- ECB monetary policy meeting unlikely to see any change
- UK Retail Sales for June expected to show uptick as economy starts to normalise
- US PMI data could ease in welcome move for the Fed
In what looks set to be a relatively quiet start to the week, Tuesday’s release of German Producer Price Index data for June will be under scrutiny. As we have noted before, this is an important metric as rising input prices mean higher retail inflation or lower profitability if companies attempt to absorb some of the uplift. Expectations are that the annualised rate will be approaching 8%, up from the 7.2% posted last month, but there may be some solace in the fact the pace of change here should slow a little.
On Thursday the European Central Bank will meet to announce its latest interest rate policy decision. There’s no real expectation of any change, especially given the bank has already announced a new strategy to tolerate inflation at levels higher, but there’s growing confidence that the Pandemic Emergency Purchasing Programme will start to be tapered from September. Growth expectations over the next two years for the currency bloc certainly look robust, but ultimately we’re still some considerable way from returning to what could be considered ‘normal’ monetary policy.
Friday sees UK Consumer Confidence data for July published by Gfk. This is tipped to show another move higher from the -9 posted in both May and June, although will still be in negative territory. Uncertainty over economic growth later in the year is likely to maintain some downside pressure here.
UK Retail Sales for June will also be under scrutiny, with pent up demand following the unwinding of lockdown restrictions very much in focus. A month-on-month decline was posted in May which caused a degree of surprise although one explanation was that consumers were focusing on hospitality rather than buying goods. Expectations are for a modest uptick to be reported this time round, although with forecasts that this could barely be above 1%, that may still be considered as underwhelming.
Friday also sees the usual raft of PMI data for July released from both sides of the Atlantic. Expectations here are that the whole suite of numbers will once again impress broadly, with some modest easing in the US, whilst Eurozone figures are set to grow a little. With the American economy at real risk of overheating, any softening here would be seen as welcome, but with the composite number still set to come in well above 60 for a fourth consecutive month, this has the potential to raise fresh concerns over the stand-offish approach that’s being taken by the Federal Reserve. UK Services PMI is tipped to move up from 62.4 in June to something around 63, whilst the less significant Manufacturing print is on course to ease from the 63.9 to nearer the 62 level.