Week Ahead – GDP out of US and UK in focus; Eurozone and Japan inflation due

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Growth data are due from two of the world’s largest economies – the United States and the United Kingdom. Japan will also be releasing a flurry of data.

United States

A slew of data are expected from the US next week. The Personal Consumption Expenditure (PCE) price index is one of the most important indicator as well as personal income and spending. The May PCE figure is due on Friday and it is a closely monitored indicator as it is the Federal Reserve’s most preferred gauge of inflation. The April PCE index rose 0.2% for April following a 0.2% decline the previous month. Any increase in the May number would add to expectations of the Fed hiking interest rates again later this year.

Final GDP for the first quarter is due on Thursday, which is also a very important piece of data. It is expected to show growth at 1.2%, the same as the previous estimate. Other data such as durable goods orders for May are expected to come in at -0.5% versus the prior month’s -0.8%. The June final reading of the University of Michigan consumer sentiment index will also be looked at for indications of the US economy’s health and is forecast at 94.5 as the previous reading.

May building permits are due on Monday, while the April number for the Case Shiller House Price Index will be released on Tuesday. The May report for pending home sales is out on Wednesday.

United States

Final GDP data for the first quarter are due on Friday.  The figure is expected to be the same as previous at 0.2% growth quarter-on-quarter and 2% year-on-year.

It has been a year since the Brexit vote and overall, the UK economy has performed relatively well in terms of GDP growth during the second half of 2016 following the referendum. However, more recently there have been signs of a slowdown in economic activity. The fall in real average wages could have serious consequences on growth in the future.

Eurozone

The flash CPI reading is expected to show inflation falling. The June reading is due on Friday and is expected at 1.3% year-on-year. May’s final CPI was confirmed at 1.4%, which was unchanged from the flash reading and also in line with consensus forecasts. A lower reading would support the ECB’s view that underlying price pressures remain subdued.

At the ECB’s June policy meeting, the inflation forecast for 2017 was cut to 1.5% from 1.7% previously.

On Thursday, the June economic sentiment report is expected to improve further and is expected at 109.5 versus 109.2 in the previous reading. The German Ifo business climate is due on Monday.

Japan

There will be flurry of data releases out of Japan next week, starting with retail sales on Thursday, then household spending, unemployment figures, CPI and industrial production due on Friday

Japan’s CPI numbers are expected to show core inflation rising in May to 0.4% year-on-year versus 0.3% previously. The preliminary industrial production number is expected at -3.2% month-on-month versus the prior month’s reading of 4%.

China

China PMI for manufacturing and non-manufacturing sectors are due on Friday.

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