UK Data
- During the week Halifax House Price Survey for July. Previous -2.0%m/m & -6.1% 3m/m
- Tuesday 9.30am CIPS Services PMI for July. Previous 47.1 index
- Tuesday 9.30am Industrial Production -0.8%m/m & -1.6%y/y
- Tuesday 9.30am Manufacturing Production -0.5%m/m & -0.8%y/y
- Wednesday 12.01am Nationwide Consumer Confidence for July. Previous 61.0 index
- Thursday 12.00pm BoE Interest Rate Announcement
Sterling remained surprisingly resilient last week despite more stories of doom and gloom facing the UK economy. Nationwide reported house prices falling at their sharpest rate in July (-8.1%y/y) since the series began in 1991 while the number of new mortgage approvals fell to just 36k in June according to a report from the Bank of England. Unsurprisingly, the GFK consumer confidence survey also fell to a disappointing -39 as concerns about the economy and in particular the housing market continued to weigh on sentiment. This week’s data is likely to be overshadowed by the Bank of England’s interest rate announcement on Thursday although a vote of no change is the widely expected outcome.
US Data
- Monday 10.00am PPI for June. Previous 1.2%m/m & 7.1%y/y
- Tuesday 9.00am Services PMI for July. Previous 49.1 index
- Tuesday 10.00am Retail Sales for June. Previous 1.1%m/m & 0.3%y/y
- Thursday 12.45pm ECB Interest Rate Announcement, followed by news conference at 1.30pm
The US economy continues to avoid the technical definition of a recession (two quarters of negative growth) as reported Q2 GDP grew at an annual rate of 1.9% up from revised growth of 0.9% in Q1. Incredibly Q4 2007 GDP was revised down to -0.2% from +0.6%, and suggests significant revisions will be seen for 2008 GDP data. Other releases continue to show a sluggish at best US economy with Non Farm Payrolls losing 51k jobs and the Unemployment Rate hitting a 4 year high at 5.7%. Construction Spending (-0.4%) and the ISM Manufacturing Index (50.0) offered no indication that the jobs outlook is set to improve in the near-term. This week the Core PCE Price Index and Federal Reserve interest rate decision will be the focus of market attention.
EU Data
- Thursday 10.00am Eurozone Unemployment for June. Previous 7.2%
- Thursday 10.00am HICP (Flash Estimate) for July. Previous 4.0%y/y
- Friday 9.00am Manufacturing PMI for July. Previous 49.2 index
European data continued to deteriorate last week with the unemployment rate ticking up to 7.3% whilst EU manufacturing PMI fell to 47.4. However, the ECB still have to contend with rising inflation following the first estimate of HICP for July which pushed higher to 4.1%y/y. With this in mind, attention this week turns to the ECB interest rate announcement on Thursday and whilst rates are expected to be left on hold at 4.25%, the key will be Trichet’s accompanying statement to see whether he retains his hawkish rhetoric.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK (MPC) |
5.00% |
-25bps |
10/04/08 |
7th August |
| US (FED) |
2.00% |
-25bps |
30/04/08 |
5th August |
| EU (ECB) |
4.25% |
+25bps |
03/07/08 |
4th September |