EU Services PMI, UK Services PMI, US ADP jobs
Saxo Bank | Jul 03, 2013 05:34AM ET
The markets will have another chance on Wednesday to stress test the view that the UK economy is on a sustainable road to recovery with today’s update on the Markit/CIPS Services PMI data. Later, attention turns to the release of Eurozone retail sales for May and the June ADP employment report for the US.
UK Markit/CIPS Services PMI (08:28 GMT): Britain is on a roll, or at least that’s the trend in recent economic numbers. Yesterday’s news of another rise in the Markit/CIPS UK Construction PMI is the latest example. “UK construction companies indicated a further moderate rise in business activity during June,” the press release observed. This wouldn’t mean much if it were an outlier, but the return to growth for the construction sector falls in line with a series of similar updates from other economic corners in recent weeks. Another example: business confidence in Britain is now the highest since 2007, driven in part by rapidly rising UK exports, according to a report published yesterday by the British Chambers of Commerce.
Today’s update on the mood in the services sector isn’t expected to deliver a stellar performance, although analysts think we’ll see this PMI number remain well above 50. In other words, Britain’s services sector is on track to provide more positive support for the economic recovery that’s becoming more conspicuous with each new data point these days. The revival is a bit ironic, considering the formal arrival this week of Mark Carney as head of the Bank of England. Recall that in April Carney described the UK as a “crisis country.” By that standard, Britain has mounted a marked if still-unspectacular recovery in just a few short months.
EU Retail Sales (09:00 GMT): In ever sharper contrast with Britain's macro profile, Europe is still stuck in recession and that's not likely to change in the next round of economic releases. The good news is that there’s a lively debate about the possibility of stabilisation and, eventually, recovery. Major turning points for the business cycle are only obvious with hindsight, but today’s retail sales update for the Eurozone may stoke discussions about whether there’s light at the end of this tunnel in the near term.
Using the last two monthly retail PMI reports as a guide, today’s number for May retail spending for Europe could bring upbeat news. Exactly how upbeat is only a guess at this point, but it’s hard to imagine that two consecutive months of improving sentiment in the retail sector is meaningless for the hard data. True, the PMI numbers are still under 50, which indicates contraction. But the rise in the June PMI to nearly a neutral level suggests that consumer spending will recover, if only modestly. Today’s retail sales report for May should at least tread water relative to the April data, although it wouldn’t be surprising should we see a bit of growth in the monthly comparison.
US ADP Employment Report (12:15 GMT): The market will be eager to see today’s ADP estimate of private payrolls for June. As usual, this data will guide expectations for Friday’s official jobs report from the government. Recent updates from both series suggest that the bias for moderate growth remains intact. Although the monthly numbers bounce around a lot, both ADP and government private payrolls have been rising at a comparatively steady annual rate of between 1.5 percent and two percent so far this year. There’s nothing in the economic news of late that suggests we’ll see anything different in today’s release
Get The News You Want
In the May report, ADP said that private payrolls expanded by a net 135,000 versus the previous month. The consensus forecast sees today’s estimate for June improving a bit to a 165,000 advance. June macro numbers overall are still largely a mystery, but an early look at the economic profile for last month via the ISM Manufacturing Index looked decent, albeit only moderately so. If today’s ADP report tells us something similar, the odds will improve for expecting another round of modest growth in Friday’s jobs report.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.