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 / 23 August 2017 at 4:59 GMT

3 Numbers: Eurozone Q3 GDP growth steady at 0.6%

editor/analyst /
United States
  • The Eurozone Composite PMI update on track for stable Q3 GDP growth
  • US manufacturing activity set for moderate expansion via today’s PMI release
  • New US home sales for July expected to hold steady against previous month

By James Picerno

New survey data for the Eurozone is the main event for today’s economic numbers in Europe, including the first look at August’s Composite PMI, a proxy for the euro area’s GDP trend.

Later, two US numbers will be influential for reassessing the macro outlook: the Manufacturing PMI for August and new home sales for July.

Eurozone: Composite PMI (0800 GMT) Today’s update offers a fresh estimate of the euro area’s economic growth in the third quarter.

Although economists are expecting a fractionally lower reading for August, the forecast remains upbeat, signalling that this year’s rebound in growth is set to continue.

 US new home sales were surprisingly weak in July - was it merely a blip? Photo: Shutterstock’s consensus forecast calls for a dip in the Composite PMI to 55.5 in August, slightly below last month’s 55.7.

Last month's reading equates with a “very respectable” 0.6% quarterly rise in GDP, said the chief business economist for IHS Markit earlier this month.

A 0.6% increase in output for the third quarter would mark the third time in the last two years that growth has reached that pace, which reflects the strongest advance since 2015.

Note that another GDP proxy - the Bank of Italy’s Euro-Coin Indicator – estimated economic growth at 0.6% for the three months to July.

Judging by analysts expectations for today’s PMI release, the Eurozone’s macro trend remains on track to deliver a 0.6% rise in Q3 GDP.

US: Manufacturing PMI (1345 GMT) A trio of preliminary estimates of regional manufacturing activity in the US point to ongoing growth for August.

Not surprisingly, today’s flash data for this month’s Manufacturing PMI is projected to reaffirm that this sector of the economy is still humming along at a moderate rate.

Yesterday’s August report for the Richmond Fed’s manufacturing benchmark held steady at 14, reflecting a fifth straight month of expansion.

The upbeat trend followed encouraging figures from the equivalent indices published by the New York and Philadelphia Federal Reserve banks for this month.

Today’s first look at national survey data for the US manufacturing profile is expected reaffirm a moderate growth narrative.’s consensus forecast sees the Manufacturing PMI edging down to 53.2, a hair below July’s 53.3. But that’s comfortably above the neutral 50 mark.

The July PMI’s final reading indicated that US manufacturing overall began the third quarter on solid footing, according to IHS Markit’s chief business economist, noting that the sector’s health was improving at the fastest rate in four months.

The analysis appears set to carry over to today’s preliminary PMI report for August.

US: New Home Sales (1400 GMT) Residential housing construction was surprisingly weak in July as housing starts fell nearly 5% - in sharp contrast with the market’s expectation for a modest rise.

The news was doubly surprisingly since confidence in the home building industry perked up sharply this month. “Our members are encouraged by rising demand in the new-home market,” said the chairman of the National Association of Home Builders last week.

 “This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence.”

The upbeat sentiment implies that today’s hard data on sales of newly built houses will follow suit. Yet economists are expecting that transactions will hold steady at 610,000 units (seasonally adjusted annual rate), according to’s consensus forecast.

The prediction still represents a decent pace, albeit a middling one compared with this year’s track record to date.

Then again, a stable rate of sales in July may be a prelude to a substantially firmer round of buying in August, or so the latest reading of builder sentiment suggests.


-- Edited by Adam Courtenay

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

Ayub11 Ayub11
Thanks for the nice post.


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