Video

#SaxoStrats
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 / 25 July 2017 at 4:54 GMT

3 Numbers: US Consumer Confidence Index on track to dip in July

editor/analyst / CapitalSpectator.com
United States
  • UK CBI Industrial Trends Orders Book Balance Index expected to backtrack in July
  • The long-term future for UK manufacturing depends on the Brexit details
  • US Consumer Confidence Index is likely slide to a five-month low in July
  • Atlanta Fed’s July Manufacturing Index projected to perk up for a second month

By James Picerno

The UK’s economic profile in July is in the spotlight again today, courtesy of the July profile of the manufacturing sector via the CBI’s industrial trends survey. Later, two US reports will be widely read for a fresh look on the macro profile for July: the Consumer Confidence Index and survey data for manufacturing in the Atlanta Fed’s region.


vcvc
The mood on Main Street continued to weaken in July. Photo: Shutterstock 

UK: CBI Industrial Trends Survey (1000 GMT)
The International Monetary Fund cut its economic forecast for the UK on Monday, in part based on the economy’s “tepid performance so far” this year, explained IMF chief economist Maurice Obstfeld. “The ultimate impact of Brexit on the United Kingdom remains unclear.”

Meanwhile, the IMF is projecting that Britain’s output will rise 1.7% this year, down from a 2.0% forecast published in April.

Will today’s survey data for the manufacturing sector offer another reason to manage expectations down? Perhaps not. The consensus forecast for the CBI Industrial Trends Orders Book Balance Index calls for a modest dip to 12 for July from last month’s 16. But that’s still a positive reading and one that’s second only to June’s print in recent years.

In other words, today’s survey data is on track to reaffirm that Britain’s manufacturing sector continues to expand at a healthy pace. But like the IMF’s forecast, the future for manufacturing activity beyond the immediate future in the UK depends on the Brexit details. At the moment, however, the path ahead for negotiating Brexit terms remains as clear as mud.

uk.cbi.25jul2017
 
US: Consumer Confidence Index (1400 GMT) The mood on Main Street continued to weaken in July, according to this month’s preliminary estimate of the University of Michigan’s Consumer Sentiment Index (CSI).

The slide in recent months remains mild, suggesting that the economy will continue to expand for the foreseeable future. “The data do not suggest an impending recession,” said the chief economist for CSI. “Rather, the data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump's victory have largely vanished, aside from a temporary snap-back expected in the second quarter.”

Today’s update from the Conference Board (CB) is on track to corroborate CSI’s modest dip of late. The Consumer Confidence Indicator is on track to dip to 117 for July, a five-month low, according to Econoday.com’s consensus forecast.

Note, too, that the hard data on retail spending has decelerated. The year-on-year growth rate for inflation-adjusted sales fell to 1.2% in June, the weakest annual gain in 10 months.

Considering the data published to date, it would be surprising if today’s CSI release for July bucks the trend and posts a gain.

us.cci.25jul2017
 
US: Richmond Fed Manufacturing Index (1400 GMT) Two regional manufacturing indices last week posted weaker-than-expected readings for July. Will today’s release make it three in a row?

No, according to economists. The consensus forecast calls for a mildly higher print for the Atlanta Fed’s manufacturing index in July. If the estimate is right, the news will offer an upbeat spin on the sector following last week’s softer-than-forecast updates for the equivalent benchmarks via the New York Fed and Philadelphia Fed.

Even if the outlook for a modest increase in the Atlanta Fed’s index to 8 from June’s 7 is accurate, the benchmark will still reflect a lesser rate of growth compared with the first quarter. That’s also the message in last week’s releases.

The main takeaway: manufacturing activity, although still expanding, is growing at a relatively subdued pace. The good news is that the softer trend doesn’t appear set to weaken further.

Yesterday’s flash data for the US Manufacturing PMI in July perked up to a four-month high. That’s a clue for thinking that the sector’s slowdown in recent months may have run its course.

“The July PMI surveys show an economy gaining growth momentum at the start of the third quarter, enjoying the strongest monthly improvement in business activity since January,” noted the chief business economist at IHS Markit.

us.atlanta.25jul2017
 Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

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

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com 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 Tradingfloor.com 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 Tradingfloor.com 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 Tradingfloor.com or as a result of the use of the Tradingfloor.com. 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 Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com 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