3 Numbers to Watch: EZ Retail Sales, UK PMI Services, US ISM-NM

Eurozone PPI levels rose by more than expected yesterday after Eurostat reported a 0.9 percent increase in the measure. This was well above the 0.5 percent estimated by analysts and created an extra concern for the European Central Bank, which already has enough on its plate. Meanwhile, the construction PMI for the UK fell short of the 50 point neutral level, rising to just 49.5 points.

Looking ahead to today, we've got a few important numbers to keep tabs on. The latest Eurozone retail sales figures will give an indication of the strength of consumer spending in the region, while UK PMI services and US ISM non-manufacturing data is also due out. 

Eurozone Retail Sales (09:00 GMT) The Eurozone’s retail sector is expected to have contracted in August, as rising unemployment and lower wages continue to erode consumers’ disposable incomes.  The total value of goods and services sold is forecast to decline by 0.1 percent on a month-on-month basis, but contract by 1.9 percent compared to the same time last year. Retail sales ended a two-month rise in July as volumes fell 0.2 percent in July from June, with consumers holding back on goods such as food and fuel, which have risen in price during recent months. Even in Germany, the Eurozone’s growth engine, retail sales fell 0.9 percent in July, a signal that real incomes are not only declining in peripheral states, but also core countries.

UK Services PMI (08:30 GMT) The UK Services PMI index is expected to decline in September following a large rebound last month. Purchasing managers in the services sector reported a rise in the number of contracts they received, with the index jumping to 53.7 in August from 51 in July. However, the PMI index is forecast to decline from 53.7 to 53 this month. The index comes at a vital time, when the Bank of England prepares to meet for its Monetary Policy Committee meeting on Thursday. The central bank may very well join its counterparts in the US, Europe and Japan to launch another round of quantitative easing if forecasts show the economy is heading into recession. The service sector accounts for about 75% of UK economic output, so policymakers will be watching this figure closely.

US ISM Non-Manufacturing (14:00 GMT) After Monday’s better-than-expected ISM manufacturing data, it’s time to look at ISM non-manufacturing data. The index is forecast to decline from 53.7 to 53.2, according to a consensus of analysts. Economic activity in the non-manufacturing sector grew in August for the 32nd consecutive month. But non-manufacturing sectors have been showing signs of weakness, with the business activity component falling 1.6 percentage points to 55.6 percent in July, while the new orders index decreased by 0.6 percentage point to 53.7 percent. This was offset by a sharp rise in the employment index, which gained 4.5 percentage points to 53.8 percent.  However, the rise in employment in the non manufacturing sector appears to be running out of steam.

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