Thursday’s a slow day for scheduled economic releases in the Eurozone, which means that the Greek crisis will continue to dominate the headlines … for all the wrong reasons. While the crowd struggles with assessing the outlook for Grexit risk, the UK publishes its May report on retail sales. Later, we’ll see the weekly release on US jobless claims, followed by an early look at US manufacturing activity in June via numbers from the Philadelphia Fed.
UK: Retail Sales (08:30 GMT) The early clues look a bit muddled for anticipating today’s monthly report on retail sales. On the one hand, the Distributive Trades Survey from the Confederation of British Industry paints an upbeat profile for May. By contrast, last month’s data from the British Retail Consortium suggest that spending was relatively soft.
“May witnessed a slowdown in sales growth, below the three-month and 12-month average,” said BRC’s director general earlier this month with the release of the BRC-KPMG Retail Sales Monitor figures. KPMG’s head of retail summarised the numbers by noting that “May's retail sales figures were disappointingly flat.”
Decline in store ... retail spending in the UK is expected to fall 0.3% in May, a sharp contrast
to April's 1.2% increase. Photo: iStock
to April's 1.2% increase. Photo: iStock
As for economists, the outlook seems to favour BRC’s softer numbers. Econoday.com’s consensus forecast anticipates that the government today will report that retail spending retreated 0.3% in May vs. the previous month – a sharp reversal from April’s strong 1.2% increase.
On a
year-over-year basis, however, analysts are looking for a relatively
mild setback that pares growth to a respectable 4.3% in May, down
slightly from April’s 4.5% advance.
US: Initial Jobless Claims (12:30 GMT)
The latest numbers on industrial production suggest that the US economy
is stumbling, but the main evidence to the contrary remains the upbeat
employment trend. Total nonfarm payrolls rose a solid 280,000 last
month, the strongest monthly advance since last December.
Initial jobless claims continue to signal ongoing growth in the labour market, providing a counterpoint to the weak numbers from elsewhere in the economy. Indeed, new filings for unemployment filings have been trending lower for years, with the decline reaching a 15-year trough in late April.
Claims have moved moderately higher in recent weeks but remain close to the seasonally adjusted 262,000 level for the week through April 25 – a number that marks the lowest point since 2000. Briefing.com’s consensus forecast calls for a mild slide to 276,000 in today’s release – down by 3000 from the previous number.
In short, the claims data is expected to renew its implied forecast for economic growth. If today's update confirms that outlook, we'll have another reason to suspect that the weakness in the industrial data is contained, with limited implications for the broad macro trend.
Initial jobless claims continue to signal ongoing growth in the labour market, providing a counterpoint to the weak numbers from elsewhere in the economy. Indeed, new filings for unemployment filings have been trending lower for years, with the decline reaching a 15-year trough in late April.
Claims have moved moderately higher in recent weeks but remain close to the seasonally adjusted 262,000 level for the week through April 25 – a number that marks the lowest point since 2000. Briefing.com’s consensus forecast calls for a mild slide to 276,000 in today’s release – down by 3000 from the previous number.
In short, the claims data is expected to renew its implied forecast for economic growth. If today's update confirms that outlook, we'll have another reason to suspect that the weakness in the industrial data is contained, with limited implications for the broad macro trend.
Today’s update from the Philly Fed will offer an early look at the June profile for the manufacturing sector. Monday’s equivalent from New York showed that business conditions suffered a mild round of contraction this month, which translates into a flat performance since April for firms in the New York Fed region.
By contrast, economists expect that the June data from the Philly Fed will provide a brighter perspective. The moderately positive 6.7 reading in May will rise slightly, to 8.0, according to Econoday.com’s consensus forecast. Even if the prediction holds, the news won’t change the fact that the US manufacturing sector overall is enduring a soft patch. Yet an upbeat report will provide support for thinking that the recent weakness isn’t widespread, which implies that growth will pick up in the months to come on a national basis.
Meanwhile, it’s clear that the manufacturing sector generally is on the defensive, in part due to a strong dollar, which makes exports less competitive. The sharp decline in energy prices over the last year isn't helping – a trend that’s weighed heavily on demand for drilling equipment and related machinery.
The question is whether the recent deceleration in growth is a headache beyond manufacturing? Based on expectations for the Philly Fed report, the answer seems to be a cautious “no.”
