3 Numbers: Eurozone Consumer Confidence Set To Hold At 10-year High
James Picerno | Jun 22, 2017 01:38AM ET
- A mild decline projected for CBI’s UK Industrial Trends Orders Index in June
- US jobless claims on track to remain close to a multi-decade low
- Consumer sentiment in Eurozone expected to remain at a 10-year high
The pace of economic releases picks up for Thursday, including the monthly update of CBI's Industrial Trends Orders Index for the UK. Later, we'll see the weekly jobless claims report for the US, followed by the June data for Eurozone consumer sentiment via the European Commission.
UK: CBI Industrial Trends Orders Index (1000 GMT): Bank of England Governor Mark Carney this week laid out a cautious review for the UK economic outlook.
“From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin [raising interest rates]”, he said . Until further notice, the monetary chief is in wait-and-see mode. Among the key factors to monitor, he pointed to updates on how softer consumption and wage growth play out in the months ahead. The details on the Brexit negotiations will be crucial as well.
No smoking guns are expected in today’s CBI report. Econoday.com’s consensus forecast sees the Industrial Trends Order Index slipping to 7 for June vs. 9 in the previous month. The projection still represents an elevated reading compared with data from last year.
Note too that CBI recently upgraded its outlook for UK growth to 1.6% for this year and 1.4% in 2018 – slightly faster than the predictions from last November. “Growth should be steady, if restrained, over the next couple of years as the pace of the economy shifts down a gear,” the CBI’s director general predicted on Tuesday.
The crowd’s expectations for today’s CBI survey data are on track to match the modestly softer forecast for UK growth generally.
US: Initial Jobless Claims (1230 GMT): Tax data published by the US Treasury suggest that the labour market growth rate may accelerate in the second half of this year.
Investor’s Business Daily reported this week that employment and income taxes withheld increased 6.2% for the past 10 weeks vs. the year-earlier level – up from a 4.3% rise in the comparable period for 2016. By some accounts, that’s a signal that the economy’s poised to create jobs at a faster pace.
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Will today’s weekly release of new filings for unemployment benefits support the upbeat forecast via tax receipts? Yes, or so one can argue based on the crowd's expectations. Economists anticipate that jobless claims will rise slightly to a seasonally adjusted 240,000 for the week through June 17, according to Econoday.com’s consensus forecast. That leaves claims close to the multi-decade low of 227,000, which was set earlier in the year, which translates into another bullish signal for this leading indicator.
If the projection is right, today’s release will strengthen the view that employment growth may be headed for a faster rate of growth in the months ahead.
Eurozone: Consumer Confidence Indicator (1400 GMT): The year so far has been a bullish turning point for the Eurozone economy, and today’s monthly review of consumer sentiment is expected to provide a fresh round of data to support the upbeat outlook.
Econoday.com’s consensus forecast calls for the European Commission’s Consumer Confidence Indicator (CCI) to hold at -3.3 for June – a 10-year high.
Most estimates of second-quarter GDP growth point to output that will hold at if not rise above the 0.6% quarterly pace in Q1, which translates to the strongest rate of expansion in two years.
“It seems likely that we’ll see many forecasters’ expectations for 2017 growth revised higher,” advised Chris Williamson, chief business economist at IHS Markit.
The European Central Bank earlier this month raised its projections for GDP growth slightly for the next several years. For 2017, for instance, the new estimate is 1.9%, up from 1.8% in the March forecast. “The economic recovery in the euro area is projected to continue, at a faster pace than previously expected,” the bank advised, citing ongoing growth in the global economy and an “accommodative monetary policy stance” in the euro area as key factors.
Today’s update on consumer sentiment for June looks set to provide more support for thinking positively.
Disclosure: Originally published at Saxo Bank TradingFloor.com
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