A very fickle week is now over, with a pretty gloomy political and economical outlook. Recession angst had diverse, but unsurprising, market impacts. Worries over a meaningful downturn in growth weighed on markets. There is however a continuous pricing in of a moderation in hikes and end in early Q1 2023 and subsequent easing. This week is all about inflation figures from all over the world. Have a look at the most important events of the coming days in our usual weekly publication.
Monday – 08 August 2022
Consumer Price Index (NZD, GMT 22:45) – RBNZ Q3’s CPI is expected to be confirmed at 3.29% on a quarterly basis.
Tuesday – 09 August 2022
Productivity & Unit Labor Cost (USD, GMT 12:30) – The Q2 productivity contraction rate is expected at -4.5%, after a Q1 trimming to a contraction rate of -7.4% from -7.3%. A Q2 growth rate for the hours-worked index is anticipated at 2.4%, after unrevised rates of 5.4% in Q1 and hourly compensation growth rates of 4.5% in Q2 after rates of 4.4% in Q1. The unit labor cost (ULC) growth rate should be at 9.0% after a 12.7% (was 12.6%) rate in Q1. Productivity is now reversing the acceleration through the pandemic, as low-wage workers return to the labor pool after the pandemic exit, leaving an hours-worked drop after the pandemic boost. The pandemic lifted productivity, and the reversal is now dampening it.
Wednesday – 10 August 2022
Consumer Price Index (CNY, GMT 01:30) – Chinese inflation for July is seen contracting at -0.1% m/m but headline is expected to ease at 2.4% y/y from 2.5% y/y.
Consumer Price Index and Core (USD, GMT 12:30) – The US inflation in July is forecasted to gain by 0.2% for the CPI headline and 0.6% for the core, following big gains of 1.3% and 0.7% respectively in June. CPI gasoline prices look poised to fall -7% in July. We see ongoing support for core prices from the war in Ukraine and continued global supply chain issues, with the associated disruption to global trade. As-expected July CPI figures would result in a pullback in the y/y headline rise to 8.8% from a 40-year high of 9.1% in June, with the core y/y gain to bounce to 6.2% from 5.9%, versus a 40-year high of 6.5% in March.
Thursday – 11 August 2022
OPEC Monthly Report at 11 GMT – This report covers the major issues affecting the world oil market and provides an outlook for crude oil market developments for the coming year.
Producer Price Index and Core (USD, GMT 12:30) – The US PPI for July is expected to grow by 0.3% for the headline and 0.4% for the core, following respective gains of 1.1% and 0.4% in June. As-expected readings would result in the y/y headline PPI metric easing to 10.5% from 11.3%, versus an all-time high of 11.6% in March. The y/y core measure could dip to 7.6% from 8.2%, versus an all-time high 9.6% in March. Overall, the massive PPI climb since the start of 2021 exceeded the uptrend in headline and core CPI data, and both sets of gains have chased outsized increases in the trade price measures. We see an ongoing lift to prices from continued supply constraints, the war in Ukraine, and lockdowns in Shanghai that wound down at the end of May.
Friday – 12 August 2022
Gross Domestic Product, Industrial & Manufacturing Production and Trade Balance (GBP, GMT 06:00) – A plethora of data from the UK should confirm a continued stuttering recession. The UK preliminary GDP for Q2 is expected to confirm a contraction rate of -0.2% q/q, down from 0.8% q/q last time. The headline is expected sharply lower from the so far 8.7% y/y, to 2.8% y/y. Industrial and Manufacturing Production for June are both expected at -0.6% from 0.9% and 1.4% respectively. The trade deficit is seen at -21.20B. The BOE’s latest growth projections were revised sharply down, with the BOE once again flagging recession risks and predicting a decline in activity of -2.1% in Q3 of next year, compared to -0.8% in the May report.
Michigan Consumer Sentiment & New Home Sales (USD, GMT 14:00) – Michigan Consumer Sentiment improved to 51.5 in the final reading for July, a little better than forecast after plunging -8.4 points to an all-time low of 50.0 in June.
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