- Germany’s Consumer Climate Indicator expected to hold steady at a high level
- Eurozone’s Business Confidence Indicator is on track to tick up to a six-year high
- Economists expect third revision for Q1 US GDP growth will hold at a weak 1.2%
Consumer sentiment for Germany is in focus today with the monthly update from Gfk. Later, the European Commission publishes new data for business and consumer confidence for the Eurozone. Later, the third revision for US GDP in the first quarter will be widely read.
Germany: Gfk Consumer Climate Indicator (0600 GMT): The Ifo this week reported that business confidence in Germany increased in June to its highest level since 1991. Sentiment is “jubilant,” said Ifo President Clemens Fuest.
“Companies were significantly more satisfied with their current business situation this month,” he explained “They also expect business to improve. Germany’s economy is performing very strongly.”
Today’s Gfk report updates the mood profile for the consumer sector. Here, too, the trend is encouraging.
The Consumer Climate Index’s (CCI) expected reading for June (published in May) rose to 10.4. Gfk noted that the increase shows that “German consumers were still highly confident in May of this year, providing reliable support to the German economy”.
The optimism looks set to carry over into the hard data. Economists expect that second quarter GDP growth will remain robust, rising 0.5%, or just below the strong 0.6% gain in Q1, according to survey data published this week by FocusEconomics.com.
Meanwhile, today’s sentiment update (labeled as a forecast for July) is expected to deliver another dose of cheer. Econoday.com’s consensus forecast calls for the CCI to hold steady at an elevated 10.4 reading, the highest since 2001.
Macro jubilance, in short, looks set to roll on for Europe’s biggest economy.
Eurozone: Business Climate Indicator (0900 GMT): Echoing the increasingly confident state of consumer sentiment in Germany, the latest measure of the mood for the Eurozone remains on a bullish track as well.
Last week’s flash update of the European Commission’s (EC) Consumer Confidence Indicator (CCI) for June rose more than expected, jumping to the highest level in more than a decade.
Today’s release from the EC updates CCI and also publishes the first look for the Business Climate Indicator (BCI) for this month.
Economists are looking for a mild rise to 0.94 for business sentiment, according to Econoday.com’s consensus forecast. The projection represents the second-highest level in six years.
An upbeat report today will hardly come as a surprise in the wake of bullish comments this week from Mario Draghi, the president of the European Central Bank.
“All the signs now point to a strengthening and broadening recovery in the euro area,” he said on Tuesday. “Deflationary forces have been replaced by reflationary ones.”
Today’s sentiment data isn’t expected to challenge Draghi’s narrative.
US: Q1 GDP (1230 GMT): Most analysts are still looking for a rebound in GDP growth in the second quarter report that’s scheduled for release next month.
Today’s third revisions for Q1 GDP, however, is widely expected to remain unchanged at a sluggish 1.2% increase, based on Econoday.com’s consensus forecast.
The good news is that prospects for improvement in Q2 remain intact, according to several sources. Monday’s revised estimate via the Atlanta Fed’s GDPNow model, for instance, projects a 2.9% increase, more than twice the gain in Q1.
Wall Street analysts are upbeat too. The median forecast for Q2 GDP growth is 3.0%, according to CNBC’s June 27 survey data.
Nonetheless, the IMF this week downplayed the odds that we’ll see stronger US growth linked to Trump administration policies.
The reasoning is based on “larger than usual risks to the US economy, given policy uncertainties”. As a result, the IMF cut its forecast for US growth for 2017 to 2.1% from 2.3%.
For the moment, however, the Q2 outlook still looks set for a stronger pace. Today’s revised Q1 report, by contrast, is expected to remain a disappointing start for the year.
Disclosure: Originally published at Saxo Bank TradingFloor.com