In the euro area the focus will be on the ECB meeting. The preliminary estimate should show June inflation spiking by one tenth to 1.5%, from July inflation should move back towards 1,1% on the back of a favourable base effect from the energy component. The second reading of PMI indices in June will confirm the recovery that has propelled the indices to their highest levels in over a year. In Germany, manufacturing orders could rebound in May after declining in April……<\/p>\n
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Sign up for our free newsletter to receive weekly news from BONDWorld<\/span> The week will bring a host of important data releases in the United States. June ISM indices should move up: in the manufacturing sector, the index should return above the 50-point threshold, confirming the temporary nature of the previous slowdown. The Employment Report, on the other hand, should provide mixed indications, with slower job growth in June than in May, but a slight reduction in the unemployment rate. Auto sales are estimated to accelerate further in June. In May, the trade balance should see a modest widening of the deficit, due to weak exports, and construction spending is expected to improve slightly.<\/p>\n Monday 1 July <\/strong> The final reading of the June euro area manufacturing PMI should confirm the preliminary estimate at 48.7 (its highest level in over a year), from 48.3 in May. The decline of the German PMI should also be confirmed, as well as the sharp rise of the French index. The first estimate for Italy should also show a recovery, albeit smaller than the one recorded in May (almost two points), to 47.5.<\/p>\n Italy. The unemployment rate could rise further in May, to 12.1% (this would mark a new long-term high not only for the monthly series \u2013 which began in January 2004 \u2013 but also for the quarterly series, which dates back to 1977). It will also be interesting to verify whether unemployment among young adults hits a new peak level beyond the 40.5% rate recorded in April. The uptrend in the unemployment rate should last until the opening months of 2014.<\/p>\n The preliminary estimate should show June inflation spiking by one tenth to 1.5%, from July inflation should move back towards 1,1% on the back of a favourable base effect from the energy component. The flash estimate should point to core inflation (net of the energy, fresh food, alcohol and tobacco components) unchanged at 1.2%. From July onwards, inflation should move back towards 1.1% on the back of a favourable base effect from the energy component. In annual terms, the CPI should average 1.4% this year and next.<\/p>\n Euro area unemployment rate could rise by r one tenth in May, to 12.3% (this would mark a new long-term high). Greece and Spain remain the hardest hit countries, with unemployment rates (of around 27%), more than twice the euro area average. If the economic recovery gains momentum over the summer, unemployment could peak by the end of the year.<\/p>\n United States<\/strong><\/p>\n Construction spending is estimated to have increased by 0.4% m\/m in May, in line with April. Recently, housing starts slowed their pace of growth: spending in the sector should continue at positive, albeit slower, rates. The May Employment Report showed an increase in work hours, with a slight drop in construction jobs, pointing to a moderate expansion in the month. In the non-residential and public sectors, on the other hand, a moderate acceleration is The ISM manufacturing in June should rise to 51.5 from 49 in May. Initial indications for June were widely positive, with the Empire index rising to 7.8 and the Philly Fed to 12.5, after a few months in negative territory. An acceleration in activity in the auto sector, and the waning of the restrictive effects of the automatic public spending cuts should prove mutually supportive, pushing the ISM index back up close to its March levels, and signalling that the slowdown in 2Q was transitory.<\/p>\n Tuesday 2 July<\/strong><\/p>\n United States<\/strong><\/p>\n Vehicle sales in June are estimated to have increased to 15.6 from 15.24 million ann. in May. Information provided by dealerships point to an acceleration in sales, driven by stronger incentives offered by Japanese manufacturers and helped by the weak yen. Auto sales will continue to contribute strongly to manufacturing output and to consumption growth.<\/p>\n Wednesday 3 July <\/strong> The final reading of the June composite PMI for the euro area should confirm the preliminary estimate of 48.9 (up from 47.7 in May). The index is now at its highest levels since January 2012. The services index should also confirm the preliminary reading at 48.6 (on YTD highs), from 47.2 in May. In essence, PMI indices remain in recessive territory, but suggest that a stabilisation of productive activity is under way.<\/p>\n United States<\/strong><\/p>\n The ADP estimate of new private non-farm payrolls in June is expected by consensus at +160k, from +135k in May.<\/p>\n The trade balance should record a -41 billion dollar deficit in May, from -40.3 billion in April. Exports should be little changed, as opposed to a modest rise in imports in the energy segment, and a solid increase in the auto sector. Exports should be supported by the civil aircraft sector.<\/p>\n The non-manufacturing ISM index is estimated to rise to 54 in June from 53.7 last month. The May survey was positive on the whole, with the activity index on the rise to 56.5 from 55 in April, and orders to 56 from 54.5. The main drivers included the positive scenario in the retail sector, and in segments related to residential construction.<\/p>\n Thursday 4 July <\/strong> ECB meeting should be rather interlocutory. We expect the ECB to maintain an easing bias and leave the door open for further adjustment to the refi rate should data disappoint during the summer.<\/p>\n Friday 5 July<\/strong><\/p>\n Euro area<\/strong><\/p>\n Germany. Manufacturing orders are expected to rebound by 1% m\/m in May, from -2.3% m\/m in April. The year-on-year date is forecast at zero, vs. -0.5% y\/y in April. The data would leave the Q2 average on track for a 2% increase on Q1, supporting our forecast of a 0,4% rise in German GDP The IFO and PMI surveys suggested a recovery in orders and activity in April and May.<\/p>\n United States<\/strong><\/p>\n June non-farm payrolls are expected to be up by 165k, slightly less than in May (+175k). In the June Employment Report survey week, new jobless claims increased to 354k (vs. 344k during the May survey week); the employment component of June manufacturing surveys remains weak (-5.4 from -8.7 in May for the Philly Fed, whereas the Empire outlined a drop in both the employment and work hours indices). The public sector should also record a slightly larger drop in employment numbers than in May, following implementation of the automatic spending cuts. The unemployment rate should return to 7.5%: in May, the rise to 7.6% was due to the rounding off of the rate (from 7.55%), in the presence of a sharp expansion of the workforce (+420k), which should slow in June. Hourly wages are estimated in rise by 0.2% m\/m.<\/p>\n Appendix<\/strong><\/span><\/div>\n Analyst Certification<\/strong><\/span> Important Disclosures<\/strong><\/span> <\/p>\n Source: BONDWorld – Intesa Sanpaolo \u2013 Research Department<\/p>\n","protected":false},"excerpt":{"rendered":" In the euro area the focus will be on the ECB meeting. The preliminary estimate should show June inflation spiking by one tenth to 1.5%, from July inflation should move back towards 1,1% on the back of a favourable base effect from the energy component. 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Euro area<\/strong><\/p>\n
expected. May data will include the revision of the series from 2011 onwards. We expect faster growth in the sector in the next couple of quarters<\/p>\n
Euro area<\/strong><\/p>\n
Euro area<\/strong><\/p>\n
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