The week ahead: 15 - 19 July 2024
These are the Key Macro Events for the upcoming week.
United States – We expect June retail sales to show another month of weak spending (-0.1% m/m) amid declining gasoline prices and slowing wage growth. Industrial production is likely to stay flat (+0.0% m/m) after last month's surprise to the upside.
Eurozone – We expect the ECB to keep policy on hold, as clearly telegraphed by GC members. President Lagarde’s remarks should leave the door open to a rate cut in September, albeit with softer signalling than that which preceded the June cut. Provided wage and inflation data do not throw up any meaningful upside surprises, we continue to expect a follow-up cut in September.
Industrial production in the eurozone is expected to contract slightly in May on a monthly basis. Earlier this month factory orders in Germany and industrial production figures in Germany and France already signalled weak industrial activity in the middle of Q2. The eurozone industrial sector is not set for a strong recovery this year (read here).
The Netherlands – The unemployment rate is expected to have increased to 3.7% in June (up from 3.6% in May). The rate has been hovering around 3.6% since July 2023. Although the unemployment rate is still low and the Dutch labour market is still tight, we do see marginal easing of tightness: labour demand is cooling somewhat and the number of firms reporting labour shortages as the most important obstacle to production has peaked. We expect the unemployment rate to average 3.8% in 2024, up from 3.6% in 2023.
China – From 15-18 July, the CCP top will meet for the so-called Third Plenum, a policy meeting that focuses on structural reforms. Main focus will likely be on the prevailing strategy of modernisation, high-tech development and productivity, although fiscal/tax, housing and welfare state reforms and private sector development may also be on the menu. Meanwhile, we expect GDP growth in Q2 to have slowed materially in qoq terms from the above-trend pace (1.6% qoq s.a.) in Q1, but annual growth to remain around 5.5% helped by base effects. June macro data are expected to show a further weakening in momentum. In line with consensus, we expect the PBoC to keep the 1-year medium-term lending facility rate on hold on Monday, partly reflecting FX considerations.