be the result of a sharper decline in imports than the expected contraction of exports. Imports should feel the reduced impact of oil, as a result of a contraction in both volumes and, especially, prices (-1.8% m/m). As regards exports, orders and deliveries were weak in the month and should result in a modest decline.
Appendix
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