Market Movers
Euro area manufacturing PMIs are due for release today. Focus will be on the first estimates in Italy and Spain. The Italian figure has increased to the highest level since 2011, while the Spanish figure has declined for two months in a row. We look for an improvement in the Spanish PMI and a small setback in the Italian.
In the UK we expect PMI manufacturing to increase marginally to 52.2 in August, from 51.9 in July. This should follow as the scope for increases is limited due to the strong GBP, which puts pressure on the manufacturing sector in the UK.
The German and euro area unemployment rates are due for release and should both remain unchanged. The euro area unemployment rate has declined since mid-2013 despite modest GDP growth. A pick-up in activity is likely to imply it will approach its structural level quickly.
We expect US manufacturing ISM to fall to 52.2 in August from 52.7 in July. The decline should follow as data show a significant inventory build-up in both the manufacturing and retail sectors in Q2. While demand continues to look solid and the fall in energy prices should boost private consumption, we believe an inventory correction is due. Coupled with the negative impact of a stronger USD and general increase in uncertainty, the ISM manufacturing index could weaken short term.
In Sweden we forecast manufacturing PMI to drop to 54.5 and in Norway we expect an increase to 47.5.
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