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 / 03 August 2017 at 4:56 GMT

3 Numbers: US factory orders set to rebound for June

editor/analyst /
United States
  • Eurozone retail sales on track to post a sixth straight gain in today's report
  • GDP data also points to an upbeat outlook for the single currency zone this year
  • US factory orders expected to rebound in June after recent falls
  • The US ISM Non-Manufacturing Index for July should show moderate growth
By James Picerno

Another busy day of economic data is on the schedule for Thursday, including the monthly hard data on retail spending in the Eurozone.

Later, two US numbers will provide more context for evaluating the macro trend: factory orders for June and the first look at the ISM Non-Manufacturing Index for July.

Eurozone: Retail Sales (0900 GMT) Today’s hard data on consumer spending is expected to reaffirm that Europe’s economic recovery remains on track. Economists are looking for retail sales to post another monthly advance, rising for a sixth straight month in June.’s consensus forecast calls for a 0.1% gain in the final month of the second quarter, down from a 0.4% pop in May.  More importantly, the year-on-year trend is projected to hold steady at a moderate 2.6% rate for a third month.

 European and US services are in the steady-as-she-goes zone. Photo: Shutterstock
The trend is hardly spectacular, but the steady gains for the monthly and annual data suggest that retail spending is on a sustainable growth path. Survey data suggest no less.

The IHS Markit Eurozone Retail PMI jumped to 53.2 in June, marking the strongest rate of growth in nearly two years.

A broad macro tailwind in the hard numbers strengthens the upbeat outlook. Earlier this week the flash data for the Eurozone’s GDP in the second quarter posted a healthy 0.6% advance, slightly above the 0.5% rise in Q1.

“All in all, the Eurozone economy has rounded out the first half of the year in a very healthy state and seems to be set up nicely for continued firm growth for the rest of 2017,” a senior economist at ING noted this week.

US: Factory Orders (1400 GMT) Analysts are predicting that factory orders will rebound in June following declines in each of the previous two months.’s consensus forecast calls for a 2.7% increase in orders, the first monthly advance since March.

If accurate, the forecast anticipates that the year-on-year trend will accelerate to a 9% increase – a  three-year high. The rosy outlook finds support in the previously released report on new durable goods orders, a subset of today’s data.

Last week’s report on new orders for durable goods posted the biggest monthly gain in almost three years, led by a sharp increase in civilian aircraft orders.

The pop translates to a strong 16.1% year-over-year advance, which also marks a three-year high. Excluding the volatile aircraft sector trims the gains, but the general takeaway is still encouraging.

Today’s broader review or orders for US factories will probably echo last week’s numbers for June. Nonetheless, some analysts note that the durable goods report revealed that core capital goods, a proxy for business investment, slipped 0.1% in June.

For today’s data, however, last news of a headline gain in durable goods orders suggests that topline growth will also look encouraging for factory orders generally in the second quarter’s closing month.

US: ISM Non-Manufacturing Index 1400 GMT) Flash data for the US Services PMI for July held at a moderately bullish 54.2, well above the neutral 50 mark.

“Survey respondents cited an improving economic backdrop and greater willingness to spend among clients in July,” advised IHS Markit last week. “Reflecting this, the latest data revealed the strongest upturn in new work received by service sector firms for exactly two years.”

Today’s first look at the ISM Non-Manufacturing Index for July is expected to align with the PMI data by indicating that the outlook for moderate growth remains intact.

The ISM reading is on track to slip to 56.9 from 57.4 in according to’s consensus forecast, but the projection is still a solid number – well above the Services PMI, in fact.

Overall, today’s update is widely expected to restate what’s been clear for much of the year to date: the services sector continues to expand at a healthy pace.

That's a sign for expecting that economic growth overall in the US will endure for the foreseeable future.

-- 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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