Top Things to Know Today - page 16
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German Annual Producer Prices Contract in May
Industrial producer prices in Germany, a proxy for the closely watched consumer prices, posted a negative reading again in the fifth month of 2016, with the gauge booking its 33rd straight month in contraction on an annual basis, the Federal Statistical Office (Destatis) showed on Monday.
June 2016 German ZEW economic sentiment 19.2 vs 4.7 exp
June 2016 German ZEW economic sentiment survey 21 June 2016
The highest for nearly a year on the headline number and the euro does nothing at 1.1335.
Comments from ZEW
German private sector growth eases slightly in June: PMI
German private-sector growth eased in June as humming factories failed to offset a slowdown in services, but the index remained stable suggesting Europe's biggest economy probably expanded at a solid rate in the second quarter.
Markit's flash composite Purchasing Managers' Index (PMI), which tracks the manufacturing and services activity that accounts for more than two-thirds of the German economy, edged down to 54.1 from 54.5 in May.
This was below the Reuters consensus forecast for 54.2, but comfortably above the 50 line that separates growth from contraction, where it's now been for 38 months in a row.
Growth in manufacturing accelerated to 54.4, propelled by the strongest increase in new export orders for more than two years, as demand increased from China and the United States.
However, the PMI sub-index for business activity in services slipped to 53.2, hurt by weaker growth in new business and output.
The survey showed that companies appeared to be shaking off any uncertainty over a possible British exit from the European Union. Employers continued to add to their headcounts and the rate of job creation was the most marked so far this year.
"It looks like companies are not bothered by Brexit.
Producers are enjoying rising demand in other countries and are not worrying about the United Kingdom," said Markit Chief Economist Chris Williamson.
"Barring any disruption from the UK vote, it does look like this solid but unexciting growth will continue," he said, adding that Markit expects the economy to expand by 0.4 percent in the second quarter.
The findings chime with a poll published by the Ifo economic institute on Wednesday, which found nearly two-thirds of German industrial companies believed a British exit from the European Union would not hurt their business.
However, the DIW economic institute has warned a vote to leave would likely lead to higher export tariffs, reducing German trade and knocking as much as half a percentage point off growth in Europe's biggest economy next year.
Germany's economy grew by 0.7 percent in the first quarter, buoyed by higher state and household spending. Growth, however, is expected to slow in the second quarter as foreign trade cools, the Finance Ministry and central bank said on Monday.
Detailed PMI data are only available under license from Markit and customers need to apply to Markit for a license.
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German Investor Sentiment Surprisingly Rises in June: Ifo
Sentiment among German businesses unexpectedly improved in the sixth month of 2016, the latest official data from the Ifo think tank showed on Friday.
The headline Ifo Business Climate Index increased to 108.7 points during the sixth month of the year, after a reading of 107.8 booked in the previous month.
Markets had penciled in a marginal decrease to 107.4 over the reported month.
5 Things to Watch on the Economic Calendar This Week
1. Possible UK credit rating downgrade
Ratings agency Moody's warned Friday that it may downgrade the U.K.’s credit rating as it lowered the outlook to “negative” from “stable” after the country voted to leave the EU.
Moody's said the result would herald "a prolonged period of uncertainty".
Rival ratings agency Standard & Poor's, the only one of three major ratings agencies that still has a AAA rating on Britain, said Friday the Brexit vote meant the AAA rating was no longer tenable.
2. EU leaders to discuss Brexit
EU leaders are to hold a two-day summit meeting on Tuesday and Wednesday in Brussels, to discuss how they should handle Britain’s decision to leave the bloc. U.K. Prime Minister David Cameron will attend the first day of the summit.
3. Janet Yellen speech
Federal Reserve Chair Janet Yellen is due to speak at an ECB central bank conference in Portugal on Wednesday, with investors looking for indications on how Brexit will alter the outlook for the U.S. economy and the path of interest rates.
Traders have now discounted any chance of a U.S. rate hike this year and federal funds rate futures are even signaling that a rate cut may be on the cards.
4. U.S. earnings results
Nike (NYSE:NKE) is to announce its quarterly earnings results after the close of the U.S. market on Tuesday.
General Mills (NYSE:GIS) and Monsanto (NYSE:MON) are to report their earnings ahead of Wednesday’s U.S. market open. ConAgra Foods (NYSE:CAG), Constellation Brands (NYSE:STZ) and Darden Restaurants (NYSE:DRI) are to report on Thursday.
5. Global manufacturing data
China, the U.K. and the U.S. are all to release survey data on manufacturing activity on Friday.
The data will be closely watched for signs that the global economy is losing momentum.
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ECB's Draghi expresses 'sadness' at Brexit vote
The European Central Bank's president Mario Draghi expressed "sadness" on Monday at Britain's vote to leave the European Union.
In his first comments on the result of last Thursday's referendum, Draghi said: "Sadness is the best word for what we feel when we witness changes of this magnitude."
He was opening the ECB's annual forum on central banking in Sintra, Portugal. Before the vote, Draghi had said the ECB was hoping that Britons would choose to stay.
German unemployment falls more than expected in June
German unemployment fell more than expected in June and the jobless rate in Europe's biggest economy remained at a record low, figures from the Federal Labour Office showed on Thursday.
"The labor market continues its overall positive development," Frank-Juergen Weise, head of the Federal Labour Office said in a statement, adding that the demand from companies for workforce remained high.
The seasonally-adjusted jobless total fell by 6,000 to 2.690 million, the Labour Office said. That compares with a consensus forecast in a Reuters poll for unemployment to fall by 5,000.
The adjusted unemployment rate remained at 6.1 percent, the lowest level since German reunification in 1990.
ECB concerned about shrinking pool of eligible debt - Bloomberg
Just a sources story for now but it's sunk the Euro. How coincidental that this comes almost as soon as Carney finishes?
France's Macron says Brexit would make the UK "a little country on the world scale"
French economy minister Emmanuel Macron speaking in Le Monde 18 June 2016
"Leaving the EU would mean the Guernseyfication of the UK which would then be a little country on the world scale. It would isolate itself and become a trading post and arbitration place at Europe's border"
5 Things to Watch on the Economic Calendar This Week
1. June U.S. Employment Data
The U.S. Labor Department will release its June nonfarm payrolls report at 12:30GMT, or 8:30AM ET, on Friday.
The consensus forecast is that the data will show jobs growth of 175,000 last month, following an increase of 38,000 in May, the unemployment rate is forecast to inch up to 4.8% from 4.7%, while average hourly earnings are expected to rise 0.2% after gaining 0.2% a month earlier.
An upbeat employment report will point to an improving economy and support the case for higher interest rates in the coming months, while a weak report would add to uncertainty over the economic outlook and push prospects of tighter monetary policy further off the table.
2. Fed FOMC Meeting Minutes
The Federal Reserve will release minutes of the June policy meeting on Wednesday at 18:00GMT, or 2:00PM ET, as investors search for some clarity on where the U.S. central bank stands on its path toward rate hikes.
The Fed kept interest rates unchanged following its meeting on June 15 and dialed back forecasts for how fast it will raise rates over the next couple of years, citing concerns over the economic outlook.
3. U.S. June ISM Services PMI
The U.S. Institute of Supply Management is to release data on June service sector activity at 14:00GMT, or 10:00AM ET, on Wednesday. The gauge is expected to rise 0.4 points to 53.3. Anything above 50.0 signals expansion.
4. Bank of England Financial Stability Report
The Bank of England’s financial stability report will be released on Tuesday at 9:30GMT, or 5:30AM ET. The publication will take a detailed look at the risks faced by the U.K. banking sector following the referendum vote and the underlying risks to the economy. BoE Governor Mark Carney will hold a press conference shortly after the release of the report.
5. Reserve Bank of Australia Rate Decision
The RBA's latest interest rate decision is due on Tuesday at 4:30GMT, or 12:30AM ET. Most economists expect no policy change, after the central bank left rates on hold at a historic low of 1.75% at its previous meeting and held off from indicating that more monetary easing is on the cards.
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