While the past week was somewhat quiet data wise, news flow should step up next week with key releases of note in the US being the July retail sales report and industrial production among others, although the main focus will remain the ongoing collapse in Turkey’s currency and whether there will be contagion to other emerging (and developed) markets.
Then there is the ongoing trade war with China: with less than two weeks remaining before threatened tariffs on $16bn of each other’s exports come into force, and the threat in the US to add another $200bn of imports to the list, the Sino-US “trade-war” narrative holds the greatest potential to drive markets according to SocGen. There is also the recent collapse in the Russian ruble, as the Trump admin dangles new sanctions. However, the crisis in Turkey is the most immediate test of financial market confidence. Data highlights include China’s monthly activity indicators which should reflect stimulative policy action, or else. Also on deck is the second revision to Q2 GDP in the Euro area and final July CPI reports are also due in Europe.
Away from that, Brexit negotiations will resume in Brussels while the earnings season in the US and Europe will move into their final stages.
With regards to the economic data that’s due out next week, in the US we’ll get a few important releases which should help to further shape Q3 GDP expectations. The highlights come on Wednesday when we get the July retail sales report
(consensus is for a +0.1% mom headline reading and +0.5% mom control group reading). After a strong Q2, and expectations that tax cuts and a strong labor market will fuel consumption in 2H, SocGen predicts that the July data will give us a clue as to whether the Q2 strength carried over in early Q3. Elsewhere, industrial production could have increased by 0.4%, while housing starts likely rebounded noticeably.
Outside of that we’ll also see the July import price index reading on Tuesday, preliminary Q2 readings for unit labor costs and nonfarm productivity on Wednesday. Look for a rise in Q2 productivity growth, but the bounce will be short-lived and not indicative of an underlying acceleration.
August Philly Fed PMI and July housing starts and building permits data on Thursday, and the preliminary August University of Michigan consumer sentiment survey on Friday.
In Europe, Deutsche Bank writes that there will be plenty of eyes on the second revision to Q2 GDP for the Euro area on Tuesday. As a reminder the preliminary print came in at a weaker than expected +0.3% qoq and the expectation is that it will stay steady at +0.3% qoq. On the same day we’ll also see the preliminary Q2 GDP print for Germany (+0.4% qoq expected) while other data worth highlighting next week in Europe includes the final July CPI revisions scattered throughout, July employment data in the UK on Tuesday, August ZEW survey in Germany on Tuesday, July inflation in the UK on Wednesday, and June trade balance for the Euro area on Thursday.
In China we’ll get the latest July activity data on Tuesday. The market expectation is for retail sales to nudge a tenth higher to +9.1% yoy while industrial production is also expected to rise three-tenths to +6.3%. Fixed asset investment is expected to hold at +6.0% YTD yoy. In Japan the notable releases include the final June industrial production print on Tuesday and July trade data on Thursday.
Away from data, Brexit talks will restart between the EU and the UK on Thursday. Given the recent news around Brexit and probability of corporates preparing for a hard Brexit, it will be worth looking out for any fresh headlines there. Moreover the EU’s chief Brexit negotiator Michel Barnier might hold a news conference on Friday.
Elsewhere earnings season in the US moves into its final stages with just 17 S&P 500 companies due to report but it’s worth highlighting that we will get reports from some of the retailers including Home Depot on Tuesday, Macy’s on Wednesday and Walmart, Gap and Nordstrom on Thursday.
Key events broken down by day, courtesy of Deutsche Bank
- Monday: It’s a very quiet start to the week on Monday with the only data of note being the final July CPI revisions for Italy.
- Tuesday: It looks set to be a much busier day for releases on Tuesday. Overnight the focus will be on China with July retail sales, industrial production and fixed asset investment data due along with June industrial production and capacity utilization data for Japan. In Europe, we get Q2 employment data in France, revisions to Q2 GDP for Germany and the Euro area, the final July CPI revisions for Germany, France and Spain, June employment data for the UK, June industrial production for the Euro area and the August ZEW expectations survey for Germany. In the US, we get the July NFIB small business optimism index, import price index and export price index while the Q2 household debt and credit report by the New York Fed will also be released. Home depot will also be releasing its earnings.
- Wednesday: It should be another busy day for releases on Wednesday. Overnight, we get July new home prices data for China. In Europe, we get July CPI, RPI and PPI for the UK. In the US, we get July retail sales, industrial production, manufacturing production and capacity utilization data along with August empire manufacturing, and preliminary Q2 nonfarm productivity and unit labor costs, June business inventories and August NAHB housing market index. Macy’s will be reporting earnings.
- Thursday: Overnight on Thursday we’ll get the July trade balance data for Japan, while in Europe we get July retail sales for the UK and June trade balance for the Euro area. In the US, we get the August Philadelphia Fed PMI along with July housing starts and building permits data. Walmart, Gap and Nordstrom will also be reporting earnings.
- Friday: There is nothing of note overnight in Asia on Friday. In Europe, we get June current account data and the final July CPI prints for the Euro area. In the US, we end the week with the July leading index and the preliminary August University of Michigan survey.
Finally, here is Goldman with a focus just on the US:
The key economic releases for the coming week are the retail sales and industrial production reports on Wednesday. There are no scheduled speaking engagements by Fed officials this week.
Monday, August 13
- There are no major economic data releases scheduled.
Tuesday, August 14
- 06:00 AM NFIB small business optimism, July (consensus 106.7, last 107.2)
- 08:30 AM Import price index, July (consensus 0.1%, last -0.4%)
- 11:00 AM New York Fed to Release Q2 2018 Household Debt and Credit Report: The Federal Reserve Bank of New York will release its Q2 2018 Household Debt and Credit Report, offering an updated snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, and auto loans.
Wednesday, August 15
- 08:30 AM Empire State manufacturing index, August (consensus +20.0, last +22.6)
- 08:30 AM Nonfarm productivity (qoq saar), Q2 preliminary (GS +2.4%, consensus +2.4%, last +0.4%); Unit labor costs, Q2 preliminary (GS -0.1%, consensus +0.2%, last +2.9%): We estimate non-farm productivity rose 2.4%, above the +0.75% trend achieved on average during this expansion. This reflects strong GDP growth in Q2 along with moderate growth in average hours worked. We expect Q2 unit labor costs–compensation per hour divided by output per hour–to decline 0.1% due to strong productivity growth, even as data revisions released during the Q2 GDP report have shown faster growth of employee compensation than previously reported.
- 08:30 AM Retail sales, July (GS +0.1%, consensus +0.1%, last +0.5%); Retail sales ex-auto, July (GS +0.4%, consensus +0.3%, last +0.4%); Retail sales ex-auto & gas, July (GS +0.4%, consensus +0.4%, last +0.3%); Core retail sales, July (GS +0.5%, consensus +0.4%, last +0.0%): We estimate core retail sales (ex-autos, gasoline, and building materials) rose at a strong pace in July (+0.5% mom sa), reflecting a boost from record sales on Amazon Prime Day. Based on a pullback in auto sales and a rise in gas prices, we estimate 0.1% and 0.4% respective increases in the headline and ex-auto measures. Recent upward revisions to the personal saving rate have boosted our outlook for consumer spending growth over the next couple of years.
- 09:15 AM Industrial production, July (GS +0.4%, consensus +0.3%, last +0.6%); Manufacturing production, July (GS +0.4%, consensus +0.3%, last +0.8%); Capacity utilization, July (GS +78.2%, consensus +78.2%, last +78.0%): We estimate industrial production rose 0.4% in July, largely driven by further increases in both auto and non-auto manufacturing. We expect capacity utilization to edge up by two tenths to 78.2%.
- 10:00 AM Business inventories, June (consensus +0.1%, last +0.4%)
- 10:00 AM NAHB housing market index, August (consensus 67, last 68)
Thursday, August 16
- 08:30 AM Initial jobless claims, week ended August 11 (GS 215k, consensus 215k, last 213k); Continuing jobless claims, week ended August 4 (consensus 1,741k, last 1,755k): We estimate initial jobless claims rose by 2k to 215k in the week ended August 11, following a 6k decline in the previous week. The trend in initial jobless claims appears to still be declining steadily, mirroring the trend in the unemployment rate.
- 08:30 AM Philadelphia Fed manufacturing index, August (GS +21.5, consensus +22.0, last +25.7); We estimate the Philadelphia Fed manufacturing index declined 4.2pt to 21.5 in August, retracing part of the 5.6pt increase to 25.7 in July. Other indicators of manufacturing activity such as the ISM have been somewhat softer in recent weeks, and we expect this to be reflected in the Philadelphia Fed survey even as the overall growth of manufacturing activity remains solid.
- 08:30 AM Housing starts, July (GS +7.0%, consensus +7.4%, last -12.3%); Building permits, July (consensus +1.4%, last -2.2%); We estimate housing starts rose 7.0% in July, retracing some of the 12.3% June decline. We expect a rebound in both the volatile multifamily category—which declined 19.9% last month—and in the single family category—where starts now look low relative to building permits. While housing starts appear still somewhat low relative to demographic trends, we expect higher interest rates and tax reform to weigh on homebuilding in the next few quarters.
Friday, August 17
- 10:00 AM University of Michigan consumer sentiment, August preliminary (GS 98.5, consensus 98.0, last 97.9); We estimate the University of Michigan consumer sentiment index edged up 0.6pt in the preliminary estimate for August, reflecting strength in recent high-frequency consumer surveys as well as positive stock market returns in the past month. However, tariff-related concerns may weigh on sentiment. The report’s measure of 5- to 10-year inflation expectations stood at 2.4% in July.
Source: DB, BofA, SocGen, Goldman
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