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 / 31 August 2017 at 5:05 GMT

3 Numbers: Firmer consumer inflation expected for Eurozone

editor/analyst /
United States
  • Eurozone inflation is projected to tick higher in today’s flash data for August
  • US job cuts for August are set to edge lower for fifth month
  • Consumer spending growth in July projected to accelerate

By James Picerno

August ends with a busy day of economic news, including the flash report on consumer inflation for the Eurozone in August.

Later, two US numbers will be closely read for a fresh read on the outlook for third quarter economic activity: job cuts in August and personal income and spending data for July.

Eurozone: Consumer Price Index (0900 GMT) Firmer-than-expected inflation data for Germany and Spain in updates published Wednesday suggest that today’s consumer price report for the Eurozone could beat the consensus forecast too.

 Getting more expensive? The coffee price register is climbing. Photo: Shutterstock

In Spain, consumer inflation rose 2% in August against the year-earlier level, above the 1.8% consensus forecast and July’s annual pace of 1.7%. German inflation also topped estimates, printing at a 1.8% annual rate in August against 1.5% in July.

The higher inflation rates ensure that the market will be keenly focused on today’s flash August data for consumer prices in the Eurozone.’s consensus forecast calls for a 1.4% advance in CPI in the euro area, slightly above the 1.3% pace in the previous month.

Factoring in the latest data from Germany and Spain, however, hints at the possibility of an upside surprise today. Frederik Ducrozet at Pictet, for instance, tweeted on Wednesday that the new inflation numbers are “consistent with a rise in € inflation to 1.5% YoY.”

US: Job Cut Report (1130 GMT) Looking for signs of weakness in the US labour market via layoffs has been a dead end this year for the bears and today’s monthly release from Challenger, Gray & Christmas (CGC) – a consultancy – is expected to provide more of the same.

Job cuts have trended lower for much of this year, dipping to 28,300 in July – an eight-month low, according to CGC.

Nonetheless, the firm’s chief executive officer in July noted that “while we have yet to see the large-scale layoffs of previous years, especially as oil and tech rebound, the spectre of a downturn is on the horizon and could spell massive cuts as we head into the fourth quarter and into next year.”

Perhaps, but so far the data suggest otherwise from the perspective of layoffs and today’s update for August isn’t expected to deviate from the recent trend.’s econometric estimate predicts a slight decline in cuts to 27,900 for this month.

If correct, the dip will mark the fifth straight month of lower layoffs and the third print of cuts falling on a year-on-year basis. If that outlook is correct, the case for anticipating “massive cuts” will remain weak, at least for the near-term horizon.

US: Personal Income & Spending (1230 GMT) Second-quarter GDP growth was revised up to a solid 3% rate, the Bureau of Economic Analysis reported on Tuesday. A key factor in the upgrade: stronger consumer spending than previously estimated.

Personal consumption expenditures increased 3.3% in Q2, the strongest gain in more than two years. The upbeat trend is expected to spill over into today’s release for July.’s consensus forecast for spending points to a faster monthly gain of 0.4% for July, up from 0.1% previously.

The prediction also represents the first round of faster monthly growth since March. Even better, the estimate translates into a 4% year-on-year increase for the start of the third quarter, which puts the annual pace on track to firm up for the first time in four months.

“The revised GDP growth rate likely comes as a sigh of relief for folks looking for further confirmation that the US economy is moving along swiftly,” said an investment strategist at Etrade.

The bullish sentiment looks set for more validation once today’s July numbers on spending hit the street.

-- 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.


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