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EU industrial production increases in May; US jobless claims decrease to two month low, while core CPI lower than expected

Jul 13 • Morning Roll Call • 39 Views • No Comments

On Thursday the investors were concentrating on the macro economic news releases mostly from Europe and the US, tracking the state of both economies. From the euro zone, positive news came regarding the May industrial production which rose by 1.3%, as opposed to the expected 1.2%, seen as a surprise due to the mixed economic data experienced in the given quarter. All industrial sectors of the 19 countries had a higher output in May compared to April. At the same time, the European Commission has revised its forecasts for the euro zone economic growth in 2018 with the estimation of 2.1% growth instead of the 2.3% GDP increase that was forecasted earlier in May. As reported by Reuters, the slowdown of economic growth will affect all euro zone’s major economies, but Italy will feel the most effect, as it will record the lowest growth rate in Europe of only 1.3%, compared to the expected growth of Germany’s GDP of 1.9% and France’s 1.7%. What has contributed to the slowdown of economic growth is the negative impact of US and EU trade war, as well as the rising oil prices.

Yesterday we had also the release of the minutes of ECBs’ June meeting, stating that the rates should stay on the current levels as long as it is deemed necessary, so as to ensure a sustained adjustment in the path of inflation. In addition, it has been signaled that the ECB is planning to end the bond purchasing stimulus program by the end of 2018, however stated that given the uncertainty faced, it would be wise to leave the end of quantitative easing conditional on incoming economic data.

From the US we have seen positive readings regarding the number of people filing for unemployment benefits that fell more than expected, declining in July to a seasonally adjusted 241k from previous week’s total of 232k. The expected number of jobless claims was 226k. This is the lowest level since May 2018 and it is seen as a sign that the labor market conditions remain robust in July. On the other hand, the CPI came at 0.1%, while the expected reading was 0.2%, showing that the consumer prices hardly rose in June, nevertheless the sign of a steady buildup of inflation pressures is still keeping the Fed on track for gradual increase of the interest rates.

ECONOMIC CALENDAR EVENTS FOR JULY 13th

NZD Business NZ Manufacturing Index
EUR German WPI m/m
EUR ECOFIN Meetings
GBP MPC Member Cunliffe Speaks
USD Prelim UoM Consumer Sentiment

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