In the Euro area, EU Commission economic sentiment and the Italian ISAE complete the round of confidence surveys for June, showing in general a slight dip in sentiment in the wake of concerns connected with the financial crisis. . …
The unemployment data should again show stability in Germany and in Euro area average terms, and a further rise in Italy. Inflation should be steady at 3.0% yoy in Italy, rising to 2.5% yoy in Germany and by one tenth to 2.8% yoy in the Euro area. Retail sales in Germany might grow further in May. M3 might accelerate to 2.1% yoy in May after the unexpected fall in April.
The coming week is packed with data in the United States. The June manufacturing surveys (Chicago PMI, ISM) should be down again, while auto sales should again correct slightly. Consumer confidence should be up slightly in June. Personal spending should be weak in May and negative in real terms, reflecting the collapse in auto sales, while construction spending is expected to improve.
Monday 27 June
Euro area
Italy. Sector pay is expected to be up 0.1% mom in May, like the previous month. Year-onyear growth would remain stuck at 1.8% yoy (over one point below the average for the last five years). According to ISTAT projections, barring renewals, the trend in sector pay might slow by several tenths in the coming months, probably remaining below inflation throughout the year.
United States
Personal spending should be unchanged in May, held back by the steep fall in auto sales, the weakness of services (utilities moderated by the cool weather) and modest growth in weekly sales. In real terms, consumption should be down slightly (-0.1% mom). Personal income is expected to be up 0.3% mom, with wages and salaries up 0.3% mom. The deflator should be up 0.2% mom, with the core rate rising more strongly (0.3% mom, 1.2% yoy) in line with the indications from the CPI: the trend in core inflation should continue without slowing. The saving rate should rise to 5.1% in May from 4.9% in April. 2Q11 consumption is on track for growth of 2.3% qoq ann., slightly better than 1.8% qoq ann. in 1Q11.
Tuesday 28 June
Euro area
Italy. Business confidence is expected to be little changed in June (our estimate: 101.5 vs. 101.3 in May). May saw a fall in orders, but the hard data on orders look more reassuring than surveys suggest. Business confidence rose in the same month both in Germany and France, while the performance of Italian industry might be less buoyant.
Germany. The data from the Laender should be consistent with consumer prices up 0.1% mom in June, inflation should hover at 2.3% yoy. On the harmonised measure, inflation should be up by on tenth to 2.5% yoy.
United States
Consumer confidence as measured by the Conference Board is expected to rise to 63 in June from 60.8 in May. In May the survey recorded a fall in the view of present conditions (to 39.3 from 40.2), and a steeper correction in expectations (to 75.2 from 83.2 in April). In June the index of current conditions might correct again, but expectations should recoup some of the ground lost last month. The weekly confidence index improved as of the third week in May, returning in mid-June to the levels seen two months before.
Wednesday 29 June
Euro area
The EU Commission index of economic confidence is expected to be steady at 105.5 in June after the May fall. Household confidence according to the advance estimate was roughly steady at -10 from -9.9, while manufacturing business confidence (according to the national surveys) might have risen to 5 from 3.9; the service, retail and construction indices might be down slightly. The composite index is still consistent with GDP growth roughly in line with the 2.5% yoy recorded in 1Q11.
Thursday 30 June
Euro area
Germany. Retail sales are expected to be up 0.5% mom in May after rising slightly in April. If confirmed, the figure would leave sales on track for a fall of 0.7% qoq in June given the weak end to the first quarter. The consumption outlook remains fair, given the healthy state of the labour market and the expected cooling of inflation looking forward.
France. Consumer spending is expected to bounce to at least 0.5% mom in May after two months of falls. Year-on-year, sales might nonetheless slow to 1% yoy, and would be on track for a sharp contraction in 2Q11, increasing the risk of a marked downturn in GDP in 2Q11.
Euro area inflation might return to the April level of 2.8% yoy in June. Between now and the autumn Euro area inflation will move roughly around the current levels and sharp falls will only come around year-end.
Year-on-year growth in M3 might be up one-tenth at 2.1% yoy in May after the unexpected fall in April. The data should also show an ongoing slowdown in M1 and an upturn in loans to the private sector (notably to firms).
Italy. Consumer prices should be up one-tenth in June (with some downside risks), like the previous month. Inflation would accelerate to 2.7% yoy from 2.6%. On the harmonised measure, we estimate 0.2% mom and inflation steady at 3% yoy. The June figure might mark a high for Italian inflation, but the cooling will be very slow.
Germany. The unemployment rate should be steady at 7% in June (the figure marks a near- 20-year low). The jobless total might be down 10k (after 8k in May). The economic surveys confirm the exceptional resilience of the German labour market.
United States
The Chicago PMI should be down again in June, falling to 55 from 56.6 in May. Last month the survey showed a collapse in production (to 56 from 70) and new orders (to 53.5 from 66.3). June should bring another, small correction, once gain due to the effects of the earthquake in Japan on the auto sector. Output and orders should pick up in the coming months.
Friday 1 June
Euro area
Italy. The unemployment rate might rise to 8.2% in May according to the preliminary estimates based on monthly data (the fall in the jobless total seen the previous month was due largely to the increase in the number of inactive workers). The final estimates of the quarterly data should show a fall in the jobless rate to at least 8.4% (from 8.5% before), and a further fall should be expected in 2Q11 according to the monthly estimates.
The unemployment rate in the Euro area might be down one-tenth at 9.8% in May, driven mainly by Germany. The unemployment rate will remain double-digit in the peripheral countries. Looking forward, the jobless total should continue to fall in the coming months, albeit very slowly.
United States
Consumer confidence in June as measured by the Univ. of Michigan (final) should improve on the preliminary figure, rising to 72.5 from 71.8. Worth watching are inflation expectations five years fwd which, in the advance reading, were rising again.
The manufacturing ISM is expected to fall further to 51 in June from 53.5 in May. The regional surveys were consistently negative: even allowing for the increased volatility of the Philly Fed and Empire surveys, the ISM too is likely to continue on the downtrend stretching back to April. Some of the slowdown in the data and the surveys is temporary and due to the effects of the earthquake, but the general trend remains uncertain.
Construction spending is expected to be up 0.4% mom in May. Spending should continue along the moderate uptrend seen in recent months, picking up after the negative weather effects of the first quarter. Based on the upturn in new starts, residential spending should be up in May, amid smaller increases in non-residential construction and public building.
Auto sales in June should again be affected by the supply-side problems stemming from the Japanese earthquake. In May sales plummeted to 11.8M units ann., and June should bring a further small fall to 11.6M units. Sales are expected to pick up in the summer, when output should normalise and inventories should be up from the very low levels seen in recent months.
Appendix
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