Here are the main events for the upcoming week:
Purchasing managers index will be announced today by Markit. individual countries may diverge further. June PMI that would close on the upper side of 53 for the composite activity would signal good growth prospects for Q2, but for now, the preliminary data suggests we might see a tick towards downside. In May, the composite PMI fell slightly to 53.5 from 54 in the month before. All values above 50 indicate expansion.
Germany IFO survey results
IFO declined last month showing the growth may be failing to keep pace in the Europe’s biggest economy. The measure fell for the current measure as it did fall for the expected economic situation. The mixed global picture, getting hit by different geopolitical risks as well as economic risks from China isn’t assuring to German investors. The index stood at 110.4 in May, it may fall a bit in June.
US Durable goods production for May
May data will be haunted by the ghosts of April past when it comes to durable goods orders in the US. April figures were lifted by air-carriers data, which may weight down on the May data. This doesn’t mean absolute slowdown in US manufacturing, but a statistical follow up growth of a strong month. Core capital goods demand is expected to persist so focus your attention to that part of the data.
France INSEE business confidence survey for June
INSEE has been stagnating for months now. Tomorrow’s PMI data may show that French manufacturing continues to decline, while there is little chance that the growth upswing of trading partners will have significant impact on ever weakening French data.
Japan CPI data
After a stellar rise in Japanese CPI that was the consequence of sales tax increase, in May, we may see 3.8 percent inflation as the effects slowly wear off. This figure was the proof of Abenomics working as companies didn’t shy away of passing costs to consumers. There are indications that retailers may have even increased their margins!
Japan Family Income and Expenditure Survey for May
This indicator may give us clues about the first point. Spending should recover somewhat after contraction following the sales hike. Real wages are under pressure as inflation rises faster than incomes. Incomes are expected to fall at 1% annual rate.
Japan Employment in May
Labor market continues to tighten in Japan. Unemployment rate is moving around 3.5 percent mark, while job openings surge to a record. These are indications of a necessary immigration reform.