Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 01 August 2017 at 4:56 GMT

3 Numbers: Another upbeat Eurozone GDP report expected for Q2

editor/analyst /
United States
  • Eurozone output for Q2 is on track to rise 0.6% in today’s flash GDP
  • There are welcome signs of growing momentum behind the GDP uptrend in Europe
  • The US ISM Manufacturing Index is expected to backtrack after surging in June 
  • Economists expect a rebound in light-vehicle sales for the US in July

By James Picerno

The August calendar of economic data begins with a wide range of numbers, including the flash report on Eurozone GDP for the second quarter. Later, two US numbers will be widely read for an early look at economic activity in July: the ISM Manufacturing Index and the monthly update on light-vehicle sales.

The three-largest Eurozone economies – Germany, France, and Italy – are growing, based on the latest estimates. Photo: Shutterstock

Eurozone: GDP (0900 GMT) Last week’s GDP report for Spain offered another encouraging data point for anticipating good news for today’s flash estimate of Eurozone economic activity in the second quarter.

Output increased 0.9% in Q2 for Europe’s fourth-largest economy, slightly faster than Q1’s strong 0.8% rise. Factor in that the three-largest economies – Germany, France, and Italy – are growing too, based on the latest estimates, and it all adds up to a solid tailwind for projecting another round of healthy growth for today’s first look at the euro area’s profile during the April-through-June period. last week advised that “the Eurozone’s growth spurt likely remained strong in the second quarter as incoming data is bright.” Economists recently lifted GDP forecasts for a dozen euro area countries, including France, Greece, Italy and Spain, the consultancy noted.

Official confirmation of the bullish outlook is expected in today’s official Q2 GDP report from Eurostat.’s consensus forecast sees output rising 0.6% in Q1. The prediction anticipates that economic activity will expand at or above the 0.5% mark for three straight quarters for the first time in nearly a decade.

"Momentum is there. We're getting a broadening out of countries in terms of economic performance,” said the chief international economist at ING. “It’s not just the likes of Germany driving it all forward ... There does seem to be self-sustaining momentum.”

US: ISM Manufacturing Index (1400 GMT) ISM data revealed a surge in manufacturing activity in June. Will the party continue in today’s update for July?

In contrast with the competing Manufacturing PMI, the ISM’s survey data for the sector closed out the second quarter on a surprisingly strong note. The index jumped to 57.8, up sharply from May’s 54.9 and edging out February’s reading to reach the highest level in nearly three years.

Survey data published by IHS Markit also paints an upbeat picture for manufacturing, although the preliminary PMI profile for July (published last week) points to a continuation of moderate growth.

Economists are expecting that the wide gap between the two manufacturing benchmarks will narrow today as the ISM Manufacturing Index gives up some ground in July.’s consensus forecast calls for a drop in the benchmark to 56.4. Although that’s still a healthy pace that’s well above the neutral 50 mark, the slide from June’s 57.8 suggests that manufacturing activity is on track to maintain a moderate rate of expansion in the third quarter.

Good news, but the crowd’s forecast suggests that the odds are still low that we’ll see a hefty acceleration in growth in the immediate future. 

US: Auto & Light Truck Sales (TBD) Today’s report on retail sales for autos and light trucks offers a hard-data preview of the appetite for consumer spending in July.

For context, consider that retail sales overall have been slipping a bit in the two months through June. The slide marks the first back-to-back declines in almost a year. Is the softer trend a sign of trouble for the consumer spending in the third quarter and beyond? It’s too soon to know, but the retail appetite for vehicles last month offers a key clue.

Industry analysts have been managing expectations down recently. Analysts at Edmunds last week predicted that auto sales for July are on track for the biggest decline of the year so far. “July is historically a strong month, but with disappointing sales and inventories still building, something needs to give,” explained the executive director of industry analysis at Edmunds.

The consensus forecast for today’s combined auto and light-truck data, however, sees a modest improvement for last month, according to After trending lower in this year’s first half, sales are expected to perk up by 300,000 to 16.8 million units (seasonally adjusted annual rate) in July – the biggest monthly advance to date in 2017.

Auto sales may still be facing headwinds, but the kickoff to the second half of 2017 is projected to start with a moderate round of growth for the combined numbers in the retail market for autos and light trucks. If so, the news may be a sign that consumer spending may be headed for a rebound in Q3.
 Create your own charts with SaxoTrader; click here to learn more  

– Edited by Susan McDonald

James Picerno is a macro analyst/editor at Follow James or post your comment below to engage with Saxo Bank's social trading platform.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail