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 / 24 July 2017 at 4:56 GMT

3 Numbers: Upbeat EZ Composite PMI for July points to solid recovery

editor/analyst /
United States
  • A rebound is expected in today’s Eurozone Composite PMI for July
  • Economists mixed about flash data for US Manufacturing and Services PMIs
  • US existing home sales in July may tick down to a middling rate vs recent history
  • These sales have been stuck in neutral, bouncing around in a tight range this year
By James Picerno

Monday brings a range of flash updates for survey PMIs in July, including reports for the Eurozone Composite, US Manufacturing, and US Services indexes. We’ll also see the June numbers on US existing home sales.

Eurozone: Composite PMI (0800 GMT) Economists are expecting that today’s survey data will continue to forecast moderate growth for the euro area at the start of the third quarter.

The Composite PMI is on track to tick fractionally lower: 56.2 in the flash data for July, according to’s consensus forecast.

But if the projection is right, the index will post its seventh straight reading of 56 or higher – an upbeat trend that points to an economic recovery that’s likely to carry over through the second half of the year.

 Existing homes sales is not where the action is in the US at the moment. Photo: Shutterstock

The forecast suggests that quarterly GDP growth for the Eurozone will remain stable at 0.6%, perhaps a bit faster.

A new economic estimate for the Eurozone from the Survey of Professional Forecasters offers a similar outlook. Respondents said that the currency bloc’s growth rate will accelerate to 1.9% this year from a previous estimate of 1.7%.

Despite the upbeat outlook for the economy, the European Central Bank last week left interest rates unchanged and ECB chief Mario Draghi was vague on details about when monetary policy would change to a hawkish bias.

A key factor: inflation wasn’t yet firm enough to warrant tighter policy, he explained. “We need to be persistent and patient because we aren't there yet,” he said at a news conference.

US: Manufacturing & Services PMIs (1345 GMT) Preliminary estimates of economic activity for July are on tap today with the flash data for the manufacturing and services sectors.

Based on consensus forecasts via, the services sector is expected to maintain a moderately strong rate of growth. Manufacturing is also expanding, but the initial PMI estimate for July is projected to show that the pace of expansion remains relatively sluggish.

Last week’s regional Fed data for manufacturing in July also reflected a softer trend. The New York Fed and Philly Fed manufacturing indices fell, suggesting that the growth rate is on track to cool in the third quarter.

“The preponderance of recent survey data point to improving conditions in the manufacturing sector, and we expect the underlying trend of reported output to gradually accelerate in the months ahead,” noted the chief economist at MFR last week.

“However, an ongoing inventory adjustment in the automotive sector will likely dampen headline factory output data over the near term.”

Whatever the source of the slowdown, today’s PMI data for manufacturing data will probably reaffirm that the sector has downshifted recently.  By contrast, the preliminary survey data for services is projected to show that this component of the US economy is expanding at a slightly faster rate.

Overall, today’s PMI reports will likely provide more support for anticipating that moderate US growth remains a reasonable forecast for the near term.

US: Existing Home Sales (1400 GMT) Residential construction activity increased more than expected in June, suggesting that the housing sector would firm up in the second half of the year after a mixed run of data in the first six months of 2017.

Despite the latest bounce in housing starts, some economists expect that any improvement in home building will be modest in the months ahead.

“A lack of workers is limiting the ability of builders to build, and input costs are also an issue,” said the chief economist at Naroff Economic Advisors. “I don't expect this part of the economy to add greatly to growth going forward.”

Today’s update on home sales isn’t expected to suggest otherwise. Economists are projecting that sales of existing houses will slip to 5.57 million units in June, down slightly from 5.62 million previously (seasonally adjusted annual rate), based on’s consensus forecast. If the estimate is right, sales will remain at a middling level against recent history.

For the year so far, existing sales have been stuck in neutral, bouncing around in a tight range year to date.

One headwind has been a relatively low supply of moderately priced houses. “Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher,” said the chief economist at the National Association of Realtors last month.


-- 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.


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