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Article / 25 July 2017 at 4:54 GMT

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

editor/analyst /
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.

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.

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’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: 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.

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– Edited by Gayle Bryant

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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